<p>MGT4710 Compensation Issues</p><p>Sample Essay Questions for Exam II </p><p>1. Please describe how a firm demonstrates it is in compliance with the Equal Pay Act (EPA) of 1963.</p><p>- Note reasons men and women can differ in pay under the act (merit, seniority, quantity/quality produced, any other reason other than sex). - Use of regression analysis in which salary is regressed onto job or person characteristics (seniority, performance, etc.), gender, and interaction of gender and job or person characteristics. If interactions are significant, violation of act is said to exist.</p><p>2. Please describe the similarities and differences between the job classification and point methods of job evaluation.</p><p>Similarities include the fact that both rely on assessment of compensable factors within job (based on job analysis), both yield ordinal ranking of job value to firm, both use job evaluation committees. </p><p>Differences include:</p><p> the point method is quantitative in that each job receives a unique number of points based on compensable factors.  job classification method uses a set of rules to evaluate compensable factors and slot jobs into categories, where each job is considered of equal worth within category. Some jobs with category may be key jobs, others may not be. </p><p>3. Please describe the Position Analysis Questionnaire and Functional Job Analysis methods and how they differ.</p><p>- PAQ is person- or behavior-oriented, focusing on behaviors and duties required of incumbents. Results can yield jobs that have very similar behavioral profiles but very different contexts (e.g., housewife and police officer). - FJA is task oriented, focusing on complexity of job requirements associated with data, people, and things.</p><p>4. Please describe how a product market wage and salary survey differs from a labor market wage and salary survey and what a firm can do when they yield different values.</p><p> The surveys sample different “universes” of possible respondents. Product market surveys sample from only those firms selling comparable products with comparable costs of technology, raw materials, etc. Labor market surveys sample from firms that are trying to hire from the same applicant pool as the target firm.  The surveys may yield different values to the extent to which the two “universes” do not overlap, i.e., to the extent that the firm’s competition in the product market does not draw from the same applicant pool as the target firm.</p><p>5. Please describe how a firm develops a compensation system that is viewed as internally equitable when more than 80% of the jobs do not have external labor markets.</p><p>- Use a point job evaluation system to evaluate worth of all jobs. - Regress external wages onto points for key jobs (key job approach) OR existing internal wages onto points (current rate approach). - Use regressions equations to adjust current salaries of all jobs to reflect a constant relationship between points and dollars. To the extent to which the point method of job evaluation has equitably, fairly, and accurately assigned points to the compensable factors (i.e., things worthy of being compensated) across the different jobs, resulting assignment of salaries based on points will be viewed as internally equitable (i.e., comparisons of ratios of inputs to outcomes ($) across different jobs will be perceived as equitable).</p>