Deck 9: Direct Financial Compensation

Question 1

Which term refers to a perception of fair pay treatment for employees?

A) direct compensation
B) financial equity
C) benchmark job
D) team equity

Answer 1

B
Explanation: B) Financial equity means a perception of fair pay treatment for employees. Ideally, compensation will be evenhanded to all parties concerned and employees will perceive it as such.

Question 2

Current trends in executive pay involve linking compensation with ________.

A) multi-year contract packages
B) deferred stock options
C) performance results
D) seniority systems

Answer 2

C
Explanation: C) The business and regulatory environment has changed and many organizations are rethinking executive compensation practices, including pay, bonuses, and severance pay. Performance assessment and accountability are the leading trends, and many executive salaries are now linked to performance results.

Question 3

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 3

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 4

Which term refers to the motivation theory that involves people comparing their job contributions and benefits to those of others?

A) expectancy theory
B) equity theory
C) reinforcement theory
D) hierarchy theory

Question 5

Assembly workers at GM receive wages that are comparable to those received by assembly workers at Ford. What form of equity most likely exists at GM?

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

Question 6

Firms which pay below the average labor market price for jobs will most likely have ________.

A) higher productivity levels
B) higher turnover rates
C) lower unit labor costs
D) fewer grievances

Question 7

Which of the following is an example of indirect financial compensation?

A) sales commission
B) annual bonus
C) social security
D) hourly wage

Question 8

What form of equity exists when employees are paid according to the relative value of their jobs within the same organization?

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

Question 9

The average pay that most employers provide for a similar job in a particular area or industry is known as the ________ rate.

A) pay follower
B) pay leader
C) market
D) wage

Question 10

What form of equity is achieved when work groups are rewarded based on group productivity?

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

Question 11

Benson Enterprises pays higher salaries than its competitors in order to attract high quality, productive employees. Which type of compensation policy is most likely in place at Benson Enterprises?

A) market rate
B) pay leader
C) pay follower
D) individual rate

Question 12

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 13

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

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

Question 14

Organizations that pay higher wages and salaries than competing firms are referred to as ________.

A) market rate leaders
B) going rate leaders
C) pay followers
D) pay leaders

Question 15

What form of equity exists when individuals performing similar jobs for the same firm are paid according to factors unique to the individual, such as performance level or seniority?

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

Question 16

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 17

In most cases, which of the following is NOT a determinant of direct financial compensation?

A) organization
B) marital status
C) labor market
D) employee's job

Question 18

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 19

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

A) job analyses
B) job evaluations
C) labor statistic reports
D) compensation surveys

Question 20

Which of the following provides general guidelines for making compensation decisions?

A) pay leaders
B) market rates
C) compensation policies
D) compensation packages

Question 21

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

Question 22

If a person is to maintain a previous level of real 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

Question 23

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 24

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 25

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 26

A method used to obtain data regarding what other firms are paying for specific jobs or job classes within a given labor market is referred to as a ________.

A) market survey
B) turnover survey
C) compensation survey
D) critical analysis survey

Question 27

What is the primary by-product of job analysis?

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

Question 28

Management techniques used for determining a job's relative worth include all of the following EXCEPT ________.

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

Question 29

What are the two primary factors that affect cost of living?

A) salaries and location
B) location and inflation
C) inflation and food prices
D) housing prices and location

Question 30

What is the most important standard for determining pay?

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

Question 31

Overtime pay is not legally required for ________.

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

Question 32

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 33

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 34

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 35

All of the following are typical results of a booming economy EXCEPT ________.

A) greater competition for workers
B) higher cost of living
C) greater supply of labor
D) higher price of labor

Question 36

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 37

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 38

An escalator clause in a labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics' cost-of-living index rises is known as a ________.

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

Question 39

Which 2009 law requires publicly-traded covered institutions to permit a shareholder vote to approve compensation for top executives?

A) Fair Labor Standards Act
B) National Labor Relations Act
C) Emergency Economic Stabilization Act
D) American Recovery and Reinvestment Act

Question 40

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) Civil Rights Act
B) Equal Pay Act
C) Davis-Bacon Act
D) Wagner Act

Question 41

Omar works in the HR department at a large manufacturing firm. Omar needs a simple method for conducting a job evaluation. Which method would be most appropriate for Omar?

A) factor comparison
B) classification
C) ranking
D) point

Question 42

Which job evaluation plan uses the compensable factors of know-how, problem solving, and accountability?

A) Hay guide chart-profile method
B) classification method
C) factor comparison method
D) point method

Question 43

Which tool is frequently used by managers to determine the appropriate number of pay grades for a company?

A) bar graphs
B) pie charts
C) flow charts
D) scatter diagrams

Question 44

Which term refers to a grouping of similar jobs to simplify job pricing?

A) job analysis
B) pay range
C) pay grade
D) job pricing

Question 45

Irene, an HR manager, needs to use a quantitative job evaluation method. Which two methods would meet Irene's needs?

A) point and ranking
B) ranking and classification
C) point and factor comparison
D) factor comparison and classification

Question 46

Placing a dollar value on a job's worth is called ________.

A) job analysis
B) job enlarging
C) job evaluation
D) job pricing

Question 47

In determining pay grades, each dot on a scatter diagram represents ________.

A) one job
B) one worker
C) a job cluster
D) a department

Question 48

Which of the following is NOT one of the universal job factors of the factor comparison method?

A) working conditions
B) abstract thinking skills
C) physical requirements
D) responsibilities

Question 49

In the ________ of job evaluation, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth.

A) point method
B) factor comparison method
C) classification method
D) chart profile method

Question 50

What includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference?

A) job cluster
B) pay curve
C) job rank
D) pay range

Question 51

The primary purpose of job evaluation is to ________.

A) prepare job descriptions
B) eliminate internal pay inequities
C) lay the groundwork for job analysis
D) price jobs within a geographic area

Question 52

Nicole, an HR professional, needs to develop a job evaluation for a data analyst position at her firm. Nicole's manager wants a quantitative job evaluation that will be useful for a long time. Which method would be most appropriate?

A) point
B) profile
C) classification
D) ranking

Question 53

As the HR manager at a new firm, Kelly is responsible for the process of job evaluation. Kelly has completed a job evaluation for each position at the firm. What will most likely be the result of Kelly's work?

A) job hierarchy
B) financial equity
C) job enlargement
D) organizational fit

Question 54

Eric, an HR manager, is using a job evaluation method in which he assigns numerical values to specific job factors before calculating the sum of the values. Which method is Eric most likely using?

A) factor comparison
B) classification
C) ranking
D) point

Question 55

What is the LEAST likely reason that a firm would use job evaluation?

A) eliminating pay inequities
B) identifying the organization's job structure
C) estimating the average industrial wage rate
D) developing a hierarchy of job value for creating a pay structure

Question 56

Historically, some variation of which job evaluation plan has been the most popular option?

A) ranking
B) classification
C) factor comparison
D) point

Question 57

Which job evaluation method involves defining a number of grades to describe a group of jobs?

A) ranking
B) classification
C) factor comparison
D) point

Question 58

How many universal job factors are there with the factor comparison job evaluation method?

A) 3
B) 5
C) 7
D) 9

Question 59

In which job evaluation method do evaluators make decisions based on five universal elements?

A) ranking
B) classification
C) factor comparison
D) paired-comparison

Question 60

The fitting of plotted points to create a smooth progression between pay grades is known as a ________.

A) job cluster
B) wage curve
C) wage range
D) pay range

Question 61

What is a technique that collapses many pay grades into a few wide bands to improve organizational effectiveness?

A) job banding
B) job clustering
C) downsizing
D) broadbanding

Question 62

As an HR manager at an electronics firm, you learn that the position of Technician I at your firm is underpaid. What would be the best way to handle this situation?

A) notify the affected workers and their union representatives
B) immediately increase the pay for workers in that job
C) give workers in that job a bonus at the end of the year
D) wait until the next broadbanding opportunity

Question 63

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

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

Question 64

Pay differentials need to be greater to be meaningful, especially ________.

A) at lower job levels
B) at higher job levels
C) during periods of recession
D) during periods of inflation

Question 65

As an HR manager, you learn that an employee is being overpaid. What would be the best way to handle this situation?

A) promote the employee to a job in a higher pay grade
B) bring the job rate and employee into line with a pay cut
C) freeze the rate until cost-of-living increases bring it into line
D) redesign the job by quantifying it with the factor comparison method

Question 66

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 67

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 68

The provision of vacation days is generally provided on the basis of ________.

A) seniority
B) team performance
C) organization membership
D) experience and knowledge

Question 69

What creates the basis for a simpler compensation system that de-emphasizes structure and places greater importance on flexible decision making?

A) job evaluation
B) broadbanding
C) gainsharing
D) clustering

Question 70

Entry-level engineers at A-1 Manufacturing are paid as much as engineers who have been with the firm for five years. Which of the following best describes the situation at A-1?

A) single-rate pay system
B) competency-based pay
C) union representation
D) salary compression

Question 71

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 72

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 73

Firms most likely reward all employees regardless of position the same group life insurance in order to ________.

A) lower expenses
B) recognize loyalty
C) avoid litigation
D) overcome biases

Question 74

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 75

Ryan, an HR manager at a publishing firm, may begin broadbanding jobs. Which of the following is NOT a benefit of broadbanding?

A) focusing on vertical promotional options
B) simplifying the firm's compensation system
C) encouraging employees to develop laterally
D) adding flexibility to the firm's compensation system

Question 76

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 77

Which type of compensation increases an employee's base pay?

A) bonus
B) merit pay
C) spot bonus
D) variable pay

Question 78

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 79

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 80

What is the most common variable pay for performance?

A) merit pay
B) bonus
C) skill-based pay
D) piecework