Deck 8: Pay Structure Decisions

Question 1

Skill-based pay systems fit well with the increased breadth and depth of skill that changing technology continues to bring.

Answer 1

True

Question 2

A compa-ratio equivalent to 1 suggests that actual pay is not consistent with the pay policy.

Answer 2

False

Question 3

A market pay policy line may be developed using job evaluation data and market pay survey data.

Answer 3

True

Question 4

Internal equity pay comparisons focus on what employees in other organizations are paid for doing the same general job.

Question 5

Under a two-tier wage plan,employees doing the same job are paid two different rates,depending on their background and training.

Question 6

Broad band pay programs can lead to weaker budgetary controls and rising labour costs.

Question 7

Essentially,labour market competition is the amount an organization must pay to compete against other companies that hire similar types of employees.

Question 8

Product market comparisons that focus on labour costs deserve greater weight when labour costs represent a large share of total costs.

Question 9

The equity theory suggests that people often evaluate their situations by comparing them with those of other people.

Question 10

When resolving conflicts between external and internal pay data,there is a growing sentiment that external comparisons deserve greater weight because organizations are finding it increasingly difficult to ignore market competitive pressures.

Question 11

Job evaluation can be defined as the relative worth of various jobs in the organization based on internal comparisons.

Question 12

Benchmarking is a procedure in which a company compares its own practices against those of the competition.

Question 13

The use of "banding" in organizations may mean fewer promotional opportunities for employees.

Question 14

It is usually valid to compare return-on-investment ratios,such as revenues/labour costs,among organizations in different industries.

Question 15

A disadvantage of using pay grades is the increased administrative burden and costs.

Question 16

The quality and productivity of national labour forces do not vary dramatically between industrialized countries and developing countries.

Question 17

As a manager you would have the most crucial role of communication as you have the day-to-day interactions with your employees.

Question 18

Conceptually,a job structure can be defined as the relative pay of various jobs in an organization.

Question 19

Product market competition places a lower bound on labour costs and compensation.

Question 20

Non-key,or non-benchmark,jobs have relatively stable content and are common to many organizations.

Question 21

_____ are the different pay rates various employees may get for the same job.

A)Wage differentials
B)Key proximities
C)Compensable factors
D)Rate ranges

Question 22

A pay system where employees doing the same jobs are paid two different rates,depending on when they were hired is called _________.

A)an unfair wage plan
B)a two-tier wage plan
C)a two-level wage plan
D)an inequitable wage plan

Question 23

As in other areas of human resource management,_____ are typically responsible for making policies work.

A)top management teams
B)team leaders
C)consultants
D)line managers

Question 24

When using pay surveys to establish pay levels,all of the following are important activities EXCEPT:

A)include all jobs in an organization in the survey.
B)include both labour market and product market competitors.
C)decide if multiple surveys will be used.
D)decide how to weigh and combine pay data.

Question 25

Which of the following is a consequence of external equity perceptions in making pay level decisions?

A)Transfer
B)Promotion
C)Cooperation among employees
D)Attraction and retention of quality employees

Question 26

Skill-based and competency-based approaches have all but one of the following potential disadvantages.Name the exception.

A)Increased bureaucracy.
B)The challenge an organization faces in terms of using new skills effectively.
C)Decreased worker flexibility.
D)Employees "topping out."

Question 27

Weighting factors based on expert judgment refers to:

A)pay policy weights.
B)empirical weights.
C)a priori weights.
D)ex post weights.

Question 28

Which of the following theories describes the conditions under which the benefits of higher pay outweigh the higher costs?

A)Equity theory
B)Expectancy theory
C)Agency theory
D)Efficiency wage theory

Question 29

Research conducted on a two-tier wage plan found that lower-paid employees were more satisfied than average.This supports which theory?

A)Expectancy
B)Equity
C)Agency
D)Efficiency wage

Question 30

Workers' compensation legislation is federally governed and provides a no-fault,employer-funded program to protect employees from "the financial hardships associated with work-related injuries and occupational diseases."

Question 31

Executive pay is not symbolic and has no influence to the tone or culture of the organization.

Question 32

Which of the following is an example of an indirect payment?

A)Wages
B)Employment Insurance
C)Bonuses
D)Salaries

Question 33

The Canada Labour Code covers 90 percent of Canadian workers.

Question 34

In a recent research study,more effective communication of the reasons for an organization's pay-cuts had:

A)little effect on employees' attitudes and behaviours.
B)a negative effect on employee retention rates.
C)a large effect on reducing employee theft rates.
D)no effect on employees' perceived equity of pay.

Question 35

Key,or benchmark,jobs have all of the following characteristics EXCEPT:

A)relatively stable content.
B)are common to many organizations.
C)are jobs on which it is possible to obtain market pay survey data.
D)have many incumbents within the organization.

Question 36

Long-term compensation,typically in the form of stock plans,is the major component of CEO pay.

Question 37

The compa-ratio:

A)measures the degree to which actual pay is consistent with pay policy.
B)is defined as actual average pay for the grade divided by the minimum pay for the grade.
C)can range from 0 to 100 percent.
D)uses data from market pay surveys.

Question 38

_____ is reducing the number of job levels to achieve more flexibility in job assignments and in assigning merit increases.

A)Remunerating
B)Reorganization
C)Downsizing
D)Delayering

Question 39

Any consideration of where to locate production can be based on labour considerations alone.

Question 40

Which of the following is a factor to consider in keeping many types of production in one's own country which has high labour costs rather than shifting to low labour cost countries?

A)Relative labour costs are stable over time.
B)The quality and productivity of national labour forces generally do not vary.
C)Any consideration of where to locate production can be based on labour considerations alone.
D)The combination of lower labour costs and higher productivity translates into lower unit labour costs.

Question 41

An organization is paying their Associate Vice President of Human Resources the equivalent to the pay of the other Associate Vice Presidents within the organization as they all have relatively equal job evaluation points.The AVP of HR is earning more than HR AVPs in other organizations.The organization is focusing on what with regards to their approach to compensation?

A)External comparison
B)Cross-functional comparison
C)Internal comparison
D)Linear comparison

Question 42

A broad band:

A)is a combination of pay grades that reduces the number of levels in a pay structure.
B)refers to the distance between the minimum and maximum pay rate in a pay grade.
C)is the salary range attached to white-collar jobs.
D)reduces flexibility in assigning merit increases.

Question 43

Actual pay is lagging behind the pay policy when the compa-ratio is:

A)greater than 1.00.
B)less than 1.00.
C)greater than 100.
D)in the range of 1 to 10.

Question 44

All of the following are ways of enhancing the organization's competitive position in the product market EXCEPT:

A)staff expansion.
B)wage and salary freezes.
C)hiring freezes.
D)sharing benefits costs with employees.

Question 45

Who are employees who are not eligible for overtime pay?

A)Exempt employees.
B)Employees paid via skill-based pay systems.
C)Employees paid via knowledge-based pay systems.
D)Employees paid via job-based systems.

Question 46

Comparable worth is a public policy that:

A)advocates remedies for any undervaluation of jobs based on market-pay data.
B)advocates equal pay for jobs of equal content.
C)has been consistently upheld in court rulings.
D)advocates remedies for any undervaluation of women's jobs.

Question 47

__________ is pay based on the skills employees acquire and are capable of using.

A)Labour-based pay
B)Skill-based pay
C)Education-based pay
D)Knowledge-based pay

Question 48

Which of the following is not a true statement concerning product market competition?

A)In the absence of clear evidence of on productivity differences,costs need to be closely monitored.
B)Organizations compete on multiple dimensions (e.g. ,quality,service,and price).
C)It is the degree to which an organization must pay to compete against other companies that hire similar employees.
D)It places an upper bound on labour costs and compensation.

Question 49

Company Ontarioba has an average pay of 3,500 for the Human Resources Specialist with a midpoint of 3,400 and an average pay of 2,000 for the Human Resources Generalist with a midpoint of 3,000.According to the compa-ratio the:

A)HR Specialist is exceeding and the HR Generalist is lagging.
B)HR Specialist is lagging and the HR Generalist is exceeding.
C)HR Specialist is lagging and the HR Generalist is lagging.
D)HR Specialist is exceeding and the HR Generalist is exceeding.

Question 50

Minimum wage,hours of work,and overtime are a few examples of minimum standards that employers must adhere to under the:

A)Employment Equity Act.
B)Equal Employment Act.
C)Equal Pay Act.
D)Employment Standards Act.

Question 51

The issue of ___________ has received widespread attention in the press although there are very few top executives and their compensation accounts for only a small share of an organization's total labour costs.

A)executive expense accounts
B)executive retirement plans
C)executive buy outs
D)executive pay

Question 52

Which of the following statements about exemption is TRUE?

A)Exempt occupations include most hourly jobs.
B)Exempt status depends on job qualifications and experience.
C)Exempt employees are covered by the Employee Standards Act.
D)Exempt employees are not eligible for overtime pay.

Question 53

Compensation management could be improved in most organizations by:

A)improving the technical merit of compensation decisions.
B)developing better theoretical bases for pay decisions.
C)increasing employee participation in compensation decision making.
D)offering better justification for the selection of compensation programs.

Question 54

_____ pay comparisons focus on what employees within the same organization,but in different jobs,are paid.

A)External equity
B)Interior incentive
C)Internal equity
D)Exterior incentive

Question 55

A disadvantage of using the pay-setting approach that groups jobs into a smaller number of pay grades is that:

A)it increases administrative burden.
B)it permits less flexibility in moving employees from job to job.
C)it results in some jobs being underpaid and others overpaid.
D)it increases costs of surveying the market.

Question 56

Implications of the equity theory for managing employee compensation include all but one of the following.Name the exception.

A)Employees evaluate their pay by comparing it with what others get paid.
B)Employees look at the intrinsic aspect of their work when making pay evaluations.
C)Employees work attitudes and behaviours are influenced by their pay comparisons.
D)Employee perceptions are what determine their pay evaluations.

Question 57

Competency-based pay is generally directed toward:

A)non-exempt employees.
B)international employees.
C)exempt employees.
D)unionized employees.

Question 58

Which pay-setting approach places the highest relative emphasis on external comparisons?

A)Basing pay on market surveys that cover as many key jobs as possible.
B)Deriving pay rates for all jobs based on the number of job evaluation points.
C)Grouping jobs into a smaller number of pay grades.
D)Basing pay on skills employees have acquired.

Question 59

Which of the following is not a recognized limitation of a job-based pay structure?

A)It encourages a bureaucratic orientation due to its reliance on inflexible job descriptions.
B)It reinforces top-down decision-making and information flow.
C)It may not reward desired behaviours,particularly in a rapidly changing environment.
D)It is difficult to explain to employees.

Question 60

Which theory states that market forces provide the most efficient means of pricing and allocating people to jobs?

A)Equity theory
B)Efficiency wage theory
C)Economic theory
D)Expectancy theory

Question 61

All of the following are counterproductive ways of restoring equity EXCEPT:

A)decreasing one's outcomes.
B)reducing one's own inputs.
C)leaving the situation that generates perceived inequity.
D)refusing to cooperate with employees who are perceived as over-rewarded.

Question 62

A market pay policy line:

A)is developed using non-key jobs.
B)can be generated using a statistical procedure called regression analysis.
C)requires market pay rate data on all jobs in the organization.
D)is always expressed as a linear relationship between job evaluation points and pay rates.

Question 63

The process of reducing the number of job levels within an organization is called ___________.

A)benchmarking
B)delayering
C)pay grading
D)range spreading

Question 64

Compensation management could be improved in most organizations by

A)Developing better theoretical bases for pay decisions.
B)Increasing employee participation in compensation decision making.
C)Offering better justification for the selection of compensation programs.
D)Improving the technical merit of compensation decisions.

Question 65

Pay rate range spreads:

A)are usually larger at higher grade levels.
B)represent the distance between the midpoint and the maximum pay rates in each grade.
C)represent a measure of the range of pay rates paid across an entire organization.
D)are usually largest for blue-collar jobs in unionized settings.

Question 66

Both pay level and job structure are characteristics of organizations and reflect decisions about:

A)human resource development.
B)individual employees.
C)organizational goals.
D)jobs.

Question 67

Which of the following is NOT a pay-setting approach to developing pay structure?

A)Market survey data
B)Pay remuneration
C)Pay policy line
D)Pay grades

Question 68

The job evaluation process includes all of the following EXCEPT:

A)compensable factors.
B)a weighting scheme.
C)pay ranges.
D)scores (ratings).

Question 69

Consider the same two jobs in two different organizations.In Organization 1,jobs A and B are paid an annual average compensation of 30,000 and 50,000,respectively.In Organization 2,the pay rates are 25,000 and 55,000,respectively.Which of the following is true?

A)Organizations 1 and 2 have the same pay level
B)Organizations 1 and 2 have the same job structures
C)Organizations 1 and 2 have the same individual pay rates
D)Organizations 1 and 2 use incentive pay systems

Question 70

_____ refers to the relative pay of jobs in an organization.

A)Pay structure
B)Equity structure
C)Job structure
D)Task structure

Question 71

When deciding where to locate production an increasing number of organizations have decided it is more important to focus on ________________.

A)skill levels
B)labour laws
C)labour costs
D)non-labour considerations

Question 72

Lower labour costs can be a reflection of __________________.

A)lower average skill of the workforce
B)lower rates of unemployment
C)labour laws
D)the type of labour

Question 73

Research on the effects of two-tier wage plans has found that:

A)lower-paid employees were less satisfied on average than higher-paid employees.
B)those in the lower tier used lower comparison standards than those in the higher tier.
C)lower-paid employees compared their pay to those in the higher tier.
D)lower-paid employees expected over time to be promoted into the second tier.

Question 74

_____ comparisons may be more important when attracting and retaining qualified employees is difficult,and when the costs of recruiting replacements are high.

A)Labour market
B)International
C)Product market
D)Commodity market

Question 75

According to the efficiency wage theory,being a higher-pay employer is more beneficial when organizations:

A)can easily monitor employee performance.
B)are centralized.
C)require highly skilled employees.
D)have specialized work structures.

Question 76

Which of the following is a major factor when comparing the differences in the cost of labour between countries?

A)The country's Gross Domestic Product.
B)Exchange rates.
C)Labour laws.
D)The type of labour.

Question 77

Glass ceiling refers to a(n):

A)situation where actual job performance is used in decisions in which women are less likely to encounter unequal treatment.
B)advancement opportunity for women and other protected groups that may be hindered by unequal access to the "old boy" or informal network.
C)situation where there are statistically significant compensation disparities between similarly situated employees.
D)opportunity that allows women and minorities to come within sight of the top management,but not advance to them.

Question 78

Typically,long-term compensation for a CEO pay comes in:

A)Stock plans.
B)Health benefits.
C)Pension plans.
D)Salary.

Question 79

The lowest hourly wage an employer is legally allowed to pay an employee in the relevant province or territory of Canada for which such wages are determined is known as:

A)Maximum wage
B)Minimum wage
C)Mandatory wage
D)Wage equity

Question 80

An example of a typical compensable factor is:

A)social status.
B)working conditions.
C)longevity.
D)gender.