UNIVERSITY OF SOUTHERN INDIANA
Romain College of Business
Management 441
Wage and Salary Administration
D.M. Partridge
Spring 2014
STUDY GUIDE FOR EXAM II
The exam will consist of six (with a choice out of seven) identification terms [30%], 20
multiple choice questions [40%], and three (with a choice out of five) short answer
questions [30%].
Keep in mind that you are responsible for material covered in the text, class lecture and
discussion, and assigned supplemental readings. A good written answer is one that
demonstrates command of the basics; an excellent answer is one that goes beyond the
basics to integrate text, class lecture and discussion, and/or other things such as examples
from supplemental readings or one’s work experiences. Conversely, a deficient answer is
one that fails to demonstrate a command of the basics.
Vocabulary Terms. Students will be asked to explain the meaning (the definition) and
significance (the “so what”) of the term.
Chapter Seven
pay level
marginal product
marginal revenue
compensating differentials
efficiency wage theory
signaling
reservation wage
human capital
Chapter Ten
merit pay
lump-sum award
spot award
gain-sharing plan
Scanlon Plan
profit-sharing plan
risk sharing
ESOP
Chapter Eight
benchmark job
central tendency
pay grade
pay range
broadbanding
Chapter Eleven
halo error
recency error
leniency error
severity error
central tendency error
ranking format
standard rating scale
BARS
MBO
Chapter Nine
expectancy theory
equity theory
reinforcement theory
total returns
base wage
across-the-board increase
COLA
Multiple Choice Questions. These questions will be based primarily on text material.
Material covered both in the text and in class has a greater likelihood of appearing on the
exam. Here is an example:
1. In a perfectly competitive market, the supply curve facing the individual firm:
A) is upward sloping.
B) is horizontal.
C) is downward sloping.
D) does not intersect the demand curve.
E) is inelastic.
Short Answer Questions.
objectives.
These questions will be based on the chapter learning
After reviewing Chapter 7, students should be able to:
1. Explain the importance of external competitiveness to the pay model.
2. Discuss the factors that influence external competitiveness.
3. Discuss the differences among labor market, product market, and organizational
factors in determining external competitiveness.
4. Explain the different pay policy positions and the consequences of using each.
After reviewing Chapter 8, students should be able to:
1.
2.
3.
4.
5.
Identify the major decisions in establishing externally competitive pay.
Discuss the importance of defining the relevant market in a pay survey.
Explain the steps involved in designing a pay survey.
Describe the key issues involved in interpreting the results of a pay survey.
Explain how the market pay line combines the internal structure with external market
rates.
6. Discuss the use of pay grades and pay ranges and their relationship to internal
alignment and external competitiveness.
7. Discuss the pros and cons of the market pricing approach to establishing a pay
structure.
After reviewing Chapter 9, students should be able to:
1. Identify the four kinds of employee behaviors that can assist an organization in
achieving its strategic objectives.
2. Discuss the relationship of the content theories of motivation to compensation.
3. Discuss the relationship of the process theories of motivation to compensation.
4. Explain why rewards, other than money, can influence employee behavior.
5. Summarize the key research evidence related to the role of compensation to motivate
the four types of employee behaviors.
6. Describe the key design issues involved in creating an effective pay-for-performance
program.
After reviewing Chapter 10, students should be able to:
1. Discuss reasons for the popularity of pay-for-performance reward plans.
2. Describe the key differences among the categories – short-term, team-based, longterm – of pay-for-performance plans.
3. Identify the advantages and disadvantages of individual incentive plans.
4. Explain why an organization might choose a group rather than an individual incentive
system.
5. Clarify the criteria involved in determining which type of group incentive plan best
fits an organization’s objectives.
6. Identify the advantages and disadvantages of group incentive plans.
After reviewing Chapter 11, students should be able to:
1. Summarize the key issues involved in defining and measuring employee
performance.
2. Discuss the key components of the four strategies to better understand and measure
performance.
3. Identify the several categories of performance appraisal formats and discuss the
issues involved in determining which format would be the most appropriate to use.
4. Understand how raters process information and identify the major errors that can
occur in this process.
5. Outline the key elements to maximize a good outcome in a performance management
system.
6. Understand the legal issues affecting performance appraisals.
7. Explain the issues involved in designing merit pay guidelines to link pay to
performance.