Question 1

What is the result of combining more assignments into a single layer, thus giving managers more flexibility in making assignments and awarding pay increases?
A) outsourcing
B) broad bands
C) rightsizing
D) benchmarks
E) downsizing

Accepted Answer

Combining more assignments into a single layer is the practice of creating broad job bands, which give managers more flexibility in making assignments and awarding pay increases. This approach allows for greater flexibility and adaptability in responding to changing business needs while also promoting employee development and career growth. Outsourcing, rightsizing, benchmarks, and downsizing are all unrelated concepts.

Question 2

Which statement is true about job-based pay structures?
A) A pay structure that rewards employees for winning promotions will encourage them to gain valuable experience through lateral career moves.
B) Their focus on higher pay for higher status can work in favor of efforts for empowerment.
C) They typically reward desired behaviors, particularly in a rapidly changing environment.
D) Organizations may avoid change because it requires repeating the time-consuming process of creating job descriptions and related paperwork.
E) They always encourage flexibility, innovation, quality, and customer service.

Accepted Answer

Job-based pay structures require detailed job descriptions, which can become cumbersome and time-consuming to update when changes occur. This can cause organizations to avoid making necessary changes to job roles and responsibilities, which can lead to stagnation and lack of innovation.

Question 3

What is a disadvantage of broad bands?
A) They reduce managers' flexibility in making assignments.
B) They always result in pay decreases.
C) They increase the number of levels in the organization's job structure.
D) They reduce the opportunities for promoting employees.
E) They discourage employees from gaining valuable experience through lateral career moves.

Accepted Answer

Broad bands reduce the number of levels in an organization's job structure, which can limit opportunities for promotions since there are fewer hierarchical levels to move up to.

Question 4

MTX Co., a manufacturing company, has a pay structure based on job descriptions. As the company moves toward customizing production to meet customers' specific needs, it finds that managers are lacking flexibility in both job assignments as well as awarding pay increases to their employees. In this case, which alternative to job-based pay structures would best help the organization to respond to this problem?
A) straight piecework plan
B) skill-based pay system
C) delayering
D) quality-based pay system
E) benchmarking

Accepted Answer

The answer of MTX Co., a manufacturing company, has a...

Question 5

Executive pay has drawn public scrutiny in recent years. Which statement best explains the reason?
A) Top executives' pay is much higher than average workers' pay.
B) Most of the top executives' pay is in the form of a salary.
C) Top executives come under the category of exempt employees.
D) Top executives are paid in the form of commissions.
E) Executives are denied short-term or long-term incentives with their pay.

Accepted Answer

Executive pay is often much higher than the pay of average workers, creating a significant gap in income inequality that has drawn public scrutiny.

Question 6

What is a disadvantage of a pay structure that rewards employees for winning promotions?
A) It does not focus on setting pay for groups of jobs.
B) It does not make adjustments to a pay rate to reflect differences in labor markets.
C) It discourages employees from gaining valuable experience through lateral career moves.
D) It rewards employees for acquiring skills but does not provide a way to ensure that employees can use their new skills.
E) It places the employer at an economic disadvantage relative to other employers that pay the market rate by raising the pay for some jobs.

Accepted Answer

Rewarding employees only for winning promotions can discourage them from taking on lateral moves or seeking out opportunities to gain valuable experience in different roles. This can stifle development and growth and limit the pool of well-rounded and capable employees.

Question 7

Ryan and Peggy hold the same position at Vineyard Rustica. However, Ryan earns more than Peggy. In the context of pay structure, which statement justifies the organization's decision to pay Ryan more than Peggy?
A) Ryan works the night shift, and night hours are less desirable for most workers.
B) Ryan is a U.S. citizen; therefore, his pay should be higher than that of non-Americans.
C) Peggy is pregnant; therefore, her productivity is assumed to be lower.
D) Ryan is physically disabled; therefore, he should be paid more than Peggy.
E) Peggy lives in a location where living expenses are higher.

Accepted Answer

A) Pay differentials based on working conditions, such as night shifts being less desirable, are a common and justifiable reason for pay differences in the same position.

Question 8

Ron and Yin are welders working for two different divisions of the same company. Both have the same level of experience. However, Ron earns more than Yin. Under the Fair Labor Standards Act (FLSA), which statement justifies the organization's decision to pay Ron more than Yin?
A) Ron lives in a location where living expenses are higher.
B) Yin is younger than Ron.
C) Ron is a U.S. citizen.
D) Yin is physically disabled.
E) Yin works the night shift.

Accepted Answer

The FLSA allows for pay differences based on factors such as geography or cost of living. Ron earning more than Yin because he lives in a location with higher living expenses is a justifiable reason for the pay difference. Age, citizenship, physical disability, and work schedule are not relevant factors in determining pay under the FLSA.

Question 9

What is skill-based pay? What are its advantages and disadvantages?

Accepted Answer

The answer of What is skill-based pay? What are its...

Question 10

What is a characteristic of delayering?
A) It increases an organization's flexibility.
B) It increases the opportunities for promoting employees.
C) It sets pay according to the employees' level of knowledge.
D) It encourages a climate of learning.
E) It decreases the flexibility of managers in making assignments.

Accepted Answer

Delayering is the process of removing levels of hierarchy in an organization, which creates a flatter organization structure. This leads to increased flexibility in decision-making and quicker response times to changes in the market or industry.

Question 11

Which statement is true about skill-based pay?
A) Skill-based pay provides a way to ensure that employees can use their new skills.
B) Gathering market data about skill-based pay is easy.
C) Skill-based pay ensures that the employer pays the employee for learning skills that benefit the employer.
D) Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures.
E) Skill-based pay does not require records related to skills, training, and knowledge acquired.

Accepted Answer

The answer of Which statement is true about skill-based pay?
A)...

Question 12

At Methods Corp., a maker of premium art pencils, the human resource department is evaluating its pay structure. A compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio of this size?
A) The company may have difficulty keeping costs under control.
B) The company may have difficulty attracting and keeping qualified employees.
C) The company may be in violation of the Fair Labor Standards Act.
D) The company may have misclassified these employees as exempt when they are nonexempt.
E) The company may not have met minimum-wage requirements.

Accepted Answer

A compa-ratio of 1.9 indicates that the employees are being paid significantly above the market rate for their positions, which could lead to difficulties in controlling labor costs.

Question 13

What is a disadvantage of skill-based pay systems?
A) It makes organizations inflexible.
B) It reduces employee empowerment.
C) It may result in paying employees for skills they don't use.
D) It reduces opportunities for promoting employees.
E) It limits the number of pay levels by delayering.

Accepted Answer

Skill-based pay systems may result in paying employees for skills that they do not use, which could lead to resentment and dissatisfaction among employees. This can also create financial waste for the organization. Additionally, if employees are not given opportunities to utilize their skills, they may become demotivated to maintain or improve their skillset.

Question 14

Heightened Homes is a real estate firm based in Texas. The company ensures that employees' pay is dependent on what they are capable of doing. The company also supports efforts to empower its employees by encouraging them to be independent and to make decisions in various areas. This, in turn, ensures job enrichment. Based on this information, identify the pay structure being utilized by Heightened Homes.
A) straight piecework plan
B) skill-based pay systems
C) merit pay system
D) differential piece rates
E) standard hour plan

Accepted Answer

Heightened Homes is using a skill-based pay system, which compensates employees based on their ability to perform specific tasks or skills. The company supports employee empowerment and job enrichment, which aligns with the principles of a skill-based pay system.

Question 15

How do employees judge the fairness of a pay structure?

Accepted Answer

The answer of How do employees judge the fairness of...

Question 16

Fresher Inc. is a whole-foods distributor. Its human resource department gathers the following data for computing compa-ratios of some positions. Based on the data, for which position is Fresher Inc. most likely underpaying for human resources?
A) shipping clerks: average salary of $22,000, range midpoint of $24,000
B) inventory clerks: average salary of $20,000, range midpoint of $30,000
C) order packers: average salary of $24,000, range midpoint of $22,000
D) purchasing agents: average salary of $30,000, range midpoint of $25,000
E) warehouse workers: average salary of $20,000, range midpoint of $20,000

Accepted Answer

The compa-ratio (average salary divided by range midpoint) for inventory clerks is only 0.67, meaning their average salary is significantly lower than the midpoint of the salary range for this position. This suggests that Fresher Inc. is likely underpaying its inventory clerks compared to industry standards.

Question 17

Discuss the three major provisions of the Fair Labor Standards Act (FLSA).

Accepted Answer

The answer of Discuss the three major provisions of the...

Question 18

Compa-ratio
A) is defined as the ratio of average pay to the midpoint of the pay range.
B) is defined as the ratio of the average pay for the grade divided by the minimum pay for the grade.
C) can range from 0 to 100 percent.
D) uses data from market-pay surveys.
E) measures the degree to which new skills learned are consistent with the increases in pay.

Accepted Answer

Compa-ratio is defined as the ratio of average pay to the midpoint of the pay range. It can range from 0 to 100 percent and is a way to evaluate how much an employee is being paid compared to the midpoint of the pay range for their position. It does not necessarily involve market-pay surveys or the consistency of new skills learned with pay increases.

Question 19

What is an adjustment to a pay rate to reflect differences in working conditions or labor markets?
A) bonus
B) pay differential
C) green-circle rate
D) rank-and-file adjustment
E) red-circle rate

Accepted Answer

Pay differential is an adjustment made to a pay rate to reflect differences in working conditions or labor markets. A bonus is a one-time additional payment to an employee, a green-circle rate is a below-salary rate for entry-level employees, a rank-and-file adjustment is a pay increase based on job evaluation, and a red-circle rate is an above-salary rate for employees with exceptional skills.

Question 20

The ________ requires employers to make jobs available to their workers when they return after fulfilling military duties for up to five years.
A) Uniformed Services Employment and Reemployment Rights Act
B) Fair Labor Standards Act
C) Equal Employment Opportunity Act
D) National Labor Relations Board
E) Family and Medical Leave Act

Accepted Answer

The Uniformed Services Employment and Reemployment Rights Act (USERRA) requires employers to make jobs available to their workers when they return after fulfilling military duties for up to five years. The other options listed do not address this specific requirement for returning military personnel.

Quiz 12: Establishing a Pay Structure

What is the result of combining more assignments into a single layer, thus giving managers more flexibility in making assignments and awarding pay increases?

Which statement is true about job-based pay structures?

What is a disadvantage of broad bands?

Executive pay has drawn public scrutiny in recent years. Which statement best explains the reason?

What is a disadvantage of a pay structure that rewards employees for winning promotions?

Ryan and Peggy hold the same position at Vineyard Rustica. However, Ryan earns more than Peggy. In the context of pay structure, which statement justifies the organization's decision to pay Ryan more than Peggy?

Ron and Yin are welders working for two different divisions of the same company. Both have the same level of experience. However, Ron earns more than Yin. Under the Fair Labor Standards Act (FLSA) , which statement justifies the organization's decision to pay Ron more than Yin?

What is skill-based pay? What are its advantages and disadvantages?

What is a characteristic of delayering?

Which statement is true about skill-based pay?

At Methods Corp., a maker of premium art pencils, the human resource department is evaluating its pay structure. A compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio of this size?

What is a disadvantage of skill-based pay systems?

How do employees judge the fairness of a pay structure?

Fresher Inc. is a whole-foods distributor. Its human resource department gathers the following data for computing compa-ratios of some positions. Based on the data, for which position is Fresher Inc. most likely underpaying for human resources?

Discuss the three major provisions of the Fair Labor Standards Act (FLSA).

Compa-ratio

What is an adjustment to a pay rate to reflect differences in working conditions or labor markets?

The ________ requires employers to make jobs available to their workers when they return after fulfilling military duties for up to five years.