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Compensation Ch. 3

Terms in this set (22)

internal alignment
•the pay relationships among different jobs/skills/competencies within a single organization
internal equity
Internal alignment, aka:
pay structure
the array of pay rates for different work or skills within a single organization
number of levels, pay differentials between levels, criteria
Three aspects of pay structures:
content
value
the worth of the work
content
A pay structure based on __________ ranks jobs based on skills required, complexity of tasks, problem-solving, and/or responsibility.
value
A pay structure based on _________ focuses on the relative contribution of the skills, tasks, and responsibilities.
relative contribution
A pay structure based on value focuses on the ____________ of the skills, tasks, and responsibilities.
use value
The value of goods/services an employee produces in a job within a single company.
exchange value
The wage agreed upon by the employer and employee.
job-based structure
compensation structure that relies on the work content - tasks, behaviors, responsibilities
person-based structure
compensation structure that shifts the focus to the employee - the skills, knowledge, or competencies the employee possesses
human capital
the education, experience, knowledge, abilities, and skills required for the job
how to tailor organization design and work flow to make the structure, how to distribute pay throughout the levels in the structure
Two strategic choices involved in internally aligning pay structures:
tailored internal structure
×Adapted by organizations with a low-cost, customer-focused strategy.
×Has well-designed jobs with detailed steps or tasks.
×Very small pay differentials among jobs.
loosely-coupled internal structure
×A strategy of innovation and short cycle time is supported by a ______________ structure.
×Turbulent, unpredictable competitive environment.
×No steps are laid out and employees may work on several teams and products.
×Pay structure is ___________ to the organization to provide flexibility.
egalitarian internal structure
×All employees are valued equally.
×Advantages:
×Fewer levels and smaller differentials.
×Disadvantages:
×Equal treatment can mean more knowledgeable employees feel underpaid.
hierarchical internal structures
×Multiple levels, detailed work descriptions, and outline who is responsible for what.
×Values the differences in work content, skills, and contribution.
×Includes detailed descriptions of work done at each level.
tailored, loosely-coupled, egalitarian, hierarchical
Four types of internal structures:
tournament theory
the bigger the prize for getting to the next level of structure, the greater the motivation
Institutional Theory
predicts that very few firms are "first movers" but instead copy innovative practices from others
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