Topic 4 - Internal Reward Alignment Flashcards
What is Internal Reward Alignment?
It is the alignment of each employee’s rewards with those received by others in the organization to ensure fairness, performance augmentation, cost management, compliance, and attraction and retention.
Why is understanding the value of different jobs important in an organization?
To develop an effective and fair Total Rewards System that aligns rewards with job contributions to organizational goals.
What is another term for Internal Reward Alignment, and why is it used?
Internal Equity; it emphasizes fairness in rewards among employees within the organization.
What organizational issues can arise from a poorly designed rewards system?
Difficulties with employee morale, turnover, collaboration, and information sharing.
How does Internal Reward Alignment contribute to organizational goals?
By ensuring fair pay comparisons, improving performance, managing costs, ensuring compliance, and supporting employee attraction and retention.
An Internal Rewards Alignment is best defined as:
A system designed to show compensation managers the market rates for specific jobs
The extent to which an organization’s Total Rewards System aligns each employee’s rewards with those received by others in the organization
The rewards with which competitive employers compensate their employees
A rewards system that allows for bonuses for executive-level managers
The extent to which an organization’s Total Rewards System aligns each employee’s rewards with those received by others in the organization
Where could potential problems lie if there are flaws in a compensation system?
Morale
Turnover
Information sharing
All of the above
All of the above
Any rewards system that does not have a clear answer to this question is destined to have difficulties not only with employee morale and turnover, but also internal processes such as collaboration and information sharing.
What are the three broad approaches to Internal Reward Alignment?
Job-based, Individual-based, and Performance-based approaches.
What does the Job-based approach to Internal Reward Alignment assume?
It assumes that rewards are provided based on the job a person holds.
What does the Individual-based approach to Internal Reward Alignment assume?
It assumes that rewards are based on the characteristics of the person holding a job.
What does the Performance-based approach to Internal Reward Alignment assume?
It assumes that rewards are based on the performance or results produced by an employee.
Why is it important to understand the three approaches to Internal Reward Alignment?
To help an organization decide on its Total Rewards Strategy and systems.
Which approach to Internal Reward Alignment is the most common and foundational?
The Job-based approach.
Which of the following is not an approach to an Internal Reward Alignment?
Individual-based approach
Job-based approach
Performance-based approach
Group-based approach
Group-based approach
The Job-based approach assumes that organizations will reward based on:
Employee merit and end-of-year company performance
Results by an employee
The job a person holds
Characteristics of a person holding a job
The job a person holds
The Individual-based approach assumes that rewards should be based on:
Characteristics of a person holding a job
The job a person holds
Merit based pay for end-of-year company performance
Results by an employee
Characteristics of a person holding a job
The Performance-based approach assumes that rewards should be based on:
Results by an employee
Characteristics of a person holding a job
Merit based pay for end-of-year company performance
The job a person holds
Results by an employee
True or False. Each of these approaches needs to be understood to allow an organization to decide upon its Total Rewards Strategy and systems.
True
In a ________________, the job itself is the fundamental unit for designing the rewards system.
Individual-based system
Group-based system
Performance-based system
Job-based system
Job-based system
In a job-based system, pay changes occur when:
A new hire starts his/her first day
An employer changes jobs
An employee changes jobs
Pay changes never occur
An employee changes jobs
True or False. In a purely job-based system, a highly skilled manager with an MBA who is preparing food in a fast-food restaurant would be paid the same amount as a high school dropout performing the same job.
True
Using job analysis, all work in business is organized into:
Job families
Jobs
Job classes
Job approaches
Jobs
Through what method do you understand how valuable a job is?
Job creation
Job evaluation
Job analysis
Job devaluation
Job evaluation
What is Job Evaluation?
The process by which the value of each job in an organization is established, forming the basis for a pay structure.
What is the purpose of Job Evaluation?
To create a rewards structure by determining the relative value of jobs within an organization.
What is a Job Structure?
An organized listing of jobs grouped and hierarchically arranged for rewards purposes.
What are Job Families?
Large categories of jobs, such as Accounting, Marketing, or Computer Engineering, within a Job Structure.
What is a Job-Value Structure?
A structure of jobs internally positioned according to their relative value to the organization.
What are the three primary methods for establishing Internal Reward Alignment?
Job Classification Approach, Job Comparison Approach, and Point Factor Approach.
What does the Job Classification Approach use to organize jobs?
Logical categories and descriptions.
What is a drawback of the Job Classification Approach in large organizations?
It can become overly complex and unwieldy as the number and types of jobs grow.
What is the Job Comparison Approach?
A method where jobs are ranked based on their value relative to other jobs in the organization.
What is the Point Factor Approach?
A method that allocates points to jobs based on their value to the organization using defined factors and measures.
What are Compensable Factors?
Statements of what the organization values, representing parts of work that create value for the organization.
How are Benchmark Jobs used in the Point Factor Approach?
They represent a sample of jobs used to develop the system for evaluating all jobs.
What is the purpose of rating scales in the Point Factor Approach?
To measure the extent to which a job involves a compensable factor.
What is an Anchored Rating Scale?
A scale that uses behavioral examples or definitions for each point value to improve clarity and agreement.
What is a Variable Distance Scale?
A scale where the point values between levels vary to reflect “natural breaks” in the factor being measured.
What is Factor Weighting?
Determining the relative importance of compensable factors in a reward plan.
Why is Factor Weighting important?
It ensures the compensation system reflects the organization’s strategy and priorities.
What is Face Validity in a Job Evaluation System?
The extent to which the system produces job values that appear accurate and credible to employees.
What is the purpose of a pilot test in the Point Factor Approach?
To ensure the system is clear, reliable, and valid before full implementation.
What happens after a pilot test reveals issues in the system?
Adjustments are made, and the process is repeated until the system is ready for rollout.
What is the final step in the Point Factor Approach?
Measuring factors for all jobs in the organization using the established system.
What is the key advantage of the Point Factor Approach?
It is scalable and can handle large organizations with many jobs.
What is a tradeoff of having a single reward structure for an organization?
It creates cohesion but may overlook unique contributions of different job families.
What is a tradeoff of having multiple reward structures for an organization?
It captures unique contributions but may reinforce silos and impede collaboration.
What connects multiple reward structures in an organization?
Common elements or compensable factors.
What challenges arise when creating a job classification system?
Ensuring the categories are meaningful, mutually exclusive, and comprehensible.
How does the Job Comparison Approach handle job evaluation?
By comparing all jobs and assigning points to indicate relative value.
What is the role of a ratings coach in the Point Factor Approach?
To assist raters in understanding and applying the system accurately.
Why is job analysis critical in developing a Job Structure?
It provides detailed descriptions of work, forming the foundation for job grouping and evaluation.
How does an organization decide the number of compensable factors to use?
By balancing enough breadth to cover all value-creating work and keeping the system manageable.
What are the steps involved in the Point Factor Approach?
Step1 - Choose Compensable Factors
Step 2 - Develop Factor Measures
Step 3 - Determine Factor Weights
Step 4 - Pilot Test the Job Evaluation System
Step 5 - Measure Factors for All Jobs
Job evaluation is:
The process by which the value of each employee in an organization is established
The process by which the value of each department in an organization is established
The process by which the value of each job in an organization is established
The process by which the value of the compensation plan is established
The process by which the value of each job in an organization is established
A job structure is:
A systematic approach to creating a job analysis for the purposes of understanding the compensation plan
A value system for the list of jobs created
An organized listing of the business’s jobs that functionally groups and hierarchically arranges the jobs for rewards purposes
The way a company decides to recruit, retain, and develop employees
An organized listing of the business’s jobs that functionally groups and hierarchically arranges the jobs for rewards purposes
The ___________________ is creating a job structure using logical categories and descriptions to organize the jobs.
Job comparison approach
Classification approach
Point factor approach
None of the above
Classification approach
The ___________________ explains how jobs are placed in a relative hierarchy based upon how their value compares to other jobs.
Job comparison approach
Classification approach
Point factor approach
None of the above
Job comparison approach
The ____________________ allocates points to jobs based upon the job’s value to the organization.
Job comparison approach
Classification approach
Point factor approach
None of the above
Point factor approach
Job evaluation is a tool to help organizations create Internal Reward Alignments that are both ____________ and ___________ to effective employee performance.
Equitable and conducive
Equitable and creative
Conducive and available
Conducive and developed
Equitable and conducive
Job evaluation produces a job value structure through:
Placing jobs in a system of classifications
Comparing jobs directly to each other
Assigning points based on the compensable factors
All of the above
All of the above
With the job evaluation system in place, the organization now has a ____________ indicator of the value that each job creates for the organization.
Qualitative
Small
Quantitative
Large
Quantitative
True or False. Organizations face certain challenges when making the connection between the Internal Job Value Structure and the monetary value created externally in labor markets.
True
Internal Reward Alignment is the extent to which the relative value of all jobs in the organization is ___________ the business strategy.
Clear about
Coherent with
Fair to
Supportive of
All of the above
All of the above
Job evaluation provides the basis for developing a network or configuration of ________ that make up a rewards structure.
Pay differences
Pay increases
Pay rates
Pay decreases
Pay rates
Job evalutation provides the basis for developing a network or configuration of pay rates that make up a rewards structure.
The most fundamental question of internal reward alignment relates to the number of ____________ in an organization.
Distinct reward structures
Distinct benefit plans
Distinct business goals
Distinct business strategy
Distinct reward structures
For example, will the organization have one reward structure that covers management, sales, and manufacturing job families, or will the organization have a different reward structure for each job family?
Which of the following is not an example of a job family?
Engineering
All are considered job families
Accounting
Biology
All are considered job families
Job families, such as accounting, marketing, or computer engineering, typically form the largest categories.
True or False. Once jobs are broadly organized into such a job structure, the next step is to create a mechanism for assigning their relative value in the organization.
True
The job value structure represents:
The structure of jobs internally positioned according to their immediate value
The structure of jobs internally positioned according to their natural value
The structure of jobs internally positioned according to their relative value
None of the above
The structure of jobs internally positioned according to their relative value
Job-value structure does not answer the question of:
How important are jobs
What jobs are
Whom to recruit for jobs
How jobs are related
Whom to recruit for jobs
The job value structure answers the question of what the jobs are, how they are related, and the relative importance of each.
True or False. Job evaluation is a tool to help organizations create internal reward alignment that is both equitable and conducive to effective employee performance.
True
Which approach is a way to establish internal reward alignment?
Classification approach
Job comparison approach
Point factor approach
All of the above
All of the above
In which approach would it appear that jobs are ordered based on rank and file?
Job comparison approach
Point factor approach
Classification approach
None of the above
Job comparison approach
In the job comparison approach (or ranking approach), jobs are placed in a relative hierarchy based upon how their value compares to other jobs.
In which approach would it appear that jobs are categorized by job descriptions?
Job comparison approach
Point factor approach
Classification approach
None of the above
Classification approach
The classification approach to creating a job structure uses logical categories and descriptions to organize the jobs.
In which approach are jobs compared and “winning” or more “important” jobs get points?
Job comparison approach
Point factor approach
Classification approach
None of the above
Job comparison approach
All jobs in the organization are compared, with points given for each comparison “won” by each job.
The advantage of the job comparison approach is that it is:
Intuitive
Holistic
Intuitive and holistic
None of the above
Intuitive and holistic
The job is considered as a whole and compared to other jobs as a whole.
A downside to the comparison approach is it:
Becomes inefficient as size of company grows
Becomes inefficient as management grows
Becomes inefficient as management shinks
Becomes inefficient as size of company shrinks
Becomes inefficient as size of company grows
True or False. The goal of job evaluation is to create a way to measure the value (and relative value) of each job in the organization.
True
The point factor approach does all except:
Defines valuable elements of jobs
Measures the extent to which each job has that element
Developes revolutionary ideas for job analysis
Specifies the importance of each element of a job
Developes revolutionary ideas for job analysis
It follows a general process of defining valuable elements of jobs, specifying their importance, and measuring the extent to which each job has that element.
Choose the answer which does not complete the blank: internal reward alignment is how _______ the relative value of all jobs in an organization is.
Fair
Enjoyable
Clear
Coherent
Enjoyable
Internal reward alignment is the extent to which the relative value of all jobs in the organization is clear, coherent, fair, and supportive of the business strategy.
It is better to have a _____________ approach in job analysis.
Quantitative
Qualitative
Both A & B
None of the above
Quantitative
A compensable factor is a:
Statement of what the organization values
Statement of what the organization wants
Statement of what the organization has
Statement of what the organization needs
Statement of what the organization values
A benchmark job is:
A sample of jobs that is representative of the type, content, and level of jobs in the organization
A sample of jobs within the organization that are to be addressed for compensation levels
A sample of jobs provided by government to control wage decreases
None of the above
A sample of jobs that is representative of the type, content, and level of jobs in the organization
A graphic rating scale is:
Where raters rate the extent to which the job involves the un-compensable factor
Where raters rate the extent to which the job involves the compensable factor
Both A & B
None of the above
Where raters rate the extent to which the job involves the compensable factor
The higher a job is rated on the scale, the more value points that it receives.
