Question 1

One goal of a strategic compensation system is to attract and retain qualified employees.

Accepted Answer

A strategic compensation system includes designing compensation packages that not only attract but also retain skilled employees. This is achieved by offering competitive salaries, benefits, and incentives that motivate employees to continue working for the company.

Question 2

How organizations choose to compensate employees can make those organizations more or less attractive as employers,motivate different employee behaviors,and affect financial outcomes.

Accepted Answer

Compensation plays an important role in attracting employees, motivating them to perform well and impacting the financial results of the organization. Different compensation strategies can have different outcomes for an organization.

Question 3

Compensation is not considered a strategic tool.

Accepted Answer

Compensation is considered a strategic tool as it can be used to attract, retain, and motivate talented employees, and align their behavior with the goals and objectives of the organization. It can also be used to differentiate the organization from its competitors in terms of total rewards offered to employees.

Question 4

There is one main type of compensation.

Accepted Answer

There are multiple types of compensation, such as base salary, bonuses, stock options, benefits, etc.

Question 5

Employees and their employers have an exchange relationship in which employees apply their time and talents to create value for the organization in exchange for tangible and intangible rewards that employees value.

Accepted Answer

This statement accurately describes the exchange relationship between employees and employers, as employees put in their time and skills to create value for the organization in return for compensation and other benefits that they consider valuable.

Question 6

Incentive pay is a popular form of indirect compensation.

Accepted Answer

Incentive pay is a form of indirect compensation that rewards employees for achieving certain goals or objectives. It's often used to motivate employees and improve productivity.

Question 7

Direct financial compensation is influenced by the organization,the job,the specific employee,and external factors.

Accepted Answer

Direct financial compensation, such as salary and bonuses, is determined by various factors, including the organization's overall compensation strategy, the job's level of responsibility and required skills, the individual employee's performance and experience, and external factors such as market demand and industry norms.

Question 8

A strategic perspective on compensation focuses on tailoring a firm's compensation system to reinforce the firm's business strategy.

Accepted Answer

This statement is true. A strategic perspective on compensation means aligning the compensation system with the firm's business strategy to achieve the desired goals and outcomes. This involves designing and implementing a compensation system that motivates and rewards employees based on their contribution to the success of the company's strategy.

Question 9

To maximize your own compensation,carefully choose your industry as well as your career.

Accepted Answer

Choosing an industry that has a high demand for your skills and offers competitive salaries can help maximize your compensation. Similarly, opting for a career path within that industry that is known for high salaries and growth opportunities can also contribute to maximizing your earnings.

Question 10

Pay followers pay their frontline employees as high a wage as possible.

Accepted Answer

Pay followers typically offer wages that are at or below the average market rate, rather than striving to pay the highest wages possible. They follow the market trends rather than leading in wage offerings.

Question 11

In large companies,severance pay is given to all employees upon termination of their employment.

Accepted Answer

Severance pay is not given to all employees upon termination of their employment in large companies. It depends on the company's policy and the circumstances of the termination.

Question 12

Employees exchange their labor for both financial and nonfinancial rewards.

Accepted Answer

Employees receive a salary or wage as their financial reward, as well as nonfinancial rewards such as job satisfaction, professional growth, and a positive work environment.

Question 13

Base pay reflects the size and scope of an employee's responsibilities.

Accepted Answer

Base pay is typically determined based on the level of responsibility associated with a job. The larger and more complex the responsibilities, the higher the base pay is likely to be.

Question 14

A cost-of-living allowance is a clause in union contracts that allows the company to argue against an increase in wages.

Accepted Answer

A cost-of-living allowance (COLA) is a clause in union contracts that provides for an increase in wages to keep up with inflation and the rising cost of living. It does not give the company the ability to argue against increased wages.

Question 15

Diversified firms are more likely to link employee pay with business unit performance,whereas less diversified firms are more likely to link employee pay with corporate performance.

Accepted Answer

This is because diversified firms have multiple business units, each with their own specific goals and targets. It makes sense to link employee pay with business unit performance as it reflects the performance of the unit that the employee is working in. On the other hand, less diversified firms have fewer business units and are more likely to focus on overall corporate performance to determine employee pay.

Question 16

The resource dependence theory proposes that organizational decisions are influenced by both internal and external agents who control critical resources.

Accepted Answer

The resource dependence theory suggests that organizations are dependent on various resources to achieve their goals and that external agents, such as suppliers, customers, and government regulators, can control access to these critical resources. This, in turn, can influence the decision-making process within an organization.

Question 17

Total rewards include everything an employee perceives to be of value that results from the employment relationship but excludes the physical work environment,organizational culture,professional development,recognition,and work/life balance.

Accepted Answer

Total Rewards include the physical work environment, organizational culture, professional development, recognition, and work/life balance in addition to everything an employee perceives to be of value that results from the employment relationship.

Question 18

Seniority and merit are two of the largest influences on wage differentials among people holding the same job in an organization.

Accepted Answer

Seniority refers to the duration of employment or time spent in a specific position, while merit refers to an individual's performance and skill level. Both factors can lead to wage differentials as longer-serving employees may receive higher pay due to their experience, and those with better performance may receive higher pay due to their higher productivity and value to the organization.

Question 19

There are numerous laws requiring severance pay.

Accepted Answer

There is no federal law requiring companies to provide severance pay to employees. However, some states, such as New York and California, have enacted their own laws mandating severance pay in certain situations such as mass layoffs or plant closings. Additionally, companies may include severance pay in employment contracts or offer it as part of a voluntary separation package.

Question 20

The labor market is all of the potential employees located within a geographic area from which the organization might be able to hire.

Accepted Answer

The labor market refers to the pool of potential employees within a certain geographical region that a company can hire from.

Quiz 9: Base Compensation