Market Pricing, Conducting a Competitive Pay Analysis CCIFP UPDATED
ACTUAL Questions and CORRECT Answers
Compensation Philosophy A broad statement of what the organization believes about how people should
be rewarded
Compensation Strategy Specific principles that guide the design, implementation and administration of a
compensation program in an organization
Compensation Philosophy It should support the business strategy and be a good fit with the organization's
culture
Factors influencing Compensation External competitiveness and Pay competitiveness
Relevant labor market Market(s) from which organization draws or loses employees
Relevant labor market is defined by Organization size, Geographic location & industry
Relevant labor market is differ by job groups Scope-sensitive job (e.g., management), Clerical jobs & Industry-specific jobs
(petroleum engineer, pharmacist)
In-demand employees Employers must keep close watch on how competitors are paying their
employees who have hot skills or are identified as critical key talent
Internal Equity Each job's relative value
Internal Equity Equal pay for jobs of equal worth
External Equity Pay levels compared to competitors
, Prevailing External Rates Imply that the employer pays wages that correspond to external market rates as
determined by market pricing
Achieving Equity When employees believe their compensation is equal to what they would receive
if they worked in a similar job at another company
Blend and Balance When employers combine internal equity and external competitiveness
Job Value Jobs with higher value to the organization
Market Position Lead the market
Market Position Lag the market
Market Position Lead-lag the market
Lead the market Set its pay at year-end anticipated market level not at current market levels
Lag the market Set its pay equal to current market levels at the beginning of the year.
Lead-lag the market Set its pay at mid-year anticipated market level
Business Life Cycle The progression of steps an organization passes through from its creation to its
decline
Start-up The organization is new with few or no formal policies or procedures
Growth Generates the need to begin standardizing procedures through policy creation
Mature Focus on maintaining/increasing market share, improving productivity and
reducing cost of sales
Decline The organization's revenues are declining
Business Life Cycle Start-up, Growth, Mature & Decline
Start-up Organization's focuses is on obtaining capital, marketing, products or services,
initial sales growth and cash conservation
Growth The organization is focused on growing sales, increasing distribution capability
and determining how to efficiently produce products or services
Mature The organization has higher levels of bureaucracy and greater amounts of cash on
hand than at other stages
Decline The organization must decide to reinvest in current products, create new
products or maximize profits with current products
Compensation Program Objectives Internally Equitable, Externally Competitive
ACTUAL Questions and CORRECT Answers
Compensation Philosophy A broad statement of what the organization believes about how people should
be rewarded
Compensation Strategy Specific principles that guide the design, implementation and administration of a
compensation program in an organization
Compensation Philosophy It should support the business strategy and be a good fit with the organization's
culture
Factors influencing Compensation External competitiveness and Pay competitiveness
Relevant labor market Market(s) from which organization draws or loses employees
Relevant labor market is defined by Organization size, Geographic location & industry
Relevant labor market is differ by job groups Scope-sensitive job (e.g., management), Clerical jobs & Industry-specific jobs
(petroleum engineer, pharmacist)
In-demand employees Employers must keep close watch on how competitors are paying their
employees who have hot skills or are identified as critical key talent
Internal Equity Each job's relative value
Internal Equity Equal pay for jobs of equal worth
External Equity Pay levels compared to competitors
, Prevailing External Rates Imply that the employer pays wages that correspond to external market rates as
determined by market pricing
Achieving Equity When employees believe their compensation is equal to what they would receive
if they worked in a similar job at another company
Blend and Balance When employers combine internal equity and external competitiveness
Job Value Jobs with higher value to the organization
Market Position Lead the market
Market Position Lag the market
Market Position Lead-lag the market
Lead the market Set its pay at year-end anticipated market level not at current market levels
Lag the market Set its pay equal to current market levels at the beginning of the year.
Lead-lag the market Set its pay at mid-year anticipated market level
Business Life Cycle The progression of steps an organization passes through from its creation to its
decline
Start-up The organization is new with few or no formal policies or procedures
Growth Generates the need to begin standardizing procedures through policy creation
Mature Focus on maintaining/increasing market share, improving productivity and
reducing cost of sales
Decline The organization's revenues are declining
Business Life Cycle Start-up, Growth, Mature & Decline
Start-up Organization's focuses is on obtaining capital, marketing, products or services,
initial sales growth and cash conservation
Growth The organization is focused on growing sales, increasing distribution capability
and determining how to efficiently produce products or services
Mature The organization has higher levels of bureaucracy and greater amounts of cash on
hand than at other stages
Decline The organization must decide to reinvest in current products, create new
products or maximize profits with current products
Compensation Program Objectives Internally Equitable, Externally Competitive
