Exam 10: Managing Compensation

Garden of the Gods' (GOTG)employees are compensated according to their organizational level, with upper-level managers receiving more compensation than lower-level managers. GOTG uses a(n)________ pay system.

According to surveys, which of the following is most likely true about family businesses?

In order for a compensation system to work well, it must:

Additional Case 10.1 Brighton Manufacturing is reviewing its compensation system. The CEO wants employees to be paid wages and benefits comparable to Brighton's competitors. He wants a system that allows for maximum flexibility in reassigning workers to different jobs without requiring compensation adjustments each time. The Finance VP suggests that the company link compensation costs more closely to productivity and profit. When profits are down, compensation costs should be reduced as well. The Finance VP also believes that employees should be paid for what they produce, not for their time, and the compensation program should apply to all employees equally. The VP of HR suggests that the key to the company's success is their employees and advocates an individual-based compensation plan. People should be paid for their skills or knowledge, not just because they are fulfilling certain jobs. The VP of HR also feels that it would be simpler to implement a compensation system by level rather than by job. -Refer to Additional Case 10.1. Which of the following, if true, best supports the compensation plan advocated by the VP of HR?

When conducting a job evaluation, it is most important to remind employees that:

Additional Case 10.1 Brighton Manufacturing is reviewing its compensation system. The CEO wants employees to be paid wages and benefits comparable to Brighton's competitors. He wants a system that allows for maximum flexibility in reassigning workers to different jobs without requiring compensation adjustments each time. The Finance VP suggests that the company link compensation costs more closely to productivity and profit. When profits are down, compensation costs should be reduced as well. The Finance VP also believes that employees should be paid for what they produce, not for their time, and the compensation program should apply to all employees equally. The VP of HR suggests that the key to the company's success is their employees and advocates an individual-based compensation plan. People should be paid for their skills or knowledge, not just because they are fulfilling certain jobs. The VP of HR also feels that it would be simpler to implement a compensation system by level rather than by job. -Refer to Additional Case 10.1. The CEO, VP of HRM, and VP of Finance would most likely agree on a(n):

When management is discussing whether to lead, lag, or pay the "going rate" for a job, they are deciding:

Below-market compensation is more prevalent at larger companies in less competitive industries.

In the opening case in Chapter 10, an experienced computer programmer complains that the starting salary for new hires at Sigma, Inc. is 15% more than his current salary. Dr. Smith's answer reveals that Sigma's compensation system is built on a(n)________ compensation model.

If a company uses a committee to sort job descriptions into grades without using a point system, the company is most likely using a ________ system for its job evaluation.

Balancing equity is most likely difficult because:

The head of HR has asked you to gather information about the tasks, duties, and responsibilities of specific jobs. He has most likely asked you to perform a(n):

Rose works for a home interiors company. She hostesses several parties a week and sells various kinds of home decorations. She receives a commission on all that she sells. Rose receives:

You are trying to convince the management of Marcelle, Inc. to pay its employees the "going rate," no more, no less. You are trying to:

Job-based compensation plans focus on the key component of:

In a company where pay decisions are decentralized, the managers of each unit often have the responsibility of determining compensation for employees.

A job that is similar or comparable in content across firms is called a(n)________.

Additional Case 10.1 Brighton Manufacturing is reviewing its compensation system. The CEO wants employees to be paid wages and benefits comparable to Brighton's competitors. He wants a system that allows for maximum flexibility in reassigning workers to different jobs without requiring compensation adjustments each time. The Finance VP suggests that the company link compensation costs more closely to productivity and profit. When profits are down, compensation costs should be reduced as well. The Finance VP also believes that employees should be paid for what they produce, not for their time, and the compensation program should apply to all employees equally. The VP of HR suggests that the key to the company's success is their employees and advocates an individual-based compensation plan. People should be paid for their skills or knowledge, not just because they are fulfilling certain jobs. The VP of HR also feels that it would be simpler to implement a compensation system by level rather than by job. -Refer to Additional Case 10.1. Brighton executives have decided to implement a decentralized pay system. Which of the following, if true, best supports this decision?

An egalitarian pay system strives to place most of their employees under the same compensation plan, while elitist pay systems establish different compensation plans based on employees' organizational level.

Variable compensation takes a variety of forms, including: