Deck 8: Designing Pay Levels, Pay Mix, and Pay Structures

Question 1

Pay ranges:

A)do not use pay to recognize individual performance differences
B)may vary for jobs within a single pay grade
C)exist whenever two or more rates are paid to employees performing the same job
D)reduce managers' flexibility to deal with pressures from external markets
E)fix a single rate to be paid to all employees performing the same job

Answer 1

C

Question 2

Apart from base pay and bonus, includes stock-based incentives too.

A)benefit
B)total compensation
C)fringe
D)nominal compensation
E)total cash

Answer 2

B

Question 3

Market pricing refers to:

A)adjusting the price of products according to the prices of competitors
B)combining jobs into a broader market band
C)relying on external market rates to set the internal pay structure
D)the point where supply and demand curves cross
E)paying rates that reflect product market conditions

Answer 3

C

Question 4

When data from a survey is adjusted to represent pay at the current or future date when the pay decisions will be implemented, it is known as:

A)frequency distributing
B)survey normalizing
C)survey levelling
D)survey restructuring
E)aging/trending survey data

Question 5

A data point that falls outside the majority of data points is known as a(n):

A)mean
B)outlier
C)median
D)variance
E)range

Question 6

Which of the following links a company's benchmark jobs on the horizontal axis with market rates paid by competitors on the vertical axis?

A)a market pay line
B)a quartile line
C)a pay range line
D)a pay policy line
E)a percentile line

Question 7

Variation is:

A)expressed as a percentage above the minimum of a pay range.
B)the distribution of rates around a measure of central tendency.
C)a data point that falls outside the majority of the data points.
D)the grouping of jobs considered substantially equal for pay purposes.
E)the value obtained by adding the base wages of all employees in a survey.

Question 8

Which of the following is the final decision involved in determining pay levels and designing pay structures?

A)designing and conducting the survey
B)determining the pay level policy
C)interpreting and applying results
D)defining the relevant market
E)balancing competitiveness with internal alignment through the use of ranges, flat rates, and/or bands

Question 9

Which of the following is true of hiring a third-party consultant instead of managing the survey internally?

A)It makes the process inefficient due to the lack of expertise.
B)It introduces subjectivity into the process.
C)It may trade off some power over the decisions that determine the quality of the data.
D)It reduces the company's expenses.
E)It helps the company gain a greater control in assessing the usefulness of the data.

Question 10

Which of the following is the first important decision involved in determining pay levels and designing pay structures?

A)constructing an internal pay policy line that reflects external pay policy
B)specifying the employer's external pay policy
C)designing the survey
D)defining the purpose of the compensation survey
E)choosing relevant market competitors to survey

Question 11

The amount of cash that competitors decide each job is worth is called:

A)a bonus
B)a fringe benefit
C)an incentive
D)piece rate
E)base pay

Question 12

Which of the following represents the relationship between pay ranges and pay grades?

A)The midpoints for each pay grade usually correspond to the points where the pay policy line crosses each range.
B)A pay grade is expressed as a percentage above the midpoint of the pay range.
C)Grades set the ceiling and floor on what the employer is willing to pay for the work; ranges refer to grouping of jobs.
D)Pay ranges set an upper and lower limit between which all wages for all jobs in a particular grade are expected to fall.
E)The competitive pay level for each range becomes the midpoint of the pay grade for that range.

Question 13

Which of the following is true about pay grades?

A)Pay grades are easy to design.
B)Jobs within a single pay grade may have different pay ranges.
C)Pay grades restrict an organization's ability to move people between jobs.
D)Pay grades are created by grouping jobs considered substantially equal.
E)Pay grades makes the pay structure inflexible.

Question 14

Which of the following is a systematic process of collecting and making judgments about payments made by other employers?

A)archival research
B)compensation survey
C)competency analysis
D)performance appraisal
E)recruitment questionnaire

Question 15

The mix of different forms of pay and their relative importance makes up the _.

A)pay level
B)pay package
C)base pay
D)pay band
E)pay grade

Question 16

In a survey report, when an employer's data is substantially out of line from other employers, it is called a(n):

A)congruity
B)synchronicity
C)anomaly
D)conformity
E)normality

Question 17

Multiplying survey data by some numerical factor that corresponds to the analyst's judgment of the differences between the company and the survey job is called:

A)survey forecasting
B)survey trending
C)survey banding
D)survey levelling
E)survey lagging

Question 18

Pay rates from market data used in pricing broad bands are known as:

A)pay grades
B)reference rates
C)pay ranges
D)anomalies
E)product rates

Question 19

When new organizations and jobs fuse together diverse knowledge and experience, relevant markets appear more like .

A)equity firms
B)defined markets
C)fuzzy markets
D)monopolies
E)knowledge markets

Question 20

Which of the following statements is true of market pay line?

A)A market pay line is a line of consumers in a market.
B)A market pay line links a company's benchmark jobs on the vertical axis with market rates paid by competitors on the horizontal axis.
C)A market pay line is constructed by adjusting pay policy line.
D)A market pay line reflects a firm's competitive position in the market.
E)A market pay line is adjusted in order to construct a pay policy line.

Question 21

Broadbanding reduces the size of pay ranges so that there is more cohesiveness in pay ranges.

Question 22

Compensation surveys provide the data for translating a policy into pay levels, pay mix, and structures.

Question 23

Grades and ranges offer managers the flexibility to deal with pressures from external markets and within the organization.

Question 24

Pay ranges are usually narrower for managerial jobs than for production jobs.

Question 25

Pay ranges fail to recognize individual differences in performance.

Question 26

A compensation survey is the systematic process of collecting and making judgments about the compensation paid by other employers.

Question 27

A pay range includes a minimum, a midpoint, and a maximum.

Question 28

In most organizations, the responsibility for managing the compensation survey lies with the chief financial officer.

Question 29

Trending is a process by which jobs considered substantially equal for pay purposes are grouped together.

Question 30

Broadbanding:

A)does not support boundaryless organizations that have eliminated layers of managerial jobs
B)does not allow cross-functional growth
C)fails to provide flexibility in defining job responsibilities
D)allows lateral movement of employees
E)makes mergers and acquisitions an elaborate and a difficult process

Question 31

Updating the market data to represent pay at the current or future date when the pay decisions will be implemented is called:

A)matching
B)compensating
C)survey levelling
D)aging/trending survey data
E)broadbanding

Question 32

One of the important questions asked while designing a compensation survey is: "Who should be involved in the survey design?"

Question 33

A market pay line is a way to set the external competitive position by adjusting the pay policy line.

Question 34

Which of the following steps involved in determining pay levels and designing pay structures immediately follows defining the purpose of a compensation survey?

A)selecting relevant market competitors to survey
B)setting a competitive pay policy
C)analyzing data statistically
D)interpreting survey results
E)designing the compensation survey

Question 35

A high degree of overlap among job ranges makes it more difficult to move employees from one range to another.

Question 36

The first major decision in designing pay structures pertains to defining the purpose of a compensation survey.

Question 37

The market pricing approach sets pay structures by relying almost exclusively on rates paid by competitors in the external market.

Question 38

provides a statistical summary of the distribution of going rates paid by competitors in the market.

A)Dispersion
B)Accretion
C)Regression
D)Accession
E)Progression

Question 39

reflects the cash value of the job plus bonuses paid to incumbents; it excludes stock options.

A)Total compensation
B)Incentive
C)Benefit
D)Base cash
E)Total cash

Question 40

Companies that adopt a market pricing strategy emphasize internal alignment.

Question 41

What needs to be considered before designing a survey?

Question 42

What is market pricing?

Question 43

What opportunities do pay ranges provide managers?

Question 44

What are the advantages and disadvantages of using broadbanding?

Question 45

What are the two steps in broadbanding?

Question 46

What is survey levelling?

Question 47

What are the three most commonly used survey measures for compensation surveys?

Question 48

Discuss how the market pay line and the pay policy line are used.

Question 49

Discuss the process of trending survey data.

Question 50

Describe the steps involved in market pricing.