Deck 9: Managing Compensation

Question 1

Managers in companies with compensation scorecards often struggle to know if the promotions,raises,bonuses,and pay adjustments they make are in line with the rest of the organization and its strategy.

Answer 1

False

Question 2

Expectancy theory predicts that people expect to be paid as much or more than individuals in a similar job class.

Answer 2

False

Question 3

Nonexempt employees are covered by the Fair Labor Standards Act and must be paid at the rate of a rate of one and a half times their regular pay rate for time worked in excess of forty hours in their workweek.

Answer 3

True

Question 4

Rewarding an employee's past performance is not a goal of a strategic compensation policy.

Question 5

Raising selection standards and hiring better-qualified employees can reduce training costs.

Question 6

A formal statement of compensation policy would typically include the rate of pay within the organization and whether it is to be above,below,or at the prevailing market rate.

Question 7

Nonexempt employees are not covered by overtime requirements under the Fair Labor Standards Act.

Question 8

Pay-for-performance programs have little,if any,effect on employee productivity.

Question 9

Pay secrecy is still prevalent in organizations despite its negative effect on motivation and employee trust.

Question 10

Employees who are compensated on an hourly basis are referred to as salary earners.

Question 11

Under the Fair Labor Standards Act,most of hourly workers involved in interstate commerce are considered nonexempt.

Question 12

Pay equity is achieved when employees' compensation is equal to the value of the work they perform.

Question 13

While most managers agree that pay should be linked to performance,employees do not.

Question 14

Exempt employees are not covered by the overtime provisions under the Fair Labor Standards Act.

Question 15

The expectancy theory of motivation predicts that one's level of motivation depends on the attractiveness of the rewards sought by employees and the probability of obtaining those rewards.

Question 16

Strategic compensation is the term used for all the processes used to determine the market rates to pay employees.

Question 17

The compensation scorecard creates a comparative tool within the organization that can reinforce desired outcomes that are unique to the company's strategy.

Question 18

A Bloomberg National Poll showed that most Americans believe that large bonuses for Wall Street companies that took taxpayer bailouts should be prohibited.

Question 19

If rates of pay are high,which creates a large applicant pool,then organizations may choose to raise their selection standards.

Question 20

Among the goals of a strategic compensation policy are rewarding past performance,attracting new employees,and reducing turnover.

Question 21

The job classification system is a quantitative job evaluation procedure that determines a job's relative value by calculating the total points assigned to it.

Question 22

A point manual can be used to determine the external equity of a job.

Question 23

Real wages represent the difference between wage increases and cost-of-living increases.

Question 24

Internal factors that influence wage rates include the worth of a job and the employer's ability to pay.

Question 25

Pay levels are limited in part by profitability of the firm and productivity of employees.

Question 26

Wages of unionized employees are generally higher than those of nonunion employees.

Question 27

A critical concern for a successful pay-for-performance system is the perceived fairness of the pay decision.

Question 28

The worth of a job is determined formally through the wage and salary survey.

Question 29

Compensable factors include skills,efforts,responsibilities,and working conditions.

Question 30

The point system of job evaluation permits jobs to be evaluated quantitatively based on compensable factors.

Question 31

Job evaluation is a non-systematic,qualitative process of determining the relative worth of jobs in order to establish a comparison with the prevailing market and regional value of a job within a job family.

Question 32

The consumer price index tracks the change in price over time of a "market basket" of goods and services.

Question 33

Job ranking is a simple method that provides a precise measure of each job's worth.

Question 34

The Hay profile method is useful for evaluating jobs of all types and levels.

Question 35

The job ranking system ranks jobs on the basis of relative worth and can be done by a single person familiar with all jobs.

Question 36

The worth of a job,as it is determined by its comparative worth with jobs in other firms,is an external factor in the wage mix.

Question 37

Point manuals contain job descriptions and the number of points assigned to each job type.

Question 38

American President Obama enacted a five-year freeze on federal salaries to help the government achieve its objectives of reducing the deficit.

Question 39

The job classification system is used commonly by smaller employers.

Question 40

The consumer price index is available in separate indexes by size of city and region of the country.

Question 41

​Strategic compensation is the compensation of employees in ways that enhance motivation and growth while concurrently aligning their efforts with the goals of the organization.

Question 42

One of the major criticisms of job-based compensation systems is that they often fail to reward employees for their skills or the knowledge they possess.

Question 43

Red circle rates are above the maximum for the pay range and are often frozen until the range shifts upward through market wage adjustments.

Question 44

When employees are paid according to the skills and knowledge they have rather than the specific jobs they perform,they are paid according to competence-based compensation.

Question 45

The wage curve represents the wages paid to jobs after adjustment for cost-of-living.

Question 46

Employers refer to the area from which they obtain certain types of workers as the labor market.

Question 47

Pay secrecy seems to be an accepted practice in many organizations.

Question 48

A major benefit of job-based compensation systems is that they encourage employees to learn new skills and capabilities.

Question 49

Steps within a rate range allow pay increases based on merit or seniority.

Question 50

Equity theory is also referred to as distributive fairness.

Question 51

An advantage of competence-based pay from the employee's perspective is that there is no limit to what they can earn by learning new skills.

Question 52

The three factors that constitute the evaluation in the Hay profile method are knowledge,mental activity,and accountability.

Question 53

Employees are likely to accept a promotion if succeeding rate ranges are larger in size.

Question 54

The National Compensation Survey published by the Bureau of Labor Statistics can provide local,regional,and national compensations statistics.

Question 55

A major criticism of competence-based pay systems is that after achieving the top wage,employees may be reluctant to continue their educational training.

Question 56

Broadbanding refers to collapsing of many traditional salary grades into a few wide salary bands.

Question 57

Managers group similar jobs into a pay grade in order to help with the setting of wages for all jobs.

Question 58

​Companies are more heavily scrutinized than they have been historically by shareholders,government,and the public for how much they pay their people.

Question 59

For employees,pay equity is achieved when the compensation received is equal to the value of the work performed.

Question 60

An advantage of published wage surveys is compatibility with the organization's jobs.

Question 61

A compensation scorecard can cloud the transparency of how people are rewarded and makes managers responsible for how they spend company money.

Question 62

Because management positions are more difficult to evaluate and involve certain demands not found in jobs at the lower levels,some organizations do not attempt to include them in their job evaluation programs for hourly employees.

Question 63

Which of the following is NOT a common goal of a strategic compensation policy?

A)To reward employees' past performance
B)To mesh employees' past performance with organizational goals
C)To remain competitive in the labor market
D)To attract new employees

Question 64

Which of the following is an example of a nonfinancial compensation?

A)Bonuses
B)Commissions
C)Health insurance
D)Employee recognition programs

Question 65

Indirect compensation includes healthcare benefits and commissions.​

Question 66

The fact that people make comparisons to others is central to:

A)expectancy theory.
B)the need for pay secrecy.
C)pay-for-performance programs.
D)equity theory.

Question 67

Pay-for-performance programs:

A)tie rewards to firm profitability.
B)are easy to implement and measure.
C)tie rewards to employee effort.
D)result in negligible increases in output.

Question 68

The concept that employees should exert greater work effort if they have reason to expect it will result in a valued reward forms the basis of:

A)expectancy theory.
B)equity theory.
C)instrumentality.
D)internal equity.

Question 69

Seniority,merit,and individual incentive plans are factors affected under the Equal Pay Act.

Question 70

Under the Fair Labor Standards Act (FLSA),an employer must pay an employee for whatever work the employer "suffers or permits" the employee to ​perform,even if the work is done away from the workplace and even if it is not specifically expected or requested.

Question 71

The term pay-for-performance can encompass all of the following EXCEPT:

A)merit pay.
B)base salary.
C)cash bonuses.
D)gainsharing plans.

Question 72

A Bloomberg National Poll showed that more than _____ of Americans thought big bonuses should be banned for Wall Street companies that took taxpayer bailouts.

A)90 percent
B)80 percent
C)85 percent
D)70 percent

Question 73

When the organization pays wages that are relatively equal to that of other employers for similar work,it is the basis of:

A)comparable worth.
B)external equity.
C)compensable factors.
D)equal pay.

Question 74

_____ encompasses employee wages and salaries,incentives,bonuses,and commissions.

A)Nonfinancial compensation
B)Indirect compensation
C)Direct compensation
D)Component compensation

Question 75

_____ includes employee recognition programs,rewarding jobs,organizational support, work environment,and flexible work hours to accommodate personal needs.

A)Financial compensation
B)Nonfinancial compensation
C)Direct compensation
D)Indirect compensation

Question 76

Instrumentality refers to:

A)wage rates of acceptable level.
B)development of both internal and external pay equity.
C)wage rates above the pay range maximum.
D)rewards that are valued and motivate employees.

Question 77

There is reason to believe that pay secrecy can do all of the following EXCEPT:

A)generate distrust in the compensation system.
B)reduce employee motivation.
C)inhibit organizational effectiveness.
D)generate feelings of commitment.

Question 78

Competence-based pay systems represent a fundamental change in the attitude of management regarding how work should be organized and how employees should be paid for their work efforts.

Question 79

Which of the following compensation options would not qualify under the term pay-for-performance?

A)Seniority-based pay
B)Group incentive
C)Pay banding
D)Gainsharing plans

Question 80

Wages paid above the range maximum are called blue square rates.