Deck 6: Formulating the Reward and Compensation Strategy

Question 1

What is the most important factor driving executive compensation?

A) firm size
B) firm performance
C) fraud
D) political connections on boards

Answer 1

A

Question 2

Trucks Are Us Ltd.is a British-Columbia-based trucking company providing long-haul services across Canada.Which level of government has the primary responsibility for passing labour-related legislation covering employees of Trucks Are Us Ltd.?

A) British Columbia and other provinces in which Trucks Are Us Ltd.operates
B) British Columbia government
C) municipalities and provincial governments in which Trucks Are Us Ltd.operates
D) federal government

Answer 2

D

Question 3

In developing a compensation strategy,the two key questions that must be addressed are: "How much is to be paid?" and "When should it be paid?"

Answer 3

False

Question 4

The demand for carpenters far outstrips the supply in British Columbia.In fact,many of the construction companies are relying on the international market to fill vacancies.Which term best describes the labour market for carpenters in British Columbia?

A) tight
B) loose
C) contingent
D) contractual

Question 5

Pay equity legislation falls under employment standards in all Canadian provinces.

Question 6

Golden parachutes generally assure large severance payments for dismissed executives.

Question 7

In which situation would a "lag the market compensation strategy" be applicable?

A) Turnover costs are low.
B) Turnover costs are high.
C) Recruitment costs are high.
D) The demand for labour is high.

Question 8

Which of the following workers are NOT covered under minimum wage legislation in some jurisdictions?

A) students
B) employees working from home
C) domestic servants
D) commissioned salespeople

Question 9

Jurisdiction over labour markets is primarily within the realm of the federal government of Canada.

Question 10

Before adopting a compensation strategy,it must be able to pass through three screens: affordability,legality,and employee attraction.

Question 11

You are attempting to define the role compensation will play in your reward strategy.What is a key factor that needs to be examined?

A) the nature of intrinsic and other extrinsic rewards offered
B) the compensation level strategy
C) the indicators of goal achievement
D) the compensation system behavioural objectives

Question 12

A "lead-the-market" compensation policy should be deployed only in situations when organizations face very tight labour markets.

Question 13

To keep work interesting and provide higher compensation opportunities for your design engineers,you have created a compensation system that allows them to move from an entry level to an expert specialist level.What term is used to describe this system?

A) management pathing
B) technical ladder
C) competency-based
D) leader development

Question 14

The process of formulating a compensation strategy includes five distinct yet interrelated steps.

Question 15

Company ABC Inc.tends to offer compensation packages below market for entry-level positions,while compensating significantly above market for more highly skilled senior positions in the company.ABC Inc.is utilizing a hybrid compensation policy.

Question 16

In which organization would compensation have a low role?

A) UNICEF store
B) chicken-processing plant
C) tree-planting firm
D) used car dealership

Question 17

Salaries are the major component of total compensation for the highest paid executives in Canada.

Question 18

Your organization is facing significant competition,putting pressure on your profit margins.Labour costs account for a significant percentage of your cost structure,and you are concerned with your profitability,moving forward.Furthermore,you are finding that it is extremely difficult to find production workers willing to work for minimum wage in Canada.As a result,you decide to move operations to Vietnam so you can take advantage of lower labour costs.Which type of key constraint has caused you to make this decision?

A) tax
B) financial
C) legislated
D) service market

Question 19

The key reason that executives earn so much more than other employees is because their base pay is so much higher.

Question 20

Which of the following is generally NOT one of the reasons why firms use contingent workers?

A) to address the shortage of qualified full-time employees
B) to cut on labour costs
C) to screen candidates for future employment
D) to improve employee productivity and job satisfaction

Question 21

Which statement best explains the legal difference between an employee and a contractor?

A) Only employees are allowed on the work site.
B) Contractors cannot hire another person to complete the work.
C) Contractors are exempt from employment standards legislation.
D) Employees can be forced to work overtime.

Question 22

A particular organization wants to explore the potential for converting many of their employees into contractors.Which characteristic would potentially lead the Canada Revenue Agency to reject this change in classification?

A) The worker has the ability to refuse or accept work from the organization.
B) The company directs how and where the work should be completed.
C) The worker has control over who actually completes the work.
D) The worker can choose the manner in which the work is completed.

Question 23

What should be your first step when you formulate the compensation strategy?

A) Define the required behaviour.
B) Determine the compensation mix.
C) Evaluate the proposed strategy.
D) Determine the compensation level.

Question 24

Which pair of job characteristics is likely associated with a high-involvement managerial strategy?

A) individual and low customer contact jobs
B) low task interdependence and narrow-in-scope jobs
C) simple and repetitious jobs
D) broad and creative jobs

Question 25

Which method involves using a "what if" scenario to determine which compensation-level strategy is most efficient for your organization?

A) cost-benefit analysis
B) market share analysis
C) trial analysis
D) utility analysis

Question 26

Which of the following is NOT covered by employment standards legislation in Canada?

A) minimum wages
B) minimum age for employment
C) pay equity
D) hours of work

Question 27

Lag strategies are cost-effective for which type of firms?

A) firms that are labour-intensive
B) firms needing to attract top-quality applicants
C) firms that value employee stability
D) firms that invest heavily in training and development

Question 28

As a human resource compensation specialist,you are recommending that your company compensate entry-level factory workers 10 percent below market,while paying 10 percent above market for engineers.What type of compensation policy are you recommending to your organization?

A) lag
B) lead
C) match
D) hybrid

Question 29

All Canadian jurisdictions have passed human rights legislation prohibiting employment discrimination based on specific employee factors.What is NOT covered under these broad human rights legislation?

A) marital status
B) race
C) gender
D) education

Question 30

Before implementing a compensation strategy,human resources professionals must ensure the appropriate screens are in place to evaluate the strategy's appropriateness.Which screen is NOT considered one of the so-called "must pass screens"?

A) Costs are within the financial means of the organization.
B) The new compensation strategy meets the minimum standards under employment standards legislation.
C) The new compensation strategy attracts potential employees with the required skill sets.
D) Current employees will be happy with the new compensation strategy.

Question 31

Tommy Jones,a male forklift operator,thinks that his employer is discriminating against him with respect to his pay because of his age.Which legislation would be applicable in this case?

A) labour standards legislation
B) pay equity legislation
C) human rights legislation
D) trade union legislation

Question 32

When we discuss labour market constraints,what are we specifically referring to?

A) union constraints on labour allocation
B) availability of employees versus demand
C) cost-of-living constraints on pay demands
D) managerial strategy in recruitment methods

Question 33

In which circumstance does the compensation system need to be relied on less heavily to motivate behaviour?

A) food processing plant
B) shelter helping the homeless
C) underground coal mine
D) tire manufacturer

Question 34

In Canada,organizations face numerous legislated constraints creating so-called "boundaries" to their compensation systems.Which of the following is NOT categorized as a legislated constraint or boundary?

A) Employment Standards Act or the Canada Labour Code
B) Human Rights Act
C) management strategy constraints
D) income tax,both individual and corporate

Question 35

A particular company operates several food processing plants across Canada.An internal audit of the company determined that several plants were paying above-market wages while other plants were paying below-market wages.What systemic issue could be causing this situation?

A) The company most likely uses one pay scale across Canada.
B) Workers in some of the plants appear to be negotiating higher wages.
C) Different management strategies are being used in each plant.
D) The compensation mix is likely the cause.

Question 36

Who is primarily responsible for the employee compensation strategy for most Canadian organizations?

A) government and chambers of commerce
B) top leadership,human resources professionals,and compensation specialists
C) compensation survey firms and human resource managers
D) government and human resource managers

Question 37

Which type of legislation covers issues such as overtime pay rates,paid time off,and minimum wage levels?

A) human rights
B) employment standards
C) trade union
D) tax

Question 38

As the owner of a medium-sized engineering consulting firm,you decide to implement a compensation level policy that compensates your employees based on market rates.Which type of compensation policy have you adopted?

A) lead
B) match
C) hybrid
D) lag

Question 39

A hybrid compensation-level strategy is one that varies across which of the following?

A) employee groups
B) managerial strategies
C) business segments
D) industrial sectors

Question 40

Which variable in executive compensation packages accounts for the majority of the value associated with executive pay in Canada?

A) annual bonuses
B) base pay
C) stock grants and stock options
D) perks

Question 41

Briefly summarize the legislative framework that compensation must comply with.

Question 42

For the special employee groups discussed in the textbook (contingent employees,executives,and international employees),what are some the implications for compensation?

Question 43

You have been asked to provide recommendations to a compensation committee in their attempts to shift the CEO's compensation into a mix of rewards that facilitates and encourages a long-term view of business performance.What foci should your recommendations take?

Question 44

What are a firm's choices for compensation-level strategy and how can it decide between them?

Question 45

Briefly describe the five main steps in the formulation of compensation strategy.

Question 46

Briefly discuss the four key understandings necessary for successful formulation of compensation strategy.