CRM 200 Lecture Notes - Lecture 7: Employment-To-Population Ratio, Factors Of Production, Marginal Revenue
3 May 2018
School
Department
Course
Professor
Chapter Seven – PART 2 – EXTERNAL COMPETITIVENESS
External Competitiveness
• refers to the pay relationships among organizations—the ogaizatio’s pay elatie to its
competitors.
• External competitiveness is achieved by:
o Setting a pay level that is above, below (with other non monetary things), or equal
to that of competitors.
o Determining the mix of pay forms relative to those of competitors.
Pay Level and Pay Forms
find more resources at oneclass.com
find more resources at oneclass.com
• Pay level
o refers to the average of the array of pay rates paid by an employer.
( Base + Bonuses + Benefits + Value of Options)
# of Employees
o Everything you pay your employees / number = average.
• Pay forms
o refer to the mix of the various types of payments, or pay mix, that make up total
compensation.
External Competitiveness Objectives
• What is the optimal level of pay that you can pay ppl to make them loyal and hard
working.
• But also, the owner will have to generate enough to make it realistic.
• Need to balance these two.
• Be able to be competitive externally and control internal cost.
Pay Level Decisions
• Have implications on labour costs
o Labour cost = number of employees X pay level
• Also hae ipat o ogaizatio’s aility to attat ad etai talet.
o As pay level increases, labor costs increase.
• Not all organizations pay the same rate.
• The pay strategy should translate into revenues exceeding the cost of the strategy.
What shapes external competiveness
find more resources at oneclass.com
find more resources at oneclass.com
Supply and demand – example.
• Supply is always going upward to right because the higher you pay, the more ppl are
going to enter your labour market.
• The demand going downwards to the right because = the lower the pay the more the
employer is able to afford to hire.
How Labor Markets Work
• Four basic assumptions:
o Employers always seek to maximize profits.
▪ Not just about max profits
o People are homogeneous and therefore interchangeable.
▪ Ppl are not the same. One might love numbers and others don’t
o Pay rates reflect all costs associated with employment.
o Markets faced by employers are competitive
Labor Demand & Supply
How many we need in the future, in the short run can only hire more ppl to deliver more of the
item or serveries. The long run is wide open
• Labour Demand
o Analysis of labor demand indicates how many employees will be hired by an
employer
o In the short run, an employer cannot change any factor of production except
human resources
▪ A company can only can change the number of employees they hire in
the short run. Without changing anything else
▪ Ex. Hiring more ppl to offer more courses
▪ In long run, can change other stuff, like increase number of space for
class.
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Chapter seven part 2 external competitiveness. Pay level and pay forms: pay level, refers to the average of the array of pay rates paid by an employer. ( base + bonuses + benefits + value of options: everything you pay your employees / number = average. # of employees: pay forms, refer to the mix of the various types of payments, or pay mix, that make up total compensation. How labor markets work: four basic assumptions, employers always seek to maximize profits, not just about max profits, people are homogeneous and therefore interchangeable, ppl are not the same. One might love numbers and others don"t: pay rates reflect all costs associated with employment, markets faced by employers are competitive. How many we need in the future, in the short run can only hire more ppl to deliver more of the item or serveries. Labour demand: analysis of labor demand indicates how many employees will be hired by an employer.
