Chapter 7 RQ 1,2,3,5 final PDF

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Chapter focused on external competitiveness. I received 100% on this assignment, ...

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Edmiston 1 Rebecca D. Edmiston Anna Marie Sohn MNGT 211 03/09/2018 Chapter7: RQ 1,2,3,5 

(1) Distinguish policies on external competitiveness from policies on internal alignment. Why is external competitiveness so important? External competitiveness refers to pay comparisons with competitors, some employers may offer a higher pay level in hopes to attract the best and most qualified applicants. Internal alignment refers to comparisons among jobs or skill levels within an organization; individual’s skills and jobs are compared to the organizations business objectives. The importance of external competitiveness is illustrated through its goals: (a) ensure pay is sufficient to attract and retain employees, (b) control labor costs so that the organization’s prices of products/services remain competitive.

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(2) What factors shape an organization’s external competitiveness? The factors that shape external competitiveness and affect decisions on pay level/pay mix include (a) competition in the labor market, (b) competition in the product service market, and (c) the characteristics specific to each organization and its employees. Together, these factors influence pay level and pay mix decisions (external competitiveness) within an organization.

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(3) What does marginal revenue product have to do with pay?

Marginal revenue is the money generated by the sale of the marginal product. In order for an organization to earn a profit on a product, the marginal revenue must exceed marginal cost (the amount of money the organization spends on selling the product). Marginal product is the change in output associated with the additional unit of labor; the amount that each employee produces is the marginal product. Marginal revenue product is associated with pay because if each employee (or hire) does not generate more revenue than the hire before them, than the firm will either break even or lose profit because the marginal revenue for the last hire is equal to the wage rate for that hire. 

(5) What is a relevant market? What difference does it make when determining people’s pay? A relevant market is described in the text as, “employers with which an organization competes for skills and products/services”. Managers must define the markets relevant to pay purposes, the three factors used by mangers to determine relevant markets include: (a) occupation (skill/knowledge required), (b) geography (willingness to relocate, commute or become virtual employee), and (c) competitors (other employers in the same product/service labor markets). Considering these factors is pertinent to determining how

Edmiston 2 much to pay and determining how to pay individuals to ensure they will achieve organizational objectives....