Deck 11: Establishing Strategic Pay Plans

Question 1

Which of the following is the best source for managers to use when determining whether or not a position is exempt or nonexempt under the Fair Labor Standards Act?

A) organizational chart
B) performance appraisal
C) HR metric
D) business plan
E) job description

Answer 1

E

Question 2

Which compensation-related law contains provisions for minimum wage,maximum hours,overtime pay,equal pay,record-keeping,and child labor?

A) Davis-Bacon Act
B) Civil Rights Act
C) Fair Wages Act
D) Fair Labor Standards Act
E) Walsh-Healey Public Contract

Answer 2

D

Question 3

Jack worked 6 hours of overtime this week but has decided to take time off instead of overtime pay.How many hours will Jack receive in time off from work?

A) 3 hours
B) 6 hours
C) 9 hours
D) 12 hours
E) 18 hours

Answer 3

C

Question 4

Which of the following terms refers to pay in the form of financial benefits,such as insurance?

A) direct financial payments
B) out-of-pocket expenses
C) indirect financial payments
D) sales commission
E) merit raise

Question 5

Direct financial payments include all of the following EXCEPT ________.

A) wages
B) insurance
C) salaries
D) incentives
E) commissions

Question 6

In most cases,all of the following occupations are exempt from the overtime provisions of the Fair Labor Standards Act EXCEPT ________.

A) physicians
B) engineers
C) paralegals
D) teachers
E) architects

Question 7

The ________ sets basic labor standards for employees working on any government contract that amounts to more than $10,000.

A) Davis-Bacon Act
B) Walsh-Healey Public Contract
C) Fair Wages Act
D) Civil Rights Act
E) Fair Labor Standards Act

Question 8

Which act regulates vesting rights and portability rights?

A) Fair Labor Standards Act
B) Title VII of the Civil Rights Act
C) Employer Retirement Income Security Act
D) Equal Pay Act of 1963
E) Davis-Bacon Act

Question 9

Which of the following terms refers to the ownership employees build up in their pension plans should their employment with a firm end prior to retirement?

A) portability
B) equity
C) vesting
D) shares
E) stocks

Question 10

Which law makes it illegal to discriminate against any individual with respect to compensation because of race,color,religion,sex,or national origin?

A) Fair Labor Standards Act
B) Title VII of the Civil Rights Act
C) Wagner Act
D) Equal Pay Act
E) Taft-Hartley Act

Question 11

All of the following issues are addressed by the Fair Labor Standards Act EXCEPT ________.

A) minimum wage
B) record-keeping
C) overtime pay
D) child labor
E) termination

Question 12

Which of the following jobs is most likely categorized as nonexempt from the overtime pay provisions of the Fair Labor Standards Act?

A) scientist
B) taxicab driver
C) personnel director
D) newspaper writer
E) computer systems analyst

Question 13

Which of the following states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work?

A) Americans with Disabilities Act
B) Title VII of the Civil Rights Act
C) Social Security Act
D) Equal Pay Act
E) Davis-Bacon Act

Question 14

Which of the following terms refers to all forms of pay or rewards going to employees and arising from their employment?

A) salary
B) employee compensation
C) wage reimbursement
D) employee benefits
E) remuneration

Question 15

Which of the following factors has the LEAST effect on the design of an organization's pay plan?

A) legal
B) union
C) equity
D) company vision
E) company policy

Question 16

Which of the following was enacted in 1931 for the purpose of setting wage rates for laborers and mechanics employed by contractors working for the federal government?

A) Walsh-Healey Public Contract
B) Fair Labor Standards Act
C) Fair Wages Act
D) Civil Rights Act
E) Davis-Bacon Act

Question 17

Which of the following is true for employers who use independent contractors?

A) Fair Labor Standards Act overtime requirements do not apply.
B) Social Security taxes are higher than for regular employees.
C) Federal income taxes are charged at a reduced rate.
D) State income taxes are charged at a higher rate.
E) Payroll taxes are paid by the employer.

Question 18

Jill works as a cashier at a grocery store.She earns $10 an hour (or $400 for a 40-hour week).Last week,she worked 46 hours.What is the minimum amount that Jill earned last week?

A) $430
B) $460
C) $490
D) $520
E) $550

Question 19

John is a sales representative in a jewelry store.He typically works 40 hours per week and his pay is completely based on his sales.He earns a 5% commission for every sale he makes.Which of the following terms best describes John's situation?

A) performance-based compensation
B) indirect financial compensation
C) time-based compensation
D) salaried plus incentives
E) piecework pay

Question 20

According to the Fair Labor Standards Act,if a worker covered by the act works more than 40 hours,he or she will receive overtime pay at a rate of ________ of normal pay for any hours worked over 40 in a workweek.

A) 50%
B) 100%
C) 125%
D) 150%
E) 200%

Question 21

Which of the following terms refers to a compensation plan that advances a firm's strategic goals?

A) portability rights
B) strategic management
C) performance pay plan
D) aligned reward strategy
E) workers' compensation package

Question 22

Which of the following has historically been the primary issue in collective bargaining?

A) safety
B) wage rates
C) income security
D) health care benefits
E) cost-of-living adjustments

Question 23

Which of the following is the primary cause of salary compression?

A) taxes
B) inflation
C) interest rates
D) collective bargaining
E) government regulations

Question 24

Unions typically negotiate all of the following issues EXCEPT ________.

A) wage rates
B) income security
C) time off with pay
D) health care benefits
E) unpaid medical leave

Question 25

External equity refers to ________.

A) how a job's pay rate in one company compares to the job's pay rate in other companies
B) how fair the job's pay rate is, when compared to other jobs within the same company
C) the fairness of an individual's pay as compared to a coworker's pay for the same job
D) the perceived fairness of the processes and procedures used to make decisions about compensation
E) the use of salary surveys and job evaluation comparisons to monitor pay levels within an industry

Question 26

According to the Family and Medical Leave Act,eligible employees can take up to ________ weeks of unpaid,job-protected leave for the birth of a child or for the care of a child,spouse,or parent.

A) two
B) four
C) six
D) twelve
E) sixteen

Question 27

Homelife,a national chain of high-end furniture stores,employs nearly 800 workers.In the past few years,the company's market share has dropped significantly,and employee turnover has increased.Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around.Historically,the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. All of the following questions are relevant to Homelife's decision to develop an aligned reward strategy EXCEPT ________.

A) What employee behaviors are essential to implementing Homelife's competitive strategy?
B) What compensation programs should Homelife use to reinforce necessary employee behaviors?
C) How well does Homelife's current compensation program match the company's strategic aims?
D) What compensation programs should Homelife use to reinforce desired employee behaviors?
E) What are the results of Homelife employee salary surveys in regards to wage satisfaction?

Question 28

Which form of equity refers to the fairness of an individual's pay as compared with what his or her coworkers are earning for the same or very similar jobs within the company,based on each individual's performance?

A) external
B) internal
C) distributive
D) individual
E) procedural

Question 29

Jason is an information systems technician in a town in North Carolina with a population of 100,000.He receives an annual salary of $35,000.He recently found out that a nearby town with a similar population pays people in the same position $40,000 annually.With which of the following is Jason most concerned?

A) distributive
B) procedural
C) internal
D) external
E) individual

Question 30

Which form of equity refers to the fairness of a job's pay rate in comparison to other jobs within the same company?

A) external
B) internal
C) distributive
D) individual
E) procedural

Question 31

Audrey is a lawyer in a mid-size firm in Chicago.She recently learned that another lawyer who joined the firm at the same time earns a lower salary than she does.Which form of equity is most relevant to Audrey's situation?

A) external
B) internal
C) distributive
D) individual
E) procedural

Question 32

Trevor,a sales manager at IBM,recently learned that an IBM human resources manager with comparable responsibilities and spans of control earns a higher salary than Trevor.Which form of equity is of most concern to Trevor?

A) external
B) internal
C) distributive
D) individual
E) procedural

Question 33

Jennifer has worked at Bank of America for six years as a loan officer.Tina was recently hired by Bank of America as a loan officer,and Tina's salary is higher than Jennifer's salary.Which of the following terms best describes this situation?

A) wage curve
B) salary compression
C) age discrimination
D) market expansion
E) reward strategy

Question 34

What theory of motivation states that people are strongly motivated to maintain a balance between what they perceive as their contributions and their rewards?

A) Maslow's hierarchy of needs
B) Two-factor theory
C) Equity theory
D) Learned needs theory
E) Expectancy theory

Question 35

All of the following laws influence compensation decisions EXCEPT the ________.

A) Americans with Disabilities Act
B) Labor Management Relations Act
C) Employer Retirement Income Security Act
D) Family and Medical Leave Act
E) Age Discrimination in Employment Act

Question 36

Which of the following is NOT one of the forms of equity related to compensation issues?

A) group
B) internal
C) external
D) individual
E) procedural

Question 37

Which form of equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies?

A) distributive
B) internal
C) external
D) individual
E) procedural

Question 38

All of the following are typical ways that employers address cost-of-living differentials EXCEPT ________.

A) paying a differential for ongoing costs plus a lump sum amount
B) paying a nonrecurring amount spread over 1 to 3 years
C) paying a nonrecurring, lump sum amount
D) raising an employee's base salary
E) raising commission percentages

Question 39

The ________ gave employees the right to organize,bargain collectively,and engage in concerted activities for the purpose of collective bargaining.

A) Fair Labor Standards Act
B) Civil Rights Act
C) Employer Retirement Income Security Act
D) Equal Pay Act
E) National Labor Relations Act

Question 40

Which form of equity refers to the perceived fairness of the processes used to make decisions regarding the allocation of pay?

A) external
B) internal
C) distributive
D) individual
E) procedural

Question 41

Homelife,a national chain of high-end furniture stores,employs nearly 800 workers.In the past few years,the company's market share has dropped significantly,and employee turnover has increased.Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around.Historically,the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following,if true,supports the argument that Homelife executives should primarily address internal equity issues when developing a new compensation plan?

A) Most of Homelife's former employees are now employed at competitor's stores in similar positions.
B) Homelife employees receive annual performance appraisals at which time they set career goals.
C) Salary surveys indicate dissatisfaction among the Homelife managers in different departments.
D) Online pay sites show the pay range for sales associates at both Homelife and its competitors.
E) Homelife pays its sales managers commissions in addition to base salaries and health benefits.

Question 42

What is the first step in the process of establishing pay rates to ensure external equity?

A) using wage curves to price each pay grade
B) analyzing a scatter plot of employee pay
C) comparing performance appraisals
D) conducting a salary survey
E) checking online pay sites

Question 43

A ________ is comprised of jobs of approximately equal difficulty or importance as established by job evaluation.

A) pay group
B) benchmark
C) pay grade
D) class
E) wage curve

Question 44

Central basic factors that establish how several jobs compare to one another and that determine the pay for each job are called ________.

A) compensable factors
B) job evaluation factors
C) comparison factors
D) ranking factors
E) analysis factors

Question 45

Which of the following best defines internal equity?

A) how a job's pay rate in one company compares to the job's pay rate in other companies
B) how fair the job's pay rate is, when compared to other jobs within the same company
C) the fairness of an individual's pay as compared to a coworker's pay for the same job
D) the perceived fairness of the processes and procedures used to make compensation decisions
E) the use of salary surveys and job evaluation comparisons to monitor pay levels within an industry

Question 46

Which of the following is used to maintain internal equity?

A) job analysis comparisons
B) organizational charts
C) incentive pay
D) salary surveys
E) HR scorecards

Question 47

When using the job classification method of job evaluation,raters categorize jobs into groups of similar jobs called ________.

A) classes
B) grades
C) sections
D) schedules
E) cohorts

Question 48

In most cases,the majority of the voting members on a job evaluation committee are ________.

A) managers
B) employees
C) HR specialists
D) industry experts
E) union representatives

Question 49

Homelife,a national chain of high-end furniture stores,employs nearly 800 workers.In the past few years,the company's market share has dropped significantly,and employee turnover has increased.Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around.Historically,the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following,if true,supports the argument that Homelife should distribute salary surveys before establishing new pay rates?

A) Homelife executives want to identify benchmark jobs before determining the worth of other jobs.
B) Homelife executives plan to use the compensable factors emphasized by the Equal Pay Act.
C) Computerized job evaluation systems will be used by Homelife to generate questionnaires.
D) A wage curve needs to be established by Homelife for the purpose of federal compliance.
E) Only Homelife store managers are classified as professional , so job evaluation is unnecessary.

Question 50

What are the two primary components of computer-aided job evaluations?

A) benchmark jobs and statistical models
B) compensable factors and benchmark jobs
C) grade definitions and factor comparisons
D) structured questionnaires and statistical models
E) structured questionnaires and grade definitions

Question 51

Which of the following is NOT one of the compensable factors emphasized in the Equal Pay Act?

A) skills
B) effort
C) accountability
D) responsibility
E) working conditions

Question 52

Which of the following best describes the factor comparison method of job evaluation?

A) identifying several compensable factors and the degree to which each factor is present in the job
B) ranking each job relative to all other jobs based on several compensable factors
C) determining the most important compensable factors for a specific job
D) categorizing jobs into groups, grades, and classes
E) classifying each job based on an overall factor

Question 53

Which of the following is used to anchor the employer's pay scale?

A) job aid
B) grades
C) job metric
D) benchmark job
E) human resource metric

Question 54

Which of the following is NOT one of the typical methods used by job evaluation committees to determine the worth of a job?

A) ranking method
B) point method
C) job classification
D) paired comparison
E) factor comparison

Question 55

The purpose of the wage curve is to ________.

A) show the relationship between the value of the job and the current average pay rates
B) equate jobs of similar difficulty or importance as established by job evaluation
C) choose benchmark jobs within each pay grade
D) cluster jobs into logical groupings
E) assign pay rates to pay grades

Question 56

Which of the following best describes the point method of job evaluation?

A) comparing the importance of each compensable factor
B) ranking each job relative to all other jobs based on pay grade
C) categorizing jobs into grades and classes based on specific rules
D) deciding which jobs have a higher number of compensable factors
E) identifying and quantifying the compensable factors present in a job

Question 57

Managers use performance appraisals and incentive pay to maintain ________ equity.

A) internal
B) external
C) individual
D) procedural
E) group

Question 58

Which job evaluation method is a quantitative technique involving the identification of several compensable factors and the degree to which each of these factors is present in the job?

A) ranking method
B) point method
C) factor comparison
D) job grading method
E) job classification method

Question 59

Which of the following terms refers to a systematic comparison done in order to determine the worth of one job relative to another?

A) job rotation
B) job analysis
C) job evaluation
D) job description
E) job classification

Question 60

Which of the following shows the relationship between the value of the job and the average pay for this job?

A) pay group
B) benchmark
C) pay grade
D) scatter plot
E) wage curve

Question 61

A company using competency-based pay compensates employees for all of the following EXCEPT ________.

A) behaviors
B) job title
C) knowledge
D) skills
E) abilities

Question 62

According to the Davis-Bacon Act,when employees work more than 40 hours per week,employers must pay overtime at a rate of at least one and a half times the normal pay for any hours worked over 40 in a workweek.

Question 63

Indirect payments that contribute to an employee's compensation include variable pay like commissions and bonuses.

Question 64

Financial benefits like employer-paid insurance and vacations are not a part of employee compensation.

Question 65

Portability rights refer to an employee's ability to transfer his or her vested rights from one organization to another.

Question 66

Which of the following job evaluation methods is associated with almost every comparable worth lawsuit?

A) factor comparison method
B) job classification method
C) job grading method
D) ranking method
E) point method

Question 67

The Equal Pay Act states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work.

Question 68

Employers prefer to give time off in lieu of overtime pay because they only have to grant the same number of hours off as the employee worked overtime while overtime pay is calculated at 150% of normal pay.

Question 69

Which of the following terms refers to a series of steps or levels within a pay grade?

A) pay metric
B) pay range
C) wage class
D) wage curve
E) salary survey

Question 70

________ means collapsing salary grades and ranges into just a few wide levels ,each of which contains a relatively wide range of jobs and salary levels.

A) Comparable worth
B) Strategic compensation
C) Job evaluation
D) Broadbanding
E) Job grading

Question 71

According to many experts,which of the following would most likely reduce the wage gap between men and women?

A) experience
B) education
C) union intervention
D) federal legislation
E) competency-based pay

Question 72

According to the FLSA,agricultural employees,live-in maids,and taxi drivers are always eligible for overtime pay.

Question 73

All of the following are typical forms of compensation used for a company's top executives EXCEPT ________.

A) stock options
B) cash bonuses
C) pension plans
D) sales commissions
E) supplemental life insurance

Question 74

Direct financial payments may be based on increments of time and on performance.

Question 75

What is the primary purpose of offering an executive stock options in a compensation package?

A) providing the executive with guaranteed bonuses
B) encouraging the executive to increase the firm's value
C) preventing the executive from negotiating with other firms
D) enabling the firm to decrease the executive's base pay
E) offering the executive long-term retirement security

Question 76

If the current rate being paid for a job falls significantly below the wage line,what step should be taken by an employer?

A) enact a pay freeze for that job
B) assess a decrease in wages
C) conduct a job evaluation
D) pay a one-time bonus
E) provide a pay raise

Question 77

Which of the following terms refers to the requirement to pay men and women equal wages for jobs of roughly equivalent value to the employer?

A) strategic compensation
B) comparable worth
C) job evaluation
D) broadbanding
E) job grading

Question 78

Homelife,a national chain of high-end furniture stores,employs nearly 800 workers.In the past few years,the company's market share has dropped significantly,and employee turnover has increased.Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around.Historically,the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following,if true,supports the decision by Homelife executives to implement competency-based pay?

A) Homelife will be using the comparable worth method of determining pay to avoid legal problems.
B) Most Homelife managers are men, but executives hope to increase the number of minority women working for the company.
C) Homelife sales associates currently receive base salaries in addition to sales commissions, but they have monthly sales quotas.
D) Homelife plans to organize employees into teams, provide regular training, and frequently assess workers' skills and knowledge.
E) In an effort to save money, Homelife will be reducing the employee training budget over the next three years.

Question 79

Because the minimum wage is set by the Fair Labor Standards Act,there is no variation from state to state in the minimum wage paid to hourly workers.

Question 80

Performance-based pay is more popular than time-based pay among most employers in the U.S.