Question 1

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

Accepted Answer

The wage curve represents the relationship between wages and unemployment rates within a local labor market, not adjustments for cost-of-living.

Question 2

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

Accepted Answer

This statement is true. Grouping jobs into a pay grade is a common practice used by organizations to determine how much employees will be paid for similar jobs within their organization. This helps to ensure equitable pay for employees who perform similar tasks and provides a framework for the organization to determine appropriate salary ranges for each pay grade.

Question 3

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

Accepted Answer

Steps within a rate range allow for pay increases based on merit or seniority. This means that as an employee gains more experience or performs better in their job, they may be eligible for a raise within their designated pay range.

Question 4

The National Compensation Survey published by the Bureau of Labor Statistics can provide compensation statistics broken down by wages, salary, and benefits.

Accepted Answer

The National Compensation Survey published by the Bureau of Labor Statistics does provide compensation statistics broken down by wages, salary, and benefits.

Question 5

Howard is responsible for performing job evaluations. To do so, he considers the knowledge, mental activity, and accountability required by the position. Howard is using the Hay profile.

Accepted Answer

The Hay profile is a job evaluation method that considers three factors: knowledge, mental activity, and accountability. Howard is using this method to perform job evaluations, so the statement is true.

Question 6

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

Accepted Answer

This is because competence-based pay systems tie pay to competencies or skills, and once an employee has achieved the required competencies and received the top wage, there may be little incentive for them to continue their education or skill development. This can lead to a lack of continuous learning and improvement, which is essential for long-term success and competitiveness.

Question 7

Marni works for a company that uses a job-based compensation system. The very nature of this system encourages her to learn new skills, which will expand her career options and also increase her value to the company.

Accepted Answer

A job-based compensation system focuses on the position and its responsibilities rather than the individual's skills or performance, which means it does not inherently encourage skill development for career expansion or increased value to the company.

Question 8

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.

Accepted Answer

Strategic compensation is about using compensation as a tool to motivate employees and align their goals with the organization's goals. It involves designing compensation packages that are attractive and meaningful to employees, while also contributing to the organization's overall success.

Question 9

Employees at LennoCorp are motivated to work hard because they know that their performance will lead to monetary rewards that are worth the extra effort. According to the Expectancy theory, this compensation package has instrumentality.

Accepted Answer

According to the Expectancy theory, instrumentality refers to the perceived connection between increased effort and receiving a desirable reward or outcome. In this scenario, the compensation package has instrumentality because it is seen as a reward for high performance, which motivates employees to work hard to achieve it.

Question 10

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

Accepted Answer

Broadbanding is the process of consolidating many salary grades or levels into a few wide salary bands. This allows for greater flexibility in rewarding employees based on their skills and performance.

Question 11

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.

Accepted Answer

The answer of An advantage of competence-based pay from the...

Question 12

Sandra is a clerk in a mid-size office. She has two friends who have similar jobs in other offices. All three friends have been in their jobs for about the same length of time, and their wages are almost identical. Sandra has pay equity.

Accepted Answer

Sandra and her friends have similar jobs with similar length of service and wages, indicating pay equity.

Question 13

Changes in technology have required LennoCorp to create several new jobs in the company. Because LennoCorp uses a job classification system, the specifications of each new position can be compared to the descriptions of each grade to determine the appropriate wage.

Accepted Answer

A job classification system allows companies to compare the specifications of new positions to existing job descriptions and determine appropriate wages. Therefore, the statement is true.

Question 14

Elias works at Lenno Landscaping as a mower. He is paid a set rate for each lawn that he mows. Elias receives piecework compensation.

Accepted Answer

Piecework compensation means that an employee is paid based on the amount of work they complete, such as the number of lawns mowed, rather than a set hourly rate. Therefore, Elias is receiving piecework compensation.

Question 15

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

Accepted Answer

Employees are more likely to accept a promotion if they feel confident in their ability to succeed in the new role. A larger succeeding rate range indicates a greater opportunity for success, which can appeal to employees and encourage them to accept the promotion.

Question 16

Red circle rates are above the maximum for the pay range and are often frozen until the range shifts upward through market wage adjustments.

Accepted Answer

Red circle rates are typically set above the maximum for the pay range, and they are often frozen until the range shifts upward through market wage adjustments.

Question 17

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.

Accepted Answer

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

Question 18

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.

Accepted Answer

This is a common critique of job-based compensation systems, as they are typically tied to job title and responsibilities rather than individual skills or knowledge.

Question 19

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

Accepted Answer

This statement is true. Employers seek workers from a specific labor market based on factors such as location, skills, education, and experience.

Question 20

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

Accepted Answer

Published wage surveys often provide general market data that may not directly match an organization's specific job roles, making direct compatibility and application to the organization's unique positions challenging.

Quiz 9: Managing Compensation