Crystal Daniels

Human Resource Management

CH 12 Review and Discussion Question
December 5, 2016

CH 12 Review and Discussion Questions

1.

In setting up a pay structure, what legal requirements must an organization meet?

Which of these do you think would be most challenging for a small start-up
business? Why?
For meeting the equal employment opportunity standard, employers need to provide
equivalent pay for equivalent work, irrespective of sex, race, age or protected status of
employs. In pay, differences need to associate with factors, for example, a qualification of
a person or market pay levels. The employer needs to pay at least the minimum wage the
law has established under the Fair Labor Standards Act (FLSA). Higher minimum wages
have been established by some local and state governments. Outside salespersons,
professionals, and managers are exempt from the requirements of overtime pay.
Employers need to meet requirements of FLSA regarding child labor. Also, federal
contractors need to meet requirements for paying at least the usual wage in the area in
which their workers work.

2.

In gathering data for its pay policies, what product markets would a citys hospital
want to use as a basis for comparison? What labor markets would be relevant?
How might the labor markets for surgeons be different from the labor market for
nursing aides?
Every organization that provides competing services and goods are included in the
product markets. Typically, labor markets comprise businesses with similar products and
businesses in other industries that employ similar workers. For surgeons, the labor
market would be different from that of nursing assistants because of the fact that surgeons
are more highly educated and skilled, thus are rare for the business to find.

3.

Why might an organization choose to pay employees more than the market rate?
Why might it choose to pay less? What are the consequences of paying more or less
than the market rate?
Businesses might go for paying more as compared to the rate of market with the intention
of attracting the most desired and talented candidates. They may pay less as compared to
the market rate because of financial problems or for the reason that the level of wage is
less in the area of working. The concerns of paying relatively as compared to the market
rate are the potentials of forming financial hardships for the business and not being
capable of attracting and retaining the organizations top talent for.

4.

Suppose you work in the HR department of a manufacturing company that is

planning to enrich jobs by having production workers work in teams and rotate
through various jobs. The pay structure will have to be adjusted to fit this new
work design. How would you expect the employees to evaluate the fairness of their

pay in their redesigned jobs? In terms of equity theory, what comparisons would
they be likely to make?
Workers evaluate their pay most frequently relative to that of other workers. According to
the Equity theory, outcomes are measured by the individuals, for example, pay in terms
of their inputs. Conclusions of employees regarding equity are contingent to what is
selected by them as a standard of comparison. In this case this may be what the other
employees working the different jobs are being paid for their services.
5.

Summarize the way organizations use information about jobs as a basis for a pay
structure.
Pay structure comprises the relative pay for dissimilar jobs inside the business. To
establish a pay structure shortens the decisions making process regarding pay of
individual employees by grouping employees together with same jobs. Relative pay is
established by the organizations for dissimilar functions and dissimilar responsibility
levels for every function. Typically, organizations start with a job evaluation for
measuring the jobs relative worth. Information gathered from the market gives valued
material for the business to assist in establishing a pay structure.

6.

Imagine that you manage human resources for a small business. You have recently
prepared a report on the market rate of pay for salespeople and the companys
owner says the market rate is too high. The company cannot afford this level of pay
and furthermore, paying that much would cause salespeople to earn more than most
of the companys managers. Suggest three possible measures the company might
take to help resolve this conflict.
The job could be evaluated by the company grounded on the wages accessible for similar
jobs within the area of work, increase the mangers pay level, or provide different
incentives to the salespeople excluding monetary ones.

7.

What are the advantages of establishing pay ranges, rather than specific pay levels, for
each job? What are the drawbacks of this approach?
Pay ranges offer organizations some flexibility in setting pay for individual jobs. It
allows organizations to pay the most valuable employees the highest amounts and to give
rewards for performance. Also, it balances conflicting information from market surveys
and job evaluation. However, the organization may find that a few employees are being
paid at rates above or below the range for their jobs.

8.

Suppose the company in Question 1 wants to establish a skills-based pay structure.

What would be some advantages of this approach? List the issues the company
should be prepared to address in setting up this system. Consider the kinds of
information you will need and the ways employees may react to the new pay
structure.

Skill-based pay systems set pay according to the employees level of knowledge and what
they are capable of doing. This type of system may encourage employees to acquire new
skills and abilities as well as increase the organizations ability to attract talented
individuals. However, the organization must be prepared to assist employees with the
acquisition of new skills and provide a place for them to apply the new skills. Employees
may feel threatened by such a system, especially older and less experienced workers.
9.

Why do some employers subsidize the pay of military reserve members called up to
active duty? If the military instead paid these people the wage they command in the
civilian market) that is, the salary they earn at their regular jobs), who would bear
the cost? When neither the reserve members employers nor the military pays
reserve members their civilian wage, reserve members and their families bear the
cost. In your opinion, who should bear this cost employers, taxpayers, or service
members (or someone else)?
Employers subsidize the pay of military personnel because they wish to retain those
individuals at the organization. Also, the organization could desire to demonstrate
patriotic support, thus improving their image in society.

10.

Do you think U.S. companies pay their chief executives too much? Why or why not?

The average CEO i U.S is not paid too much in the United States, because they devote
enough time and effort to deserve it. For Instance, Marissa Mayer of Yahoo earns U.S
$42.1 million sitting at 14th on the list of the highest paid CEO in U.S. The pay does not
commensurate the amount of hours she has to put in serving in this docket. It takes a lot
of sacrifice from the CEO to run a multinational company like Yahoo.