Tutorial 11 – Solutions

Group Activity

1. Working individually or in groups, conduct salary surveys for the

following positions: entry-level accountant and entry-level chemical
engineer. What sources did you use, and what conclusions did you
reach? If you were the HR manager for a local engineering firm, what
would you recommend that you pay for each job? Students should be
expected to use several of the resources indicated in Table 11-2 for
gathering this information. Results should be checked for bias or
contamination such as only surveying the largest firms in the area, or the
unwillingness of some firms to provide this information. Student
recommendations should be based on sound logic and conclusions from
the data they collect. (LO 11.3; AACSB: Analytic Skills; Learning Outcome:
Describe the steps employers use to establish pay rates)

2. Working individually or in groups, develop compensation policies for

the teller position at a local bank. Assume that there are four tellers:
two were hired in May, and the other two were hired in December. The
compensation policy should address the following: appraisals, raises,
holidays, vacation pay, overtime pay, method of pay, garnishments,
and time cards. Student answers will vary but look for responses to
incorporate material from the chapter. (LO 11.3; AACSB: Analytic Skills;
Learning Outcome: Describe the steps employers use to establish pay
rates)

3. Working in groups, access relevant online Web sites to determine

what equitable pay ranges are for these jobs: chemical engineer,
marketing manager, and HR manager with a bachelor’s degree and five
years of experience in the following cities: Shanghai; Beijing,
Guangzhou, Dalian, Hangzhou, Zhengzhou, Zhumadian, Lanzhou,
Zhangye. For each position in each city, what are the pay ranges and
the average pay? Does geographical location impact the salaries of
the different positions? If so, how? The students should use resources
and Internet sites discussed in the chapter to determine the pay ranges and
average pay in each city. (LO 11.3; AACSB: Use of Information Technology;
Learning Outcome: Describe the steps employers use to establish pay
rates)

Discussion Questions

1. What is the difference between exempt and non-exempt jobs? Under

the Fair Labor Standards Act, certain categories of employees are exempt
from the act or certain provisions of the act. Those categories of employees
that are exempted from provisions of the act are called "exempt" while those
covered by the act are called "non-exempt." Generally executives,
administrative, managerial, and professional employees are exempt from
 minimum wage and overtime provisions. (LO 11.1; AACSB: Analytic Skills;
Learning Outcome: Describe the steps employers use to establish pay
rates)

2. Should the job evaluation depend on an appraisal of the jobholder's

performance? Why or why not? No. Job evaluation involves comparing
jobs to one another based on their content. Individual performance is
covered under performance evaluation and does not affect the content of
the job. (LO 11.2; Learning Outcome: Describe the steps employers use to
establish pay rates)

3. What is the relationship between compensable factors and job

specifications? Compensable factors include skill, effort, responsibility,
working conditions, problem solving, know-how, accountability, and the like.
Many of these factors are obtainable from job specifications that are part of
the job analysis. (LO 11.3; AACSB: Reflective Thinking Skills; Learning
Outcome: Describe the steps employers use to establish pay rates)

4. Compare and contrast the following methods of job evaluation:

ranking, classification, factor comparison, and point method. The
ranking method is the simplest, easiest to explain, and the quickest to
implement. The drawbacks to the ranking method are a tendency to rely
too heavily on guesstimates and that it does not provide a yardstick for
measuring the relative values of jobs. The classification (or grading) method
is simple, and widely used. Most employers usually end up classifying jobs
anyway, so this method often makes sense. The disadvantages are that it
is difficult to write the class or grade descriptions, and considerable
judgment is required to apply them. The factor comparison method is
considered a refinement of the ranking system, thus it may be considered
more accurate than others. The disadvantages are the considerable time
and effort involved to implement the system and to evaluate jobs. The point
method, like the factor comparison method, is a quantitative analysis that is
considered accurate. This system is easy to implement, but developing a
point manual can be expensive. (LO 11.3; AACSB: Analytic Skills; Learning
Outcome: Describe the steps employers use to establish pay rates)

5. What are the pros and cons of broadbanding, and would you
recommend your current employer (or some other firm you're familiar
with) use it? Why or why not? The advantages are that it injects greater
flexibility into employee compensation, and it is especially sensible where
firms have flattened their organizations. It allows training and rotation of
employees with fewer compensation problems. It also facilitates the
boundaryless jobs and organizations being embraced by many firms. The
negatives are that it may be more difficult to administer, to keep track of
individuals, and to keep pay comparable. (LO 11.6; AACSB: Analytic Skills;
Learning Outcome: Describe the steps employers use to establish pay
rates)

6. It was recently reported in the news that the average pay for most
university presidents ranged around $250,000 per year, but that a few
 earned much more. For example, the new president of Vanderbilt
received $852,000 in one year. Discuss why you would (or would not)
pay university presidents as much or more than many corporate
CEOs. Student answers will vary but the same things that account for the
wide range of pay for the chief executive officers of other businesses and
organizations in the same industry account for the disparity among
universities. Look for many factors entering into this mix, including, but not
limited to: size of the organization, ownership of the organization (public or
private), focus of the organization (religious or secular, research or
teaching), performance of the organization (financial and enrollment),
prestige of the organization, and endowment and funding of the
organization. (LO 11.4; AACSB: Analytic Skills; Learning Outcome:
Describe the steps employers use to establish pay rates)

7. Do small companies need to develop a pay plan? Why or why not?

Yes, small companies need to develop a pay plan. Students should use
information learned in the chapter to justify their responses. (LO 11.1;
AACSB: Reflective Thinking Skills; Learning Outcome: Describe the steps
employers use to establish pay rates)