Deck 18: Management: Making It Work

Question 1

A major advantage of a _____ is that it reduces benefits costs, something that the other cost-cutting options ordinarily do not achieve.

A)reduction in work hours
B)furlough
C)pay cut
D)reduction in force

Answer 1

D

Question 2

The compa-ratio reflects the _____.

A)rate paid for satisfactory performance
B)relationship of actual salaries to the midpoint of the going rates in the market
C)maximum value of red circle rates
D)relationship of the average actual salary in each range to the midpoint of the range

Answer 2

D

Question 3

If financially troubled employers have NOT been able to maintain competitive market positions, the conventional response has been to _____.

A)increase the rate of reduction in average pay by controlling adjustments in base pay
B)decrease employees' copays and deductibles for benefits
C)increase base wages but not variable pay
D)reduce employment

Answer 3

D

Question 4

The denominator for calculating the current year's pay rise is _____.

A)average pay at the beginning of the year
B)average pay at the end of the year
C)average number of employees during the year
D)average employment level

Question 5

The _____ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees.

A)WHO
B)FMLA
C)OSHA
D)ADEA

Question 6

When employees are paid more than the maximum of their pay grade, these rates are called _____ rates.

A)red circle
B)yellow circle
C)blue circle
D)green triangle

Question 7

If Philadelphia has a CPI of 165 and Houston has a CPI of 145, and if both cities started with bases of 100, it means that _____.

A)prices have risen faster in Philadelphia since the base year than in Houston
B)it essentially costs more to live in Philadelphia than in Houston
C)it costs less to live in Houston than in Philadelphia
D)pay in Philadelphia is, on average, 20 percent higher than in Houston

Question 8

A compa-ratio less than 1 means that, on average, _____.

A)employees are senior employees
B)the turnover rate of the organization is low
C)employees are high performers
D)employees in a range are paid below the midpoint

Question 9

Which of the following is NOT a potential problem with headcount reductions?

A)Regulatory requirements make it difficult to make targeted cuts.
B)Workforce reductions, especially if not handled well, can harm employee relations.
C)Organizations that make greater involuntary workforce reductions also experience greater voluntary turnover.
D)RIFs are very costly in tangible terms in the long run due to decreases in unemployment insurance tax rate.

Question 10

All of the following are adverse effects of layoffs EXCEPT _____.

A)decreased unemployment insurance tax rates
B)unrealized productivity
C)lower morale
D)lower financial gains than expected

Question 11

The _____ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage.

A)productivity effect
B)conflict effect
C)turnover effect
D)morale effect

Question 12

The average company match for 401(k) retirement plan is _____ cents on the dollar up to 6 percent of pay.

A)50
B)40
C)30
D)20

Question 13

Which of the following is a measure of changes in prices of goods and services in the product and service markets over time?

A)Producer price survey
B)Product market competitor wage survey
C)Labor market competitor wage survey
D)Consumer price index

Question 14

The percentage increase in average pay that is expected for an organizational unit or company is called _____.

A)a decentralized budget
B)a bottoms-up budget
C)a planned pay-level rise
D)the current year's rise

Question 15

_____ is the budgetary approach that begins with an estimate from the highest ranking executives of the pay increase budget for an entire organization.

A)Bottom-up budgeting
B)Top-down budgeting
C)Managerial plan
D)Executive estimate budgeting

Question 16

Total compensation in many organizations makes up at least _____ percent of operating expenses.

A)20
B)30
C)40
D)50

Question 17

HoldDesk Inc.has an annual labor cost of $3,000,000.It has a turnover rate of 10 percent and a planned average increase of 5 percent.The turnover effect is _____.

A)$10,000
B)$45,000
C)$15,000
D)$30,000

Question 18

Changes in wages in labor markets are measured _____.

A)using the producer price index
B)using the modified balance sheet approach
C)through pay surveys
D)by examining the personal expenditure of each employee

Question 19

GronLan Inc., a company with a majority of workers with high seniority, decides to hire 1,000 college graduates to meet the sudden productivity requirements generated by a growth in the market.Which of the following statements is most likely to be happen in this situation?

A)The compa-ratio of the company will become greater than one.
B)The average pay actually paid by the company will fall below its range midpoint.
C)The salary range midpoint of the company will become lesser than the compa-ratio.
D)The number of employees being paid red circle rates will increase.

Question 20

Which of the following is NOT a likely consequence of a highly decentralized pay system?

A)Financial malfeasance is completely eliminated.
B)Pay rates for the same work could be inconsistent.
C)Managers could use pay to motivate their own objectives.
D)Employees are likely to be treated unfairly.

Question 21

Rather than define employment as hours of work, number of employees is often used.

Question 22

_____, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay.

A)Communication portals
B)Enterprise resource planning systems
C)Cafeteria plans
D)Content delivery networks

Question 23

In the past two decades, the average variable pay budget has increased.

Question 24

Which of the following is the basic question to ask to improve quality and ensure that value is added by each technique and at each stage in the compensation system?

A)Who should do the activity?
B)How should the technique be redesigned?
C)Does each specific activity directly contribute to our objectives?
D)Should the activity be done in-house, or can others do it more effectively?

Question 25

A major advantage of a reduction in force is that it reduces benefits costs.

Question 26

MerTon Inc.decides to reduce labor costs by using exit incentives to encourage some of its senior, high-earning members to leave the organization.It replaces the employees who quit with new employees and pays them low wages.Which of the following statements is most likely true in this scenario?

A)The number of employees being paid red circle rates will increase.
B)The salary range midpoint of the company is lesser than the compa-ratio.
C)The salary range midpoint of the company is higher than the actual salary paid.
D)The compa-ratio of the company is greater than one.

Question 27

_____, a software package, allows workers to make health-care choices, allocate savings to 401(k)s or other savings vehicles, and access vacation schedules.

A)Manager self-service
B)Employee self-service
C)A cafeteria plan
D)An enterprise resource planning system

Question 28

According to one study, only _____ of organizations actually calculate the cost and value added by their pay programs.

A)three-fourths
B)one-fourth
C)one-half
D)one-third

Question 29

Many employers achieve flexibility and control employment costs by utilizing contingent workers rather than expanding and contracting the core workforce.

Question 30

The Web page for the compensation society is _____.

A)Society for Human Resource Management
B)American Compensation Association
C)International Compensation and Benefits Society
D)WorldatWork

Question 31

If red circle rates become common throughout an organization, then the design of the ranges and the evaluation of the jobs should be reexamined.

Question 32

Changes in the CPI indicate whether prices have increased more or less rapidly in an area since the base period.

Question 33

In a totally decentralized pay system, employees are likely to be treated unequally and unfairly.

Question 34

Which of the following statements about anchoring/framing is true?

A)It states that initial data strongly affect decisions/beliefs.
B)It is the reluctance to accept evidence that contradicts existing beliefs.
C)It refers to the tendency to follow fashions in programs/techniques.
D)It states that people discover patterns in random events.

Question 35

Replacing merit grids with _____ eliminates the link between the pay increase and the employees' salary position in the range and performance rating.

A)bands
B)skill- or competency-based plans
C)job evaluation plans
D)bonuses

Question 36

The CPI accurately reflects an individual employee's cost of living.

Question 37

A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is _____.

A)known as a centralized strategy
B)known as a decentralized strategy
C)the best approach to design
D)rarely done in today's organizations

Question 38

An individual employee cannot earn more pay than the maximum of the pay grade of their current job.

Question 39

The major potential advantage of outsourcing is _____.

A)increased turnover rate
B)increased compa-ratio
C)increased absenteeism
D)increased cost savings

Question 40

Exit incentives is likely to result in the loss of high-performing employees.

Question 41

What is the consumer price index (CPI)? Explain with an example.

Question 42

What are the potential problems associated with headcount reductions?

Question 43

Less than 10 percent of compensation professionals strongly agree that employees know their own pay range and the one above them.

Question 44

A compa-ratio is the average actual pay divided by the midpoint of the pay grade.

Question 45

A key reason to communicate pay information is that the goodwill engendered by the act of being open about pay may affect perceptions of pay equity.

Question 46

Generally, organizations have increased their use of variable pay relative to traditional base pay increases.

Question 47

Briefly summarize compa-ratios.

Question 48

Broad bands provide managers greater discretion in pay for their subordinates compared to a grade-range design.

Question 49

What is the top-down method of budgeting?

Question 50

What is the turnover effect? Explain how it is calculated with an example.

Question 51

If a pay system is not based upon work-related or business-related logic, it is probably best to not conduct a formal compensation communication program.

Question 52

Pay policies are more open in the public sector than in the private sector.

Question 53

The most important components of a pay communication program are the business-related and work-related rationales on which the pay systems are based.

Question 54

A compa-ratio greater than 1 means that, on average, the rates exceed the intended policy.

Question 55

Over half of the employees in the private sector work in companies with open pay policies.