Question 1

Broadbanding is a pay level model in which all jobs in a particular category are assigned a specific pay category.

Accepted Answer

Broadbanding is a pay level model in which jobs are grouped into categories based on skills, responsibilities, and other criteria. Each category is then assigned a specific pay range or band, and all jobs within that category are paid according to the same range or band.

Question 2

401(k) plans are popular as they do not require a vesting period before the employer will match the funds contributed.

Accepted Answer

While 401(k) plans may not require a vesting period for employee contributions, employers often require a vesting period for their matching contributions. This means that the employer's contributions may not be fully owned by the employee until they have worked for the company for a certain amount of time.

Question 3

If employees are being paid fairly, they will not compare their own pay to that of others in the organization.

Accepted Answer

Even if employees are being paid fairly, they may still compare their pay to that of others in the organization. This can be due to factors such as job level, tenure, and performance. Additionally, people have a natural tendency to compare themselves to others, particularly in the workplace where pay is often seen as a measure of worth and status.

Question 4

A spot bonus is a planned bonus given to an employee for meeting a certain objective.

Accepted Answer

A spot bonus is typically an unplanned bonus given to an employee for exceptional performance or accomplishment beyond what is expected, rather than for meeting a specific objective.

Question 5

The Equal Pay Act of 1963 set a minimum wage for jobs, overtime laws, and child labor laws.

Accepted Answer

The Equal Pay Act of 1963 focused specifically on prohibiting pay discrimination based on gender. It did not set a minimum wage or address overtime and child labor laws, which were covered by other legislation.

Question 6

The absence of unions can lead to mandated pay scales.

Accepted Answer

The absence of unions means there is no collective bargaining and negotiation between workers and employers, which can lead to lower wages and poor working conditions for workers. Mandated pay scales, on the other hand, are typically implemented by government legislation or regulations, not as a result of the absence of unions.

Question 7

Pay systems can be used to reward individual or team performance and encourage employees to work at their own peak performance.

Accepted Answer

Pay systems can be designed to incentivize both individual and team performance, motivating employees to execute at their best level.

Question 8

When average salaries are targeted at the average salary levels of employees in comparable positions in our various labor markets, the market compensation policy is being used.

Accepted Answer

Market compensation policy involves setting salaries at levels that are competitive with other employers in the same labor market who are looking to hire for similar positions. This means targeting average salary levels for comparable positions in that market.

Question 9

Merit base is normally an annual pay increase tied to performance.

Accepted Answer

Merit pay is typically awarded annually and based on an employee's performance.

Question 10

A company may use a market plus philosophy because the industry's cutting-edge nature requires the best employees.

Accepted Answer

A market plus philosophy refers to the approach of offering employees a salary and benefits package that exceeds the market rate in order to attract and retain the most talented individuals. In a cutting-edge industry, where competition for top talent is fierce, companies may employ this philosophy to ensure that they have the best employees. Therefore, the statement is true.

Question 11

When employees look at higher level jobs, lower level jobs, and years with the organization to make their decision on pay equity, they are evaluating the internal pay equity.

Accepted Answer

When employees consider factors such as higher level jobs, lower level jobs, and years with the organization to determine pay equity, they are looking at internal pay equity within the organization.

Question 12

The withdrawal of funds from workers' paychecks to pay for retirement benefits is called income tax.

Accepted Answer

The withdrawal of funds from workers' paychecks to pay for retirement benefits is called payroll tax or Social Security tax, not income tax. Income tax is a separate type of tax that applies to a person's earnings or income.

Question 13

In a paired comparison, individual jobs are compared with one comparable job to determine the relative importance of one over the other.

Accepted Answer

In a paired comparison, each job is compared with every other job being evaluated, not just one comparable job, to establish a ranking of jobs based on their relative importance or complexity.

Question 14

Preferred provider organization is a health-care plan that allows employees to see a physician outside the network.

Accepted Answer

A preferred provider organization (PPO) is a type of health-care plan that allows employees to see a physician outside the network, although typically at a higher cost than seeing an in-network provider.

Question 15

Leadership abilities are an example of compensable factors.

Accepted Answer

Leadership abilities are considered as one of the compensable factors when determining an employee's salary or compensation. These factors include skills, knowledge, experience, responsibility, and effort required for the job. As leadership abilities require specific skills and expertise, they can be compensated accordingly.

Question 16

Stock options involve the employee being given stock as reward for performance.

Accepted Answer

Stock options give the employee the right, but not the obligation, to buy company stock at a predetermined price after a certain period, rather than directly receiving stock as a reward.

Question 17

When choosing a compensation management system, future capabilities refers to the ability of the chosen technology to match the changing needs.

Accepted Answer

Future capabilities refers to the ability of the chosen technology to match the changing needs. Therefore, it is true that when choosing a compensation management system, future capabilities should be taken into consideration.

Question 18

A compensation package can include pay, health-care benefits, and other benefits such as 401(k) plans.

Accepted Answer

A compensation package typically includes various components such as base pay, bonuses, health-care benefits, retirement plans, and other benefits.

Question 19

The delayering and banding process was evolved to reduce the pay levels in a hierarchy.

Accepted Answer

The delayering and banding process is a restructuring strategy that reduces the number of hierarchical levels within an organization, with the aim of increasing flexibility and efficiency. A side effect of this process is also a reduction in pay levels within the hierarchy.

Question 20

An exempt employee is usually an hourly employee.

Accepted Answer

An exempt employee is typically a salaried employee. They are not eligible for overtime pay and are generally expected to work any necessary additional hours without extra compensation.

Quiz 6: Compensation and Benefits