ILRHR4631 Review for Midterm Exam

ILRHR4631 Review for Midterm Exam - Managing Compensation...

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Managing Compensation Spring 2009 ILRHR 4631 Review for Midterm Exam Charles G. Tharp
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Why Wages Differ for the Same Job Reasons wages for the same job may be different between two employers: Compensating differentials. Imperfect mobility of labor ( switching costs ). Imperfect information/information costs. Lack of utility-maximizing behavior by workers. Pay based on relative rather than absolute rates. Pay tends to be correlated with employer profitability. Employers do not attempt to get by with the lowest possible rate necessary to attract labor. Wages tend to be “sticky” and employment levels fluctuate more than wages. There are also compensation “anomalies” Thayler explains anomalies in his article that we discussed
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Compensation: Who Cares and Why Multi-stakeholder view of pay Who are the stakeholders Why do they care
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Aligning Pay and Business Strategy What is meant by “business strategy”? What is meant by “workforce strategy”? What is meant by “human resource strategy”? What is meant by “compensation strategy”?
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Aligning Pay and Business Strategy What would be the characteristics of the following business strategies? 1. Innovator 2. Cost Cutter 3. Customer Focused How would the human resources strategy differ for each of these business strategies? How would the compensation and benefits strategy differ?
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Internal alignment, Internal alignment, often called internal equity , refers to the pay relationships between the jobs / skills / competencies within a single organization . The relationships form a pay structure that can support the workflow support the workflow , , is fair to fair to employees employees , , and directs their behavior directs their behavior toward organization objectives.
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Job Evaluation Process of systematically determining the relative worth of jobs to create a job structure for the organization. Why not merely market price jobs to determine the job structure? The evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market. Helps with legal compliance and internal consistency. This potential to blend internal forces and external market forces is both a strength and a challenge to job evaluation.
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Job Evaluation Methods Job Ranking Raters examine job description and arrange jobs according to value to company Job Classification Classes or grades are defined to describe a group of jobs. Point Method Numerical values are assigned to specific job components; sum of values provides quantitative assessment of job’s worth (Hay Guide Chart- Profile Method)
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Compensable Factors Compensable factors are paid-for, measurable qualities, features, requirements, or constructs that are common to many different kinds of jobs.
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