QUESTIONS AND VERIFIED ANSWERS |GRADED A+|PASS FIRST AT-
Direct financial compensation - ANSWER compensation received in the form of salary,
wages, commissions, stock options or bonuses
Indirect financial compensation - ANSWER all the tangible and financially valued rewards
that are not included in direct compensation including free meals, vacation time and health
insurance
Nonfinancial compensation - ANSWER rewards and incentives given to employees that
aren't financial in nature
Base pay - ANSWER reflects the size and scope of an employee's responsibilities
Severance pay - ANSWER give to employees upon termination of their employment
Fixed pay - ANSWER pays employees a set amount regardless of performance
Variable pay - ANSWER bases some or all of an employee's compensation on employee,
team, or organizational
Pay structure - ANSWER the array of pay rates for different work or skills within a single
organization
Pay mix - ANSWER the relative emphasis give to different compensation components
1
,Pay leader - ANSWER organization with a compensation policy of giving employees
greater rewards than competitors
Pay follower - ANSWER an organization that pays its front-line employees as little as pos-
sible
Resource dependence theory - ANSWER proposition that organizational decisions are in-
fluenced by both internal and external agents who control critical resources
Wage differentials - ANSWER differences in wage between various workers, groups of
workers, or workers within a career field
Labor market - ANSWER all of the potential employees located within a geographic area
from which the organization might be able to hire
Cost of living allowances - ANSWER clauses in union contacts that automatically increase
wages base on the U.S. Bureau of Labor Statistics' cost of living index
Market pricing - ANSWER uses external sources of information about how others are
compensating a certain position to assign value to a company's similar job
Compensation surveys - ANSWER surveys of other organizations conducted to learn what
they are paying for specific jobs or job classes
Benchmark jobs - ANSWER jobs that tend to exist across departments and across diverse
organizations allowing them to be used as a basis for compensation comparisons
Job evaluation - ANSWER a systematic process that uses expert judgement to assess dif-
ferences in value between jobs
2
,Ranking methos - ANSWER subjectively compares jobs to each other based on their over-
all worth to the organization
Job classification method - ANSWER subjectively classifies jobs into an exiting hierarchy
of grades and categories
Point factor method - ANSWER uses a set of compensable factors to determine a job's
value. Skill, resp, effort, working cond.
Compensable factor - ANSWER any characteristic used to provide a basis for judging a
job's value
Skills, responsibilities, effort, working conditions - ANSWER Four categories of compensa-
ble factors
Hay Group Guide Chart - Profile Method - ANSWER a point-factor system is used to pro-
duce both a profile and a point score for each position.
Know how
Problem solving
Accountability
Working conditions
Know-how, problem solving, accountability, working conditions - ANSWER Hay Group
Method based on four main factors
Position Analysis Questionnaire - ANSWER a structured job evaluation questionnaire that
is statistically analyzed to calculate pay rates based on how the labor market is valuing
worker characteristics. A copyrighted, standardized, structured job analysis questionnaire. 6
sections covering 187 job elements.
3
, Job pricing - ANSWER the generation of salary structures and pay levels for each job
based on the job evaluation data
Single rate system, pay grades and broadbanding - ANSWER Three most common job
pricing systems
Pay grade (pay scale) - ANSWER the range of possible pay for a group of jobs
Broadbanding - ANSWER using very wide pay grades to increase pay flexibility
Internal equity - ANSWER when employees perceive their pay to be fair relative to the
pay of other jobs in the organization
Employee equity - ANSWER the perceived fairness of the relative pay between employ-
ees performing similar jobs for the same organization
External equity - ANSWER when an organization's employees believe that their pay is fair
when compared to what other employers pay their employees who perform similar jobs
Comparable worth - ANSWER if two jobs have equal difficulty requirements, the pay
should be the same, regardless of who fills them
Wage rate compression - ANSWER starting salaries for new hires exceed the salaries paid
to experienced employees
Golden parachute - ANSWER lucrative benefits given to executives in the event the com-
pany is taken over
Cost-of-living adjustments - ANSWER pay increases to account for a higher cost of living
in one country versus another
4
Direct financial compensation - ANSWER compensation received in the form of salary,
wages, commissions, stock options or bonuses
Indirect financial compensation - ANSWER all the tangible and financially valued rewards
that are not included in direct compensation including free meals, vacation time and health
insurance
Nonfinancial compensation - ANSWER rewards and incentives given to employees that
aren't financial in nature
Base pay - ANSWER reflects the size and scope of an employee's responsibilities
Severance pay - ANSWER give to employees upon termination of their employment
Fixed pay - ANSWER pays employees a set amount regardless of performance
Variable pay - ANSWER bases some or all of an employee's compensation on employee,
team, or organizational
Pay structure - ANSWER the array of pay rates for different work or skills within a single
organization
Pay mix - ANSWER the relative emphasis give to different compensation components
1
,Pay leader - ANSWER organization with a compensation policy of giving employees
greater rewards than competitors
Pay follower - ANSWER an organization that pays its front-line employees as little as pos-
sible
Resource dependence theory - ANSWER proposition that organizational decisions are in-
fluenced by both internal and external agents who control critical resources
Wage differentials - ANSWER differences in wage between various workers, groups of
workers, or workers within a career field
Labor market - ANSWER all of the potential employees located within a geographic area
from which the organization might be able to hire
Cost of living allowances - ANSWER clauses in union contacts that automatically increase
wages base on the U.S. Bureau of Labor Statistics' cost of living index
Market pricing - ANSWER uses external sources of information about how others are
compensating a certain position to assign value to a company's similar job
Compensation surveys - ANSWER surveys of other organizations conducted to learn what
they are paying for specific jobs or job classes
Benchmark jobs - ANSWER jobs that tend to exist across departments and across diverse
organizations allowing them to be used as a basis for compensation comparisons
Job evaluation - ANSWER a systematic process that uses expert judgement to assess dif-
ferences in value between jobs
2
,Ranking methos - ANSWER subjectively compares jobs to each other based on their over-
all worth to the organization
Job classification method - ANSWER subjectively classifies jobs into an exiting hierarchy
of grades and categories
Point factor method - ANSWER uses a set of compensable factors to determine a job's
value. Skill, resp, effort, working cond.
Compensable factor - ANSWER any characteristic used to provide a basis for judging a
job's value
Skills, responsibilities, effort, working conditions - ANSWER Four categories of compensa-
ble factors
Hay Group Guide Chart - Profile Method - ANSWER a point-factor system is used to pro-
duce both a profile and a point score for each position.
Know how
Problem solving
Accountability
Working conditions
Know-how, problem solving, accountability, working conditions - ANSWER Hay Group
Method based on four main factors
Position Analysis Questionnaire - ANSWER a structured job evaluation questionnaire that
is statistically analyzed to calculate pay rates based on how the labor market is valuing
worker characteristics. A copyrighted, standardized, structured job analysis questionnaire. 6
sections covering 187 job elements.
3
, Job pricing - ANSWER the generation of salary structures and pay levels for each job
based on the job evaluation data
Single rate system, pay grades and broadbanding - ANSWER Three most common job
pricing systems
Pay grade (pay scale) - ANSWER the range of possible pay for a group of jobs
Broadbanding - ANSWER using very wide pay grades to increase pay flexibility
Internal equity - ANSWER when employees perceive their pay to be fair relative to the
pay of other jobs in the organization
Employee equity - ANSWER the perceived fairness of the relative pay between employ-
ees performing similar jobs for the same organization
External equity - ANSWER when an organization's employees believe that their pay is fair
when compared to what other employers pay their employees who perform similar jobs
Comparable worth - ANSWER if two jobs have equal difficulty requirements, the pay
should be the same, regardless of who fills them
Wage rate compression - ANSWER starting salaries for new hires exceed the salaries paid
to experienced employees
Golden parachute - ANSWER lucrative benefits given to executives in the event the com-
pany is taken over
Cost-of-living adjustments - ANSWER pay increases to account for a higher cost of living
in one country versus another
4
