Cho & Greenwood, a management consulting firm, analyzes its own pay structure an

Question

Cho & Greenwood, a management consulting firm, analyzes its own pay structure and finds that the average pay for junior associates is $60,000. The pay range that the firm set for this position is $50,000 to $72,000. Which of the following statements is true about the compa-ratio for this position?

A.The compa-ratio is $60,000/$72,000, or less than 1.

B.The compa-ratio is $60,000/$61,000, or slightly less than 1.

C.The compa-ratio is $60,000/$122,000, or much less than 1.

D.The compa-ratio is $61,000/$60,000, or slightly more than 1.

E.The compa-ratio is $72,000/$60,000, or greater than 1.

In most organizations, only a small fraction of the employees are executives, yet employees and others often consider executive pay when evaluating the equity of a company’s pay structure. Which of the following statements is a reason why executive pay draws this attention?

A.Executive pay ranges tend to be very close to the pay levels of the other employees.

B.Employees at all levels are affected by executives’ actions.

C.Customers are usually more satisfied when executives earn much more than other employees.

D.Front-line workers set the tone or culture of the organization.

E.CEOs of most companies earn $10 million or more per year.

Explanation / Answer

1. The answer for the given question is option B, the compa-ratio is $60,000/$61,000, or slightly less than 1.

Explanation

The compa-ratio is calculated as Compa ratio= salary / range midpoint.

Here the salary range is $50,000 to $72,000

Hence mid point = (50000+72000)/2 = 61,000

The average pay offered to junior associates is $60,000.

Hence as per the formula, the compa ratio = $60000/$61000 = 0.9836 slightly less than 1.

2. The answer is option D; Front-line workers set the tone or culture of the organization

Explanation

The frontline workers directly interact with the customers and have the ability to make or break the culture of the organization and play key role in the organization like executives. They should be treated well by the organization and the company’s profit depends on the customers who evaluate company performance based on the frontline worker’s performance. Frontline workers should be motivated with rewards and high pay and the huge difference in payment structure de motivate the employees from performing well. Hence in order to set a positive culture front line employees play a great role and consider executive pay while evaluating equity of a company’s pay structure.

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.