WORLD AT WORK C17 MARKET PRICING
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPREHENSIVE
STUDY GUIDE
●● Compensation Philosophy
Answer: broad statement on how people should be rewarded
●● Compensation Strategy
Answer: principles that guide the design, implementation and
administration of a compensation program; specifies what programs will
be used and how they will be administered
●● Factors influencing compensation
Answer: 1. External competitiveness
2. Pay competitiveness
3. Relevant labor market
4. Organizations must be willing and able to pay
5. In-demand employees
6. Internal vs external equity
●● External Competitiveness
,Answer: prevailing rate for jobs in the marketplace
●● Relevant labor market
Answer: market where organization draws or loses employees
(organization size, geographic, industry)
●● Pay competitiveness
Answer: prevailing market rates with whom the organization competes;
identify movement of salary; identify pay practices
●● Internal Equity
Answer: employees' perceptions of fairness and consistency
●● External Equity
Answer: pay levels compared to competitors; prevailing external rates;
achieving equity; retention
●● Job Value
Answer: determining which jobs are of higher value to the organization
●● Lead
Answer: company consciously sets its pay at year-end anticipated
market level, not at the current market level; company's pay level will
, then "lead" the market until the start of the next year; "pay leader" may
be better positioned to attract and retain more experienced/higher
performing employees by offering above market pay
●● Lag
Answer: company consciously set its pay equal to current market levels
at beginning of the year; may experience greater difficulty in attracting
and retaining qualified employees (benefit offerings might be used to
offset below-market pay)
●● Lead-Lag
Answer: company will consciously set its pay at mid-year anticipated
market level; company's pay will lead the market in the 1st half of the
year and lag in the 2nd half
●● Business Life Cycle
Answer: progression of steps an organization passes through from its
creation to its decline
●● 4 Stages of Business Life Cycle
Answer: 1. Start-up
2. Growth
3. Mature
4. Decline
UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS COMPREHENSIVE
STUDY GUIDE
●● Compensation Philosophy
Answer: broad statement on how people should be rewarded
●● Compensation Strategy
Answer: principles that guide the design, implementation and
administration of a compensation program; specifies what programs will
be used and how they will be administered
●● Factors influencing compensation
Answer: 1. External competitiveness
2. Pay competitiveness
3. Relevant labor market
4. Organizations must be willing and able to pay
5. In-demand employees
6. Internal vs external equity
●● External Competitiveness
,Answer: prevailing rate for jobs in the marketplace
●● Relevant labor market
Answer: market where organization draws or loses employees
(organization size, geographic, industry)
●● Pay competitiveness
Answer: prevailing market rates with whom the organization competes;
identify movement of salary; identify pay practices
●● Internal Equity
Answer: employees' perceptions of fairness and consistency
●● External Equity
Answer: pay levels compared to competitors; prevailing external rates;
achieving equity; retention
●● Job Value
Answer: determining which jobs are of higher value to the organization
●● Lead
Answer: company consciously sets its pay at year-end anticipated
market level, not at the current market level; company's pay level will
, then "lead" the market until the start of the next year; "pay leader" may
be better positioned to attract and retain more experienced/higher
performing employees by offering above market pay
●● Lag
Answer: company consciously set its pay equal to current market levels
at beginning of the year; may experience greater difficulty in attracting
and retaining qualified employees (benefit offerings might be used to
offset below-market pay)
●● Lead-Lag
Answer: company will consciously set its pay at mid-year anticipated
market level; company's pay will lead the market in the 1st half of the
year and lag in the 2nd half
●● Business Life Cycle
Answer: progression of steps an organization passes through from its
creation to its decline
●● 4 Stages of Business Life Cycle
Answer: 1. Start-up
2. Growth
3. Mature
4. Decline
