Chapter 8: Establishing Pay Plans
True or False
Employee compensation is the base salary paid for employees' performance.
Commissions and bonuses are a form of indirect payments to employees.
Salary compression means new workers are paid more than long-term employees.
Salaries to be paid for various jobs are compared to benchmark jobs.
The worth of one job in relation to another is determined by a job evaluation.
Factors that establish how jobs compare to one another are called compensable factors.
The most important function of a job evaluation committee is to create compensable factors.(The committee performs its most important function - actually evaluating the worth of each job)
The basis for ranking jobs for pay purposes is job specifications.(Job specifications are not as necessary with this method as they are for other job evaluation methods)
A disadvantage of the ranking method is that it provides no measurement of the value of one job relative to another.
Jobs are categorized into groups in the job classification method.
The job classification method is the most widely used job evaluation method.(The point method is apparently the most widely used job evaluation method.
Jobs must be ranked several times each when using the factor comparison method.
Job evaluation methods are unnecessary for employees in managerial positions.(The aim of developing compensation plans for managers or professionals is similar in many respects to developing plans for any employee. )
An advantage of broadbanding is its flexibility.
Managers and professionals are paid more for what they can do rather than for their job demands.( There's more emphasis on paying managers and professionals based on ability. )
Short-term incentives encourage executives to take actions that improve the firm's stock value.
Executive compensation emphasizes performance incentives more than for other employees.
Today's trend is toward bolstering executive pay on which performance incentives are based.(The trend is toward reducing the relative importance of base salary while boosting the emphasis on incentives. )
Broadbanding means having only a few wide salary ranges, each containing a wide range of jobs and salary levels.