MGT 421: Compensation and Benefits
exam 2 well answered already passed
Compensation survey: how they're formulated, strengths and weaknesses - correct answer
✔✔Serve 2 essential functions:
Define the relevant labor market.
Help choose the benchmark jobs for comparison.
Strengths: Able to gain valuable data on competitors compensation plans and trends from base
wages to discretionary benefits and how compensation plans are mixed between the two
(example: 60% wages, 40% benefits). Helps compensation professionals set compensation for
their employees and stay competitive in the marker.
Weaknesses: Compensation surveys contain a massive amount of data that can be
overwhelming to analyze without the use of statistics. Usually a large amount of variation in
comp between companies can make it hard to build a market competitive plan for your
company. Surveys often have outdated data as it takes a while to compile wages and benefits to
make the survey.
Evaluating raw compensation survey data (4 steps) - correct answer ✔✔1.) measures of central
tendency: mean, median, mode
2.) measures of variation: standard deviation
3.) aging data (using CPI)
4.) performing regression analysis
Benchmark jobs - correct answer ✔✔contents well known, relatively stable, agreed upon by
employees
, common across different employers
represents the entire range of jobs that are being evaluated within a company
generally accepted in the labor market for the purpose of setting pay levels
Median vs. mean - correct answer ✔✔Median: the middle value of a data set, regardless of
magnitude
Mean: the average value of a data set, influenced by magnitude
Understanding the significance of quartiles - correct answer ✔✔Quartiles are useful for
understanding the spread of data based on a particular value; i.e. if the 25th quartile is $30,000
that means 25% of people surveyed make less than or equal to $30,000.
Pay policies: market lead, market match, market lag - correct answer ✔✔Lead: distinguishes a
company from competition by compensating employees more highly than most competitors
Match: typically follows the market pay rates along the market pay line
Lag: distinguishes a company from competition by compensating employees less than most
competitors
Measures of dispersion - correct answer ✔✔Standard deviation: the average distance of each
value from the mean
Quartile: describing data sets in groups of four: 25th, 50th, 75th, 100th
exam 2 well answered already passed
Compensation survey: how they're formulated, strengths and weaknesses - correct answer
✔✔Serve 2 essential functions:
Define the relevant labor market.
Help choose the benchmark jobs for comparison.
Strengths: Able to gain valuable data on competitors compensation plans and trends from base
wages to discretionary benefits and how compensation plans are mixed between the two
(example: 60% wages, 40% benefits). Helps compensation professionals set compensation for
their employees and stay competitive in the marker.
Weaknesses: Compensation surveys contain a massive amount of data that can be
overwhelming to analyze without the use of statistics. Usually a large amount of variation in
comp between companies can make it hard to build a market competitive plan for your
company. Surveys often have outdated data as it takes a while to compile wages and benefits to
make the survey.
Evaluating raw compensation survey data (4 steps) - correct answer ✔✔1.) measures of central
tendency: mean, median, mode
2.) measures of variation: standard deviation
3.) aging data (using CPI)
4.) performing regression analysis
Benchmark jobs - correct answer ✔✔contents well known, relatively stable, agreed upon by
employees
, common across different employers
represents the entire range of jobs that are being evaluated within a company
generally accepted in the labor market for the purpose of setting pay levels
Median vs. mean - correct answer ✔✔Median: the middle value of a data set, regardless of
magnitude
Mean: the average value of a data set, influenced by magnitude
Understanding the significance of quartiles - correct answer ✔✔Quartiles are useful for
understanding the spread of data based on a particular value; i.e. if the 25th quartile is $30,000
that means 25% of people surveyed make less than or equal to $30,000.
Pay policies: market lead, market match, market lag - correct answer ✔✔Lead: distinguishes a
company from competition by compensating employees more highly than most competitors
Match: typically follows the market pay rates along the market pay line
Lag: distinguishes a company from competition by compensating employees less than most
competitors
Measures of dispersion - correct answer ✔✔Standard deviation: the average distance of each
value from the mean
Quartile: describing data sets in groups of four: 25th, 50th, 75th, 100th
