Deck 9: Compensation and Benefits

Question 1

One of the largest consulting firms in the world prefers to hire many entry-level consultants and then retain only about 10 percent by the third year. This strategy allows them to become acquainted with many workers and keep only the best. On the basis of this strategy, the firm pays below-market salaries. Which of the following is NOT a likely outcome of paying below-market rates?

A) It may encourage voluntary turnover.
B) It is less costly to the organization.
C) It may create a culture of competitive superiority.
D) It may not attract the highest-quality employees.
E) It may lead to feelings of resentment among employees.

Answer 1

C

Question 2

The job evaluation system that results in a number of job grades is called

A) job ranking.
B) the classification system.
C) the point system.
D) the factor comparison method.
E) job analysis.

Answer 2

B

Question 3

____ refers to all of the pay and benefits provided to employees for the completion of work.

A) Salary
B) Pay substructure
C) Total compensation
D) Fair labor standards
E) Incentives

Answer 3

C

Question 4

Jorge, a supervisor for a large luxury hotel, compared his salary to other supervisors in the same organization. He found that his base pay was about 25 percent less than other individuals in similar supervisory jobs. Jorge is experiencing

A) internal inequity.
B) lateral inequity.
C) position inequity.
D) external inequity.
E) compensation inequity.

Question 5

What is the general method used to determine the relative value or worth of jobs to an organization?

A) Job analysis
B) Comparable worth
C) Job evaluation
D) Compensable factors
E) Pay compression

Question 6

Which job evaluation method identifies a job's various compensable factors for which the organization is willing to provide compensation?

A) Job ranking
B) Classification system
C) Point system
D) Job analysis
E) Comparable worth

Question 7

An aspect of a job for which an organization is willing to provide compensation is called a

A) comparable worth issue.
B) pay grade.
C) job class.
D) compensable factor.
E) job evaluation.

Question 8

While performing a job evaluation for a nursing home, Brad compared two jobs to a benchmark job. He found that the job of nurses' aide required a high level of physical effort, a moderate level of responsibility, and a low level of skill. By comparison, the job of occupational therapist had a low level of physical effort, but a high level of both responsibility and skill. Therefore, occupational therapists are paid more. Brad is using the ____ job evaluation technique.

A) job- ranking
B) classification system
C) regression-based system
D) job analysis
E) factor comparison

Question 9

____ occurs when a company indicates to employees the importance of certain behaviors by paying for such behaviors.

A) Supporting
B) Suggesting
C) Spiraling
D) Benchmarking
E) Signaling

Question 10

Which of the following is NOT a likely factor in determining an organization's compensation strategy?

A) The organization's ability to pay
B) The organization's legal context
C) Influence of unions
D) Location of the organization
E) The organization's job classification system

Question 11

Which job evaluation method assesses jobs in a factor-related manner?

A) Point system
B) Factor comparison method
C) Job ranking
D) Classification system
E) Regression-based system

Question 12

The National Association for Law Placement (NALP) gathers and presents information about average compensation for attorneys, including data specific to regions, specializations, years of experience, and size of the firm. The NALP is creating

A) a job evaluation.
B) a pay survey.
C) pay compression.
D) external equity.
E) a pay structure.

Question 13

Which of the following employee behavioral outcomes is MOST likely under conditions of perceived internal inequity as compared to external inequity?

A) Lower morale
B) Higher conflict
C) Lower satisfaction
D) Lower motivation
E) All of these

Question 14

The U.S. postal system utilizes different job grades to pay employees, which is part of a

A) job ranking system
B) classification system
C) regression-based system
D) factor comparison method
E) No method

Question 15

Information used to assess external equity is likely collected with

A) pay surveys.
B) benefits administrators.
C) compensation calculators.
D) random telephone interviews.
E) none of these.

Question 16

A laborer who is responsible for landscaping a local golf course likely receives

A) a salary.
B) a wage.
C) broad incentive pay.
D) no overtime.
E) a pension but no worker's comp.

Question 17

In general, salaries are paid to

A) professionals.
B) executives.
C) line workers.
D) all of these.
E) both professionals and executives.

Question 18

Which of the following would NOT be considered an argument in favor of knowledge-based pay?

A) Employees focus on growth and the accumulation of new knowledge.
B) The organization will gain flexibility.
C) The organization will develop a more knowledgeable workforce.
D) Assessing what a person knows is much easier than assessing what the person does.
E) Employees are paid for what they are worth to the company.

Question 19

Organizations are MOST likely to be able to pay below-market compensation rates in an area with

A) high unemployment.
B) high cost of living.
C) high wage levels.
D) high labor costs.
E) highly skilled workers.

Question 20

Which of the following would be considered a DISADVANTAGE of the use of above-market compensation?

A) It may encourage voluntary turnover.
B) It is less costly to the organization.
C) It may create a culture of competitive superiority.
D) It may not attract the highest-quality employees.
E) It may encourage a sense of entitlement among employees.

Question 21

The fundamental purpose of compensation is to provide an adequate reward system for employees so that they feel valued.

Question 22

A program that allows employees to select the benefits they want is called a(n)

A) cafeteria-style benefits plan
B) employee assistance plan
C) wellness program
D) defined benefit plan
E) workers' compensation

Question 23

Wages are paid to employees based on the time they function in a particular job.

Question 24

A special program that helps employees with drug or alcohol problems is called a(n)

A) cafeteria-style benefits plan
B) employee assistance plan
C) wellness program
D) defined benefit plan
E) workers' compensation

Question 25

Which mandated type of insurance covers individuals who suffer a job-related illness or accident?

A) Unemployment insurance
B) Social security
C) Workers' compensation
D) Health insurance
E) Accidental death and dismemberment insurance

Question 26

A special program that helps prevent employee sickness is called a(n)

A) defined contribution plan
B) employee assistance plan
C) wellness program
D) defined benefit plan
E) workers' compensation

Question 27

How does the United States rank in terms of the cost of benefits relative to that of other countries around the globe?

A) Much higher
B) A small percentage higher
C) About the same
D) Lower
E) Costs cannot be compared across countries.

Question 28

Which mandated employee benefit is designed to provide a basic subsistence payment to employees between jobs?

A) Unemployment insurance
B) Social security
C) Workers' compensation
D) Medical insurance
E) Accidental death and dismemberment insurance

Question 29

Scenario 9.1
Chocolatta University, an institute of higher learning that educates future confectionary chefs, offers a very attractive benefits package. Costs associated with benefits are about double those of rival institutions, Jellibelli Tech and Truffle State. However, Chocolatta U. administrators feel that the extensive benefits attract the most talented faculty and staff in the world. Due to recent societal trends in fitness and health, Chocolatta U. has experienced a downturn in its funding support from global confectionary corporations seeing lower profits. The university's budget has therefore been reduced. Joy Almond, human resource benefits manager, has been asked to find ways to reduce expenditures on benefits, so that important university programs such as Candy Fillings and White Chocolate Creations do not suffer. Ms. Almond is in a quandary!
Refer to Scenario 9.1. Which of the following is a benefit that Ms. Almond may NOT legally drop from Chocolatta's benefits package?

A) Health insurance
B) Employee assistance program
C) Unemployment insurance
D) Life insurance
E) Vacation pay

Question 30

Under Equal Pay Act of 1962, workers must be paid the same money that other employees earn working in similar jobs in other companies.

Question 31

When is pay compression MOST likely to develop?

A) When employee skill levels increase faster than managerial skill levels
B) When the market rate for starting salaries increases faster than organizations can give raises to existing employees
C) When an organization's internal resources increase faster than it is able to hire new employees
D) When the organization can provide monetary rewards more easily than intangible benefits
E) When existing employees make more than new entrants in the organization

Question 32

Which of the following is NOT a nonmandated benefit?

A) paid time off
B) workers' compensation
C) health insurance
D) defined benefit plan
E) defined contribution plan

Question 33

Scenario 9.1
Chocolatta University, an institute of higher learning that educates future confectionary chefs, offers a very attractive benefits package. Costs associated with benefits are about double those of rival institutions, Jellibelli Tech and Truffle State. However, Chocolatta U. administrators feel that the extensive benefits attract the most talented faculty and staff in the world. Due to recent societal trends in fitness and health, Chocolatta U. has experienced a downturn in its funding support from global confectionary corporations seeing lower profits. The university's budget has therefore been reduced. Joy Almond, human resource benefits manager, has been asked to find ways to reduce expenditures on benefits, so that important university programs such as Candy Fillings and White Chocolate Creations do not suffer. Ms. Almond is in a quandary!
Refer to Scenario 9.1. In the midst of all this activity, Professor Nestlé severely burned himself while demonstrating in class the art of the flaming dessert. He will therefore be away from work and recuperating for three to six months. What benefit will help Professor Nestlé pay his bills while he is out of commission?

A) Unemployment insurance
B) Health maintenance organization
C) Social security
D) Elder care
E) Workers' compensation

Question 34

When Piccadilly Cafeterias filed for bankruptcy protection in the fall of 2003, its pension fund did not have enough assets to cover expected future payments. Which law ensures that retirees will receive their pensions as promised?

A) Tax Reform Act of 1986
B) Tax Reform Act of 1997
C) ERISA
D) FMLA
E) Economic Recovery Tax Act

Question 35

A maturity curve is a schedule specifying the amount of annual increase a person will receive.

Question 36

Scenario 9.1
Chocolatta University, an institute of higher learning that educates future confectionary chefs, offers a very attractive benefits package. Costs associated with benefits are about double those of rival institutions, Jellibelli Tech and Truffle State. However, Chocolatta U. administrators feel that the extensive benefits attract the most talented faculty and staff in the world. Due to recent societal trends in fitness and health, Chocolatta U. has experienced a downturn in its funding support from global confectionary corporations seeing lower profits. The university's budget has therefore been reduced. Joy Almond, human resource benefits manager, has been asked to find ways to reduce expenditures on benefits, so that important university programs such as Candy Fillings and White Chocolate Creations do not suffer. Ms. Almond is in a quandary!
Refer to Scenario 9.1. Ms. Almond is considering one cost-cutting option, in which employees are asked to make a small co-payment for each doctor's or dentist's visit. What is this called?

A) Cafeteria-style benefits
B) Coordination of benefits
C) Defined benefits
D) Sharing costs
E) Health maintenance organization

Question 37

Which of the following is NOT a mandated benefit?

A) workers' compensation
B) social security
C) unemployment insurance
D) private pension plan
E) all of these benefits are mandated

Question 38

Scenario 9.1
Chocolatta University, an institute of higher learning that educates future confectionary chefs, offers a very attractive benefits package. Costs associated with benefits are about double those of rival institutions, Jellibelli Tech and Truffle State. However, Chocolatta U. administrators feel that the extensive benefits attract the most talented faculty and staff in the world. Due to recent societal trends in fitness and health, Chocolatta U. has experienced a downturn in its funding support from global confectionary corporations seeing lower profits. The university's budget has therefore been reduced. Joy Almond, human resource benefits manager, has been asked to find ways to reduce expenditures on benefits, so that important university programs such as Candy Fillings and White Chocolate Creations do not suffer. Ms. Almond is in a quandary!
Refer to Scenario 9.1. Regardless of benefit reductions due to budget setbacks, Ms. Almond feels strongly that Chocolatta should continue to provide help for faculty and staff with recurring chocolate cravings. Otherwise, classroom materials tend to disappear, and employees get severe sugar headaches. Which type of benefit would this be classified as?

A) Employee assistance plan
B) Life-cycle plan
C) Workers' compensation
D) Health maintenance plan
E) Employee wellness plan

Question 39

Scenario 9.1
Chocolatta University, an institute of higher learning that educates future confectionary chefs, offers a very attractive benefits package. Costs associated with benefits are about double those of rival institutions, Jellibelli Tech and Truffle State. However, Chocolatta U. administrators feel that the extensive benefits attract the most talented faculty and staff in the world. Due to recent societal trends in fitness and health, Chocolatta U. has experienced a downturn in its funding support from global confectionary corporations seeing lower profits. The university's budget has therefore been reduced. Joy Almond, human resource benefits manager, has been asked to find ways to reduce expenditures on benefits, so that important university programs such as Candy Fillings and White Chocolate Creations do not suffer. Ms. Almond is in a quandary!
Refer to Scenario 9.1. Chocolatta University administrators justify the high costs of its benefits programs by espousing which particular theory?

A) Equity theory
B) Efficiency wage theory
C) Motivational theory
D) Expectancy theory
E) Reinforcement theory

Question 40

Internal equity involves comparisons to employees working in similar jobs in other companies.

Question 41

The downside to above-market compensation levels is increased employee absenteeism and turnover.

Question 42

Skill-based pay plans are related mostly to hourly workers.

Question 43

The point system utilizes compensable factors to evaluate the importance of jobs.

Question 44

The outcome of a point system job classification structure is the grading of jobs.

Question 45

Discuss the concept of job evaluation, including the most common methods used by organizations.

Question 46

Discuss the various factors that may influence an organization's compensation strategy.

Question 47

What is pay compression? Discuss the possible consequences of pay compression.

Question 48

Compare employee wellness programs and employee assistance programs.

Question 49

What is a pay survey? What types of information are necessary to conduct a pay survey? How might pay surveys be used by organizations and employees?

Question 50

Executive compensation is usually based on salary and incentive pay.