In the context of pay-structure decisions, which of the following is a difference between hierarchical pay structures and compressed pay structures?
A) Unlike hierarchical pay structures, in compressed pay structures, there are big differences from one pay level to another.
B) Unlike hierarchical pay structures, the basic idea behind compressed pay structures is that large differences in pay between jobs should motivate people to work harder to obtain those higher-paying jobs.
C) Unlike hierarchical pay structures, in compressed pay structures, pay is more dispersed and varied across jobs in a company.
D) Unlike hierarchical pay structures, the basic idea behind compressed pay structures is that similar pay levels should lead to higher levels of cooperation and better group and team performance.

Question

Quizplus · Accepted Answer

The main difference between hierarchical pay structures and compressed pay structures is the basic idea behind them. Hierarchical pay structures have large differences in pay between jobs, with higher-level positions earning significantly more than lower-level positions. In contrast, compressed pay structures have similar pay levels between jobs, with the idea that this will lead to better group and team performance through increased cooperation. Option D correctly identifies this difference between the two pay structures. Option A is incorrect because, in compressed pay structures, there are typically small differences from one pay level to another. Option B is incorrect because it describes the motivation behind hierarchical pay structures, not compressed pay structures. Option C is incorrect because compressed pay structures typically have less variability in pay across jobs.

In the Context of Pay-Structure Decisions, Which of the Following