Question 1

Scenario 9.1
Denton and Denton Inc. (D&D Inc.)is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the USA. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. Which of the following is NOT a benefit of competence-based pay system?
A) greater productivity
B) decreased compensation costs
C) improved staffing flexibility to meet production or service demands
D) reduced effects of absenteeism and turnover

Accepted Answer

Competence-based pay system is a pay structure that links pay to the skills, knowledge, and competencies that an employee acquires and demonstrates on the job. It does not aim to decrease compensation costs, but rather to ensure that employees are rewarded for their skills and contributions to the organization. The benefits of a competence-based pay system include greater productivity, improved staffing flexibility to meet production or service demands, and reduced effects of absenteeism and turnover.

Question 2

Scenario 9.1
Denton and Denton Inc. (D&D Inc.)is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the USA. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. Given that these employees are skilled-based/knowledge workers, which of the following is a more effective way to compensate them?
A) piece rate pay system
B) hourly rate based on task completed
C) salaried employee system
D) competence-based pay system

Accepted Answer

A competence-based pay system would be the most effective way to compensate skilled-based/knowledge workers. This type of system rewards employees based on their skills, knowledge, and abilities rather than just time worked. It would better incentivize and retain the valuable employees at D&D Inc.

Question 3

Desirée is a female receptionist employed by York University in Toronto. John is a male janitor with the same employer. Both jobs are evaluated as having 500 points, yet Desiree is paid less than John. She has decided to legally challenge the employer. Which of the following is relevant in this case?
A) the Peter principle
B) market matching
C) equal pay for work of equal value
D) equal pay for equal work

Accepted Answer

The principle of equal pay for work of equal value is relevant in this case. Even though both jobs have the same point evaluation, if Desirée's job duties and responsibilities are equivalent to John's and her lower pay is not justified by factors such as market rates or seniority, then she has a case for discrimination based on gender.

Question 4

Scenario 9.2
Calendar "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendar "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Calendar "R" Us jobs range from management to administrative, to clerical to production to packing to delivering. Which of the following would be key to evaluating the worth of each job category?
A) avoiding the use of job evaluation to establish wage structure
B) evaluating the job based on market price
C) evaluating the job based on total value delivered to the organization
D) comparing each job with a competitor in the market

Accepted Answer

Evaluating the job based on total value delivered to the organization would be key to determining the worth of each job category, as it takes into account the specific contributions of each position to the company's success. Using market price or competitor comparison may not accurately reflect the unique needs and contributions of Calendar "R" Us. Avoiding job evaluation altogether would not provide a structured and fair approach to compensating employees.

Question 5

Rewarding an employee's past performance is a goal of strategic compensation policy.

Accepted Answer

Rewarding an employee's past performance is a key aspect of strategic compensation policy. It helps to motivate and retain employees by recognizing their contributions and encouraging them to continue working hard. This can also improve job satisfaction and overall organizational performance.

Question 6

Scenario 9.2
Calendar "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendar "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Which of the following is a useful and cost-effective way for Calendar 'R" Us to find information on wage and salary trends in similar industries?
A) develop in-house surveys
B) use surveys done by provincial governments and boards of trade
C) purchase surveys done with global organizations
D) set wages based on ability to pay only

Accepted Answer

Using surveys done by provincial governments and boards of trade would be a useful and cost-effective way for Calendar "R" Us to find information on wage and salary trends in similar industries. These organizations can provide reliable data on compensation practices in the industry, which can help the company establish fair and competitive wages for its employees. Developing in-house surveys or purchasing surveys done by global organizations would be more expensive and time-consuming, and may not provide relevant information for the local industry. Setting wages based on ability to pay only would not be a fair or sustainable practice for the company or its employees.

Question 7

Scenario 9.1
Denton and Denton Inc. (D&D Inc.)is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the USA. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. What type of pay system is D&D Inc. currently using to compensate its employees?
A) broadbanding
B) competence-based
C) red circle rates
D) piece rate

Accepted Answer

D&D Inc. is currently using a broadbanding pay system, which collapses pay ranges for multiple job bands into a few broad pay grades. This is evident from the fact that the pay structure ranges from $20 to $65 per hour, which is likely covering multiple job roles and levels within the organization.

Question 8

Which of the following is the most likely outcome of collapsing many salary grades into a few wide salary bands through broadbanding?
A) reduction of pay levels
B) encouragement of lateral skill building
C) reduction of the number of employees needed
D) the collapse of broadbands

Accepted Answer

When many salary grades are collapsed into a few wide salary bands through broadbanding, employees may be encouraged to build lateral skills, as there may be less opportunity for advancement through traditional hierarchical advancement. This can lead to more cross-functional knowledge and skill-building within the organization. The other options (reduction of pay levels, reduction of the number of employees needed, collapse of broadbands) are not necessarily the most likely outcomes of broadbanding.

Question 9

What is NOT an outcome of wage-rate compression?
A) increased employee performance
B) low employee morale
C) delinquent employee behaviour
D) increased absenteeism

Accepted Answer

Wage-rate compression typically leads to negative outcomes such as low morale, delinquent behavior, and absenteeism, but it does not increase employee performance.

Question 10

Jambrone Foods and CUPE Local 5000 have a collective agreement in place that allows for wages to be paid at more than the minimum wage set by the Employment Standards Act. Which of the following describes this agreement?
A) illegal
B) legal
C) legal but ill-advised
D) acceptable under the Employment Standards Act but illegal under the Canada Labour Code

Accepted Answer

This collective agreement between Jambrone Foods and CUPE Local 5000 to pay wages above the minimum wage set by the Employment Standards Act is legal. Collective agreements are legal documents negotiated by employers and unions to set the terms and conditions of employment. As long as they are not in violation of any laws, they are allowed.

Question 11

Scenario 9.2
Calendar "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendar "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Setting pay levels at Calendar "R" Us can be limited by all EXCEPT which one of the following factors?
A) employee expectations and motivation
B) profitability of the firm
C) productivity of employees
D) economic condition and competition

Accepted Answer

Employee expectations and motivation are not a limiting factor in setting pay levels.

Question 12

Woolite Fabrics is located in Vancouver, British Columbia. Which laws regulate its compensation?
A) federal and international laws
B) municipal and federal laws
C) provincial and federal laws
D) international laws

Accepted Answer

Since Vancouver is located in British Columbia, the laws that regulate Woolite Fabrics' compensation will be governed by the provincial laws of British Columbia and the federal laws of Canada.

Question 13

Which of the following is NOT a potential challenge to competence-based pay?
A) limits by organizations to how much employees can earn despite their competencies
B) reluctance by employees to participate in relevant training
C) the development of appropriate measures of skills and competencies
D) staff flexibility

Accepted Answer

Staff flexibility is not a challenge to competence-based pay. In fact, it can actually be a benefit as it allows employees to develop a broader range of competencies and potentially earn higher pay. The other options (A, B, and C) are potential challenges to implementing and maintaining a competence-based pay system.

Question 14

Which of the following is NOT an idea that organizations may incorporate in an attempt to minimize the problem of wage-rate compression?
A) giving larger increases to more-senior employees
B) emphasizing pay-for-performance
C) providing equity adjustments for employees hardest hit by pay compression
D) linking all employees' pay more tightly to the CPI

Accepted Answer

Linking all employees' pay more tightly to the CPI would not address the issue of wage-rate compression. Instead, it would maintain the existing pay structures and potentially exacerbate the problem by giving the same percentage increase to all employees, regardless of their current pay level. A, B, and C are all strategies that can be used to address wage-rate compression by providing higher pay increases to employees with lower salaries or longer tenure, or adjusting pay to bring it in line with market rates.

Question 15

Scenario 9.2
Calendar "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendar "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Calendar "R" Us wants to develop a set of compensation policies that are internally fair. Which of the following is helpful in making this decision?
A) job evaluation
B) external competition
C) global comparisons of pay
D) market surveys

Accepted Answer

The answer of Scenario 9.2
Calendar "R" Us Ltd. is a...

Question 16

Which legislation is concerned with minimum wage rates and overtime payments?
A) Equal Pay Act
B) Employment Equity Act
C) Employment Standards Act
D) Pay Equity Act

Accepted Answer

The Employment Standards Act is the legislation that sets out minimum wage rates and overtime payments in most Canadian provinces and territories. The Equal Pay Act and Pay Equity Act focus on ensuring that men and women receive equal pay for equal work, while the Employment Equity Act aims to eliminate employment barriers for designated groups.

Question 17

Indirect compensation includes bonuses and commissions.

Accepted Answer

Indirect compensation refers to non-monetary benefits such as health insurance, retirement plans, and paid time off, rather than direct cash payments like bonuses and commissions.

Question 18

How can organizations dodge comparable worth issues?
A) by paying female and male secretaries the same wage
B) by having an employment equity program in place
C) by using one job evaluation system for clerical jobs and another system for other jobs
D) by having a valid performance appraisal system

Accepted Answer

Having an employment equity program in place helps ensure that pay disparities based on gender, race, or other characteristics are identified and addressed. This includes addressing comparable worth issues, which may arise when jobs held predominantly by women are undervalued and underpaid compared to jobs held predominantly by men. Implementing a comprehensive employment equity program can help avoid such issues and create a fair and equitable workplace.

Question 19

Strategic compensation is the compensation of employees in ways that enhance motivation and growth while concurrently aligning their efforts with the goals of the organization.

Accepted Answer

Strategic compensation aims to align employee motivation and growth with the goals of the organization.

Question 20

As the year 2000 approached, many organizations hired "young" and "inexperienced" information technology (IT)specialists to help address the Y2K problem. Many of these new hires were paid high compensation that brought them very close to the compensation earned by experienced IT specialists working with these companies. Which of the following can such a practice lead to?
A) wage inversion
B) pay equity
C) wage-rate compression
D) high turnover across the board

Accepted Answer

This practice can lead to wage-rate compression, which occurs when there is a narrowing or compression of the wage gap between entry-level and experienced workers. This means that the compensation earned by experienced IT specialists may not be much higher than that earned by the new, young and inexperienced IT specialists. This can cause dissatisfaction among experienced workers, who may feel undervalued, and lead to high turnover across the board. However, this practice does not necessarily lead to wage inversion or pay equity.

Quiz 9: Managing Compensation

Rewarding an employee's past performance is a goal of strategic compensation policy.

Which of the following is the most likely outcome of collapsing many salary grades into a few wide salary bands through broadbanding?

What is NOT an outcome of wage-rate compression?

Jambrone Foods and CUPE Local 5000 have a collective agreement in place that allows for wages to be paid at more than the minimum wage set by the Employment Standards Act. Which of the following describes this agreement?

Woolite Fabrics is located in Vancouver, British Columbia. Which laws regulate its compensation?

Which of the following is NOT a potential challenge to competence-based pay?

Which of the following is NOT an idea that organizations may incorporate in an attempt to minimize the problem of wage-rate compression?

Which legislation is concerned with minimum wage rates and overtime payments?

Indirect compensation includes bonuses and commissions.

How can organizations dodge comparable worth issues?

Strategic compensation is the compensation of employees in ways that enhance motivation and growth while concurrently aligning their efforts with the goals of the organization.