Deck 9: Managing Compensation

Question 1

Employees who earn pay for hourly work are referred to as salary earners.

Answer 1

False

Question 2

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.

Answer 2

True

Question 3

Companies are more heavily scrutinized than they have been historically by shareholders,government,and the public for how much they pay their people.

Answer 3

True

Question 4

Managers in companies with compensation scorecards often struggle to know if the promotions,raises,bonuses,and pay adjustments they make are in line with the rest of the organization and its strategy.

Question 5

Raising selection standards and hiring better-qualified employees can reduce training costs.

Question 6

Some research shows that most Americans believe that large bonuses at Wall Street should be prohibited.

Question 7

Strategic compensation is the term used for all of the processes used to determine the market rates to pay employees.

Question 8

The compensation scorecard creates a comparative tool within the organization that can reinforce desired outcomes that are unique to the company's strategy.

Question 9

If rates of pay are high,thereby creating a large applicant pool,organizations may choose to raise their selection standards.

Question 10

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

Question 11

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

Question 12

A formal statement of compensation policy would typically include the rate of pay within the organization and whether it is to be above,below,or at the prevailing community rate.

Question 13

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

Question 14

While most managers agree that pay should be linked to performance,employees do not.

Question 15

Nonexempt employees are not covered by overtime requirements under the Fair Labor Standards Act and are therefore nonexempt.

Question 16

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 17

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

Question 18

Rewarding an employee's past performance is not a goal of strategic compensation policy.

Question 19

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

Question 20

Indirect compensation includes healthcare benefits and commissions.

Question 21

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 22

The job classification system is used commonly by smaller employers.

Question 23

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

Question 24

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

Question 25

A critical concern for a successful pay-for-performance system is the perceived fairness
of the pay decision.

Question 26

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

Question 27

The consumer price index is available in separate indexes by size of city and region of the country.

Question 28

The worth of a job is determined formally through the wage and salary survey.

Question 29

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

Question 30

Wages of unionized employees are generally higher than those of nonunion employees.

Question 31

The job classification system is a quantitative job evaluation procedure that determines a job's relative value by calculating the total points assigned to it.

Question 32

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

Question 33

Exempt employees are not covered by the overtime provisions of the Fair Labor Standards Act.

Question 34

American President Obama enacted a five-year freeze on federal salaries to help the government achieve its objectives of reducing the deficit.

Question 35

Nonexempt employees are covered by the Fair Labor Standards Act and must be paid at the rate of 1-1/2 times their regular pay rate for hours worked over 40 in the workweek.

Question 36

The job ranking system ranks jobs on the basis of relative worth and can be done by a single person familiar with all jobs.

Question 37

The worth of a job,as it is determined by its comparative worth with jobs in other firms,is an external factor in the wage mix.

Question 38

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

Question 39

Under the Fair Labor Standards Act,the majority of hourly workers involved in interstate commerce are considered nonexempt.

Question 40

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

Question 41

The Hay profile method is useful for evaluating jobs of all types and levels.

Question 42

When employees are paid according to the skills and knowledge they have rather than the specific jobs they perform,they are paid according to competence-based compensation.

Question 43

Managers will group similar jobs into a pay grade in order to help with the setting of wages for all jobs.

Question 44

The wage curve represents the wages paid to jobs after adjustment for cost-of-living.

Question 45

Point manuals contain job descriptions and the number of points assigned to each job type.

Question 46

Employees are likely to accept a promotion if succeeding rate ranges are larger in size.

Question 47

Equity theory is also referred to as distributive fairness.

Question 48

A point manual can be used to determine the external equity of a job.

Question 49

Steps within a rate range allow pay increases based on merit or seniority.

Question 50

Red circle rates are above the maximum for the pay range and are often frozen until the range shifts upward due to inflation.

Question 51

The three factors that constitute the evaluation in the Hay profile method are knowledge,mental activity,and accountability.

Question 52

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

Question 53

For employees,pay equity is achieved when the compensation received is equal to
the value of the work performed.

Question 54

The number of grades within a wage structure follows a pattern determined by the Hay Group.

Question 55

The National Compensation Survey published by the Bureau of Labor Statistics can provide local,regional,and national compensations statistics.

Question 56

Competence-based pay may more effectively reinforce an organizational culture of involvement and empowerment.

Question 57

A major benefit of job-based compensation systems is that they encourage employees to learn new skills and capabilities.

Question 58

Employers refer to the area from which they obtain certain types of workers as the labor market.

Question 59

An advantage of published wage surveys is compatibility with the organization's jobs.

Question 60

One of the major criticisms of job-based compensation systems is that they often fail to reward employees for their skills or the knowledge they possess.

Question 61

The Davis-Bacon Act of 1931 mandates that all Federal Employees on projects worth more than $20,000 be paid at a wage equal to the prevailing rate and at 1.5 times the rate for overtime.

Question 62

The Fair Labor Standards Act has four major provisions.The provisions are concerned with minimum wage rates,overtime payments,equal rights,and child labor.

Question 63

The employer must pay an employee for whatever work the employee must or is allowed to perform,even if it is not specifically expected or requested.

Question 64

Because management positions are more difficult to evaluate and involve certain demands
not found in jobs at the lower levels,some organizations do not attempt to include them in their job evaluation programs for hourly employees.

Question 65

A compensation scorecard can cloud the transparency of how people are rewarded and makes managers responsible for how they spend company money.

Question 66

Broadbanding refers to collapsing many traditional salary grades into a few wide salary bands.

Question 67

_____ encompasses employee wages and salaries,incentives,bonuses,and commissions.

A) Non-financial compensation
B) Indirect compensation
C) Direct compensation
D) Component compensation

Question 68

Under the Walsh-Healy Act,employers must exclude any bonuses or incentive payments that may be a part of the employee's total earnings.

Question 69

Broadbands create more concern by employees with pay grades and steps.

Question 70

An advantage of competence-based pay from the employee's perspective is that there is no limit to what they can earn by learning new skills.

Question 71

Seniority,merit,and individual incentive plans are factors affected under the Equal Pay Act.

Question 72

Wages paid above the range maximum are called blue square rates.

Question 73

Pay secrecy seems to be an accepted practice in many organizations.

Question 74

A major criticism of competence-based pay systems is that after achieving the top wage,employees may be reluctant to continue their educational training.

Question 75

The Davis-Bacon Act is the oldest of the three federal wage laws.

Question 76

When time off is given in exchange for overtime work,it must be given hour-for-hour of the number of hours worked overtime.

Question 77

Outside salespeople,along with executives and administrators,are exempt from overtime provisions under the Fair Labor Standards Act.

Question 78

Competence-based pay systems represent a fundamental change in the attitude of
management regarding how work should be organized and how employees should be
paid for their work efforts.

Question 79

Which of the following is an example of a nonfinancial compensation?

A) bonuses
B) commissions
C) health insurance
D) employee recognition programs

Question 80

Broadbanding expands the traditional salary grades into broader salary bands.