Chapter 12 Summary, terminologies and Review questions,Chapter SummaryThis chapter describes how managers weigh the importance and costs of pay to arrive at astructure for compensation and levels of pay. The chapter first defines the basic decisions interms of pay structure and pay level. Next, it looks at several considerations that influence thesedecisions: legal requirements related to pay, economic forces, the nature of the organization’sjobs, and employees’ judgments about the fairness of pay levels. The chapter then describesmethods for evaluating jobs and market data to arrive at a pay structure. This is followed by asummary of the alternatives to the usual focus on jobs. The chapter closes with a look at twoissues of current importance – pay for employees on leave to serve in the military and pay forexecutives.After reading and studying Chapter twelve, you will be able to:1.Identify the kinds of decisions involved in establishing a pay structure. 2.Summarize legal requirements for pay policies.3.Discuss how economic forces influence decisions about pay. 4.Describe how employees evaluate the fairness of a pay structure.5.Explain how organizations design pay structures related to jobs.6.Describe alternatives to job-based pay.7.Summarize how to ensure that pay is actually in line with the pay structure.8.Discuss issues related to paying employees serving in the military and paying executives.
Vocabulary Terms
Benchmarking
Delayering
Exempt Employees
Fair Labor Standards Act (FLSA)
Hourly Wage
Job Evaluation
Job Structure
Minimum Wage
Nonexempt Employees
Pay Differential
Pay Grades
Pay Level
Pay Policy Line
Pay Range
Pay Structure
Piecework Rate
Salary
Skill-Based Pay Systems
Review and Discussion Questions with Suggested Responses
1.In setting up a pay structure, what legal requirements must an organization meet? Which of these do you think would be most challenging for a small start-up business? Why?
