Question 1

The laws governing Equal Employment Opportunity guarantee equal pay for men and women,whites and minorities,and other groups within the United States.

Accepted Answer

In a two-tier wage system, existing employees continue on at their current (upper-tier) pay rate while new employees sign on for less pay (the lower tier).

Question 2

The most common approach to pay differentials is to move an employee lower in the pay structure to compensate for increasing costs.

Accepted Answer

Overtime payment to employees is a legal requirement in the pay structure of an organization.

Question 3

Pay grades allow rates of pay for individual jobs to be more precisely matched to market rates and the organization's job structure.

Accepted Answer

Product markets and labor markets would act as market forces that impact the development of a pay structure.

Question 4

An organization's job structure and pay levels are policies of the organization,rather than the amount a particular employee earns.

Accepted Answer

According to equity theory, people measure outcomes such as pay in terms of their inputs.

Question 5

Paying a salary does not necessarily mean a job is exempt.

Accepted Answer

To conduct a job evaluation, the committee identifies each job's compensable factors, meaning the characteristics of a job that the organization values and chooses to pay for.

Question 6

In terms of compensation,benchmarking involves the use of pay surveys.

Accepted Answer

Skill-based pay also supports efforts to empower employees and enrich jobs because it encourages employees to add to their knowledge so they can make decisions in many areas.

Question 7

Compensable factors are job characteristics that an organization values and chooses to pay for.

Accepted Answer

Top executives help to set the tone or culture of the organization, and employees at all levels are affected by behavior at the top. As a result, the equity of executive pay can affect more employees than, say, equity among warehouse workers or salesclerks.

Question 8

Pay level is the average amount (including wages,salaries,and bonuses)the organization pays for a particular job.

Accepted Answer

In terms of compensation, benchmarking involves the use of pay surveys. These provide information about the going rates of pay at competitors in the organization's product and labor markets.

Question 9

In states that have laws specifying minimum wages,employers must pay whichever rate is higher-the federal or state.

Accepted Answer

One might expect reaction among employees in the lower tier that the pay structure is unfair. But a study of these employees found that they were more satisfied than the top-tier employees.

Question 10

When labor costs are a large part of an organization's total costs,the organization responds by increasing pay levels.

Accepted Answer

Broad bands reduce the opportunities for promoting employees, so organizations that eliminate layers in their job descriptions must find other ways to reward employees.

Question 11

Product markets do not place any limit on the pay an organization will offer.

Accepted Answer

The most common approach to pay differentials is to move an employee higher in the pay structure to compensate for higher living costs.

Question 12

Research suggests that employees in the lower tier of the pay structure are less satisfied than the top-tier employees.

Accepted Answer

The armed services pay service members during their time of duty, but military pay often falls short of what they would earn in their civilian jobs.

Question 13

Organizations in a product market compete to serve different customers.

Accepted Answer

A drawback of pay grades is that grouping jobs will result in rates of pay for individual jobs that do not precisely match the levels specified by the market and the organization's job structure.

Question 14

According to equity theory,people measure outcomes such as pay in terms of their outputs.

Accepted Answer

Assuming the organization has pay grades, the organization would find a compa-ratio for each pay grade: the average paid to all employees in the pay grade divided by the midpoint for the pay grade. If the average equals the midpoint, the compa-ratio is 1. More often, the compa-ratio is somewhat above 1 (meaning the average pay is above the midpoint for the pay grade) or below 1 (meaning the average pay is below the midpoint).

Question 15

In a two-tier wage system,employees doing the same job are paid two different rates,depending on their technical background and training.

Accepted Answer

An organization's policies regarding pay structure greatly influence employees' and even the general public's opinions about the organization. Issues affecting pay structure therefore can hurt or help the organization's reputation and ability to recruit, motivate, and keep employees.

Question 16

When job structure and market data conflict,organizations should base their pay only on market forces because this is the only approach that does not have any practical drawbacks.

Accepted Answer

The organization's job structure and pay levels are policies of the organization, rather than the amount a particular employee earns.

Question 17

Under the FLSA,children aged 14 and 15 may not be employed in any work associated with interstate commerce.

Accepted Answer

Key jobs are jobs that have relatively stable content and are common among many organizations, so it is possible to obtain survey data about what people earn in these jobs.

Question 18

The 1938 FLSA requires federal contractors to pay local or area prevailing wage rates.

Accepted Answer

When job structure and market data conflict, organizations have to decide on a way to resolve the two. One approach is to stick to the job evaluations and pay according to the employees' worth to the organization. At the other extreme, the organization could base pay entirely on market forces. However, this approach has some practical drawbacks.

Question 19

Broad bands increase the opportunities for promoting employees.

Accepted Answer

Under the laws governing Equal Employment Opportunity, employers may not base differences in pay on an employee's age, sex, race, or other protected status. Any differences in pay must instead be tied to such business-related considerations as job responsibilities or performance. The goal is for employers to provide equal pay for equal work.

Question 20

Key jobs have relatively unstable content and are uncommon to many organizations.

Accepted Answer

Job structure consists of the relative pay for different jobs within the organization. It establishes relative pay among different functions and different levels of responsibility.

Quiz 11: Establishing a Pay Structure