Question 1

Which of the following is an example of mandatory indirect pay?
A) major health benefits such as medical coverage
B) registered retirement savings plans (RRSPs) benefits
C) employee services
D) workers' compensation benefits

Accepted Answer

The answer of Which of the following is an example...

Question 2

Your executive vice president has asked you to explain the basic notion of "skill blocks" within the context of skill-based pay systems design. What two variables would you emphasize?
A) different skills and depth of each skill
B) skill certification and criterion
C) key competencies and training requirements
D) broad banding and market value

Accepted Answer

Skill blocks refer to the grouping of different skills that are required for a particular position or job. The two variables emphasized within the context of skill-based pay systems design would be the different skills required for the job and the depth of each skill needed. This helps to determine the appropriate level of compensation for an employee based on their skill level and proficiency.

Question 3

Which of the following is the most important potential disadvantage of performance pay?
A) It increases the need for layoffs in poor economic conditions.
B) It does not fit well with high-involvement management.
C) It is mainly effective in small companies.
D) It does not pay off for some employers.

Accepted Answer

Performance pay may not pay off for employers if it is not effectively designed and implemented. If the criteria for measuring performance are not clearly defined or employees do not perceive the process as fair, it may not motivate them to improve their performance or may lead to frustration and decrease overall morale. This can ultimately result in a waste of resources and budget allocated for performance pay.

Question 4

A flexible benefits system with cost sharing on individual benefits is a good fit for which type of firm?
A) human relations firm
B) high-involvement firm
C) classical firm
D) firm with no managerial strategy

Accepted Answer

A flexible benefits system with cost sharing on individual benefits is a good fit for a high-involvement firm where employees have a say in the decisions affecting their benefits. High-involvement firms focus on creating a collaborative work environment and actively involve their employees in decision-making processes. By offering a flexible benefits system with cost sharing, employees have the ability to choose the benefits that best suit their needs while also sharing in the costs associated with those benefits. This creates a sense of ownership and investment in the benefits program, which aligns with the values of a high-involvement firm.

Question 5

As a general rule, organizations using a high-involvement managerial strategy use indirect pay as a way to encourage which of the following relationships?
A) employer-community relationship
B) employee-task relationship
C) employer-employee relationship
D) employer-union relationship

Accepted Answer

High-involvement managerial strategy emphasizes the involvement of employees in decision-making and problem-solving processes. Indirect pay, such as bonuses and profit-sharing, is used to encourage a positive employer-employee relationship, which can lead to increased employee motivation, commitment, and loyalty. This ultimately leads to better performance and overall success of the organization. Indirect pay does not necessarily have a direct impact on any other relationships mentioned in the choices.

Question 6

As a human resource specialist, you have been asked by your organization to provide recommendations on which base pay method to use, given that the human resources department has very limited human capital and financial resources. Which of the following methods would be on top of your list of recommendations?
A) job evaluation
B) person-based pay
C) competency-based pay
D) market pricing

Accepted Answer

Market pricing is the most cost-effective base pay method as it involves analyzing the prevailing wage rates in the market for similar jobs and adjusting the pay accordingly. It also reduces the need for extensive job analysis and evaluation and can be easily executed with limited resources. Person-based and competency-based pay methods require additional resources for assessments and evaluations, while job evaluation is a time-consuming and complex process that may require expertise or additional training.

Question 7

Which statement best describes the difference between pay for knowledge systems (PKS) and job-based pay systems?
A) Pay for knowledge systems involve basing pay on the capabilities of individuals, and job-based pay is based on the characteristics of the job.
B) Pay for knowledge systems are applied to managerial employees, and job-based pay is applied to operational-level employees.
C) Pay for knowledge systems are more widely used by Canadian firms than job-based pay systems,
D) Pay for knowledge systems involve low training costs and are easier to administer than job-based pay systems,

Accepted Answer

Pay for knowledge systems determine pay based on an individual's knowledge, skills, and abilities. Job-based pay, on the other hand, is determined by the job's responsibilities, duties, and required qualifications. Therefore, choice A best describes the difference between the two pay systems. Choices B, C, and D are not accurate descriptions of the difference between PKS and job-based pay.

Question 8

Which of the following is NOT a key issue in competency-based pay systems?
A) identifying competencies that demonstrably affect performance
B) devising methods to measure achievement of each competency
C) providing learning opportunities
D) developing the merit pay grid

Accepted Answer

Developing the merit pay grid is not a key issue in competency-based pay systems. The merit pay grid is related to traditional pay systems where the focus is on rewarding employees based on their job title or position, rather than their competencies. In a competency-based pay system, the focus is on identifying and rewarding employees based on the specific skills and knowledge they possess, rather than their job title or position. The other options listed (identifying competencies, measuring achievement of competencies, and providing learning opportunities) are key issues in competency-based pay systems.

Question 9

Which of the following variables offers the most likely explanation for the decrease in popularity of "defined benefit plans" by employers in Canada?
A) They provided poor returns on pension plan investments, and longevity of employees increased.
B) Defined benefit plans are simply not popular among employees.
C) They help organizations plan more accurately; hence, they make it easier to fund these liabilities.
D) Employers believe defined contribution plans are much more unpredictable from a funding perspective.

Accepted Answer

Poor returns on pension plan investments, coupled with increased longevity of employees, likely resulted in higher costs for employers to maintain defined benefit plans. This would make defined contribution plans a more attractive option because they shift the investment risk onto the employees.

Question 10

Which of the following refers to job evaluation?
A) determining how well a job is performed
B) surveying the market
C) ranking all jobs according to their value to the firm
D) establishing the skill level of each employee

Accepted Answer

Job evaluation is the process of ranking all jobs within a company according to their value to the firm, based on factors such as required skills, responsibilities, and working conditions. This process helps to establish fair compensation levels and ensure that employees are paid according to the relative value of their jobs.

Question 11

Which of the following statements relating to the notion of pay for knowledge is true?
A) There is little empirical evidence supporting the validity of competency-based pay models.
B) Competency-based pay models are usually associated with operational level roles.
C) Pay for knowledge requires very detailed job descriptions for every role in an organization.
D) Pay for knowledge fits well with classical management styles, requiring employee flexibility in skill sets.

Accepted Answer

Competency-based pay models, which are a form of pay for knowledge, have limited empirical evidence supporting their effectiveness, as they are relatively newer and less studied compared to traditional pay models.

Question 12

As a consultant, you have been asked by an organization to provide a menu of indirect benefits that the employer does not have to provide by law. Which of the following would you NOT include in your menu?
A) employment insurance
B) company pension plan
C) psychological counseling
D) supplemental medical coverage

Accepted Answer

Employment insurance is typically a legally required benefit that employers must provide in many countries, including Canada. Therefore, it would not be included on a menu of indirect benefits the employer does not have to provide by law. The other options are common examples of indirect benefits that employers may offer, but are not legally required to provide.

Question 13

Which methods are used to establish base pay?
A) market pricing, job evaluation, and pay for knowledge
B) job analysis, competency testing, and demographics
C) tenure, job preview, and environmental analysis
D) knowledge, education, and market pricing

Accepted Answer

Market pricing involves comparing the base pay of similar jobs in the external market, job evaluation is the process of determining the relative worth of jobs within an organization, and pay for knowledge is a system where employees are paid based on their level of knowledge and skills. These are all commonly used methods for establishing base pay in organizations. Option B and C are not valid methods for establishing base pay. Option D includes market pricing but omits other important methods such as job evaluation and pay for knowledge.

Question 14

Peter, a manager at a local manufacturing firm, is perplexed that employees tend to respond to management's request by evoking the dreaded "That is not on my job description," or "That is above my pay grade." From a compensating perspective, which base pay method is normally associated with the aforementioned responses?
A) market pricing
B) job evaluation
C) competency-based pay
D) skill-based pay

Accepted Answer

The responses of "That is not on my job description" or "That is above my pay grade" suggest that the employees are using a job evaluation-based pay method. This method typically involves determining pay rates based on the duties and responsibilities outlined in an employee's job description. If a task falls outside of that scope, the employee may feel that they are not being fairly compensated for it.

Question 15

Which pay type usually makes up a small proportion of total compensation, and may not be used at all by some employers?
A) mandatory benefits
B) wages
C) merit pay
D) salaries

Accepted Answer

Merit pay is a type of pay that is usually based on an employee's individual performance or contribution to the organization, and therefore only a small proportion of total compensation. Additionally, some employers may not use merit pay at all, making it less common than other types of pay such as mandatory benefits, wages, and salaries.

Question 16

Which of the following base pay methods best supports behaviours needed by high-involvement firms?
A) market pricing
B) pay for knowledge
C) job evaluation
D) broad banding

Accepted Answer

Pay for knowledge is the best option for high-involvement firms as it rewards employees for acquiring and utilizing knowledge to improve performance and innovation. This method encourages continuous learning and skill development, which is essential in high-involvement firms where employees are expected to be proactive and contribute to the company's success. Market pricing, job evaluation, and broad banding are not as effective in promoting the type of behaviours needed in high-involvement firms.

Question 17

Your organization has come to realize that roles occupied by women seem to be concentrated in the lower-wage areas of your organization. Which of the base pay methods is your organization most likely using?
A) job evaluation
B) competency-based
C) market pricing
D) skill-based

Accepted Answer

Market pricing is a base pay method that relies on external market data to determine salaries. This method is often used when an organization has a large number of employees in similar roles, and it can help to ensure that employees are paid fairly in relation to the market. However, market pricing can also lead to pay disparities between men and women, as women are often paid less than men for the same work.

Question 18

As the owner of a large hotel, you expect your employees to be flexible, learn a variety of skills, and shift around from one job to another as needed. Which of the following plans will best fit your needs?
A) competency-based pay
B) skill-based pay
C) team-based pay
D) piece rates

Accepted Answer

Skill-based pay rewards employees for developing a broad range of skills and being able to perform multiple job roles. This aligns with the expectations of the owner of a large hotel who requires flexibility and the ability for employees to shift around from one job to another as needed. Competency-based pay focuses on employees demonstrating specific skills or competencies related to a single job role, which may not align with the owner's expectations. Team-based pay and piece rates may not incentivize employees to develop a broad range of skills or be flexible in their job roles.

Question 19

Your company offers you pay for time not worked, disability benefits, supplemental medical coverage, and a full range of free employee services. These items refer to which component of the compensation mix?
A) direct pay
B) base pay
C) indirect pay
D) performance pay

Accepted Answer

These items are indirect pay or benefits, which refer to non-monetary compensation provided to employees in addition to their base pay.

Question 20

Which of the following best explains why medical and dental coverage can be purchased more cheaply by the employer than the employee?
A) indexation
B) economies of scale
C) utility
D) dividends

Accepted Answer

Employers are able to purchase medical and dental coverage more cheaply due to economies of scale - they are able to negotiate better rates with insurance companies because they are buying coverage for a larger group of people. This results in lower costs for each individual employee.

Quiz 4: Components of Compensation Strategy

Which of the following is an example of mandatory indirect pay?

Your executive vice president has asked you to explain the basic notion of "skill blocks" within the context of skill-based pay systems design. What two variables would you emphasize?

Which of the following is the most important potential disadvantage of performance pay?

A flexible benefits system with cost sharing on individual benefits is a good fit for which type of firm?

As a general rule, organizations using a high-involvement managerial strategy use indirect pay as a way to encourage which of the following relationships?

Which statement best describes the difference between pay for knowledge systems (PKS) and job-based pay systems?

Which of the following is NOT a key issue in competency-based pay systems?

Which of the following variables offers the most likely explanation for the decrease in popularity of "defined benefit plans" by employers in Canada?

Which of the following refers to job evaluation?

Which of the following statements relating to the notion of pay for knowledge is true?

As a consultant, you have been asked by an organization to provide a menu of indirect benefits that the employer does not have to provide by law. Which of the following would you NOT include in your menu?

Which methods are used to establish base pay?

Which pay type usually makes up a small proportion of total compensation, and may not be used at all by some employers?

Which of the following base pay methods best supports behaviours needed by high-involvement firms?

Your organization has come to realize that roles occupied by women seem to be concentrated in the lower-wage areas of your organization. Which of the base pay methods is your organization most likely using?

As the owner of a large hotel, you expect your employees to be flexible, learn a variety of skills, and shift around from one job to another as needed. Which of the following plans will best fit your needs?

Your company offers you pay for time not worked, disability benefits, supplemental medical coverage, and a full range of free employee services. These items refer to which component of the compensation mix?

Which of the following best explains why medical and dental coverage can be purchased more cheaply by the employer than the employee?