Deck 9: Compensation & Benefits

Question 1

The fundamental purpose of compensation is to provide an adequate reward system for employees so that they feel valued.

Answer 1

True

Question 2

_____ refers to a company indicating to employees the importance of certain behaviors by paying for such behaviors.

A) Supporting
B) Suggesting
C) Spiraling
D) Benchmarking
E) Signaling

Answer 2

E

Question 3

A leading placement consultancy firm gathers and presents information about average compensation for attorneys, including data on specific geographic regions, specializations, years of experience, and sizes of firms to its clients.Therefore, the placement consultancy firm uses a _____ to gather information.

A) job preview
B) pay survey
C) maturity curve
D) point system
E) classification system

Answer 3

B

Question 4

Individuals who work hard and perform at a high levelshould be compensated at the same level as individualswho do just enough to get by.

Question 5

Which of the following is a disadvantage of using an above-market compensation rate?

A) It may encourage voluntary turnover.
B) It is less costly for an organization.
C) It creates a culture of competitive superiority.
D) It may not attract the highest-quality employees.
E) It encourages a sense of entitlement among employees.

Question 6

Which of the following behaviors of an employee is most likely the outcome of perceived internal inequity?

A) Lower turnover
B) Agency problem
C) Pay inversion
D) Price fixing
E) Low morale

Question 7

Open pay systems promote equity and motivation in organizations.

Question 8

George, a supervisor in the housekeeping department of a luxury hotel, compares his salary with supervisors in other departments.He finds that his base pay is about 25 percent less than the other supervisors.This scenario illustrates the concept of _____.

A) internal equity
B) job evaluation
C) agency problems
D) external equity
E) workers' compensation

Question 9

Employee assistance plans are designed to help employees with chronic drug or alcohol problems.

Question 10

Benefits offered by companies seldom impact the job satisfaction of employees.

Question 11

A laborer who is paid in terms of the hours worked per week most likely to receive a _____.

A) salary
B) wage
C) remittance
D) quota
E) tariff

Question 12

Job-classification systems require clear definitionsof classes and benchmark jobs for each class.

Question 13

External equity involves comparing compensation with employees working in similar jobs in other companies.

Question 14

Which of the following is true of a maturity curve?

A) It is used when rewarding employees for acquiring new skills.
B) It is used to identify benchmarks or key jobs in an organization.
C) It is used to determine the relativevalue or worth of a job toan organization so thatindividuals who performthat job can be compensatedadequately and appropriately.
D) It is used when collecting information on compensation paidto employees by otheremployers in a particulargeographic area, industry, oroccupational group.
E) It is used when the annual increase in payvaries based on the actual number of years of service aperson has accumulated.

Question 15

Information used to assess external equity is mostly collected through _____.

A) pay surveys
B) a point system
C) a classification system
D) job evaluation
E) maturity curves

Question 16

Organizations are most likely to pay below-market compensation rates in an area with:

A) high unemployment.
B) high costs of living.
C) high wage levels.
D) high labor costs.
E) highly skilled workers.

Question 17

Executive compensation is usually based on salary and incentive pay.

Question 18

The point system utilizes compensable factors to evaluate the importance of jobs.

Question 19

Total compensation refers to _____.

A) compensation paid to individuals for learning specific material that is useful to an organization in future
B) ​insurance thatcovers individuals who suffer ajob-related illness or accident
C) the overall value of financial compensation plus the value ofadditional benefits that an organization provides
D) the hourly compensation paidto operating employees
E) income paid to anindividual on the basis ofperformance

Question 20

An individual must have worked a minimum number of weeks to be covered by unemployment insurance.

Question 21

Gordon finds that he is being paid lesser than the new employees in his company despite working in the company for three years.Therefore, Gordon is faced with a _____.

A) glass wall
B) pay compression
C) passive income
D) pay inversion
E) glass ceiling

Question 22

Which of the following is true of the factors influencing benefits offered by organizations?

A) The need to remain competitive with other firms in an industry is a major force for reduction in the cost of benefits programs.
B) Job satisfaction and employee turnover are not influenced by the benefits offered by an organization.
C) Benefits programs seldom attract better applicants.
D) Social, cultural, and political forces have little role in promoting the introduction of new and broader benefits programs.
E) Most experts believe thatorganizationswilling to spend more money on total compensationare able to attract better-qualified people.

Question 23

Which of the following would NOT be considered an argument in favor of knowledge-based pay?

A) Employees focus on growth and the accumulation of new knowledge.
B) Organizations become flexible to changes in their operating environments.
C) Organizations will develop a more knowledgeable workforce.
D) Assessing what a person knows is much easier than assessing what the person does.
E) Employees are paid for what they are worth to a company.

Question 24

Which of the following job evaluation methods assesses jobs against a standard of key points?

A) The point system
B) The factor-comparison method
C) The rating traits method
D) The classification system
E) The paired-comparison method

Question 25

_____ isfunded through employee and employertaxes that are withheld on a payrollbasis.

A) Unemployment insurance
B) Social Security
C) Workers' compensation
D) Medical insurance
E) Paid time off

Question 26

Which of the following is NOT a likely outcome of paying below-market rates?

A) It may encourage voluntary turnover.
B) It is less costly for an organization.
C) It may create a culture of competitive superiority.
D) It may not attract high quality employees.
E) It may lead to feelings of resentment among employees.

Question 27

A law firm performs a job evaluation by organizing jobs into sets called grades.Once the gradeshave been determined, a job evaluator writes definitionsand descriptions of each job type that serve as a standard around which thecompensation system for employees is built.Which of the following jobevaluationmethods is the law firm using?

A) Rating traits
B) Classification system
C) Regression-based system
D) Factor-comparison method
E) Point system

Question 28

Which of the following is an example of a life-cycle benefit plan offered by employers?

A) Helping employees cope with chronic drug and alcohol problems
B) Providing child care facilities at the work place
C) Providing fitness and nutrition consultation
D) Providing medical insurance for employees' families
E) Helping employees deal with domestic problems

Question 29

An advantage of the _____ as a job evaluation method is that it provides specific standards forcompensation and can easily accommodate changes inthe value of various individual jobs in an organization.

A) graphic rating scale
B) classification system
C) point system
D) factor-comparison method
E) paired-comparison method

Question 30

Pay compression most likely to develop when:

A) employee skill levels increase faster than managerial skill levels
B) the market rate for starting salaries increases faster than organizations can give raises to existing employees
C) an organization's internal resources are over-utilized so that new employees need not be hired
D) the external market changes sorapidly that new employeesare actually paid more thanexperienced employees
E) existing employees earn more than new entrants in an organization

Question 31

While performing a job evaluation for a nursing home, Brad, a consultant, compares two jobs to a benchmark job.He finds that the job of nurses' aides required a high level of physical effort, a moderate level of responsibility, and a low level of skill.In contrast, the job of an occupational therapist has a low level of physical effort, but high levels of responsibility and skill, which results in occupational therapists being paid more.Which of the following job evaluation techniques is Brad using?

A) The point system
B) The classification system
C) The rating traits method
D) The paired-comparison method
E) The factor-comparison method

Question 32

The _____is a jobevaluation technique that requires managersto quantify, in objectiveterms, the value of the variouselements of specific jobs.

A) rating traits method
B) classification system
C) factor-comparison method
D) point system
E) graphic rating scale

Question 33

Which of the following is the first step in the factor-comparison method for job evaluation?

A) The comparison factors to be used are selected anddefined.
B) Benchmark or key jobs in the organization are identified.
C) A job-comparison chart is developed to display thebenchmark jobs and the monetary values that each jobreceived for each factor.
D) The benchmark jobs chosen for evaluation are grouped into grades.
E) Jobs are ranked at a level of importance to organizations.

Question 34

Which mandated type of insurance covers individuals who suffer a job-related illness or accident?

A) Unemployment insurance
B) Social Security
C) Workers' compensation
D) Health insurance
E) Cafeteria style benefits

Question 35

Which of the following is NOT a nonmandated benefit?

A) Paid time off
B) Workers' compensation
C) Noncontributoryplan
D) Defined benefit plan
E) Defined contribution plan

Question 36

Which of the following is true of executive compensation?

A) Incentives for executives are normally in the form of bonuses that can exceed their base pay by some multiple.
B) The selection and appraisal of top executives can be accomplished using the same methods as used for other employees.
C) The share in the profits of corporations received by executives is based on the number of years they spend in their organizations.
D) Bonuses are mostly dependent on theperceived performance of an executive.
E) Most senior executives receive their compensation only in the form of a base pay.

Question 37

Which of the following is NOT a mandated benefit?

A) Workers' compensation
B) Social security
C) Unemployment insurance
D) Private pension plan
E) Old age survivors and disability insurance program

Question 38

_____ is mostlyconcerned with establishing internal pay equity.

A) Job analysis
B) Performance management
C) Job evaluation
D) Pay inversion
E) Pay compression

Question 39

An automobile manufacturing company arranges yoga session every week for its employees.Which of the following benefits programs is the company implementing?

A) Workers' compensation
B) Cafeteria-style benefits programs
C) Wellness programs
D) Employee assistance plans
E) Affordable healthcare

Question 40

Which of the following is true of cafeteria-style benefits plans offered by organizations?

A) They focusonkeeping employees frombecoming sick rather thansimply paying expenseswhen they do become sick.
B) Theytypically take the form of referralsfor employees with a disabled parent or one who needsconstant care.
C) They give employees the option to choose the benefits offered in any combination they wish.
D) They are targetedat differentstages in an employee's life.
E) Theyare prearranged plansadministered byorganizations that provide income to employees at theirretirement.

Question 41

What is pay compression? Discuss the possible consequences of pay compression.

Question 42

Compare employee wellness programs and employee assistance plans.

Question 43

Discuss the various factors that may influence an organization's compensation strategy.

Question 44

Discuss the concept of job evaluation, including the most common methods of job evaluation used by organizations.

Question 45

Scenario 9.1
Colette University, an institute of higher learning that educates confectionery chefs, offers a very attractive benefits package.Costs associated with the benefits are about double those of rival institutions.However, the university's administrators feel thatextensive benefits attract the most talented faculty and staff in the world.Due to recent societal trends in fitness and health, Colette University has experienced a downturn in its funding support from global confectionery corporations seeing lower profits.The university's budget is adversely impacted.Joy, the human resource manager of the university, has been asked to find ways to reduce expenditures on benefits so that important university programs do not suffer.
Refer to Scenario 9.1.Joy is considering to implement a benefits plan in which employees of the university will be asked to choose benefits that best suit their individual needs.Which of the following benefits plans is Joe planning to implement?

A) Cafeteria-style benefits plans
B) Executive compensation
C) Defined benefit plans
D) Private pension plans
E) Wellness programs

Question 46

Scenario 9.1
Colette University, an institute of higher learning that educates confectionery chefs, offers a very attractive benefits package.Costs associated with the benefits are about double those of rival institutions.However, the university's administrators feel thatextensive benefits attract the most talented faculty and staff in the world.Due to recent societal trends in fitness and health, Colette University has experienced a downturn in its funding support from global confectionery corporations seeing lower profits.The university's budget is adversely impacted.Joy, the human resource manager of the university, has been asked to find ways to reduce expenditures on benefits so that important university programs do not suffer.
Refer to Scenario 9.1.The administrators of Colette Universityjustify the high costs of its benefits programs.Which of the following theories supports their claim?

A) The equity theory
B) The efficiency wage theory
C) The motivational theory
D) The expectancy theory
E) The goal-setting theory

Question 47

Scenario 9.1
Colette University, an institute of higher learning that educates confectionery chefs, offers a very attractive benefits package.Costs associated with the benefits are about double those of rival institutions.However, the university's administrators feel thatextensive benefits attract the most talented faculty and staff in the world.Due to recent societal trends in fitness and health, Colette University has experienced a downturn in its funding support from global confectionery corporations seeing lower profits.The university's budget is adversely impacted.Joy, the human resource manager of the university, has been asked to find ways to reduce expenditures on benefits so that important university programs do not suffer.
Refer to Scenario 9.1.Regardless of the reductions in benefits due to budget constraints, Joy feels strongly that Colette Universityshould continue to provide help for the faculty and support staff to cope with drug and alcohol problems.According to Joy, which of the following benefits programs should the university continue to provide to its employees?

A) Employee assistance plans
B) Wellness programs
C) Workers' compensation
D) Defined contribution plans
E) Social Security

Question 48

Scenario 9.1
Colette University, an institute of higher learning that educates confectionery chefs, offers a very attractive benefits package.Costs associated with the benefits are about double those of rival institutions.However, the university's administrators feel thatextensive benefits attract the most talented faculty and staff in the world.Due to recent societal trends in fitness and health, Colette University has experienced a downturn in its funding support from global confectionery corporations seeing lower profits.The university's budget is adversely impacted.Joy, the human resource manager of the university, has been asked to find ways to reduce expenditures on benefits so that important university programs do not suffer.
Refer to Scenario 9.1.Professor Nathan, a senior faculty in the university accidentally injures himself during a demonstration class.He will therefore be away from work and recuperating for three to six months.Which of the following benefits is the university legally obliged to provide Professor Nathan because of the accident?

A) Unemployment insurance
B) Cafeteria-style benefits
C) Social Security
D) Life-cycle benefits
E) Workers' compensation

Question 49

Scenario 9.1
Colette University, an institute of higher learning that educates confectionery chefs, offers a very attractive benefits package.Costs associated with the benefits are about double those of rival institutions.However, the university's administrators feel thatextensive benefits attract the most talented faculty and staff in the world.Due to recent societal trends in fitness and health, Colette University has experienced a downturn in its funding support from global confectionery corporations seeing lower profits.The university's budget is adversely impacted.Joy, the human resource manager of the university, has been asked to find ways to reduce expenditures on benefits so that important university programs do not suffer.
Refer to Scenario 9.1.Which of the following is a benefit that Joy may NOT drop from Colette's benefits package because of legal obligations?

A) Health insurance
B) Employee assistance programs
C) Unemployment insurance
D) Life insurance
E) Vacation pay

Question 50

What is a pay survey? What information is necessary to conduct a pay survey? How can pay surveys be used by organizations and employees?