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17. The home-country-based approach compensates the expatriate at the same level as workers from the
country where the expatriate has been sent from the headquarter.
18. The overall objective of the host-country-based approach is to maintain the expatriate’s standard of
living in the country where the company is headquartered.
19. The ranking method is a simple system of job evaluation that places jobs in order, from highest to
lowest, by their value to the organization.
20. A major difficulty with the factor-comparison method is that subjective judgments are needed to
develop the class descriptions and to place jobs accurately in them.
21. A pay survey is a report based on research of compensation rates for workers performing similar jobs
in other organizations.
22. Market banding groups jobs into pay grades based on similar market survey amounts.
23. The practice of using fewer pay grades with much broader ranges than in traditional compensation
systems is called broadbanding.
24. A red-circled employee is an employee who is paid above the range for the job.
25. An individual whose pay is above the range for a job is referred to as a green-circled employee.
26. Integrating performance appraisal ratings with pay changes can be done through the development of a
merit-based performance matrix.
27. A pay adjustment matrix considers two factors—the employee’s level of performance as rated in an
appraisal and the employee’s position in the pay range, which is often related to experience and tenure.
28. The compa-ratio is calculated by dividing the individual’s pay rate by the lowest point in
the pay range.
SHORT ANSWER
1. Define base pay.
2. Differentiate between exempt employees and nonexempt employees.
3. Describe the entitlement philosophy of employee compensation.
4. Describe the pay-for-performance philosophy of employee compensation.
5. Define offshoring.
6. Define job evaluation.
ANS:
7. Define compensable factor.
8. Define broadbanding.
9. What is a lump-sum increase?
ESSAY
1. Describe the various components of compensation.
2. Describe the Fair Labor Standards Act and the major areas it focuses on.
3. Describe the two different compensation philosophies.
4. Describe two motivation theories and their relationship with compensation.
5. Discuss compensation fairness and equity.
6. Describe market competitive compensation.
7. Describe the different methods of job evaluation.
8. Describe Internet-based pay information and pay surveys.
9. Discuss individual pay.
10. Describe performance-based pay increases.
