Deck 11: Establishing a Pay Structure

Question 1

The laws governing Equal Employment Opportunity guarantee equal pay for men and women,whites and minorities,and other groups within the United States.

Answer 1

False
Explanation: In a two-tier wage system, existing employees continue on at their current (upper-tier) pay rate while new employees sign on for less pay (the lower tier).

Question 2

The most common approach to pay differentials is to move an employee lower in the pay structure to compensate for increasing costs.

Answer 2

False
Explanation: Overtime payment to employees is a legal requirement in the pay structure of an organization.

Question 3

Pay grades allow rates of pay for individual jobs to be more precisely matched to market rates and the organization's job structure.

Answer 3

False
Explanation: Product markets and labor markets would act as market forces that impact the development of a pay structure.

Question 4

An organization's job structure and pay levels are policies of the organization,rather than the amount a particular employee earns.

Question 5

Paying a salary does not necessarily mean a job is exempt.

Question 6

In terms of compensation,benchmarking involves the use of pay surveys.

Question 7

Compensable factors are job characteristics that an organization values and chooses to pay for.

Question 8

Pay level is the average amount (including wages,salaries,and bonuses)the organization pays for a particular job.

Question 9

In states that have laws specifying minimum wages,employers must pay whichever rate is higher-the federal or state.

Question 10

When labor costs are a large part of an organization's total costs,the organization responds by increasing pay levels.

Question 11

Product markets do not place any limit on the pay an organization will offer.

Question 12

Research suggests that employees in the lower tier of the pay structure are less satisfied than the top-tier employees.

Question 13

Organizations in a product market compete to serve different customers.

Question 14

According to equity theory,people measure outcomes such as pay in terms of their outputs.

Question 15

In a two-tier wage system,employees doing the same job are paid two different rates,depending on their technical background and training.

Question 16

When job structure and market data conflict,organizations should base their pay only on market forces because this is the only approach that does not have any practical drawbacks.

Question 17

Under the FLSA,children aged 14 and 15 may not be employed in any work associated with interstate commerce.

Question 18

The 1938 FLSA requires federal contractors to pay local or area prevailing wage rates.

Question 19

Broad bands increase the opportunities for promoting employees.

Question 20

Key jobs have relatively unstable content and are uncommon to many organizations.

Question 21

A compa-ratio of 1 suggests that actual pay is not consistent with the pay policy.

Question 22

Which of the following statements is true of Equal Employment Opportunity laws?

A) These laws guarantee equal pay for whites and minorities.
B) The goal of these laws is for employers to provide equal pay for equal work.
C) Job descriptions and job structures cannot help organizations demonstrate that they are upholding these laws.
D) These laws guarantee equal pay for men and women.
E) Under these laws, employers cannot tie differences in pay to business-related considerations.

Question 23

The equity of executive pay does not affect other employees.

Question 24

Which of the following statements is true of the FLSA requirements for overtime pay?

A) The overtime rate is one and a half times the employee's hourly rate, excluding any bonuses or piece-rate payments.
B) Time worked includes only hours spent on production or sales, but not on activities such as attending required classes, cleaning up the work site, etc.
C) Overtime must be paid whether or not the employer specifically asked or expected the employee to work the extra hours.
D) Everyone is eligible for overtime pay.
E) Most workers paid on an hourly basis are exempt and therefore not subject to the laws governing overtime pay.

Question 25

Under the FLSA,exempt status of an employee depends on his/her:

A) job responsibilities and salary.
B) organizational commitment.
C) job title.
D) work experience.
E) job qualifications.

Question 26

The Fair Labor Standards Act (FLSA)includes provisions for:

A) personal finance.
B) minimum wage.
C) wage discrimination.
D) environmental hazards.
E) retirement plans.

Question 27

_____ means that the employee is paid a given amount regardless of the number of hours worked or quality of the work.

A) Pay level
B) Nonexemption
C) Pay policy line
D) Piecework rate
E) Salary basis

Question 28

Military pay often exceeds what service members would earn in their civilian jobs.

Question 29

Which of the following is a drawback of a minimum wage in terms of social policy?

A) It assumes people will take differences in pay into account when they choose a career.
B) It is only one and a half times the employee's usual hourly rate.
C) It applies only to the hours worked beyond 40 in one week.
D) It places the employer at an economic disadvantage relative to employers that pay the living wage.
E) It tends to be lower than the earnings required for a full time worker to rise above the poverty level.

Question 30

Which of the following would act as a market force during the development of a pay structure?

A) Restrictions on child labor
B) Meeting principles of fairness
C) Providing equal pay for equal work
D) Paying atleast the minimum wage established by law
E) Obtaining human resources in labor markets

Question 31

Identify the legal requirement(s)for developing a pay structure.

A) Product markets
B) High-quality workforce
C) Equity and fairness
D) Overtime pay
E) Pay differentials

Question 32

Which of the following permits a lower training wage,which employers may pay to workers under the age of 20 for a period of up to 90 days?

A) FLSA
B) ADA
C) FMLA
D) ERISA
E) ADEA

Question 33

Issues affecting an organization's pay structure do not affect its general reputation.

Question 34

An organization's job structure and pay levels:

A) reflect the organization's knowledge about inflationary pressures.
B) reflect the decisions about how much to pay each employee.
C) provide the total amount an organization pays for a particular job.
D) are annual earnings of key employees in the organization.
E) are policies of the organization.

Question 35

The comparable-worth policy:

A) advocates remedies for any undervaluation of jobs based on market-pay data.
B) is designed to reduce the wage gap between women and minority groups.
C) has been consistently upheld in court rulings.
D) uses job evaluation of an organization's jobs in terms of such criteria as their difficulty.
E) is the only non-controversial pay policy.

Question 36

From an economic standpoint,identify the drawback of a comparable-worth policy.

A) A free-market economy assumes people will not take differences in pay into account when they choose a career.
B) Employees may conclude that pay rates are unfair.
C) The pay policy line reflects the pay structure in the market, which does not always match rates in the organization.
D) Grouping jobs will result in rates of pay for individual jobs that do not precisely match the levels specified by the market and the organization's job structure.
E) Raising pay for some jobs places the employer at a disadvantage relative to employers that pay the market rate.

Question 37

An organization's job structure consists of:

A) the relative pay for different jobs within the organization.
B) the average amount an organization pays for a particular job.
C) the characteristics of jobs that the organization values and chooses to pay for.
D) regular pay, overtime pay, and bonuses.
E) the standard amount that employers must pay under federal and state law.

Question 38

Skill-based pay systems support efforts to empower employees and enrich jobs.

Question 39

Which of the following is true of the Fair Labor Standards Act (FLSA)?

A) The overtime rate under the FLSA is two and a half times the employee's hourly rate.
B) It requires federal contractors to pay less than the prevailing wage rate.
C) It permits a subminimum training wage equal to 95% of the minimum wage.
D) Nonexempt employees are covered by FLSA and include most hourly workers.
E) Under the FLSA, executive, professional, and administrative employees are considered nonexempt employees.

Question 40

An employee who earns a base rate of $10 an hour and receives a weekly attendance award of $20 works 50 hours this week (Overtime pay is required,whether or not the employer specifically asked or expected the employee to work more than 40 hours).His/her total compensation for the week will be:

A) $550.00.
B) $557.50.
C) $570.00.
D) $577.50.
E) $505.00.

Question 41

The Walsh-Healy Public Contracts Act of 1936:

A) permits a lower "training wage," which employers may pay to workers under the age of 20 for a period of up to 90 days.
B) requires that employers pay higher wages for overtime, defined as hours worked beyond 40 hours per week.
C) covers construction contractors that receive more than $2,000 in federal money.
D) requires general contractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates found prevailing in the locality.
E) covers all government contractors receiving $10,000 or more in federal funds.

Question 42

The procedure in which an organization compares its own practices against those of successful competitors is known as:

A) redlining.
B) poaching.
C) benchmarking.
D) profiling.
E) delayering.

Question 43

Decisions about how to respond to the economic forces of product markets and labor markets limit an organization's choices about:

A) pay rates.
B) pay structure.
C) pay differentials.
D) pay grades.
E) pay ranges.

Question 44

A company that views employees as resources is most likely to pay the employees _____.

A) at market rates
B) below the market rates
C) above the market rates
D) only minimum wages
E) overtime rates only if they meet certain targets

Question 45

Organizations under pressure to cut labor costs may respond by:

A) retaining staff levels.
B) hiking pay levels to prevent employee turnover.
C) postponing hiring decisions.
D) requiring employees to bear less of the cost of benefits such as insurance premiums.
E) increasing staff levels.

Question 46

Which of the following is true of labor markets?

A) Organizations compete to sell labor in the labor market.
B) Competition for labor establishes the minimum an organization must pay to hire an employee for a particular job.
C) Changes in the CPI do not affect the labor market.
D) Cost-of-living considerations have little impact on labor-market rates.
E) An organization's competitors in labor markets typically include only companies with different products.

Question 47

The National Compensation Survey is an ongoing activity of the:

A) Bureau of Labor Statistics.
B) Society for Human Resource Management.
C) American Management Association.
D) AFL-CIO.
E) Bureau of Economic Analysis.

Question 48

Following and studying changes in the _____ can help employers prepare for changes in the demands of the labor market.

A) Living-Wage Index
B) Consumer Price Index
C) Gross National Product
D) Exchange Rate Index
E) interest rate

Question 49

The Davis-Bacon Act of 1931:

A) permits a lower "training wage," which employers may pay to workers under the age of 20 for a period of up to 90 days.
B) requires that employers pay higher wages for overtime, defined as hours worked beyond 40 hours per week.
C) requires general contractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates found prevailing in the locality.
D) covers all government contractors receiving $10,000 or more in federal funds.
E) covers construction contractors that receive more than $2,000 in federal money.

Question 50

According to _____,people measure outcomes such as pay in terms of their inputs.

A) the pay policy line
B) equity theory
C) retributive justice theory
D) progressive justice theory
E) economic theory

Question 51

Which of the following is true about the Consumer Price Index (CPI)?

A) It helps product markets place an upper limit on the pay an organization will offer.
B) Following and studying changes in the CPI helps employers prepare for changes in the demands of the labor market.
C) It helps organizations lure top-quality employees.
D) The CPI helps control labor market's demand for pay increases.
E) It helps organizations to compete with companies in other industries that hire similar employees.

Question 52

Which of the following is true of competition in product-markets?

A) The cost of labor does not affect the product market as it is an insignificant part of an organization's costs.
B) Product-market considerations are of particular concern to a company when its customers place greater importance on product rather than price.
C) Organizations in a product market are competing to serve the same customers.
D) Product markets place a lower limit on the pay an organization will offer its employees.
E) Organizations must increase the cost of labor every quarter.

Question 53

The size of the range of pay levels based on labor and product markets depends on:

A) the minimum and maximum wages fixed by the government.
B) the pay of federal contractors.
C) an organization's competitive environment.
D) the quality of employees.
E) an organization's global reputation.

Question 54

Economic theory holds that the most profitable pay level,all things being equal,would be:

A) below the market rate.
B) at the market rate.
C) above the market rate.
D) anywhere within (slightly above or slightly below) the market-rate range.
E) the pay level that is lower than that of the lowest paying organization.

Question 55

Under the FLSA,which of the following statements is true of child labor?

A) Children aged 18 and 19 may not be employed in hazardous occupations defined by the Department of Labor.
B) Children aged 14 and 15 may not be employed in any work associated with interstate commerce.
C) The FLSA's restrictions on the use of child labor apply to children younger than 18.
D) Children aged 18 and 19 may work only outside school hours, in jobs defined as nonhazardous, and for limited time periods.
E) All the states have laws requiring working papers or work permits for minors.

Question 56

Under the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936,federal contractors must pay their employees at rates at least equal to the prevailing wages in the area.The calculation of prevailing rates must be based on _____ percent of the local labor force.

A) 2
B) 5
C) 10
D) 20
E) 30

Question 57

Pay policies are one of the most important human resource tools for:

A) reducing competition in the product market.
B) automating routine activities.
C) persuading customers that high quality is worth a premium price.
D) making decisions about product pricing.
E) encouraging desired employee behaviors.

Question 58

The federal government tracks trends in the nation's cost of living with a measure known as the:

A) Consumer Price Index.
B) Living-Wage Index.
C) Gross National Product Index.
D) Exchange Rate Index.
E) Employment Cost Index.

Question 59

Which of the following is true according to the Walsh-Healy Public Contracts Act of 1936?

A) Under the Walsh-Healy Public Contracts Act, children aged 18 and 19 may not be employed in hazardous occupations defined by the Department of Labor.
B) Federal contractors must pay their employees at rates at least equal to the prevailing wages in the area.
C) The overtime rate applies to the hours worked beyond 45 in one week.
D) Employers must pay a training wage to workers under the age of 15 for a period of up to 60 days.
E) Organizations can defend themselves against claims of discrimination by showing that they pay the going market rate.

Question 60

According to the FLSA,which of the following is most likely a nonexempt employee?

A) CEO
B) Senior administrative employee
C) Hourly-paid employee
D) Executive employee
E) Director

Question 61

_____ are sets of jobs having similar worth or content,grouped together to establish rates of pay.

A) Pay scales
B) Pay ranges
C) Pay differentials
D) Pay levels
E) Pay grades

Question 62

Which of the following is true of key jobs?

A) The organization usually has no survey data for key jobs.
B) These are jobs that have highly unstable content.
C) These are jobs that are unique among organizations and are rare to obtain.
D) Organizations make the process of creating a pay structure more impractical by defining key jobs.
E) A job with a higher evaluation score than a particular key job would receive higher pay than that key job.

Question 63

_____ provide the basis for decisions about relative internal worth.

A) Benchmarks
B) Pay structures
C) Job evaluations
D) Pay rates
E) Two-tier wage systems

Question 64

A pay policy line:

A) shows the mathematical relationship between the minimum pay and the maximum pay in an organization.
B) can be generated using a statistical procedure called regression analysis.
C) requires market-pay-rate data on all jobs in the organization.
D) can be used to estimate the minimum pay level for a given job evaluation.
E) reflects the pay structure in the market, which always matches rates in the organization.

Question 65

_____ is a set of possible pay rates defined by a minimum,maximum,and midpoint of pay for employees holding a particular job.

A) Pay grade
B) Pay range
C) Pay differential
D) Compa-ratio
E) Compensation differential

Question 66

Assuming an organization wants to motivate employees through promotions,and assuming enough opportunities for promotions are available,the organization would want to:

A) increase the overlap from one level to the next.
B) reduce its compa-ratio to less than 1.
C) implement a broad-band pay structure.
D) limit the overlap from one pay range to the next.
E) use a fixed interval promotion policy.

Question 67

Which of the following is true of compensable factors?

A) They are generally statistically derived.
B) They are the characteristics of jobs that a firm values and chooses to pay for.
C) They refer to the factors that are important for setting the two-tier wage system.
D) They describe all aspects of the jobs being evaluated.
E) They are used to ensure equity among employees.

Question 68

What is the advantage of two-tier wage systems?

A) They help in moving jobs out of the country.
B) They help in closing down jobs without any legal hassles.
C) They cut labor costs without cutting employees' existing salaries.
D) They provide more pay to new employees.
E) They provide better standards of benchmarking.

Question 69

Which of the following is true of pay ranges?

A) Pay ranges are most common for blue-collar jobs and those covered by union contracts.
B) Pay ranges are often widest for employees who are at lower levels in terms of their job evaluation points.
C) Pay ranges generally are designed so that they do not overlap.
D) The market rate or the pay policy line generally serves as the midpoint of a range for the job.
E) The less overlap, the more flexibility in transferring employees among jobs.

Question 70

Overlapping _____ give the organization more flexibility in transferring employees among jobs,because transfers need not always involve a change in pay.

A) pay rates
B) pay ranges
C) pay policies
D) pay differentials
E) pay ranks

Question 71

Pay ranges are most common for _____.

A) white-collar jobs
B) piece-rate jobs
C) jobs that are covered by union contracts
D) automotive workers
E) construction workers

Question 72

An example of a typical compensable factor is:

A) social status.
B) education.
C) longevity.
D) gender.
E) religion.

Question 73

_____ is an administrative procedure for measuring the relative worth of an organization's jobs.

A) Job analysis
B) Job determination
C) Job evaluation
D) Job identification
E) Job description

Question 74

A drawback of pay rates is that they:

A) increase the administrative burden of managing the compensation system.
B) result in decreased promotional opportunities for employees.
C) result in some jobs being underpaid and others being overpaid.
D) increase the costs of surveying the market.
E) grouping jobs will result in rates of pay for individual jobs that precisely match the levels specified by the market.

Question 75

_____ play the most significant role in communication because they interact with their employees each day.

A) CEOs
B) Directors
C) Subordinates
D) HR professionals
E) Managers

Question 76

Which of the following is true about job-based pay structures?

A) The ambiguous definition of a job's responsibilities can contribute to an attitude that some activities "are not in my job description," at the expense of inflexibility.
B) Their focus on higher pay for higher status can work in favor of efforts of empowerment.
C) They usually reward desired behaviors, particularly in a rapidly changing environment.
D) Organizations may avoid change because it requires repeating the time-consuming process of creating job descriptions and related paperwork.
E) They always encourage innovation and customer service.

Question 77

Research on the effects of two-tier wage plans found that:

A) lower-paid employees were less satisfied on average than higher-paid employees.
B) lower-paid employees were more satisfied on average than higher-paid employees since they made comparisons with lower-paying alternatives for themselves.
C) lower-paid employees expected to be promoted into the second tier in a short time span.
D) equity theory did not come into play for either group and neither group experienced more or less job satisfaction than the other.
E) both existing employees and new employees have a similar pay rate.

Question 78

A _____ is an adjustment to a pay rate to reflect differences in working conditions or labor markets.

A) bonus
B) pay differential
C) green-circle rate
D) rank-and-file adjustment
E) red-circle rate

Question 79

A graphed line showing the mathematical relationship between job evaluation points and pay rate is termed as a(n):

A) job evaluation line.
B) pay policy line.
C) equity line.
D) aggregate income line.
E) comprehensive appraisal line.

Question 80

A rate of pay for each unit produced is known as:

A) yearly pay.
B) salary.
C) hourly wage.
D) piecework rate.
E) monthly pay.