UARK MGMT 2103 - Exam 3 questions and solutions

UARK MGMT 2103 - Exam 3 questions and
solutions

Internal Equity - answersin the same firm ji ji ji ji ji ji




-job structure: primary factor when making internal comparisons
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External Equity - answersin another firm ji ji ji ji ji




-pay level: primary factor when making external comparisons
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Market Pay Surveys - answersprovides information on going rates of pay among competing organizations
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-3 Issues to Consider:
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1. Which employers should be included in the survey?
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2. What jobs are included in the survey?
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3. If multiple surveys are used, how are all the rates of pay weighted and combined?
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Benchmarking - answerscomparing an organizations practices against those of the competition ji ji ji ji ji ji ji ji ji ji




Key Jobs - answersbenchmark jobs, used in pay surveys, that have relatively stable content and are common
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to many organizations
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Non-Key Jobs - answersjobs that are unique to organizations and that cannot be directly valued or compared
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through the use of market surveys
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Job Evaluation - answersa method for matching a salary with a job; administrative procedure used to
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measure internal job worth
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Point System of Job Evaluation - answersquantitative job evaluation that determines the relative value of a
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job by the total points assigned to it
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-permits jobs to be evaluated on the basis of compensable factors (experience, education, complexity..) that
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constitute a job
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Pay Policy Line - answersequation that describes the relationship between a job's pay and its job evaluation
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points
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Pay Grades - answersjobs of similar worth or content grouped together for pay administration purposes
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Pay Structure: Pros - answers-More Grades: job differences more closely relate to pay differences
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-Fewer Grades: fewer, broader grades (broadbanding) increases simplicity and equality
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Pay Structure: Cons - answers-More Grades: job evaluations are costly, time consuming, and create
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seemingly artificial distinctions
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-Fewer Grades: decreased opportunity for promotion and weaker budgetary control
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Broadbanding as it Relates to Compensation? - answershaving extremely wide salary bands ji ji ji ji ji ji ji ji ji ji ji ji




-encourages the development of broad employee skills because non-managerial jobs are appropriately ji ji ji ji ji ji ji ji ji ji ji




valued and skill development is rewarded
ji ji ji ji ji ji

, 100% difference between minimum and maximum salaries
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Executive Compensation Packages - answers-Base Salary: ji ji ji ji ji ji




-Executive Short-Term iIncentive - annual bonuses based on the pay for-performance strategy ji ji ji ji ji ji ji ji ji ji ji ji




-Executive Long-Term Incentives: right to buy company stock at discounted price (executive pay varies with ji ji ji ji ji ji ji ji ji ji ji ji ji ji




performance of stock market)
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-Stock Grants: stock given to employees as compensation/part of compensation
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-Executive Benefits: health insurance, life insurance, retirement plans, paid vacations, payment of mortgage ji ji ji ji ji ji ji ji ji ji ji ji




interest
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-Executive Perquisites/Perks ji




Equal Pay Act of 1963 - answersmen and women in the same firm who do "equal work" must be paid equally
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-equal in terms of skill, responsibility, and working conditions (requires a job analysis)
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-if these factors differ, pay can be unequal (differences in training, shift, and seniority)
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Fair Labor Standards Act of 1938 - answersestablished minimum wage and overtime pay rate (overtime
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includes work that an employee is expected to do)
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Salary - answerscompensation is computed on the basis of weekly, biweekly, or monthly pay periods
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Exempt - answersthose employees (executive, professional, administrative and outside sales, as well as
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certain "computer employees") not covered by the FLSA and not eligible for overtime pay
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Non-Exempt - answersemployees that are covered under FLSA; includes most hourly jobs ji ji ji ji ji ji ji ji ji ji ji




Reinforcement Theory - answerstheory that states high employee performance followed by a monetary ji ji ji ji ji ji ji ji ji ji ji ji




reward will make future high performance more likely
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Expectancy Theory - answerstheory that says motivation is a function of valence, instrumentality and ji ji ji ji ji ji ji ji ji ji ji ji ji




expectancy
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-effort will result in performance -> expectancy
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-performance will result in outcomes -> instrumentality ji ji ji ji ji ji




-Outcomes will be valuable -> valence ji ji ji ji ji




Agency Theory - answersperson (e.g. a manager) who is expected to act on behalf of a principal (e.g. an
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owner)
ji




Merit Increase Grid - answersa grid that combines an employee's performance rating with employee's
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position in a pay range to determine size and frequency of his or her pay increase
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Merit Bonus - answersmerit pay paid in the form of a bonus, instead of a salary increase
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-differs from merit pay raise in that bonus is paid once; raise is a permanent salary increase
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Concerns on Merit Pay Plans - answers-accuracy of raise depends on accuracy of performance evaluation ji ji ji ji ji ji ji ji ji ji ji ji ji ji




method
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-can encourage competition when budget or economic constraints exist
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-average difference in raises between high and average performers is around $21.15/week ji ji ji ji ji ji ji ji ji ji ji




Individual Incentive Plans - answersincentive plans make it difficult to forecast labor costs, especially if goals ji ji ji ji ji ji ji ji ji ji ji ji ji ji ji




are too easy
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-What if goals change during the year? Results-based evaluations open to many forms of contamination
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