Deck 13: Activating and Maintaining an Effective Compensation System

Question 1

What is a major issue for most organizations when planning for information technology?

A) whether to use computers
B) whether to use consultants
C) how advanced the system should be
D) whether to protect employee privacy

Answer 1

C

Question 2

Your organization has asked you to prepare a compensation budget by taking into account the following variables: current employees' wages, anticipated merit increases, seniority increases, as well as expected turnover. What kind of compensation budgeting process is your organization using?

A) zero-based
B) top-down
C) bottom-up
D) break-even

Answer 2

C

Question 3

Central tendency is a phenomenon associated with a decline in performance shortly after the introduction of a new process or system.

Answer 3

False

Question 4

According to a recent survey of HR professionals, what is the predominant use of human resources management systems?

A) planning and research
B) time and attendance
C) payroll
D) benefits

Question 5

In order to avoid resistance to a new compensation system, it a good practice to discontinue the usage of the old system before you have fully tested the new system. Otherwise, employees will gravitate to the old and familiar system. .

Question 6

You work in a human resource department and have access to the personal health information of employees. A front line manager contacts you and requests that you look at an employee's file and let her know if there are any health issues that could explain an employee's "bizarre behaviour" (the employee seems extremely quiet). Which of the following actions should you do, so as to be compliant with Bill C-6?

A) Email the file to the manager but scrub it so only information that may be related to the "bizarre behaviour" is included.
B) Email the employee's file to the manager, including any health-related information you may have.
C) Do not share any health-related information with the manager, even if she tells you she is going to escalate the request.
D) Email the requested information but tell the manager not to share it with anyone.

Question 7

Which of the following is NOT a component of compensation administration?

A) collecting the necessary information
B) performing pay calculations
C) establishing accountability
D) preparing and distributing remittances

Question 8

Often, organizations will contract out a portion of their benefits administration to "product providers."

Question 9

Information technology is particularly useful for pay and remittance calculations.

Question 10

You work as a human resource professional at a large accounting firm in Ontario. Part of your mandate requires that you investigate processes that will streamline basic human resource functions, including remittance of pay stubs to employees. You are currently contemplating the notion of automating this process. What minimum requirements must you adhere to so as to make this process compliant with Bill 88?

A) Make the statements available via the company's intranet to employees.
B) Send out a quarterly summary to each employee via a "personalized email," and make the biweekly stubs available via the intranet.
C) It is impossible to be compliant with the act while automating the process.
D) On a biweekly basis, send out the statements to each employee via the company's email platform.

Question 11

Why is a bottom-up approach for compensation budgeting favoured by the textbook author?

A) Its simplicity is advantageous.
B) It supports the strategic pay notion.
C) It fits with other strategic aspects of the organization.
D) It is more compatible with new human resource information systems.

Question 12

In evaluating a new compensation system, two main sets of employee attitudes should be examined-job attitudes and compensation attitudes.

Question 13

Organizations using a classical management strategy are the most likely to use a broad spectrum of employees when developing a plan to manage the implementation process.

Question 14

Two aspects of compensation system documentation include the compensation system itself and a process to document assignment of specific tasks.

Question 15

One of the key functions associated with documentation of compensation systems is the establishment of service contracts with external service providers. Which of the following criteria is likely to be the most difficult to document in the contract?

A) addressing unforeseeable events
B) employer responsibilities
C) penalties for failing to meet standards
D) minimum performance standards

Question 16

Integrated human resource information systems can support and increase efficiencies associated with many routine activities once performed by human resource personnel. Which of the following activities is NOT conducive to automation via computer systems?

A) computing market lines and pay policies
B) determining the relative value of jobs
C) labour market data analysis
D) online surveys of employee attitudes

Question 17

Which of the following aspects would a human resource professional consider part of documenting the compensation system?

A) ensuring stakeholders have up-to-date job evaluation manuals
B) deciding to use an external service provider
C) designing job evaluation criteria that are valid and reliable
D) deciding on the compensation strategy

Question 18

In the bottom-up approach to compensation budgeting, an arbitrary amount is allocated to compensation and given to department managers for distribution to their employees.

Question 19

Because of complexity and resistance by stakeholders, computers have taken on a secondary role in communicating compensation policies and procedures

Question 20

Of all the human resource functions, payroll activities were one of the first functions to be computerized in medium and large organizations in Canada.

Question 21

Your organization launches a new compensation system. Within six months, compensation costs are below budget. Which of the following variables would you NOT look at as a viable explanation for this surplus?

A) training costs
B) turnover rates
C) administrative costs
D) compensation budget, which was likely too conservative

Question 22

In regard to evaluating the compensation system, which of the following is NOT true?

A) Most organizations don't even try to evaluate their systems.
B) A slipshod attempt at evaluation may do more harm than good.
C) Compensation costs below budgeted levels should make you happy.
D) If the budget was not realistic in the first place, comparisons are meaningless.

Question 23

Why is it useful to conduct surveys of key employee attitudes before system implementation?

A) to provide information about the new system
B) to have a baseline for future comparisons
C) to solicit recommendations for changes
D) to create perception of employee involvement

Question 24

A particular company notices that performance, as measured by the accuracy of entries by managers in a new human resource management system, decreased during the early stages of launch. What phenomenon may account for this decrease in performance?

A) socialization
B) initial dip
C) integration
D) freedom to act

Question 25

As a result of focusing your recruitment efforts on attracting recent university graduates, your workforce has become younger. What impact does this change have on your compensation system?

A) It needs greater focus on pension plans and retirement income.
B) It needs to offer more cash and family benefits.
C) It needs to adopt a job evaluation system.
D) It needs to adopt a new managerial strategy.

Question 26

Which of the following situations may account for higher-than-budgeted compensation expenditures?

A) initial dip
B) spiral career paths
C) overgenerous job evaluation system
D) excessive accumulation

Question 27

What main indicators should firms examine in the process of examining compensation costs?

A) budgeted costs and actual costs
B) compensation cost ratios and budget ratios
C) net profit per employee and average employee earnings
D) compensation cost ratios and average employee earnings

Question 28

When evaluating a new compensation system, you notice that the compensation cost ratio increased, while total compensation or average earnings remained static. Which of the following is a likely explanation?

A) All employees have received some kind of raise.
B) Total costs and/or revenues have decreased.
C) Benefits have been removed from total compensation.
D) There is an error in the data; this situation is not possible.

Question 29

Which of the following is NOT a key aspect of developing the implementation plan?

A) the training plan
B) preparing the compensation budget
C) the plan for communicating the new system
D) the plan for evaluating the new system

Question 30

A training process is critical to the launch of a new compensation system. Our textbook identifies three groups of stakeholders that should be trained so as to facilitate the introduction of an effective compensation system. Which of the following stakeholders should have very detailed system knowledge?

A) recruiters and secretarial personnel
B) front-line supervisors and managers
C) support personnel in the human resource department
D) all customer-facing employees

Question 31

Given changes in financial circumstances of an organization, senior management requests recommendations geared towards containing compensation costs. Which of the following would NOT be a recommendation that you would bring forward?

A) Enact a hiring freeze.
B) Contain benefit costs.
C) Replace some raises with bonuses.
D) Replace variable pay with fixed pay.

Question 32

Which of the following is NOT one of the steps in implementing the compensation system?

A) Establish the implementation task forces.
B) Decide on the compensation level.
C) Test the system.
D) Conduct the training.

Question 33

Which of the following statements about developing a communication plan to introduce a new compensation system is NOT true?

A) Employees need to know the rationale behind the change.
B) Ensure it is an on-going process; communicate often.
C) Various modes of communications should be used.
D) It is often a recipe for failure if frontline managers are told of impending changes early in the process.

Question 34

Which of the following does NOT support the notion of outsourcing some human resource functions to third-party service providers?

A) It provides internal staff with a better sense of issues facing employees.
B) It reduces costs.
C) It leverages the specialized knowledge of external experts.
D) It allows internal staff to focus on strategic human resource activities.

Question 35

Katrina works at a factory assembling plastic toys. She prides herself in producing the most units with the lowest rejection rates. What kind of behaviour is Katrina displaying?

A) loyalty
B) citizenship
C) membership
D) task

Question 36

In regard to compensation communication, which of the following is NOT true?

A) Employers may be found legally liable for poor benefits communication.
B) Two-way communication is extremely important.
C) The move towards defined contribution plans has increased the need for effective communication.
D) Employees who understand their compensation system are less satisfied with it.

Question 37

You have been tasked with providing senior management with a plan to evaluate the effectiveness of a new compensation system to be launched by an organization. Which of the following is NOT a typical approach associated with evaluating the impact of a compensation system?

A) impact on a company's return on equity
B) impact on compensation objectives
C) impact on compensation costs
D) impact on employees' attitudes and behaviours

Question 38

Which of the following factors is NOT normally a consideration when organizations make the decision to outsource human resource functions?

A) the size of the organization
B) the activities competitors are undertaking with their human resource functions
C) the level of internal expertise
D) the strategic role played by compensation in the organization

Question 39

A good employee threatens to leave your firm because she has received a higher pay offer from a competitor. The offer is well outside your company's pay range for the job the employee is performing. What should you tell the employee?

A) You will match the other offer.
B) You will beat the other offer to be sure you won't lose her.
C) You will try to get her job put into a higher pay grade.
D) You wish her all the best in her new job with the competitor.

Question 40

Which of the following is NOT an indicator of membership behaviour?

A) the number of applicants job postings attract
B) the number of useful employee suggestions submitted
C) absenteeism
D) employee turnover

Question 41

Identify the four key aspects that need to be considered in planning the infrastructure for compensation administration.

Question 42

Identify the tasks involved in preparing to implement a compensation system.

Question 43

Identify and describe the steps necessary for implementing a compensation system.

Question 44

Discuss the advantages and disadvantages of outsourcing compensation administration, as well as the factors involved in deciding outsourcing policy.

Question 45

What are the primary areas for computer applications in a compensation system?