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Week 5 Midterm Exam

Week 5 Midterm Exam

Q 1. Define incentive pay and identify the two key differences between incentive pay and merit pay. 10 pts2. Define external competitiveness as it relates to compensation. 15 pts3. Using the internal structure design terms found on page 86 of the textbook, describe the structure of the Pennsylvania Power and Light pay system found in Exhibit 3.11, pages 97 and 98 of the textbook. 15 pts4. There has been a lot of discussion about raising the minimum wage. Several state and local governments increased their minimum wage in the past few years. What impacts would raising the minimum wage have on an organization, its workers, and its customers? 15pts5. What factors should be considered in determining relevant comparison labor markets for setting wage rates in an organization? 10 pts6. What are compensating differentials and how do they impact pay rates? 10 pts7. Briefly describe the main features of equity theory and tournament theory and contrast their predictions. 15 pts

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The base wage does not get enhanced in case of provision of incentive pay to any individual in the organization. In each pay-period, there has to be re-earning of incentive by an individual. There will be prior declaration and knowledge of the design and rate of incentive payment from before. However, in case of merit pay, the performance of an individual in the past is thoroughly evaluated. Thereafter, there is decision finalized on the rate of enhancement of the pay package for the individual. In case of incentive pay, there will be complete awareness gained by the individual about the incentive-pay requirements. There will be specific requirements as well.