UNIVERSITY OF SOUTHERN INDIANA
Romain College of Business
Management 441
Wage and Salary Administration
D.M. Partridge
Spring 2014
STUDY GUIDE FOR EXAM I
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.
Identification Terms. Students will be asked to explain the meaning (the definition) and
significance (the “so what”) of the term.
Chapter One
compensation
base wage
exempt jobs
nonexempt employees
merit pay
COLA
incentive
variable pay
implicit contract
external competitiveness
Chapter Two
Chapter Four
job analysis
essential elements
job description
reliability
validity
Chapter Five
job evaluation
benchmark job
ranking method
alternation ranking
paired comparison
classification method
point method
compensable factor
Chapter Six
skill-based structures
skill analysis
Chapter Seventeen
Fair Labor Standards Act
prevailing wage laws
Davis-Bacon Act
Equal Pay Act
Civil Rights Act of 1964
disparate treatment
adverse (disparate) impact
EEOC
Chapter Three
internal alignment
pay structure
procedural justice
distributive justice
differentials
job-based structure
person-based structure
internal labor market
comparable worth
Age Discrimination Act
Pregnancy Discrimination Act
Americans with Disabilities Act
Family and Medical Leave Act
Sarbannes-Oxley
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. An incentive payment:
A) will increase base wages in future years.
B) is nontaxable and therefore highly preferred by employees.
C) may be made at the beginning of a quarter for expected performance during
that quarter.
D) can be based on individual or group performance.
E) all of the above.
Short Answer Questions.
objectives.
These questions will be based on the chapter learning
After reviewing Chapter 1, students should be able to:
1. Explain how perceptions of compensation differ among society, stockholders,
managers and employees.
2. Discuss the difference between cash compensation (direct compensation) and benefits
(indirect compensation) and define each of the direct and indirect forms of
compensation.
3. Explain how the employment relationship combines both transactional and relational
returns to form an implicit contract between employers and employees.
4. Identify and describe the three main components of a pay model.
5. Understand how the pay model integrates objectives, policies, and techniques into a
compensation system.
After reviewing Chapter 2, students should be able to:
1. Explain the idea of a strategic perspective to compensation.
2. Identify the five dimensions of a compensation strategy and how a compensation
strategy can support an organization’s strategy.
3. Understand the four steps involved in developing a total compensation strategy.
4. Discuss how three tests can be used to determine if a pay strategy can be a source of
competitive advantage.
5. Describe the key arguments related to the two approaches – best-fit vs. best-practices
– in developing a compensation strategy and system.
After reviewing Chapter 3, students should be able to:
1. Explain why internal alignment is an important pay policy issue and how to evaluate
internal alignment.
2. Discuss the three (3) key factors that define an internal pay structures.
3. Identify and describe how external and organization factors shape the design of pay
structures.
4. Discuss the pros and cons of egalitarian and hierarchical structures and how they
relate to an organization’s strategy.
5. Discuss the impact of internal pay structures on efficiency, fairness, and compliance
in the pay system.
After reviewing Chapter 4, students should be able to:
1. Explain the importance of job analysis, the uses of job analysis, and the relationship
of job analysis to internal alignment.
2. Discuss the key difference(s) between job-based, skill-based and competency-based
pay structures.
3. Identify and describe the key components of the job-based approach to the job
analysis process (see Ex. 4.3).
4. Discuss the difference(s) between the quantitative and conventional methods to
collect job analysis information.
5. Describe the key criteria to judge job analysis.
After reviewing Chapter 5, students should be able to:
1. Discuss the relationship between internal alignment, job analysis, job evaluation, and
job structure.
2. Identify the major decisions involved in job evaluation.
3. Compare the advantages and disadvantages of the most common job evaluation
methods.
4. Explain the six (6) steps in a point plan, the most commonly used job evaluation
method.
After reviewing Chapter 6, students should be able to:
1. Discuss the differences and similarities between job-based structures, skill-based
plans, and competency-based plans.
2. Identify the major decisions involved in developing skill-based plans and
competency-based plans.
3. Discuss the advantages and disadvantages of employee involvement in the evaluation
of work.
4. Describe the key criteria to assess the usefulness of the results of each of the
approaches to job evaluation.
After reviewing Chapter 17, students should be able to:
1. Identify the major provisions of the Fair Labor Standards Act and describe how this
Act affects the regulation of pay.
2. Identify the key components of the Equal Pay Act of 1963 and explain how they
affect wage discrimination.
3. Discuss how the two theories of discrimination under Title VII of the Civil Rights Act
of 1964 (as amended) affect pay issues.
4. Explain the difficulties and issues in determining pay discrimination for dissimilar
jobs.
5. Discuss the social implications of the earnings gap between men and women and
among racial groups.