Section 1: Multiple Choice Questions

1. What is internal pay equity?

A. Comparing jobs within an organization to ensure that people in jobs worth the most money
are paid accordingly.
B. Comparing jobs within an organization to ensure that people in jobs worth the least money
are paid accordingly.
C. Comparing jobs within an organization to ensure that people in jobs are paid equally
regardless of their worth.
D. Comparing jobs within an organization to ensure that people in jobs are paid according to
their experience.

Answer: A. Internal pay equity involves comparing jobs within an organization to ensure that the
people in jobs worth the most money are paid accordingly.

2. What is the first step in evaluating a job?

A. Determining the factor weights.
B. Determining the levels for each compensable factor.
C. Determining compensable job factors.
D. Determining the total number of points to be distributed.

Answer: C. The first step in evaluating a job is to decide what factors differentiate the relative
worth of jobs. Possible compensable job factors include level of responsibility, physical demands,
mental demands, education requirements, training and experience requirements, and working
conditions.

3. What is the process for determining the factor weights?

A. The job evaluation committee determines the total number of points that will be distributed
among the factors.
B. Each factor is weighted by assigning a number of points.
C. The number of points assigned to a factor is then divided into each of the levels.
D. Both A and B.

Answer: D. The process for determining factor weights involves the job evaluation committee
determining the total number of points that will be distributed among the factors, and each
factor being weighted by assigning a number of points.

4. What is external equity?

A. Comparing jobs within an organization to ensure that people in jobs worth the most money
are paid accordingly.
B. Comparing jobs within an organization to ensure that people in jobs worth the least money
are paid accordingly.
C. Determining the worth of a job by comparing it to the external market.
D. Determining the worth of a job by comparing it to the internal market.
 Answer: C. External equity involves determining the worth of a job by comparing it to the
external market, which includes other organizations.

Section 2: Short Answer Questions

5. What are the possible compensable job factors in determining internal pay equity?
Answer: The possible compensable job factors in determining internal pay equity include level of
responsibility, physical demands, mental demands, education requirements, training and
experience requirements, and working conditions.

6. What is the process for determining the levels for each compensable factor?
Answer: For a factor such as education, the levels are easy to determine (e.g., high school
diploma, associate’s degree, bachelor’s degree). For factors such as responsibility, a considerable
amount of time and discussion may be required to determine the levels.

7. How are the factor weights determined?

Answer: The job evaluation committee determines the total number of points that will be
distributed among the factors. Each factor is weighted by assigning a number of points. The more
important the factor, the greater the number of points that will be assigned.

8. What is the purpose of external equity?

Answer: The purpose of external equity is to determine the worth of a job by comparing it to the
external market, which includes other organizations. This is important if an organization is to
attract and retain employees and must be competitive with the compensation plans of other
organizations.

Answers to all questions:

1. A. Internal pay equity involves comparing jobs within an organization to ensure that the
people in jobs worth the most money are paid accordingly.
2. C. The first step in evaluating a job is to decide what factors differentiate the relative worth of
jobs. Possible compensable job factors include level of responsibility, physical demands, mental
demands, education requirements, training and experience requirements, and working
conditions.
3. D. The process for determining factor weights involves the job evaluation committee
determining the total number of points that will be distributed among the factors, and each
factor being weighted by assigning a number of points.
4. C. External equity involves determining the worth of a job by comparing it to the external
market, which includes other organizations.
5. The possible compensable job factors in determining internal pay equity include level of
responsibility, physical demands, mental demands, education requirements, training and
experience requirements, and working conditions.
6. For a factor such as education, the levels are easy to determine (e.g., high school diploma,
associate’s degree, bachelor’s degree). For factors such as responsibility, a considerable amount
of time and discussion may be required to determine the levels.
7. The job evaluation committee determines the total number of points that will be distributed
among the factors. Each factor is weighted by assigning a number of points. The more important
the factor, the greater the number of points that will be assigned.
8. The purpose of external equity is to determine the worth of a job by comparing it to the
external market, which includes other organizations. This is important if an organization is to
attract and retain employees and must be competitive with the compensation plans of other
organizations.