Deck 9: Compensation Management

Question 1

When relative pay is too low, employees cannot meet their physiological and security needs.

Answer 1

False

Question 2

If a recruiter offers one recruit a salary that is higher than the salary of other workers within the firm doing the same job, this is a threat to internal equity.

Answer 2

True

Question 3

When implementing the point system of job evaluation, the first step is to determine compensable factors.

Answer 3

True

Question 4

Consulting companies are poor sources of compensation information.

Question 5

When compensation is perceived to be inadequate, there are negative consequences regardless of whether the employee continues to work for the firm or not.

Question 6

Job evaluations are systematic procedures used to determine the relative worth or value of jobs.

Question 7

Job evaluation techniques focus on achieving internal equity.

Question 8

Controlling costs, rewarding behaviours, and complying with legal regulations are all objectives sought through effective compensation management.

Question 9

The purpose of job evaluation is to identify which jobs should be paid more than others.

Question 10

External equity involves paying workers at a rate perceived to be fair compared to what the market pays.

Question 11

The final phase of the compensation process involves establishing an appropriate pay level for each job and grouping the pay levels into a manageable structure.

Question 12

The point system for job evaluation cannot be applied until the point matrix and the point manual are ready.

Question 13

When implementing the point system of job evaluation, the second step is to allocate points to subfactors.

Question 14

Internal equity requires that wage rates and salaries be reflective of what other employers are paying for the same type of work.

Question 15

Job evaluation methods include job ranking, job grading, and the point system.

Question 16

Wage and salary surveys discover what other employers in the same labour market are paying for specific key jobs.

Question 17

A job's relative worth is determined by what the labour market pays and its absolute worth by the internal job evaluation.

Question 18

Compensation systems consist only of direct compensation paid to employees in exchange for the work that they do.

Question 19

In Canada, perceptions of unfairness based on absolute pay levels tend to cause more dissatisfaction than perceptions of inadequate pay based on relative levels of pay.

Question 20

Point system matrices list job factors down one side and list point levels across the top.

Question 21

Team incentive plans are used when measurable output is the result of group effort and it is challenging to separate individual contributions.

Question 22

When implementing incentive compensation programs, the HR function interviews employees who are leaving the organization.

Question 23

The total reward model of compensation includes everything employees value in an employment relationship.

Question 24

The concept of equal pay for work of equal value is known as pay equity.

Question 25

A scattergram combines absolute and relative data.

Question 26

A factor contributing to the earning gap between men and women is that women have greater career interruptions.

Question 27

An integrated global compensation strategy involves imposing the "home-country system" on overseas operations.

Question 28

Wage trend lines represent the intersection of the point value and wage rate for nonkey jobs.

Question 29

Unions are able to use their power to obtain wage rates that are disproportional to the relative worth of the job.

Question 30

An organization that aims to preserve national cultural differences while maintaining organizational values is attempting to apply a global strategy.

Question 31

When minimum wage rates are increased by law, employers only need to adjust the wages of those workers earning minimum wage.

Question 32

To determine the wage rate for nonkey jobs, an analyst needs to identify the point value for the nonkey job, draw a line vertically to the wage trend line, and then draw a line horizontally to the dollar scale.

Question 33

An organization that develops a corporate culture, policy, and strategy that allows it to do business in any country of the world is using a lead strategy.

Question 34

A compa-ratio above 1 would emerge when there are a lot of new employees.

Question 35

Piecework, bonuses, and commissions are all types of individual incentive plans.

Question 36

The concept of equal pay for equal work is the same as pay equity

Question 37

The greatest advantage of using skill-based pay is how flexible the workforce is.

Question 38

Redesigning jobs is a way for organizations to manage situations where workers are being paid more than they are contributing in terms of long-term productivity.

Question 39

All of the components that may be included in a total compensation valuation have a dollar value associated with them.

Question 40

Demotion pay procedures are one of 7 reasonable factors that can justify differences in wages.

Question 41

Incentive pay is directly linked to an employee's performance.

Question 42

Piecework is an individual incentive plan which pays employees:

A) for exceeding a specific level of output
B) a flat amount for each unit sold
C) for special contributions as they occur
D) for each unit of output produced
E) a base wage as well as a bonus

Question 43

Unlike employee stock ownership plans profit-sharing plans give employees genuine ownership.

Question 44

A pay raise given to an employee according to a performance evaluation is referred to as:

A) merit raise
B) production bonus
C) commission
D) promotion
E) indirect compensation

Question 45

Which of the following steps required by the point system of job evaluation involves breaking factors down into subcomponents?

A) determining compensable factors
B) determining levels of factors
C) developing the point manual
D) allocating points to sub factors
E) allocating points to levels

Question 46

According to Lawler, which of the following lowers employees' pay satisfaction as well as their motivation perform?

A) profit-sharing plans
B) job evaluations
C) pay equity
D) piecework incentive systems
E) pay secrecy

Question 47

Which of the following factors can justify differences in wages for jobs of equal value?

A) sex
B) seniority
C) race
D) national origin
E) age

Question 48

The job grading method of job evaluation is also known as:

A) job ranking
B) job classification
C) job posting
D) job listing
E) job comparison

Question 49

Which of the following steps required by the point system of job evaluation involves using the point system matrix to weight subfactors?

A) determining compensable factors
B) allocating points to subfactors
C) determining levels of factors
D) allocating points to levels
E) developing the point manual

Question 50

Employers using variable pay aim to keep compensation competitive.

Question 51

Which of the following types of pay levels is a common cause of dissatisfaction among employees?

A) relative
B) corporate
C) absolute
D) basic
E) compensable

Question 52

Which of the following is an advantage of using the point system for job evaluation?

A) the evaluation does not require additional review by other parties
B) it is the easy to develop from scratch
C) it is a simple to use
D) it can usually be applied my departmental managers
E) it can handle critical factors in more detail

Question 53

To determine a fair rate of employee compensation, most firms rely upon which of the following tools to establish external equity?

A) job grading
B) wage and salary surveys
C) point system
D) job ranking
E) job analysis

Question 54

Which of the following is based on the concept that jobs of comparable worth to the organization should be equally paid?

A) equal pay for work of equal value
B) pay equity
C) equal pay for equal work
D) employment equity
E) reverse discrimination

Question 55

Which phase in compensation management involves understanding the elements of the job and the skills needed to conduct the job?

A) reviewing job analysis information
B) establishing the compensation philosophy
C) determining compensable factors
D) matching employees to pay
E) pricing jobs

Question 56

Which of the following is a good source of information on wage and salary benchmark data?

A) consulting companies
B) private employment agencies
C) professional search firms
D) educational institutions
E) temporary-help agencies

Question 57

The principle of equal pay for men and women in jobs with comparable worth to the organization is called:

A) equal pay for equal work
B) equal pay for work of equal value
C) employment equity
D) female ratio
E) compa-ratio

Question 58

Which of the following is a group or team-based incentive plan?

A) spot awards
B) production incentive plans
C) commissions
D) discretionary bonus plans
E) piecework

Question 59

The final step in the point system job evaluation method is:

A) allocating points to subfactors
B) determining compensable factors
C) applying the point system
D) developing the point manual
E) determining levels of factors

Question 60

Which of the following is an individual incentive plan?

A) piecework
B) production incentive plans
C) employee stock ownership plans
D) team results
E) profit-sharing plans

Question 61

Compensation systems aim to incentivize workers by doing which of the following?

A) enhancing job satisfaction
B) decreasing the variety of variable pay
C) making employee behaviour more efficient
D) adding task significance
E) increasing the competitiveness of the compensation system

Question 62

Which of the following challenges may cause wage and salary analysts to make further adjustments to employee compensation?

A) succession plans
B) union power
C) job requirements
D) economic conditions
E) analyst habits

Question 63

Which of the following job pricing methods focuses on paying employees based on skill depth, breadth, and self-management?

A) wage and salary surveys
B) point system
C) job ranking
D) job grading
E) knowledge-based pay

Question 64

In pricing jobs, the appropriate pay level for any job reflects:

A) the productivity of the organization
B) the firm's compensation philosophy
C) manager preferences
D) the compa-ratio
E) the job's relative and absolute worth

Question 65

Which of the following is a form of job evaluation that assigns jobs to predetermined job classifications according to their relative worth to the organization?

A) noncomparative evaluation
B) job grading method
C) wage and salary surveys
D) point system
E) job ranking method

Question 66

Which of the following is defined as the perceived fairness in pay relative to what other employers are paying for the same type of work?

A) internal equity
B) pay equity
C) external equity
D) equal pay
E) equal opportunity

Question 67

Perceived fairness of a pay system across different jobs within an organization is referred to as:

A) external equity
B) internal equity
C) pay equity
D) equal pay
E) equal opportunity

Question 68

One thing all job evaluations have in common is that they all result in an ordering of jobs based upon:

A) their perceived relative worth
B) external competitiveness
C) the subjective evaluations of human resource specialists
D) employee skill
E) seniority

Question 69

Which of the following helps employers address gender pay inequity by ensuring that at least one woman and one minority member is considered for every open manager position?

A) compa-ratios
B) the Rooney rule
C) measuring promotions according to the nature of the promotions
D) using job grading to price jobs
E) encouraging blind screening of resumés

Question 70

The major challenge of market pricing matching is which of the following?

A) the process is complex
B) its accuracy has been questioned
C) prevailing wage rates can distort how much some jobs need to be paid
D) job descriptions using the same title can be considerably different
E) unions are able to use their power to influence wage rates

Question 71

Which of the following challenges does an organization face when market forces require that some jobs be paid more than is indicated by their relative work?

A) employment standards
B) wage and salary policies
C) productivity
D) prevailing wage rates
E) union power

Question 72

Which of the following is a reason why the issue of equal pay for work of equal value is a difficult concept to deal handle?

A) it covers women in the marketplace but ignores other protected classes
B) employer are often unaware of the pay differential between male and female employees
C) the lack of a generally acceptable definition of "equal value"
D) it conflicts with equal pay for equal work principles
E) Perceptions of fairness are largely based on relative perceptions of pay

Question 73

If an organization applies a general across-the-board pay raise, how does the wage-trend line change?

A) it moves the right
B) it moves upwards
C) it moves downwards
D) it reverses the direction of the slope
E) it moves to the left

Question 74

Which of the following is described as a job evaluation system whereby jobs in an organization are placed subjectively on a scale according to their overall worth to the organization?

A) job grading
B) job rating
C) job ranking
D) job classification
E) job analysis

Question 75

What does the vertical axis of a scattergram represent when the point system was used to rank jobs?

A) pay rates
B) wage-trend line
C) key jobs
D) the point value of jobs
E) job classes

Question 76

If the average wage rate for a particular job class is $13 per hour, but a less than average employee can be paid $11 per hour and an exceptional employee can be paid $15 per hour, then this organization is using which type of compensation policy within job classes?

A) flat rates
B) disbursed rates
C) red-circled rate
D) rate ranges
E) gold-circled rate

Question 77

Which of the following is a systematic procedure that is used to determine the relative worth of jobs to the organization?

A) job evaluation
B) noncomparative evaluation method
C) job characteristics model
D) forced distribution method
E) job analysis

Question 78

Since flat wage rates can make rewarding exceptional employees more difficult, most firms now use which of the following instead?

A) wage compression
B) rate ranges
C) merit raises
D) red circle rates
E) knowledge-based pay

Question 79

Relative levels of pay primarily impact which of the following?

A) employees' perception that they can meet basic needs
B) employees' perception that they can meet physiological needs
C) employees' pay expectations
D) employees' perception that they can meet security needs
E) employee satisfaction

Question 80

Which job evaluation method is most commonly used today?

A) job ranking method
B) the point system
C) the job grading method
D) the job classification system
E) the noncomparative method