Deck 18: Management: Making It Work

Question 1

_____ is the budgetary approach that begins with an estimate from top management of the pay increase budget for the entire organization.

A) Bottom-up budgeting
B) Top-down budgeting
C) Managerial plan
D) Executive estimate budgeting

Answer 1

B

Question 2

The Web page for the compensation society is _____.

A) Society for Human Resource Management
B) American Compensation Association
C) International Compensation and Benefits Society
D) WorldatWork

Answer 2

D

Question 3

Sometimes referred to as "churn" or "slippage," the _____ recognizes the fact that when people leave an organization,they typically are replaced by employees who earn a lower wage.

A) productivity effect
B) conflict effect
C) turnover effect
D) morale effect

Answer 3

C

Question 4

All of the following are potential problems with headcount reductions except _____.

A) regulatory requirements make it difficult to make targeted cuts
B) workforce reductions,especially if not handled well,can harm employee relations
C) organizations that make greater involuntary workforce reductions also experience greater voluntary turnover
D) RIFs are very costly in tangible terms up front due to increases in employment insurance tax rates

Question 5

Changes in wages in labor markets are measured _____.

A) by the producer price index
B) by the consumer price index
C) through pay surveys
D) by examining the personal expenditures of each employee

Question 6

Contingent workers include all of the following except _____.

A) part-time regular workers
B) workers on rotating shifts
C) overtime workers
D) small independent vendors

Question 7

Which of the following is a measure of prices of goods and services in the product and service markets?

A) Producer price surveys
B) Product market competitor wage surveys
C) Labor market competitor wage surveys
D) Consumer price index

Question 8

Which of the following approaches to pay budgeting requires the most training of managers?

A) Top-down
B) Forward cycle budgeting
C) Bottom-up approach
D) Unit-level budgeting

Question 9

Which of the following is not a tradeoff that would be considered in setting a compensation budget?

A) Seniority versus performance contingent pay
B) To pay overtime for exempt versus nonexempt
C) Short-term versus long-term incentives
D) Cash compensation versus benefits

Question 10

If financially troubled employers have not been able to maintain competitive market positions,the conventional response has been to _____.

A) increase the rate of reduction in average pay by controlling adjustments in base pay
B) decrease employees' copays and deductibles for benefits
C) increase base wages but not variable pay
D) reduce employment

Question 11

The denominator for calculating the current year's rise is _____.

A) average pay at beginning of year
B) average pay at end of year
C) average number of employees during the year
D) average employment level

Question 12

Which method of budgeting relies heavily on employee pay histories?

A) Unit-level budgeting
B) Bottom-up
C) Control to planned level rise
D) Top-down

Question 13

A major advantage of a _____ is that it reduces benefits costs,something that the other options ordinarily do not achieve.

A) reduction in hours
B) furlough
C) pay cut
D) reduction in force

Question 14

All of the following are major factors used to manage total labor costs except _____.

A) average employment level
B) average cash compensation
C) number of overtime hours
D) average benefits costs

Question 15

Which of the following is not a likely consequence of a highly decentralized pay system?

A) Total labor costs would be reduced
B) Pay rates would be very unsystematic
C) Managers would use pay to motivate their own objectives
D) Employees are likely to be treated unfairly

Question 16

If San Diego has a CPI of 165 and Los Angeles has a CPI of 145,this means _____.

A) prices have risen faster in San Diego since the base year than they have in LA
B) it essentially costs more to live in San Diego than in LA
C) it costs less to live in LA than in San Diego
D) pay in San Diego is,on average,20 percent higher than in LA

Question 17

The _____ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees.

A) ADA
B) FMLA
C) FLSA
D) ADEA

Question 18

The percentage increase that is planned for an organizational unit or company is called _____.

A) a top-down budget
B) a bottoms-up budget
C) a planned pay-level rise
D) the current year's rise

Question 19

Which form(s)of compensation is/are most likely to be involved in unethical practices?

A) Executive stock options
B) Employee medical benefits
C) Employee base pay
D) Worker pensions and retirement income

Question 20

_____ is a common effect of layoffs.

A) Lower financial gains than expected
B) Unfavorable short-term stock prices
C) Higher morale among remaining employees
D) Productivity gains

Question 21

Which of the following objectives of the pay model is most appropriate for judging ethical behavior of compensation specialists?

A) Ensure legal compliance
B) Strive to achieve efficiency and fairness
C) Seek fairness for all stakeholders
D) Strive to achieve efficiency and legal compliance

Question 22

The compa-ratio reflects the _____.

A) rate paid for satisfactory performance
B) relationship of actual salaries to the midpoint of the going rates in the market
C) relationship of the midpoint of each range to actual salaries
D) relationship of actual salaries in each range to the midpoint of the range

Question 23

Research shows that employees tend to _____ the actual pay of those in jobs above them and _____ the pay of those below them.

A) underestimate;underestimate
B) overestimate;overestimate
C) access;overestimate
D) overestimate;underestimate

Question 24

A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is _____.

A) centralized authority
B) decentralized responsibility
C) the best approach to design
D) rarely done in today's organizations

Question 25

Approximately _____ of 600 surveyed companies calculate the cost and value added of their pay programs.

A) three-fourths
B) one-fourth
C) one-half
D) one-third

Question 26

A major potential advantage of outsourcing is _____.

A) stockholder returns
B) improved employee satisfaction
C) fewer problems with legislative compliance
D) cost savings

Question 27

For the compensation system,the basic question to ask is _____

A) "Who should do the activity?"
B) "How should the technique be redesigned?"
C) "Does each specific activity directly contribute to our objectives?"
D) "Should the activity be done in-house,or can others do it more effectively?"

Question 28

Which of the following statements about anchoring/framing is true?

A) Initial data strongly affect decisions/beliefs.
B) Reluctance to accept evidence that contradicts existing beliefs.
C) Following fashions in programs/techniques.
D) People "discover" patterns in random events.

Question 29

A _____ rate is when an employee is paid more than the maximum of their pay grade.

A) red circle
B) yellow circle
C) blue circle
D) green triangle

Question 30

A compa-ratio greater than 1 typically means that _____

A) the intended policy line has been violated
B) employees are overpaid
C) most employees are new entrants
D) turnover is high

Question 31

Range minimums and maximums reflect the _____.

A) market value of the output produced
B) market value of the employee's skills and abilities
C) market fluctuations in wage rates
D) value to the organization of the output of a job

Question 32

_____ is a system that allows employees to make health care choices,allocate savings to 401Ks or other savings vehicles,access vacation schedules and other activities.

A) Manager self-service
B) Employee self-service
C) Cafeteria plans
D) A communication portal

Question 33

In a _____ approach in a compensation communication program,the focus is on explaining practices and how pay is determined.

A) communication
B) marketing
C) management
D) mixed

Question 34

All of the following are recommended steps in the compensation communication cycle by WorldatWork except _____.

A) defining the objectives of the communication program
B) a communication program that will convey the information needed to accomplish the original objectives
C) collecting information from executives,managers,and employees
D) operate an informal communication network

Question 35

All of the following are examples of inherent controls except _____.

A) range minimums and maximums
B) broad bands
C) budgets
D) performance evaluation

Question 36

Replacing merit grids with _____ eliminates the link between the pay increase and the employees' salary position in the range and performance rating.

A) banding
B) skill- or competency-based plans
C) job evaluation
D) bonuses

Question 37

All of the following statements about commercial compensation software are true except _____.

A) can analyze almost every aspect of compensation information
B) can simulate alternate wage proposals and compare their potential effects
C) can easily compare past estimates to future estimates
D) can help evaluate salary survey data and simulate the cost impact of gain-sharing options

Question 38

_____,designed for employees or managers,explain compensation policies and practices,answer frequently asked questions,and explain how these systems affect their pay.

A) Communication portals
B) Manager self-services
C) Cafeteria plans
D) Content delivery networks

Question 39

Which of following is a legitimate reason why a compa-ratio may be less than 1?

A) A majority of workers with high performance
B) The majority of employees may be new or recent hires
C) Low promotion rates
D) Turnover is low

Question 40

_____ are to broad bands as minimums,midpoints,and maximums are to pay ranges.

A) Gray fields
B) Band-guides
C) Reference rates
D) Gray ranges

Question 41

The component of compensation most likely subject to unethical practices are employee profit-sharing payouts and executive stock valuations.

Question 42

If an organization has a number of red circle pay rates,this suggests problems with pay ranges and/or job evaluations.

Question 43

Under the contract pay system,each worker was paid according to a uniform contract for each company.

Question 44

An individual employee cannot earn more pay than the maximum of the pay grade of their current job.

Question 45

Executive estimation is the budgetary approach that begins with an estimate from top management of the pay increase budget for the entire organization.

Question 46

Tying changes in pensions,social security payments,and labor agreements to changes in the CPI is called indexing.

Question 47

A CPI of 180 in Boston and 220 in Chicago means that it is more expensive to live in Chicago than in Boston.

Question 48

An area that presents an ethical dilemma for compensation managers is the manipulation of measures on which variable pay is based.

Question 49

Rather than define employment as hours of work,number of employees is often used.

Question 50

In calculating labor costs,employment level includes only core employees not contingent workers.

Question 51

The phenomenon of turnover effect means that organizations must budget additional money for next year's budget to cover effects of turnover.

Question 52

If a company pays above the market for only one of five jobs,total compensation for these jobs may be above competitors.

Question 53

Many employers achieve flexibility and control employment costs by utilizing contingent workers rather than expanding and contracting the core workforce.

Question 54

The "churn","slippage" or turnover effects assume that employees who leave earn,on average,less than employees likely to replace them.

Question 55

In a total decentralized pay system,employees are likely to be treated unequally and unfairly.

Question 56

Job analysis and gain-sharing are not examples of inherent controls on managers' compensation decisions.

Question 57

The CPI measures the cost of living.

Question 58

Managing compensation ethically is comparatively easy since much of compensation is guided by many laws and regulations.

Question 59

Changes in the CPI only indicate whether prices have increased more or less rapidly in an area since the base period.

Question 60

Policy lines and skill-based pay plans are examples of inherent controls on managers' compensation decisions.

Question 61

What are red circle rates?

Question 62

Distinguish the concepts of the cost of living,changes in prices in the product and service markets,and changes in wages in labor markets.

Question 63

The most important components of a pay communication program are the business- and work-related rationales on which the system is based.

Question 64

What is the consumer price index (CPI)? Explain with an example.

Question 65

What are the steps involved in the bottom-up budgeting process?

Question 66

Generally,management prefers a higher proportion of variable pay versus base wages and salary.

Question 67

The final step in the compensation communication cycle is conducting the communication sessions.

Question 68

Briefly summarize compa-ratios.

Question 69

What is the top-down method of budgeting?

Question 70

What are the potential problems associated with headcount reductions?

Question 71

What are some of the software packages that help in making information useful?

Question 72

Manager self-service answers questions,explains compensation policy,and explains how systems affect their pay.

Question 73

A key reason to communicate pay information is that the goodwill engendered by the act of being open about pay may also affect perceptions of pay equity.

Question 74

What is the turnover effect? Explain how it is calculated with an example.

Question 75

Employees in companies with open pay systems express higher satisfaction with their pay system but not their pay than employees in more secret pay systems.

Question 76

Why is outsourcing a viable alternative for organizations? What are the major potential advantages and disadvantages of outsourcing?

Question 77

Broad bands provide managers greater discretion in pay for their subordinates than in grades and ranges.

Question 78

Employees should never be paid below the minimum of their pay range.

Question 79

If a pay system is not based upon work-related or business-related logic,it is best to not conduct a formal compensation communication program.

Question 80

The compa-ratio is the average actual pay divided by the midpoint of the pay grade.