CH 7: Defining External Competitiveness

External competitiveness

refers to the pay relationships among organizations—the organization's pay relative to its competitors.

level

External competitiveness is achieved by: Setting a pay ___ that is above, below, or equal to that of competitors.

competitors

External competitiveness is achieved by: Determining the mix of pay forms relative to those of ____.

pay level

refers to the average of the array of pay rates paid by an employer.

pay mix

refers to various types of payments, or pay forms, that make up total compensation.

2

Pay level and pay mix decisions focus on ____ objectives: control costs and increase revenues, and attract and retain employees.

costs

Pay level and pay mix decisions focus on 2 objectives: control ____ and increase revenues, and attract and retain employees.

retain

Pay level and pay mix decisions focus on 2 objectives: control costs and increase revenues, and attract and ___ employees.

3

there are __ factors that shape external competitiveness: labour market factors, product market factors, and organizational factors

4

Theories about how labour markets work begin with _____ basic assumptions:

profits

Theories about how labour markets work begin with four basic assumptions: 1. Employers always seek to maximize ____.

interchangeable

Theories about how labour markets work begin with four basic assumptions: 2. People are homogeneous and therefore _____.

all

Theories about how labour markets work begin with four basic assumptions: Pay rates reflect ___ costs associated with employment.

competitive

Theories about how labour markets work begin with four basic assumptions: Markets faced by employers are ____

Many

Labor Supply Analysis model assumes: ___ people are seeking jobs,

accurate

Labor Supply Analysis model assumes: they possess _____ information about all job openings

mobility

Labor Supply Analysis model assumes: there are no barriers to ____.

hired

Analysis of labor demand indicates how many employees will be ____ by an employer

short

In the ___ run, an employer cannot change any factor of production except human resources

single

A ____ employer's demand for labour coincides with the marginal product of labour

output

The marginal product of labor is the additional ____ associated with the employment of one additional person, with other production factors held constant.

Diminishing marginal productivity

results when each additional employee has a progressively smaller share of production factors to work with, e.g., office space, number of computers, telephone lines and hours of clerical support.

Compensating Differentials Theory

Higher wages must be offered to compensate for negative features of jobs

Efficiency Wage Theory

the theory that the productivity of workers, either individually or as a group, will increase if they are paid more

Signalling Theory

job applicants interpret their recruitment experiences as cues or signals about unknown characteristics of a job and an organization and what it will be like to work in an organization

Reservation Wage theory

Job seekers have a wage level below which they will not accept a job, no matter how attractive the other attributes.

Human Capital theory

Those who improve their potential productivity by investing in themselves receive higher earnings.

product market

Competitors who produce the same product or service.

afford

Product market conditions determine what an organization can ____ to pay.

max

Two key product market factors are: product demand (sets ____ pay level) and degree of competition

competition

Two key product market factors are: product demand (sets max pay level) and degree of _____

lower

Labour-intensive industries tend to pay ______ than technology-intensive industries

influences

new technology within an industry ____ pay levels

more

Large organizations tend to pay ___ than small ones

preferences

Better understanding employee ________ of pay forms is important in determining external competitiveness

variety

A _____ of pay-level and pay-mix strategies exist

value

Higher pay levels may be well-suited to particular strategies such as higher ___-added segments

relevant

Three factors determine ______ labor markets: occupation, geography, and competitors

occupation

skills and knowledge required and their importance to organizational success

geography

where the business is located, willingness to relocate, commute, or become a virtual employee

competitor

Depending on its location and size, a company may be a relevant comparison even if it is not a product market competitor

specific

Data from product market competitors are likely to receive greater weight when: Employee skills are _____ to the product market

share

Data from product market competitors are likely to receive greater weight when: Labour costs are a large ______ of total costs

responsive

Data from product market competitors are likely to receive greater weight when: Product demand is _______ to price changes

Supply

Data from product market competitors are likely to receive greater weight when: _____ of labour is not responsive to changes in pay

enough

employers do not spend ___ time with determining relevant market

follow:

Three conventional pay-level policies: meet/match, lead, and ____ (lag)

Competitiveness

______ of pay may affect the organization's ability to achieve its compensation objectives, and in turn, affect employees' performance.

hybrid

Employees sometimes go beyond the three policy options to create ______ options (i.e., performance driven; research is lacking in these areas)

families

Many employers go beyond a single choice and may: Vary the policy for different occupational ____.

forms

Many employers go beyond a single choice and may: Vary the policy for different ____ of pay.

conditions

Many employers go beyond a single choice and may: Adopt different policies for different business units facing different competitive ____.

employer of choice

corresponds to the brand the company projects as an employer

shared choice

begins with traditional options of lead, meet, or lag; Also offers employees choices in the pay mix

confusion

risk of shared choice: Employees will make "wrong" choices and Offering too many choices may lead to ____, mistakes, and dissatisfaction

large

Avoid offering too many options, makes the menu too ____ and confusing

yes

Can specialists look at statistics canada for industry wide labour standards on statistics canada?

circumstances

No research suggests under what ________ managers should choose which pay-mix.

advantage

Pay level may not be a source of competitive _________.

disadvantage

Wrong pay level may be a serious _________.

directly

satisfaction with pay is _____ related to pay level.

others

Sense of fairness is related to how ____ are paid.

minimum

Employers must pay at or above the legal ____ wage

equal

Prevailing wage laws, ____ rights and other legislation must be met.

relationship

External competitiveness refers to the ____ of one organization's pay to that of its competitors.

skills

The three major factors that shape external competitiveness are competition in the labour market for people with various ___, competition in the product and service markets and characteristics unique to each organization and its employees.

service

The three major factors that shape external competitiveness are competition in the labour market for people with various skills, competition in the product and ____ markets and characteristics unique to each organization and its employees.

unique

The three major factors that shape external competitiveness are competition in the labour market for people with various skills, competition in the product and service markets and characteristics ___ to each organization and its employees.