Question 1

Which of the following is true about core employees?
A)They are employees whose employment agreements cover only short, specific time periods.
B)They can be contracted and expanded more easily than the contingent workers.
C)They help achieve flexibility and control labour costs.
D)They bring about an increase in the fixed portion of labour costs.
E)They have many varied compensation packages.

Accepted Answer

D

Question 2

A management strategy that gives separate organization units the responsibility to design and administer their own systems is known as:
A)outsourcing
B)centralization
C)decentralization
D)authoritarianism
E)tactical planning

Accepted Answer

Decentralization gives separate organization units the responsibility to design and administer their own systems. Outsourcing involves the hiring of a separate outside company to handle certain functions. Centralization involves having decision-making power concentrated at the top of the organization. Authoritarianism involves strict control by a single leader. Tactical planning involves short-term planning to achieve specific goals.

Question 3

Which of the following depends on performance and is NOT added to employees' base pay?
A)variable pay
B)overtime pay
C)merit pay
D)across-the-board increase
E)provident fund

Accepted Answer

Variable pay is a type of pay that depends on an employee's performance and is not added to their base pay. Overtime pay is a type of extra pay for working additional hours and is not dependent on performance. Merit pay is a type of performance-based pay that is added to an employee's base pay. An across-the-board increase is a type of pay increase given to all employees regardless of their performance. A provident fund is a type of retirement savings plan that is not dependent on performance.

Question 4

Beta Systems decided to outsource some of its operations. Which of the following will be a short-term advantage for the company?
A)increased ability to focus on activities that do not directly contribute to the strategic objectives of the company
B)more control over decisions
C)less risk of information being leaked to rivals
D)cost savings
E)more responsiveness to employee-manager problems

Accepted Answer

Outsourcing can lead to cost savings in the short-term by reducing the need for in-house staff and resources.

Question 5

Range minimums and maximums reflect:
A)the value placed on work
B)government regulations of wages
C)the market value of the output produced
D)market fluctuations in wage rates
E)the market value of an employee's skills and abilities

Accepted Answer

The answer of Range minimums and maximums reflect:
A)the value placed...

Question 6

To help ensure that different managers grant consistent increases to employees with similar performance ratings and in the same position in their ranges one should utilize:
A)job security measures
B)outsourcing techniques
C)ad hoc reshuffling
D)merit grids
E)management by objectives

Accepted Answer

Merit grids are designed to provide a framework for consistent and objective decision-making when it comes to salary increases. By using a merit grid, managers can see clearly what amount of increase is appropriate for employees with similar performance ratings in the same position, based on their salary range. This helps to ensure that all employees are treated fairly and consistently.

Question 7

The compa-ratio reflects the relationship of:
A)red circle rates to green circle rates
B)average rates actually paid to the midpoint of the range
C)company profits of the present year to those of the previous year
D)rates paid for satisfactory performance to rates paid for exceptional performance
E)range maximums to range minimums

Accepted Answer

The compa-ratio compares the average rate that is actually paid to employees with the midpoint of the salary range for that position. A compa-ratio of 1 indicates that an employee is paid at the exact midpoint of the salary range for their position. A compa-ratio greater than 1 indicates that an employee is paid above the midpoint, while a compa-ratio less than 1 indicates that an employee is paid below the midpoint. Therefore, the most accurate choice is B.

Question 8

Which of the following is an advantage of outsourcing?
A)It ensures short-term cost savings to the business.
B)It enables more control over decisions that are often critical to all employees.
C)It brings about greater responsiveness to unique and specific employee problems.
D)It reshapes the compensation function to make it less client focused and more promotion focused.
E)It results in the preservation of information from rivals and competitors.

Accepted Answer

Outsourcing allows businesses to reduce costs in the short-term due to lower labor, operational, and overhead expenses in foreign countries with cheaper labor markets.

Question 9

A compa-ratio greater than 1.00 typically occurs because:
A)majority of employees are new hires
B)turnover is high
C)promotion rates are low
D)most workers are high in seniority
E)majority of workers are poor performers

Accepted Answer

The answer of A compa-ratio greater than 1.00 typically occurs...

Question 10

An organization adopts a marketing approach to let its employees know the benefits of its overall pay policies but not specific details about increases or limits of the policies. Which of the six steps in the communication compensation process does the organization's action reflect?
A)collecting information from executives, managers, employees concerning their understanding of the existing compensation programs
B)evaluating the compensation program
C)developing a communication strategy that will accomplish the original objectives
D)defining the objectives of the compensation program
E)determining the most effective media in light of the message and the audience

Accepted Answer

The organization is developing a communication strategy that will accomplish the original objectives. The objective is to let employees know the benefits of the pay policies without disclosing specific details. This falls under the third step in the communication compensation process.

Question 11

The most common approach to managing labour costs during a recession involves:
A)using a top-down budgeting
B)reducing employees' variable pay
C)reducing the workforce
D)hiring only core employees
E)using competitive market rates

Accepted Answer

The most common approach to managing labor costs during a recession is to reduce the workforce. This is because labor costs are typically the largest expense for a company, and reducing the number of employees is an effective way to cut costs quickly. While other options, such as reducing variable pay or using competitive market rates, may also be considered, reducing the workforce is often the most straightforward and impactful solution during difficult economic times. Top-down budgeting and hiring only core employees may help control costs in the long term, but they may not provide the immediate relief needed during a recession.

Question 12

A possible side effect of a decentralized pay structure is that:
A)it may be difficult to transfer employees from one business unit to another
B)there is decreased potential for pay discrimination
C)there is decreased opportunity for the inconsistent treatment of employees
D)pushing responsibilities and expenses close to the units, managers, and employees affected by them may cause doubt that decisions are business related
E)organizations require larger compensation staffs

Accepted Answer

The answer of A possible side effect of a decentralized...

Question 13

A group of employees with whom a strong and long-term relationship is desired is:
A)temporary workers
B)part-time employees
C)contract employees
D)core employees
E)contingent workers

Accepted Answer

Core employees are those who are long-term, highly valued and have a strong relationship with the organization. They are dependable and full-time workers who have vested interests in the organization's success. Maintaining a strong relationship with core employees is crucial for the organization's growth and stability.

Question 14

Employers achieve flexibility and control labour costs by:
A)hiring only full-time employees
B)expanding the permanent workforce
C)forming strong and long-term relationships with all employees
D)expanding or contracting the contingent workforce
E)basing employee payment decisions on manager preferences

Accepted Answer

Expanding or contracting the contingent workforce allows employers to have flexibility in their staffing levels and control labour costs, as they can hire temporary or contract workers as needed without committing to full-time employees. This also allows them to easily adjust to changes in demand and avoid overstaffing. Hiring only full-time employees or expanding the permanent workforce can be more costly and limit flexibility. Forming strong and long-term relationships with employees is important, but may not necessarily achieve labour cost control or flexibility. Basing employee payment decisions on manager preferences is not a viable option and can lead to wage discrimination.

Question 15

Which of the following processes is a change agent in restructuring compensation policies?
A)reemployment
B)reverse engineering
C)broadbanding
D)reengineering
E)benchmarking

Accepted Answer

The answer of Which of the following processes is a...

Question 16

Which of the following factors helps in the reduction of labour costs?
A)Paying more benefits and less cash
B)Paying the same wages to fewer employees
C)Making early retirement less attractive
D)Increasing the number of employees
E)Expanding the core workforce

Accepted Answer

Paying the same wages to fewer employees helps in the reduction of labour costs as there are fewer salaries to pay.

Question 17

The budgeting approach that requires senior management of each unit to estimate the pay increase for the entire organization unit is known as the:
A)bottom-up budgeting approach
B)peer budgeting approach
C)top-down budgeting approach
D)employee-participation budgeting approach
E)decentralized budgeting approach

Accepted Answer

The top-down budgeting approach involves senior management setting the overall budget for the organization and then delegating portions of the budget to lower level units. This approach suggests that senior management has the best understanding of organization-wide priorities and financial constraints. The other options do not involve senior management setting the budget.

Question 18

Which of the following statements is true about analyzing the return of investments of pay decisions?
A)It focuses on increasing the turnover of top employees.
B)It restricts thinking to treating compensation as only an expense.
C)It is a practice followed by all organizations regularly.
D)It encourages looking at compensation as an investment as well as an expense.
E)It increases the focus of employees as individuals and not as human capital.

Accepted Answer

Analyzing the return of investments of pay decisions encourages looking at compensation as an investment as well as an expense, which means that the organization can evaluate the effectiveness of the compensation strategy and determine the ROI (return on investment) of the compensation and benefits provided to employees. This helps in making informed decisions about pay decisions and helps to align compensation with organizational goals.

Question 19

Which of the following factors influences decisions made using the top-down approach?
A)providing consultation to managers
B)reviewing and revising forecasts and budgets with management
C)monitoring budget versus actual increases
D)analyzing the impact of the cost of living increases on wages
E)analyzing forecasts

Accepted Answer

The answer of Which of the following factors influences decisions...

Question 20

Which of the following is the first step in the six-stage process of compensation communication?
A)evaluating the compensation program
B)defining the objectives of the communication program
C)developing a communicating strategy for the compensation program
D)collecting information from executives, managers, and employees concerning their understanding of existing compensation programs
E)determining the most effective media with which to communicate compensation program

Accepted Answer

The first step in the six-stage process of compensation communication is to define the objectives of the communication program. This step sets the foundation for the communication program and ensures that the goals and objectives are aligned with the overall compensation strategy of the organization.

Quiz 13: Compensation Budgets and Administration

Which of the following is true about core employees?

A management strategy that gives separate organization units the responsibility to design and administer their own systems is known as:

Which of the following depends on performance and is NOT added to employees' base pay?

Beta Systems decided to outsource some of its operations. Which of the following will be a short-term advantage for the company?

Range minimums and maximums reflect:

To help ensure that different managers grant consistent increases to employees with similar performance ratings and in the same position in their ranges one should utilize:

The compa-ratio reflects the relationship of:

Which of the following is an advantage of outsourcing?

A compa-ratio greater than 1.00 typically occurs because:

An organization adopts a marketing approach to let its employees know the benefits of its overall pay policies but not specific details about increases or limits of the policies. Which of the six steps in the communication compensation process does the organization's action reflect?

The most common approach to managing labour costs during a recession involves:

A possible side effect of a decentralized pay structure is that:

A group of employees with whom a strong and long-term relationship is desired is:

Employers achieve flexibility and control labour costs by:

Which of the following processes is a change agent in restructuring compensation policies?

Which of the following factors helps in the reduction of labour costs?

The budgeting approach that requires senior management of each unit to estimate the pay increase for the entire organization unit is known as the:

Which of the following statements is true about analyzing the return of investments of pay decisions?

Which of the following factors influences decisions made using the top-down approach?

Which of the following is the first step in the six-stage process of compensation communication?