Base Pay Administration Flashcards

Which pay structure design approach groups jobs with similar worth into the same pay grade regardless of job family?

Answer: Traditional graded structure

Traditional graded structures assign jobs of similar evaluated worth to the same pay grade, applying a uniform range across those jobs.

A company sets its pay range midpoint at the 50th percentile of the market. This practice is best described as:

Answer: Meeting the market

Setting the midpoint at the 50th percentile reflects a 'meet the market' or 'match the market' pay philosophy.

What is the PRIMARY purpose of a pay range minimum?

Answer: To set the starting rate for fully qualified new hires

The range minimum typically represents the lowest rate paid to a qualified individual performing the job.

When an employee's base salary falls below the minimum of their pay grade, this situation is called:

Answer: Green circle rate

A green circle rate occurs when an employee's pay is below the range minimum, often indicating underpayment relative to the grade.

Which formula correctly calculates the range spread of a pay grade?

Answer: (Maximum - Minimum) / Minimum × 100

Range spread = (Maximum − Minimum) / Minimum × 100, expressing how wide the range is relative to its minimum.

A lump-sum merit payment differs from a traditional merit increase because:

Answer: It does not become part of the employee's base salary

Lump-sum merit awards are one-time payments that do not permanently increase base pay, helping control fixed labor costs.

Which of the following BEST describes the concept of 'pay for position' versus 'pay for person'?

Answer: Pay for position sets salary based on the job's value; pay for person adjusts pay based on the incumbent's skills or competencies

Pay for position anchors compensation to the job's evaluated worth, while pay for person adjusts pay based on the individual's demonstrated skills or competencies.