Deck 9: Direct Financial Compensation Core Compensation:

Question 1

Wages,salaries,bonuses,and commissions are referred to as ________.

A) financial benefits
B) direct financial compensation
C) indirect financial compensation
D) discretionary workplace benefits

Answer 1

B
Explanation: B)The Walsh-Healy Act of 1936 requires companies with federal supply contracts exceeding $10,000 to pay prevailing wages as determined by the Secretary of Labor.

Question 2

As a pediatric nurse,Cary experiences a significant amount of job satisfaction,which is considered ________.

A) nonfinancial compensation
B) indirect compensation
C) organizational fit
D) personal equity

Answer 2

A
Explanation: A)Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works.This aspect of nonfinancial compensation involves both psychological and physical factors within the firm's working environment.

Question 3

If a person is to maintain a previous level of nominal wages,then a pay increase must be roughly equivalent to the ________.

A) cost of living increase
B) industry average
C) national average
D) market rate

Answer 3

A
Explanation: A)Although not a problem in recent years,the logic for using cost of living as a pay determinant is both simple and sound: when prices rise over time and pay does not,real pay is actually lowered.A pay increase must be roughly equivalent to the increased cost of living if a person is to maintain his or her previous level of real wages.

Question 4

What form of compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works?

A) nonfinancial compensation
B) direct financial compensation
C) indirect financial compensation
D) total internal compensation

Question 5

Which term refers to the face value of pay?

A) direct compensation
B) nominal compensation
C) real compensation
D) market-competitive pay

Question 6

How can the General Schedule best be described?

A) performance-based pay
B) seniority-based pay
C) person-focused pay
D) state government pay system

Question 7

On average,companies spent $31.57 per hour worked per employee in December 2013.Of this total,how much did they spend on wages and benefits,respectively?

A) $28.63 and $9.80, respectively per employee per hour worked
B) $21.77 and $9.80, respectively per employee per hour worked
C) $120.93 and $99.21, respectively, per employee per day worked
D) $7.25 and $4.56, respectively, per employee per hour worked

Question 8

An escalator clause in a labor agreement that automatically increases wages as the U.S.Bureau of Labor Statistics' Consumer Price Index rises is known as a ________.

A) BARS
B) COPE
C) COLA
D) POS

Question 9

Indirect financial compensation consists of all financial rewards that are not included in direct compensation,such as commissions and spot bonuses.

Question 10

Ellen received a one-time bonus of $500 from her employer as a reward for her significant contribution on a project.Which of the following did Ellen most likely receive?

A) a performance incentive
B) an experience bonus
C) a premium payment
D) a spot bonus

Question 11

Nonfinancial compensation consists of the satisfaction that a person receives from the psychological environment in which the person works.

Question 12

Which type of compensation increases an employee's base pay and contributes to cost control over time??

A) merit pay
B) incentive pay
C) person-focused pay
D) seniority-based pay

Question 13

Which term refers to the total of all rewards provided to employees in return for their services?

A) benefits
B) commissions
C) bonuses
D) compensation

Question 14

Which of the following is an example of indirect financial compensation (employee benefits)?

A) sales commission
B) psychological welfare
C) paid vacation
D) hourly wage

Question 15

Which term refers to a one-time annual financial award based on productivity?

A) bonus
B) merit award
C) skill-based pay
D) competency-based pay

Question 16

What is a limitation of profit sharing plans?

A) profit sharing plans are excessively costly
B) employees have a difficult time understanding their particular contributions to company profits
C) profit sharing adds recurring increases to base pay year over year
D) profit sharing plans create unhealthy competition between employees

Question 17

Direct financial compensation consists of the pay that a person receives in the form of wages,salaries,commissions,and health benefits.

Question 18

What is compensation? Define direct financial,indirect financial and nonfinancial compensation.

Question 19

Todd,a financial analyst,was recently hired by Maxwell Enterprises.After one year with the firm,Todd will be eligible to receive a pay increase added to his base pay that is based on his performance level.Which term best describes this type of compensation?

A) commission
B) merit pay
C) piecework
D) spot bonus

Question 20

Compensation is the total of all rewards provided to employees in return for their services.

Question 21

Which of the following is a gainsharing plan that provides a financial reward to employees for labor cost savings resulting from their suggestions?

A) deferred plan
B) Scanlon plan
C) current plan
D) Rucker plan

Question 22

Nominal compensation and real compensation are never equal.

Question 23

The objective of ________ is to improve productivity by rewarding those who best assist in achieving this goal.

A) performance-based pay
B) cost-of-living allowances
C) skill-based pay
D) salary compression

Question 24

Which type of profit sharing plan provides payment to employees in cash or stock as soon as profits have been determined?

A) deferred plan
B) current plan
C) performance plan
D) gainsharing plan

Question 25

Which of the following is a disadvantage associated with team-based pay?

A) Exemplary performers become disgruntled and quit.
B) Performance standards are difficult to develop.
C) Output is difficult to categorize and assess.
D) Members lack the time to assist others.

Question 26

The rationale for adopting seniority pay plans is described by which theory?

A) job-based theory
B) pay-for-performance theory
C) human capital theory
D) equity theory

Question 27

Labor unions tend to favor ________ as the basis for compensation changes.

A) performance
B) experience
C) seniority
D) skill

Question 28

What gainsharing plan embodies management-labor cooperation,collaborative problem-solving,teamwork,trust,open-book management and servant leadership?

A) deferred plan
B) Scanlon plan
C) Roth plan
D) current plan

Question 29

Cost-of-living allowances are becoming increasingly popular in nonunion settings.

Question 30

John works at a company that uses a variety of heavy machines.John knows how to operate three of the machines,and if he learns how to use another one,his pay will increase.Which type of compensation plan is most likely used by John's employer?

A) variable pay
B) invariable pay
C) lump sum pay
D) skill-based pay

Question 31

Which performance-based pay system assumes that employees who know more are more valuable to the firm and deserve to be rewarded for their efforts in acquiring new skills?

A) variable pay
B) merit pay
C) lump sum pay
D) skill-based pay

Question 32

Which of the following is an incentive pay plan designed to bind employees to the firm's performance by providing payment based on improved company performance or other outcomes such as attaining cost-efficiency?

A) deferred
B) job sharing
C) compression
D) gainsharing

Question 33

A compensation plan that results in the distribution of a predetermined percentage of the firm's profits to employees is referred to as ________.

A) team sharing
B) piecework
C) profit sharing
D) broadbanding

Question 34

Anna,a marketing manager,frequently takes development and training courses to learn new skills.Anna is financially rewarded by her employer each time she acquires a new capability.What type of compensation plan is most likely used by Anna's employer?

A) variable pay
B) skill-based pay
C) lump sum pay
D) competency-based pay

Question 35

Which type of profit sharing plan places company contributions in an irrevocable trust and credits individual employees' accounts?

A) deferred plan
B) current plan
C) stock plan
D) defined plan

Question 36

PetFair,a national chain of pet supply stores,employs nearly 1,000 workers.In the past two years,the firm's market share has dropped and employee turnover has increased.The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers.Currently,PetFair employees receive compensation primarily based on years with the firm and job level.Which of the following,if true,best supports the idea of offering a Scanlon plan to employees at PetFair?

A) The environment at PetFair lacks teamwork, trust, and collaboration among employees.
B) Perquisites for key executives at PetFair were eliminated during the 2008 recession.
C) PetFair uses broadbanding to price jobs at all levels of the organization.
D) The Hay plan is already utilized successfully at PetFair.

Question 37

PetFair,a national chain of pet supply stores,employs nearly 1,000 workers.In the past two years,the firm's market share has dropped and employee turnover has increased.The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers.Currently,PetFair employees receive compensation primarily based on years with the firm and job level.Which of the following,if true,best supports the argument that PetFair should implement a competency-based pay system?

A) PetFair uses the classification method to price management jobs.
B) PetFair sales representatives earn straight commissions.
C) PetFair managers experience variable work assignments.
D) PetFair offers a profit-sharing plan to top executives.

Question 38

Vesting on a graduated basis has a tendency to ________.

A) discourage participation
B) improve recruiting
C) increase hiring
D) reduce turnover

Question 39

Individuals performing in professional jobs are compensated initially for their ________.

A) productivity
B) goal achievement
C) knowledge
D) extensive experience

Question 40

Claudia works as a seamstress at a clothing company.She receives $10 for each pair of pants she sews.What type of pay plan is Claudia's employer most likely using?

A) variable pay
B) piecework
C) lump sum pay
D) skill-based pay

Question 41

Merit pay is a one-time financial award based on productivity.

Question 42

The Scanlon plan provides a financial reward to employees for savings in labor costs that result from their suggestions and serves as a type of participative management program.

Question 43

According to research,merit pay,which is similar to an annual bonus,is highly successful in motivating employee performance and improving compensation satisfaction.

Question 44

What is the most important standard for determining pay?

A) pay leaders
B) market rates
C) geographic areas
D) organizational levels

Question 45

When the United Auto Workers negotiate with GM and Ford for higher wages,which legislation supports the union's right to engage in collective bargaining?

A) Title VII of the Civil Rights Act
B) Equal Pay Act
C) Davis-Bacon Act
D) National Labor Relations Act

Question 46

Profit sharing is a compensation plan that helps HR managers with recruiting and retaining employees.

Question 47

Competency-based pay plans are increasingly common as employees shift from traditional jobs to variable work assignments.

Question 48

Which Act requires companies with federal supply contracts exceeding $10,000 to pay prevailing wages?

A) Davis-Bacon Act
B) Walsh-Healy Act
C) Norris-LaGuardia Act
D) Fair Labor Standards Act

Question 49

The following describes the possible effect of wages in union settings on wages in nonunion settings.

A) market match policy
B) mimicking effect
C) spillover effect
D) pay following effect

Question 50

Piecework is an incentive pay plan where employees are paid for each unit they produce.

Question 51

What are the advantages and disadvantages of team-based pay?

Question 52

In most cases,which of the following is NOT a contextual influence on direct financial compensation?

A) labor unions
B) indirect financial compensation
C) labor market
D) legislation

Question 53

Seniority is the length of time an employee has been associated with the company,division,department,or job.

Question 54

Which Act was the first national law to deal with minimum wages?

A) Davis-Bacon Act
B) Railway Labor Act
C) Norris-LaGuardia Act
D) Fair Labor Standards Act

Question 55

What is a profit-sharing plan? Identify and discuss the three basic profit-sharing plans.

Question 56

Merit payments are relatively small gifts given to employees for outstanding work or effort during a brief period of time.

Question 57

In general gainsharing plans are intended to link employees to organizational productivity by focusing on cost-efficiency.

Question 58

Which Act establishes a minimum wage,requires overtime pay and record keeping,and provides standards for child labor?

A) Davis-Bacon Act
B) Walsh-Healy
C) Norris-LaGuardia Act
D) Fair Labor Standards Act (FLSA)

Question 59

Which Act requires federal construction contractors with projects valued in excess of $2,000 to pay at least the prevailing wages in the area?

A) Railway Labor Act
B) Davis-Bacon Act
C) Norris-LaGuardia Act
D) Fair Labor Standards Act

Question 60

Compare and discuss skill-based and competency-based systems of pay.

Question 61

Overtime pay is not legally required for ________.

A) nonexempt employees
B) exempt employees
C) blue-collar workers
D) salaried employees

Question 62

Which federal law established standards for child labor?

A) Social Security Act
B) Walsh-Healey Act
C) Fair Labor Standards Act
D) Labor Management Relations Act

Question 63

The Fair Labor Standards Act (as amended)provides for all of the following EXCEPT ________.

A) minimum wage
B) overtime pay
C) age discrimination
D) child labor standards

Question 64

Factors that must be taken into account when building compensation systems include the labor market,labor unions,interindustry wage differentials,the economy,and legislation.

Question 65

What is the process that determines the relative value of one job in relation to another?

A) job specification
B) job description
C) job evaluation
D) job analysis

Question 66

Unions' gains often influence nonunion companies' compensation practices.Many nonunion companies offered similar compensation to their employees.

Question 67

What form of pay equity exists when employees are paid according to the differences in job characteristics within the company?

A) internal
B) employee
C) external
D) team

Question 68

Which of the following is NOT an exception for paying women less than men for performing equal work?

A) seniority-based pay
B) merit-based pay
C) any factor other than the sex of an employee
D) any factor, including the sex of an employee

Question 69

As an HR manager,what tool would you most likely use to determine if internal equity exists at your firm?

A) job analysis
B) job evaluation
C) compensation survey
D) behavioral methods study

Question 70

What is the primary by-product of job analysis?

A) human resource planning
B) job evaluation
C) equity analysis
D) job description

Question 71

The Walsh-Healy Act was the first national law to mandate a minimum wage.

Question 72

Interindustry differentials can be attributed to a number of factors,including the industry's product market,the degree of capital intensity,the profitability of the industry,unionization,and gender mix of the workforce.

Question 73

Which of the following job evaluation techniques is placed in the non quantitative type?

A) point method
B) ranking method
C) job description method
D) factor comparison method

Question 74

Nonexempt employees are categorized as executive,administrative,professional employees,and outside salespersons.

Question 75

There are many contextual influences that must be taken into account when designing and implementing direct financial compensation plans,and one of them is interindustry wage or compensation differentials.Briefly,state the implications of these differentials for establishing competitive compensation programs.Then,explain the factors that contribute to the existence of interindustry wage differentials.

Question 76

Which of the following would NOT be an exempt employee under the Fair Labor Standards Act?

A) production manager
B) machine operator
C) senior statistician
D) outside salesperson

Question 77

Pay for similar jobs do not vary across different labor markets.

Question 78

Management relies on all of the following to help determine the relative worth of a job,EXCEPT ________.

A) job analysis
B) job enumeration
C) job descriptions
D) job evaluation

Question 79

A senior statistician would probably be categorized as what type of employee under the Fair Labor Standards Act?

A) administrative
B) executive
C) professional
D) outside salesperson

Question 80

One of the primary purposes of the Fair Labor Standards Act of 1938 was to eliminate substandard wages and to prevent children from excessive work hours.