Question 1

There is often one so-called best compensation system that applies to a broad spectrum of organizations.

Accepted Answer

There is no one-size-fits-all approach to compensation. Different organizations have different needs, cultures, and structures that require unique compensation systems tailored to meet their needs. Therefore, what works for one organization may not work for another.

Question 2

Evidence provided in the textbook appears to indicate a relationship between the level of stock options provided to executives and the risk those executives are prepared to undertake.

Accepted Answer

The evidence provided in the textbook suggests a relationship between the level of stock options and the risk-taking behavior of executives.

Question 3

Which statement best describes the difference between the terms "rewards" and "incentives"?
A) Rewards are given to satisfy basic human needs, while incentives are used to satisfy higher-order human needs.
B) Rewards serve to recognize valued behaviour, while incentives are intended to produce valued behaviour.
C) Rewards are job-context related, while incentives are job-content related.
D) Rewards are used to influence future performance, and incentives are given to recognize past work behaviour.

Accepted Answer

Rewards are generally given as recognition for past behavior, while incentives are used to encourage or motivate future behavior. Rewards are typically seen as positive reinforcements for actions that have already occurred, while incentives are intended to encourage actions that have not yet been taken. Rewards may include things like bonuses or promotions, while incentives might include things like performance-based bonuses or commissions. Overall, rewards are given to recognize valued behavior, while incentives are intended to produce valued behavior.

Question 4

Under a total rewards philosophy, companies should first develop an appropriate compensation strategy.

Accepted Answer

The answer of Under a total rewards philosophy, companies should...

Question 5

A compensation system must be viewed in the context of the total reward system because it is the total pattern of financial and non-financial rewards that motivates employee behaviour.

Accepted Answer

A compensation system is only one component of the total reward system. The total reward system includes all the financial and non-financial rewards that employees receive, such as bonuses, benefits, recognition programs, and career development opportunities. Therefore, a compensation system must be viewed in the context of the total reward system to understand its impact on employee motivation and behavior.

Question 6

Which of the following statements is supported by evidence in the textbook?
A) Canadian firms spend 40 to 70 percent of their capital budgets on compensation.
B) Properly designed compensation systems usually promote unproductive behaviour.
C) Reward systems should be static and rarely reviewed.
D) Canadian firms spend 40 to 70 percent of their operating budgets on compensation.

Accepted Answer

The textbook states that "firms allocate 40 to 70 percent of their operating budgets to compensation." This matches statement D, which refers to operating budgets. Statement A refers to capital budgets, which is not supported by the evidence in the textbook. Statement B is contradicted by the textbook, which states that properly designed compensation systems can promote productivity. Statement C is also contradicted by the textbook, which recommends that reward systems be regularly reviewed and adjusted.

Question 7

Which of the following items is considered part of a compensation system?
A) variable pay
B) flexible work schedules
C) positive organizational culture
D) work/life programs

Accepted Answer

Variable pay is directly tied to an employee's performance, so it is considered part of a compensation system. Flexible work schedules, positive organizational culture, and work/life programs are all important aspects of an overall employee benefits package, but are not considered part of a compensation system.

Question 8

As a small business owner committed to the total rewards approach to compensation, what do you need to establish before you start to develop your compensation system?
A) a reward system
B) an incentive program
C) a compensation strategy
D) a reward strategy

Accepted Answer

The answer of As a small business owner committed to...

Question 9

An effective compensation system is important to most organizations because it can mean the difference between company success and failure.

Accepted Answer

A fair and competitive compensation system can attract and retain talented employees, improve motivation and productivity, and promote overall organizational success. A poorly designed compensation system can lead to high turnover rates, low morale, and ultimately harm the organization's performance.

Question 10

Three of the key criteria for evaluating a compensation system are whether it promotes achievement of organizational goals, whether it is seen as equitable, and whether it promotes the full spectrum of task behaviour.

Accepted Answer

These are indeed three key criteria for evaluating a compensation system.

Question 11

Which of the following best explains intrinsic rewards?
A) Intrinsic rewards focus on increasing an employee's financial position.
B) Intrinsic rewards are provided by job content.
C) Intrinsic rewards provide security and employee services.
D) Intrinsic rewards relate to bonuses based on performance.

Accepted Answer

Intrinsic rewards are provided by job content, such as enjoyment, personal growth, and fulfillment from the work itself. They are not related to financial incentives or employee services.

Question 12

The main similarity between extrinsic rewards and intrinsic rewards is that they both satisfy so-called higher order needs such as survival and security.

Accepted Answer

Extrinsic rewards satisfy lower order needs such as survival and security, while intrinsic rewards satisfy higher order needs such as autonomy, mastery, and purpose.

Question 13

According to the "Road Map to Effective Compensation," the first step is formulating your reward and compensation strategy.

Accepted Answer

The answer of According to the "Road Map to Effective...

Question 14

The main difference between a reward system and a compensation system is that a reward system rewards only good performance while a compensation system provides pay to all employees.

Accepted Answer

A reward system is specifically designed to recognize and reward exceptional performance, while a compensation system is designed to provide fair pay to all employees in exchange for their work.

Question 15

An owner of an enterprise asks you to describe the major components of a compensation system. Which of the following would you exclude in your description?
A) base salary
B) performance pay linked to some organizational objectives
C) employee benefits, which may include: disability insurance, medical, and dental plans
D) flexible work schedules and some element of job autonomy

Accepted Answer

Flexible work schedules and job autonomy are not direct components of a compensation system, but rather elements of work-life balance and job design. The major components of a compensation system typically include base salary, performance pay, and employee benefits.

Question 16

Joe, a service manager, loves his job. He particularly appreciates the level of autonomy his job provides. From a rewards perspective, which kind of reward appears to be motivating Joe?
A) extrinsic
B) incentives
C) intrinsic
D) compensation

Accepted Answer

Autonomy is a characteristic of intrinsic motivation, which comes from within the individual and is driven by personal satisfaction and enjoyment of the work itself. Intrinsic rewards are psychological and include factors like autonomy, mastery, and purpose. Extrinsic rewards, such as incentives and compensation, come from external sources and are typically financial in nature. Therefore, Joe's motivation appears to be driven by intrinsic rewards.

Question 17

The compensation system typically refers to which aspect of the reward system?
A) the mix of intrinsic and extrinsic rewards
B) the economic or monetary part
C) the entire spectrum of rewards
D) incentives

Accepted Answer

The compensation system specifically refers to the economic or monetary aspect of the reward system, such as salary, bonuses, and benefits. It does not encompass the entire spectrum of rewards or the mix of intrinsic and extrinsic rewards. Incentives may be included as part of the compensation system, but they are not the same thing.

Question 18

A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means through which they will be provided.

Accepted Answer

A reward strategy is indeed a planned approach to providing a mix of rewards to organization members along with the manner in which they will be provided.

Question 19

Which of the following statements most accurately describes extrinsic rewards?
A) They focus on factors inherent in the work itself-the job content.
B) They satisfy higher-order human needs.
C) They include monetary and nonmonetary rewards and come from the job context.
D) They involve skill variety, task identity, task significance, autonomy, and feedback.

Accepted Answer

Extrinsic rewards are external to the job itself and come from the job context, such as pay, benefits, promotions, and recognition. Option A refers to intrinsic rewards, while option B refers to self-actualization needs that transcend extrinsic rewards. Option D describes the job characteristics model, which focuses on intrinsic motivation.

Question 20

Which statement best describes the term "reward strategy"?
A) the means through which performance bonuses are paid
B) the mix of rewards provided to organization members
C) the means for recognizing outstanding achievement
D) the means for identifying the key contextual variables for an organization

Accepted Answer

Reward strategy refers to the mix of rewards provided to organizational members. This can include various forms of compensation, benefits, recognition, and other incentives. It is a comprehensive approach to motivating and retaining employees, as well as achieving organizational goals. While performance bonuses and recognition may be a part of a reward strategy, they do not encompass the full scope of it. Contextual variables are typically considered in the design and implementation of a reward strategy, but they are not the primary focus.

Quiz 1: A Road Map to Effective Compensation

There is often one so-called best compensation system that applies to a broad spectrum of organizations.

Evidence provided in the textbook appears to indicate a relationship between the level of stock options provided to executives and the risk those executives are prepared to undertake.

Which statement best describes the difference between the terms "rewards" and "incentives"?

Under a total rewards philosophy, companies should first develop an appropriate compensation strategy.

A compensation system must be viewed in the context of the total reward system because it is the total pattern of financial and non-financial rewards that motivates employee behaviour.

Which of the following statements is supported by evidence in the textbook?

Which of the following items is considered part of a compensation system?

As a small business owner committed to the total rewards approach to compensation, what do you need to establish before you start to develop your compensation system?

An effective compensation system is important to most organizations because it can mean the difference between company success and failure.

Three of the key criteria for evaluating a compensation system are whether it promotes achievement of organizational goals, whether it is seen as equitable, and whether it promotes the full spectrum of task behaviour.

Which of the following best explains intrinsic rewards?

The main similarity between extrinsic rewards and intrinsic rewards is that they both satisfy so-called higher order needs such as survival and security.

According to the "Road Map to Effective Compensation," the first step is formulating your reward and compensation strategy.

The main difference between a reward system and a compensation system is that a reward system rewards only good performance while a compensation system provides pay to all employees.

An owner of an enterprise asks you to describe the major components of a compensation system. Which of the following would you exclude in your description?

Joe, a service manager, loves his job. He particularly appreciates the level of autonomy his job provides. From a rewards perspective, which kind of reward appears to be motivating Joe?

The compensation system typically refers to which aspect of the reward system?

A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means through which they will be provided.

Which of the following statements most accurately describes extrinsic rewards?

Which statement best describes the term "reward strategy"?