University of Southern Indiana

UNIVERSITY OF SOUTHERN INDIANA Romain College of Business

Management 441 D.M. Partridge Wage and Salary Administration 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 Chapter Two compensation base wage Chapter Three exempt jobs internal alignment nonexempt employees pay structure merit pay procedural justice COLA distributive justice incentive differentials variable pay job-based structure implicit contract person-based structure external competitiveness internal labor market

Chapter Four Chapter Five job analysis job evaluation essential elements benchmark job job description ranking method reliability alternation ranking validity paired comparison classification method point method Chapter Six compensable factor 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 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. These questions will be based on the chapter learning objectives.

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.

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.

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.

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.

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.