UARK MGMT 2103
UARK MGMT 2103 - EXAM 3 QUESTIONS
AND ANSWERS
Internal Equity - in the same firm
-job structure: primary factor when making internal comparisons
External Equity - in another firm
-pay level: primary factor when making external comparisons
Market Pay Surveys - provides information on going rates of pay among competing
organizations
-3 Issues to Consider:
1. Which employers should be included in the survey?
2. What jobs are included in the survey?
3. If multiple surveys are used, how are all the rates of pay weighted and combined?
Benchmarking - comparing an organizations practices against those of the competition
Key Jobs - benchmark jobs, used in pay surveys, that have relatively stable content and
are common to many organizations
Non-Key Jobs - jobs that are unique to organizations and that cannot be directly valued or
compared through the use of market surveys
Job Evaluation - a method for matching a salary with a job; administrative procedure
used to measure internal job worth
UARK MGMT 2103
,UARK MGMT 2103
Point System of Job Evaluation - quantitative job evaluation that determines the relative
value of a job by the total points assigned to it
-permits jobs to be evaluated on the basis of compensable factors (experience, education,
complexity..) that constitute a job
Pay Policy Line - equation that describes the relationship between a job's pay and its job
evaluation points
Pay Grades - jobs of similar worth or content grouped together for pay administration
purposes
Pay Structure: Pros - -More Grades: job differences more closely relate to pay differences
-Fewer Grades: fewer, broader grades (broadbanding) increases simplicity and equality
Pay Structure: Cons - -More Grades: job evaluations are costly, time consuming, and
create seemingly artificial distinctions
-Fewer Grades: decreased opportunity for promotion and weaker budgetary control
Broadbanding as it Relates to Compensation? - having extremely wide salary bands
-encourages the development of broad employee skills because non-managerial jobs are
appropriately valued and skill development is rewarded
100% difference between minimum and maximum salaries
Executive Compensation Packages - -Base Salary:
-Executive Short-Term iIncentive - annual bonuses based on the pay for-performance
strategy
-Executive Long-Term Incentives: right to buy company stock at discounted price
(executive pay varies with performance of stock market)
UARK MGMT 2103
, UARK MGMT 2103
-Stock Grants: stock given to employees as compensation/part of compensation
-Executive Benefits: health insurance, life insurance, retirement plans, paid vacations,
payment of mortgage interest
-Executive Perquisites/Perks
Equal Pay Act of 1963 - men and women in the same firm who do "equal work" must be
paid equally
-equal in terms of skill, responsibility, and working conditions (requires a job analysis)
-if these factors differ, pay can be unequal (differences in training, shift, and seniority)
Fair Labor Standards Act of 1938 - established minimum wage and overtime pay rate
(overtime includes work that an employee is expected to do)
Salary - compensation is computed on the basis of weekly, biweekly, or monthly pay
periods
Exempt - those employees (executive, professional, administrative and outside sales, as
well as certain "computer employees") not covered by the FLSA and not eligible for
overtime pay
Non-Exempt - employees that are covered under FLSA; includes most hourly jobs
Reinforcement Theory - theory that states high employee performance followed by a
monetary reward will make future high performance more likely
Expectancy Theory - theory that says motivation is a function of valence, instrumentality
and expectancy
-effort will result in performance -> expectancy
UARK MGMT 2103
UARK MGMT 2103 - EXAM 3 QUESTIONS
AND ANSWERS
Internal Equity - in the same firm
-job structure: primary factor when making internal comparisons
External Equity - in another firm
-pay level: primary factor when making external comparisons
Market Pay Surveys - provides information on going rates of pay among competing
organizations
-3 Issues to Consider:
1. Which employers should be included in the survey?
2. What jobs are included in the survey?
3. If multiple surveys are used, how are all the rates of pay weighted and combined?
Benchmarking - comparing an organizations practices against those of the competition
Key Jobs - benchmark jobs, used in pay surveys, that have relatively stable content and
are common to many organizations
Non-Key Jobs - jobs that are unique to organizations and that cannot be directly valued or
compared through the use of market surveys
Job Evaluation - a method for matching a salary with a job; administrative procedure
used to measure internal job worth
UARK MGMT 2103
,UARK MGMT 2103
Point System of Job Evaluation - quantitative job evaluation that determines the relative
value of a job by the total points assigned to it
-permits jobs to be evaluated on the basis of compensable factors (experience, education,
complexity..) that constitute a job
Pay Policy Line - equation that describes the relationship between a job's pay and its job
evaluation points
Pay Grades - jobs of similar worth or content grouped together for pay administration
purposes
Pay Structure: Pros - -More Grades: job differences more closely relate to pay differences
-Fewer Grades: fewer, broader grades (broadbanding) increases simplicity and equality
Pay Structure: Cons - -More Grades: job evaluations are costly, time consuming, and
create seemingly artificial distinctions
-Fewer Grades: decreased opportunity for promotion and weaker budgetary control
Broadbanding as it Relates to Compensation? - having extremely wide salary bands
-encourages the development of broad employee skills because non-managerial jobs are
appropriately valued and skill development is rewarded
100% difference between minimum and maximum salaries
Executive Compensation Packages - -Base Salary:
-Executive Short-Term iIncentive - annual bonuses based on the pay for-performance
strategy
-Executive Long-Term Incentives: right to buy company stock at discounted price
(executive pay varies with performance of stock market)
UARK MGMT 2103
, UARK MGMT 2103
-Stock Grants: stock given to employees as compensation/part of compensation
-Executive Benefits: health insurance, life insurance, retirement plans, paid vacations,
payment of mortgage interest
-Executive Perquisites/Perks
Equal Pay Act of 1963 - men and women in the same firm who do "equal work" must be
paid equally
-equal in terms of skill, responsibility, and working conditions (requires a job analysis)
-if these factors differ, pay can be unequal (differences in training, shift, and seniority)
Fair Labor Standards Act of 1938 - established minimum wage and overtime pay rate
(overtime includes work that an employee is expected to do)
Salary - compensation is computed on the basis of weekly, biweekly, or monthly pay
periods
Exempt - those employees (executive, professional, administrative and outside sales, as
well as certain "computer employees") not covered by the FLSA and not eligible for
overtime pay
Non-Exempt - employees that are covered under FLSA; includes most hourly jobs
Reinforcement Theory - theory that states high employee performance followed by a
monetary reward will make future high performance more likely
Expectancy Theory - theory that says motivation is a function of valence, instrumentality
and expectancy
-effort will result in performance -> expectancy
UARK MGMT 2103
