Question 1

There is an increasingly strong push to manage reward systems globally for at least three reasons: achieving economies of scale, building unique firm capability, and
A)gaining workforce alignment
B)gaining cost savings
C)developing key competencies
D)establishing a strong company image worldwide

Accepted Answer

Managing reward systems globally can help achieve workforce alignment, which is essential for a multinational company to operate smoothly across different locations and cultures. While cost savings and developing key competencies are possible benefits, achieving economies of scale is the most compelling reason to implement a global reward system.

Question 2

Four variable contextual factors for determining the appropriate degree of emphasis on a global versus local perspective in designing compensation systems include heterogeneity, pervasiveness, strength of enforcement, and
A)regulatory enforcement.
B)demographic composition.
C)formalization.
D)divergence.

Accepted Answer

Formalization refers to the degree of consistency and structure in policies and procedures across different locations. The more formalized a company's policies and procedures are, the more likely it is that a global perspective would be appropriate in designing compensation systems. Therefore, formalization is one of the contextual factors that needs to be considered.

Question 3

Milkovich and Bloom's strategic flexibility model includes the following compensation sets:
A)Core, Crafted, and Reward
B)Strategic, Crafted, and Choice
C)Core, Crafted, and Choice
D)Core, Assistance, and Optional

Accepted Answer

Milkovich and Bloom's strategic flexibility model includes three compensation sets: Core (fundamental compensation that is necessary to compete in the market and attract employees), Crafted (tailored compensation for specific employee groups or job roles), and Choice (employee-selected compensation options). Option D is incorrect because Assistance and Optional are not part of the model. Option A is incorrect because Reward is not one of the sets listed. Option B is incorrect because Strategic is not one of the sets listed.

Question 4

The use of this expatriate compensation model may lead to repatriation problems for TCNs and inpatriates from lower-salary countries who find that a return to their home country salary structure means a significant decrease in pay.
A)Headquarters-Based Model
B)Modified Home-Country Model
C)International Citizen Model
D)Lump-Sum Model

Accepted Answer

The Modified Home-Country Model ties employee compensation to the salary structures of both the host country and home country. While this model provides a fair compensation package for expatriates, it may cause issues for TCNs and inpatriates from lower-salary countries who may face a significant decrease in pay upon repatriation.

Question 5

This is by far the most common expatriate compensation model used by U.S. and European MNCs:
A)Headquarters-Based Model
B)Modified Home-Country Model
C)International Citizen Model
D)Lump-Sum Model

Accepted Answer

The Modified Home-Country Model is the most common expatriate compensation model used by U.S. and European MNCs. This model involves setting the expatriate's compensation package based on the standard of living in their home country, while also factoring in additional benefits to cover the costs of living abroad. This model is popular because it allows for a degree of predictability in compensation costs, while also providing some flexibility to account for differences in cost of living between the home and host countries.

Question 6

The purpose of the __________ approach is to help expatriates avoid personal sacrifice in standard of living or financial loss due to the expatriate assignment, as well as provide an attractive incentive for accepting the assignment.
A)Flex-Rate
B)Earning Stability
C)Procurement Parity
D)Balance Sheet

Accepted Answer

The Balance Sheet approach aims to maintain the expatriate's home country standard of living by covering the difference in cost of living between the home and host country. It also assists in offsetting any financial losses suffered by the expatriate. This serves as an attractive incentive for accepting and completing the expatriate assignment.

Question 7

For expatriates needing tax adjustments, in most cases the __________ method is used where MNCs deduct income taxes from the expatriate's salary at the rate that would normally be paid in the home country, and then pay any additional tax owed due to the higher local tax rates in the host country.
A)Tax Equalization
B)Tax Contingency
C)Tax Customization
D)Tax Protection

Accepted Answer

Tax Equalization method is commonly used by MNCs for adjusting expatriate taxes. Under this method, MNCs deduct income taxes from the expatriate's salary based on the tax rates in the home country and pay any additional tax owed due to higher tax rates in the host country. This ensures that the expatriate is not unfairly taxed and is not at a disadvantage compared to other employees in the host country.

Question 8

That which can effectively reward and motivate employee performance is not limited to direct financial compensation.

Accepted Answer

Other factors such as recognition, promotions, flexible work arrangements, and opportunities for learning and development can also effectively reward and motivate employee performance.

Question 9

An employee's perceptions of the total set of rewards, incentives, and disincentives constituting his or her overall compensation and rewards picture are all that ultimately matters in motivating employee performance.

Accepted Answer

An employee's perception of their overall compensation package is critical in motivating their performance, as it influences their level of job satisfaction and commitment to the organization. Factors like salary, benefits, recognition, and work-life balance all play a role in shaping an employee's compensation and rewards picture. Therefore, it is essential for organizations to align their reward systems with employee expectations and needs to enhance their motivation and engagement.

Question 10

Employee compensation focuses on motivating individual performance, not on organizational objectives like company-wide commitment and alignment.

Accepted Answer

Employee compensation is designed to motivate not only individual performance but also to align employees' efforts with the overall organizational objectives, including company-wide commitment and alignment.

Question 11

Since compensation has such a potentially powerful influence on individuals at the local level, this particular HR function is unable to contribute much to integration, coordination, and cooperation at the global level.

Accepted Answer

Compensation strategies, when designed effectively, can significantly contribute to integration, coordination, and cooperation at the global level by aligning the interests of employees across different regions with the overall goals of the organization, fostering a unified corporate culture, and encouraging collaboration and knowledge sharing among diverse teams.

Question 12

The strategic management of global compensation should be coordinated and integrated with other company HR functions and practices to effectively carry out strategic objectives.

Accepted Answer

The integration of global compensation strategy with other HR functions and practices is necessary for the effective implementation of strategic objectives. Companies should take a holistic approach to HR management, where all aspects of HR, including compensation, performance management, talent acquisition and retention, and employee development, are aligned with strategic goals. This approach ensures that the company's HR initiatives are focused on achieving the long-term objectives of the organization.

Question 13

The practice of "pay-for-performance" focuses on financial incentives to motivate individual work performance, not group or organizational performance.

Accepted Answer

Pay-for-performance can be applied to both individual and group or organizational performance, offering financial incentives based on performance metrics at various levels.

Question 14

Especially used as a form of incentive compensation for groups or larger distinct working units, profit sharing tends to be rewarded on a regular basis according to an established performance measure, such as monthly levels of work unit productivity or cost savings.

Accepted Answer

Profit sharing is typically distributed on an annual or quarterly basis, rather than monthly, to share a portion of the company's profits with employees, which can motivate and reward them, but it's not usually tied to specific monthly performance metrics.

Question 15

The individual is becoming an increasing focus in performance-based pay, away from group- and organization-based rewards, and even despite traditional customs of collectivism in some countries.

Accepted Answer

This statement is true. There is a growing trend towards individualization in performance-based pay, which means that rewards are tied more to individual achievement rather than group or organizational outcomes. This trend is happening across many countries, even those with collectivist cultural traditions.

Question 16

Compared to non-accumulating pay schemes, accumulating pay schemes in general are seen to produce a higher average level of employee performance at a lower cost to the organization.

Accepted Answer

Accumulating pay schemes often involve higher costs due to bonuses or incentives, and while they may boost performance, they do not necessarily result in lower overall costs compared to non-accumulating pay schemes.

Question 17

Individual performance-based pay in the form of bonuses or even less tangible benefits also can be a vital tool in retaining top talent and keeping employees engaged and focused during tough economic times.

Accepted Answer

Individual performance-based pay, such as bonuses or other incentives, can motivate employees to perform at a high level and stay with the company, even during difficult economic conditions. This helps employers retain top talent and keep the workforce productive and engaged.

Question 18

Senior executives, whose individual leadership performance is often associated with organizational performance, will likely continue to have their pay based more on organizational performance targets, such as stock price.

Accepted Answer

Senior executives are often responsible for overall organizational performance, and their pay is often tied to achieving specific targets like stock price, to incentivize them to lead the company effectively.

Question 19

Despite increasing interest across the globe in performance-based pay, there also is nearly universal agreement that incentives should constitute a limited portion of the compensation package.

Accepted Answer

While performance-based pay is gaining popularity, there is consensus that incentives should only make up a portion of overall compensation.

Question 20

There is a general trend that the higher the employee level, the less of one's total direct financial compensation is at risk with individual, group, and organizational incentives.

Accepted Answer

Typically, the higher the employee level, the greater portion of their total direct financial compensation is at risk, often tied to individual, group, and organizational performance incentives. This means that executives and higher-level employees usually have a larger percentage of their compensation linked to performance outcomes compared to lower-level employees.

Quiz 10: Compensation for a Global Workforce

There is an increasingly strong push to manage reward systems globally for at least three reasons: achieving economies of scale, building unique firm capability, and

Four variable contextual factors for determining the appropriate degree of emphasis on a global versus local perspective in designing compensation systems include heterogeneity, pervasiveness, strength of enforcement, and

Milkovich and Bloom's strategic flexibility model includes the following compensation sets:

The use of this expatriate compensation model may lead to repatriation problems for TCNs and inpatriates from lower-salary countries who find that a return to their home country salary structure means a significant decrease in pay.

This is by far the most common expatriate compensation model used by U.S. and European MNCs:

The purpose of the __________ approach is to help expatriates avoid personal sacrifice in standard of living or financial loss due to the expatriate assignment, as well as provide an attractive incentive for accepting the assignment.

For expatriates needing tax adjustments, in most cases the __________ method is used where MNCs deduct income taxes from the expatriate's salary at the rate that would normally be paid in the home country, and then pay any additional tax owed due to the higher local tax rates in the host country.