Deck 9: Managing Compensation

Question 1

In a unionized environment, how is pay for employees in the bargaining unit normally determined?

A) through escalator clauses
B) through collective bargaining
C) through pay equity
D) through market evaluations with other all unions

Answer 1

B

Question 2

Some organizations can choose a strategy to pay higher than market wages and salaries. Which of the following will this NOT help them do?

A) be more selective in their employee hiring
B) reduce training costs
C) retain valuable employees
D) develop more advanced performance appraisals

Answer 2

D

Question 3

The term pay-for-performance can encompass all of the following EXCEPT which one?

A) merit-based pay
B) base salary
C) bonuses
D) gainsharing programs

Answer 3

B

Question 4

Which of the following best describes the pay-for-performance?

A) It ties compensation to employee effort and performance.
B) It is easy to implement and measure.
C) It ties rewards to employee attitudes.
D) It usually results in negligible increases in output.

Question 5

Which of the following clauses are found in some labour agreements that periodically adjust compensation rates to reflect increases in cost of living?

A) maintenance clauses
B) escalator clauses
C) roll-up clauses
D) guarantee clauses

Question 6

Assume Microsoft wants to link its overall organizational strategy to its wage and benefit policies in the strategic plan. How can the company best do this?

A) through the development of better performance standards
B) through following federal strategic planning legislation
C) through adhering to Harvard University's Professor Porter model
D) through formalized compensation goals

Question 7

York University has developed a merit-based pay system for its professors, in addition to other forms of pay. Which of the following terms refers to this type of merit-based pay?

A) value-added compensation
B) pay-for-performance
C) pay equity
D) indirect compensation

Question 8

Both Sam and Samantha work as cashiers at Modelo Hot Dogs. They do work of equal value to the firm; yet, Sam receives less pay than Samantha. Sam is not happy because he perceives the system as being unfair to him. Which of the following theories can you use to explain Sam's perceptions?

A) reverse discrimination theory
B) pay equity theory
C) expectancy theory
D) equity theory

Question 9

Which of the following is an internal factor that can influence the rates at which employees are paid?

A) labour market conditions
B) collective bargaining
C) the employer's ability to pay
D) the cost of living

Question 10

Which of the following is the measure of the average change in prices over time in a fixed "market basket" of goods and services?

A) a cost of living allowance
B) a cost of living adjustment
C) the consumer price index
D) the inflation index

Question 11

For real wages to increase, which of the following is necessary?

A) An employee's wage increase must be greater than the increase in the CPI.
B) An employee must receive a lump-sum wage increase equal to the increase in the CPI.
C) An employee's wage must simply increase.
D) The CPI must increase at least as much as the employee's wage.

Question 12

One's level of motivation depends on the attractiveness of the rewards sought. Which of the following refers to the probability of obtaining those rewards?

A) expectancy theory
B) equity theory
C) instrumentality
D) internal equity

Question 13

Which of the following is a major challenge in designing a sound pay-for-performance system?

A) getting the firm to agree to this pay system
B) generating revenues to compensate for the costs of the program
C) deciding how to measure performance
D) getting the government to agree to the pay system

Question 14

Which of the following can pay secrecy NOT do?

A) generate distrust in the compensation system
B) reduce employee motivation
C) inhibit organizational effectiveness
D) generate feelings of commitment

Question 15

Which of the following is NOT a common goal of compensation policy?

A) to punish employees for poor performance
B) to reward employees' past performance
C) to maintain the budget
D) to attract new employees

Question 16

Which of the following terms refers to paying wages that are relatively equal to the value of the work being performed?

A) comparable worth
B) pay equity
C) compensable factors
D) equal pay

Question 17

Which of the following is a key implication of expectancy theory when applied to pay systems?

A) Employees must get pay raises to cover increased living costs.
B) Employees expect their managers to be competent.
C) Employers expect their employees to be competent.
D) Rewards must be valuable for motivation to occur.

Question 18

Which of the following is an external factor that can influence the rates at which employees are paid?

A) the worth of the job
B) the employees' relative worth
C) the employer's ability to pay
D) the cost of living

Question 19

Vidya works at Paymore Shoes and is paid for time she works in the store. Which of the following is she?

A) a salaried employee
B) an hourly employee
C) an exploited employee
D) a white-collar employee

Question 20

How far do the impacts of collective bargaining extend?

A) to hourly employees only
B) to both hourly and management employees
C) beyond the segment of the labour force that is unionized
D) to both exempt and nonexempt employees

Question 21

Which of the following is NOT a disadvantage of the job ranking system?

A) It does not provide a very refined measure of the job's worth, since the comparisons are made on the basis of the whole job.
B) The final rankings of jobs do not indicate the relative importance of the jobs.
C) Its simplicity makes it suitable for smaller employers.
D) It should only be used with nonexempt jobs.

Question 22

In developing a wage curve, what are market wage rates plotted against?

A) market survey data
B) employee benefits
C) the size of a firm
D) the point value of jobs

Question 23

Accounting clerks, pay clerks, and junior secretaries are all classed in Grade 2 at Metroland Inc. What should apply to all these jobs?

A) They should all receive the same wage rate in order to achieve equality.
B) They should be paid within the same pay range.
C) They should be paid similar to Grade 2 jobs at McDonald's.
D) They should be paid at different wage rates because the worth of these jobs to the organization may differ.

Question 24

According to your text, which of the following job evaluation methods is considered the most valid?

A) job ranking
B) the point method
C) the classification method
D) the factor comparison method

Question 25

Which of the following types of equity do wage and salary surveys permit an organization to maintain?

A) internal
B) distributive
C) external
D) salary

Question 26

Job evaluation helps to address issues dealing with which of the following?

A) employees' need for pay that reflects cost of living increases
B) employees' perceptions of equity
C) employers' need to match the market pay
D) employers' perceptions of unfair jobs

Question 27

In the development of a factor comparison scale, key jobs are NOT normally ranked against which of the following factors?

A) skill
B) performance
C) mental effort
D) responsibility

Question 28

What do companies normally use to collect wage survey data?

A) key jobs
B) low-rated jobs
C) high-rated jobs
D) strategic jobs

Question 29

What should employers do if they wish to encourage employees to accept a promotion to a job in a higher grade?

A) increase the size of successive rate ranges
B) increase the point spread of pay grades
C) decrease the size of successive rate ranges
D) decrease the point spread of pay grades

Question 30

Crystal Ball Inc. is a large information technology firm with many levels of management. The company would like to compensate its managers on factors such as knowledge and accountability. Which of the following systems would you recommend?

A) market pricing
B) the Hay profile method
C) job classification as implemented in Microsoft
D) work valuation

Question 31

In geography, the water catchment area or watershed refers to the area that channels or supplies a specific area with its water. Catchment areas divide drainage basins. In wage surveys, what is this catchment area similar to?

A) the labour market
B) the region
C) the recruiting area
D) the supply region

Question 32

What is job classification often used to help determine pay for?

A) merit bonuses
B) CEO pay
C) classified university professors' jobs
D) government jobs

Question 33

Which three factors does the Hay profile method use for evaluating jobs?

A) knowledge, skill, and responsibility
B) responsibility, mental activity, and skill
C) responsibility, knowledge, and mental activity
D) knowledge, accountability, and mental activity

Question 34

Tiffany works as an IT specialist at Nortel. She is compensated based on such skills as programming and service to clients. It is likely that she is paid under which of the following pay plans?

A) a competence-based pay plan
B) a performance-based pay plan
C) a merit-based pay plan
D) a seniority-based pay plan

Question 35

Why can red circle rates to result above the maximum for the pay range?

A) Promotional opportunities are plentiful.
B) The relevant jobs may have been evaluated too high previously.
C) Employees are demoted.
D) Grades are added to the range.

Question 36

Which of the following is a quantitative job evaluation procedure that determines a job's relative value on the basis of quantitative assessments of specific job elements?

A) the point system
B) job ranking
C) the factor comparison method
D) the job grade system

Question 37

Using the point manual, how is the relative worth of a job determined?

A) by benchmarking jobs contained in the point manual
B) through the wage mix
C) by the number of steps within the pay grade
D) by the total points that have been assigned to that job

Question 38

Which of the following is NOT a method of comparison used in job evaluation?

A) job worth system
B) job ranking system
C) job classification system
D) point system

Question 39

Ontario Hydro is seeking a senior-level engineer too help with its operations; what is the relevant labour market to be surveyed?

A) regional
B) local
C) national
D) tight

Question 40

To help achieve internal equity, factors such as skills, effort, responsibilities, and working conditions may be used to assess jobs. Which of the following terms refers to these factors?

A) job specifications
B) job classification factors
C) compensable factors
D) factor comparisons

Question 41

Pay equity is achieved when employees' compensation is equal to the value of the work they perform.

Question 42

According to your text, which of the following is the predominant approach to employee compensation?

A) pay-for-performance
B) competence-based pay
C) job-based pay
D) individual contract

Question 43

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

Question 44

Pay-for-performance programs have little if any effect on employee productivity.

Question 45

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

Question 46

The major provisions of which of the following acts are concerned with minimum wage rates and overtime payments?

A) Equal Pay Act
B) Employment Equity Act
C) Employment Standards Act
D) Pay Equity Act

Question 47

Which of the following is NOT an outcome of wage-rate compression?

A) increased employee performance
B) low employee morale
C) delinquent employee behaviour
D) increased absenteeism

Question 48

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

Question 49

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.

Question 50

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

A) federal and international laws
B) municipal and federal laws
C) provincial and federal laws
D) international laws

Question 51

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

Question 52

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 stupid
D) acceptable under the Employment Standards Act but illegal under the Canada Labour Code

Question 53

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

A) It reduces pay levels.
B) It encourages lateral skill building.
C) It reduces the number of employees needed.
D) It leads to a collapse of broadbands.

Question 54

Among the goals of strategic compensation policy are rewarding past performance, attracting new employees, and reducing turnover.

Question 55

A potential difficulty with pay-for-performance programs is how to measure employee performance.

Question 56

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

Question 57

Which of the following pay systems would an organization wishing to establish greater job-staffing flexibility most likely use?

A) straight pay
B) competence-based pay
C) incentive pay
D) two-tier pay

Question 58

The allocation of compensation sends a message to employees about what is important.

Question 59

Indirect compensation includes bonuses and commissions.

Question 60

How may 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

Question 61

Wage compression can be avoided by granting wage increases solely on the basis of the CPI.

Question 62

The point system of job evaluation permits jobs to be evaluated quantitatively based on compensable factors.

Question 63

Employees who earn pay for hourly work are referred to as salaried employees.

Question 64

The use of job evaluation is widespread in the private sector but is rarely used in the public sector.

Question 65

Wage survey data can be obtained from government sources, trade associations, or professional groups, or organizations can conduct their own surveys.

Question 66

Labour market conditions have little impact on wage rates paid to employees.

Question 67

Internal factors that influence wage rates include the worth of a job, and the employer's ability to pay.

Question 68

An organizational reliance on pay secrecy can serve to diminish employee concerns about the equity of their pay and its relationship to their performance.

Question 69

Pay levels are limited in part by profitability of the firm and productivity of employees.

Question 70

The expectancy theory of motivation predicts that one's level of motivation depends on the attractiveness of the rewards sought by employees and the probability of obtaining those rewards.

Question 71

Job ranking is a simple method that provides a precise measure of each job's worth.

Question 72

Compensable factors include skills, effort, responsibilities, and working conditions.

Question 73

Real wages represent the difference between wage increases and cost-of-living increases.

Question 74

HR professionals establish predetermined wage grades as a basis for evaluating jobs in the job classification system of job evaluation.

Question 75

The job classification system is commonly used by smaller employers.

Question 76

Job evaluation is a non-systematic, qualitative process of determining the relative worth of jobs in order to establish a comparison with the prevailing market and regional value of a job within a job family.

Question 77

Expectancy theory predicts that people expect to be paid as much or more than individuals in a similar job class.

Question 78

Granting wage increases solely on the basis of the CPI helps compress pay rates within a pay structure, thereby ensuring equity among those who receive the wage increase.

Question 79

The consumer price index tracks the change in price over time of a "market basket" of goods and services.

Question 80

Pay secrecy is still prevalent in organizations despite its negative effect on motivation and employee trust.