Chapter 11 Pay Structure Decisions Review Guide
Summary
This chapter discusses the nature of the pay structure and its component parts, the pay level, and the
job structure. Equity theory is discussed relative to internal and external comparisons that employees
make about their pay. Such comparisons may have consequences for employee attitudes and retention.
Such comparisons also play an important role in the controversy over executive pay. Two administrative
tools used in managing pay level and job structure components of the pay structure are pay
benchmarking surveys and job evaluation. A discussion of globalization suggests why benchmarking is
increasingly critical to meet the competition. A theme that runs through this chapter is the need to
consider how the organization's strategy matches the compensation plan. For example, skill-based pay is
discussed in terms of the trend toward reducing bureaucracy and communication of compensation
being critical to reinforce participation and commitment that is increasingly expected from employees.
Learning Objectives
After studying this chapter, the student should be able to:
1.
2.
3.
4.
5.
6.
7.
8.
List the major decision areas and concepts in employee compensation management.
Describe the major administrative tools used to manage employee compensation.
Explain the importance of competitive labor market and product-market forces in compensation
decisions.
Discuss the significance of process issues such as communication in compensation management.
Describe new developments in the design of pay structures.
Explain where the United States stands from an international perspective on pay issues.
Explain the reasons for the controversy over executive pay.
Describe the regulatory framework for employee compensation.
Be sure to know about each of the terms and concepts below before opening the Chapter 11 Quiz on
pay structure decisions for conquest.
Pay structure
Efficiency Wage Theory
Benchmarking
Rate ranges, pay grades, range spread
Key job
Job evaluation
Compensable factor
Point-factor job evaluation system
Pay policy lines
Compa-Ratio
Delayering
Skill based pay
Comparable Worth
Fair Labor Standards Act
Exempt and non-exempt employees
Minimum wage