11.Compensation is not considered a strategic tool.

12.A strategic perspective on compensation focuses on tailoring a firm’s compensation system to reinforce the firm’s business strategy.

13.Diversified firms are more likely to link employee pay with business unit performance, whereas less diversified firms are more likely to link employee pay with corporate performance.

14.Direct financial compensation is influenced by the organization, the job, the specific employee, and external factors.

15.To maximize your own compensation, carefully choose your industry as well as your career.

16.Pay followers pay their frontline employees as high a wage as possible.

17.The resource dependence theory proposes that organizational decisions are influenced by both internal and external agents who control critical resources.

18.Seniority and merit are two of the largest influences on wage differentials among people holding the same job in an organization.

19.The labor market is all of the potential employees located within a geographic area from which the organization might be able to hire.

20.A cost-of-living allowance is a clause in union contracts that allows the company to argue against an increase in wages.

21.Market pricing identifies the economic worth of a job on the open labor market based on what is needed to attract and retain qualified individuals.

22.Any characteristic used to provide a basis for judging a job’s value is called a compensation factor.

23.In applying the point factor method, benchmark jobs are selected based on their having equitable pay and representing a wide range of the compensable factors.

24.The Hay Group Guide Chart-Profile Method is a point-factor system used to produce both a profileand a point score for each position.

25.The Position Analysis Questionnaire is a structured job evaluation questionnaire that is statistically analyzed to calculate pay rates based on how the labor market is valuing worker characteristics.