Week 7 - Compensation

Question 1

What is Equity?

Answer 1

Based on the perception of individuals that determine whether the compensation they receive is fair. There is Internal and External equity. External is comparing with outside organizations, internal is within organization.

Question 2

What are the compensable factors?

Answer 2

Compensation Factors are factors that determine pay. Typical compensable factors are: experience, education, complexity of duties, supervision received, supervision exercised, mental demands, physical demands, working conditions.

Question 3

What is pay for classification?

Answer 3

Pay for type of job which includes point-factor job evaluation, market model, rank-in-person, broad-banding.

Question 4

What is pay for performance?

Answer 4

Pay for increase in performance which can be seniority pay, merit pay, skill pay, or thru gainshairing.

Question 5

What is a point-factor job evaluation?

Answer 5

• It is determining a score for each job based on worth or position. Job is broken down into factors.
• Factors can be weighted according to the significance of the organization, and this allows the pay scheme to be linked to the organization’s strategy.
• most commonly used

Question 6

What’s rank-in person?

Answer 6

Focused on employee’s competencies and not the duties of the job.
The Federal GS schedule is an example. Used in military, police depts.

Question 7

What’s market model?

Answer 7

• Jobs are ordered hierarchically based on point-factor analysis.
• Benchmark positions are identified.
• Market based salary ranges for these benchmark positions are established by salary surveys.

Question 8

What’s broadbanding?

Answer 8

• Arrange jobs into broad occupational classes and a few pay bands such as training level, full performance level, etc.
• Managers are authorized to adjust salaries within ranges without having to gain approval from personnel
  Typically used in small non profit orgs.

Question 9

What’s seniority pay?

Answer 9

• Money is given based on the assumption that seniority increases an employee’s skills. These skills increase value to the agency.
• Simple, objective, predictable, and fair
• Encourages workforce stability

Question 10

What’s merit pay?

Answer 10

• Bonuses for workers who perform their jobs better
• Based on achievement
• Attractive b/c they are supported by the conventional wisdom and leading motivational theories (economic, need, expectancy)

Question 11

What’s skill pay?

Answer 11

• Employees qualify for salary increments as new skills are learned, used, and show results
• Emphasizes competencies that a fully performing employee is expected to demonstrate

Question 12

What’s gainsharing?

Answer 12

• Organizations and employees share greater-than-expected gains in productivity and/or cost reduction
• 1/2 of the savings revert to the agency fund and balance is distributed to the people involved

Question 13

What’s internal equity?

Answer 13

The standard that requires employers to set wages for jobs that corresponded to the relative internal value of each job

Question 14

What’s external equity?

Answer 14

• The standard that compares an employer’s wages with the rates prevailing in external markets
• To be competitive with the job market (if employees do not see their pay as equal to what other orgs pay, they will likely leave)