Deck 9: Determining Pay and Benefits

Question 1

An organization can generally expect that an individual's satisfaction with his/her compensation is simply a function of the amount of compensation received.

Answer 1

False
Research cited in the text has found that the amount of pay has been found to be less important than its perceived fairness or equity.

Question 2

The Equal Pay Act bars employers from paying lower wages to one sex when the work of the two sexes is substantially equal.

Answer 2

True
The EPA bars employers from paying lower wages to one sex when the work of the two sexes is substantially equal.

Question 3

The Employee Retirement Income Security Act requires that employers provide all full-time employees with a retirement plan.

Answer 3

False
ERISA requires that employers follow certain rules if they decide to provide a retirement plan. Plans are strictly voluntary in nature.

Question 4

Skill-based pay systems are probably most effective in bureaucratic organizations that employ routine technologies under relatively stable conditions.

Question 5

The impact of labor costs on competitive advantage is particularly strong in service-related organizations.

Question 6

Contrary to equity theory predictions, tension-reducing responses occur only when employees believe they are underpaid.

Question 7

Job evaluation is the systematic process for determining the relative worth of a job.

Question 8

Federal law specifies that when state minimum wage levels differ from that required by federal law, the employer must pay the higher of the two rates.

Question 9

Labor costs have risen sharply in recent years due to escalating social security taxes.

Question 10

People judge the equity of their pay by comparing their outcome-to-input ratio with another person's ratio.

Question 11

Internal consistency exists when employees perceive their pay is fair relative to pay received by workers in other organizations who hold similar positions.

Question 12

The focus of analysis in job evaluation should be on the individual currently performing the job and not the requirements of the job.

Question 13

The primary federal law regulating overtime pay practices is the National Labor Relations Act.

Question 14

A skill-based pay system is based on the assumption that workers who acquire additional skills can make a greater contribution to the organization and, consequently, should be paid more.

Question 15

A firm achieves external competitiveness when its employees perceive that their pay is fair in relation to what each of them contributes to the firm.

Question 16

A Preferred Provider Organization (PPO) is a health insurance program where an employer has an agreement with doctors, hospitals, and other medical facilities to provide services at a discounted fee in return for the company's participation.

Question 17

Line managers have little responsibility with respect to federal wage and hour laws.

Question 18

Cafeteria plans allow employees to choose among various benefits and levels of coverage.

Question 19

Employee compensation is all forms of financial returns and tangible services and benefits employees receive as part of an employment relationship.

Question 20

Validity is achieved when two people evaluating the same job provide similar ratings.

Question 21

Line managers play a critical role in controlling an organization's cost associated with unemployment and workers' compensation claims.

Question 22

____ refers to employees perceiving that their pay is fair relative to the pay coworkers in the same organization receive.

A) Internal competitiveness
B) External competitiveness
C) Internal consistency
D) External consistency

Question 23

Which of the following standards for conducting job evaluation indicate that those making the evaluations should be quite knowledgeable of the jobs being rated?

A) Accuracy of information
B) Consistency
C) Freedom from bias
D) Representativeness

Question 24

Which of the following refers to the perceptions that people have regarding the returns they get for the work they perform?

A) Inputs
B) Compensable factors
C) Resources
D) Outcomes

Question 25

Initial salary offers should be based on candidate qualifications and salary history.

Question 26

If you allow an employee to leave early with the promise to make up the time another day, the make-up time must be scheduled for the same week in which the time off was granted.

Question 27

When making salary offers, you should remember that your bargaining power is greater in a tight job market.

Question 28

Unemployment compensation benefits are funded by both employer and employee contributions.

Question 29

An employee who arrives at work early and begins working before the official start of the workday generally must be paid for the time worked.

Question 30

To entice an applicant to accept an offer, the offer should be about 35 to 40 percent greater than the applicant's previous salary.

Question 31

____ refers to employees perceiving that their pay is fair relative to the pay received by workers in other organizations who hold similar positions.

A) Internal consistency
B) External competitiveness
C) Internal competitiveness
D) External consistency

Question 32

The development and administration of a company's compensation system is primarily the responsibility of the HRM department.

Question 33

When calculating overtime, a worker's hours must be averaged over at least four weeks.

Question 34

People usually judge the equity of their pay by comparing their outcome-to-input ratio with all but whom among the following?

A) People doing the same job within the same organization.
B) People doing different jobs within the same organization.
C) People doing the same job in other organizations.
D) People doing different jobs in other organizations.

Question 35

When employees' perception of inequity is based on external comparisons, the employees are more likely to:

A) quit their job.
B) reduce effort.
C) work harder.
D) steal from their employer.

Question 36

According to compensation expert Richard Henderson, "probably no one cost of business is more controllable and has a greater influence on profits than ____ costs."

A) commission
B) marketing
C) legal
D) labor

Question 37

____ is the systematic process for determining the worth of a job.

A) Job evaluation
B) Job analysis
C) Job shadowing
D) Job enrichment

Question 38

To lessen the chance of having to pay for unauthorized overtime, supervisors should be trained to avoid pressurizing employees to report for work early, stay late, or to take work home.

Question 39

All but which of the following results from a firm's compensation system being viewed as inadequate?

A) Top applicants may reject the company's employment offers.
B) Current employees may choose to leave the organization.
C) Forceful implementation of massive layoffs.
D) Current employees may begin to behave unproductively.

Question 40

Which of the following refers to the perceptions that people have concerning what they contribute to a job?

A) Effort
B) Input
C) Performance
D) Participation

Question 41

Job evaluation ratings focus on:

A) requirements of the job.
B) requirements of the jobholder.
C) key selection criteria.
D) personal requirements.

Question 42

When job evaluations have been completed, jobs are grouped into:

A) job grades.
B) classification grades.
C) comparable grades.
D) pay grades.

Question 43

A group of individuals convened for the purpose of making job evaluations is called a:

A) performance appraisal committee.
B) job evaluation committee.
C) grievance team.
D) job analysis team.

Question 44

All but which of the following are included in the primary information sought in a salary survey?

A) The established salary range.
B) The actual salary range.
C) The proposed salary range.
D) The average salary level now being paid.

Question 45

After the pay practices of other companies have been identified using a salary survey, an organization sets a ____ stipulating how well it will pay its employees relative to the market.

A) pay policy
B) pay structure
C) pay range
D) pay grade

Question 46

____ are jobs that are performed in a similar manner in all companies and seen as a basis for making meaningful comparisons.

A) Red-circle jobs
B) Equitable jobs
C) Benchmark jobs
D) Comparable jobs

Question 47

All but which of the following is a correct step in the development of a point-factor rating scale used to determine job worth?

A) Select and define the compensable factors.
B) Determine the number of degrees for each factor.
C) Weigh each compensable factor in terms of its relative importance.
D) Assign point values to the degrees giving the highest points for the least weight.

Question 48

Where do most employers set the market rate when establishing pay ranges?

A) In the top half of the range
B) At the midpoint of the range
C) In the bottom half of the range
D) At the bottom of the range

Question 49

Skill-based pay programs would probably be least effective in:

A) organizations that have few hierarchical levels.
B) bureaucratic organizations that rely on routine technology.
C) companies that use self-managed work teams.
D) organizations that engage in decentralized decision making.

Question 50

____ generate information on pay rates offered by a firm's competitors for certain benchmark jobs.

A) Equity surveys
B) Salary surveys
C) Price surveys
D) Market surveys

Question 51

Information regarding the amount of skill and effort required to perform the job, the difficulty of the job, and the amount of responsibility assumed by the jobholder is used to evaluate:

A) job worth.
B) job performance.
C) job content.
D) job context.

Question 52

____ is achieved when two people evaluating the same job provide similar ratings.

A) Validity
B) Reliability
C) Equity
D) Fairness

Question 53

A pay policy is based on a firm's:

A) profitability.
B) market capitalization.
C) HR plans.
D) strategic plans.

Question 54

In the point-factor method of job evaluation, jobs are evaluated separately on several criteria called:

A) compensable factors.
B) value-added factors.
C) garnishment factors.
D) seniority factors.

Question 55

Organizations must ensure all but which of the following while selecting benchmark jobs?

A) All the firm's jobs are selected.
B) Each job is clearly defined.
C) Jobs represent all points along the pay hierarchy.
D) Jobs encompass a sizable number of employees.

Question 56

What is the regression line indicating the statistical relationship between job evaluation points and prevailing market rates called?

A) Pay rate line
B) Pay policy line
C) Pay worth line
D) Pay range line

Question 57

What range spread do most organizations establish for professional and lower-level management position pay rates?

A) 10 to 25 percent
B) 25 to 35 percent
C) 35 to 60 percent
D) 60 to 120 percent

Question 58

____ is achieved when employees believe that their pay fairly reflects their level of contribution to the organization.

A) Internal consistency
B) External competitiveness
C) Internal competitiveness
D) Employee contributions equity

Question 59

A ____ specifies the minimum and maximum pay rates for all jobs within a grade.

A) pay range
B) pay rate
C) pay line
D) pay factor

Question 60

Standards that organizations should employ to promote effective job evaluation ratings include all but which of the following?

A) Consistency
B) Correctability
C) Representativeness
D) Self-interest

Question 61

Which plan specifies the amount of pension a worker will receive on retirement?

A) Defined benefit plan
B) Defined contribution plan
C) Cafeteria benefit plan
D) Flexible benefit plan

Question 62

The ____ prohibits pay differential based on sex.

A) Equal Pay Act (EPA)
B) Compensation Performance Act (CPA)
C) Pay Equity Act (PEA)
D) Glass Ceiling Act (GCA)

Question 63

In 2007, Congress amended the FLSA to raise the minimum wage to ____ an hour.

A) $4.15
B) $5.15
C) $7.25
D) $8.25

Question 64

The ____ of 1984 provides for the continuation of health insurance coverage for a period of up to three years for employees who leave a company through no fault of their own.

A) Fair Labor Standards Act
B) Employee Benefit Protection Act
C) Consolidated Omnibus Budget Reconciliation Act
D) Employee Retirement Income Security Act

Question 65

Which type of health insurance program involves an agreement between employers and doctors, hospitals, and other medical facilities to provide services at a discounted fee in return for the company's participation?

A) Traditional programs
B) HMO
C) PPO
D) Self funded programs

Question 66

____ is the fastest growing category of workers' compensation claims.

A) Drug abuse
B) Mental stress
C) Alcohol abuse
D) Physical exhaustion

Question 67

To win a comparable worth case, plaintiffs must prove ____ caused by intentional discrimination.

A) disparate treatment
B) disparate impact
C) undue hardship
D) perceived inequity

Question 68

The primary law regulating minimum wage and overtime pay practices is the:

A) Social Security Act.
B) Fair Labor Standards Act.
C) Compensation Performance Act.
D) National Labor Relations Act.

Question 69

A(n) ____ is based on the assumption that workers who acquire additional skills can make a greater contribution to the organization.

A) equity-based pay plan
B) seniority-based pay plan
C) benchmark-based pay plan
D) skill-based pay plan

Question 70

The statement-Department managers should not inflate evaluations for jobs in their own departments-substantiates which of the following standards for conducting job evaluations?

A) Freedom from bias
B) Consistency
C) Correctability
D) Accuracy of information

Question 71

Which type of insurance programs provide replacement income for an employee who cannot return to work for an extended period of time due to illness or injury?

A) HMO programs
B) LTD programs
C) PPO programs
D) POS programs

Question 72

The law imposes constraints on organizational pay practices in all but which of the following areas?

A) Minimum wages
B) Overtime pay
C) Commissions
D) Pay discrimination

Question 73

Which act, as amended, provides monthly benefits to retired workers who are at least 62 years of age?

A) Fair Labor Standards Act of 1938
B) Social Security Act of 1935
C) Employee Retirement Income Security Act of 1974
D) National Labor Relations Act of 1935

Question 74

After employees have satisfied certain age and time requirements, the employee becomes ____ in their pension plan and has a right to participate in the plan.

A) certified
B) vested
C) classified
D) socialized

Question 75

All the following are true about skill-based pay systems EXCEPT:

A) it adds to labor costs because employees are paid more.
B) it may lead to equity perceptions because skilled employees are paid more.
C) it is not cost-effective if the organization cannot make use of skilled employees.
D) it creates a problem when one employee has more skills than another.

Question 76

In all but which of the following cases does the EPA bar employers from paying lower wages to one sex where the work of the two sexes is substantially equal?

A) The jobs require an equal level of skill and effort.
B) The jobs require an equal level of responsibility.
C) The jobs require an equal level of productivity.
D) The jobs are performed under similar working conditions.

Question 77

Which is possibly the largest single benefit most employees receive?

A) Pension
B) Unemployment compensation
C) Injury compensation
D) Health insurance

Question 78

____ are organizations of physicians and other health care professionals who provide a wide range of services for a fixed fee.

A) HMOs
B) PPOs
C) POSs
D) Traditional providers

Question 79

Which benefit plans specify the rate of employer and employee contributions?

A) Flexible benefit plans
B) Cafeteria benefit plans
C) Defined contribution plans
D) Defined benefit plans

Question 80

Which of the following courses of action should an employer take when state minimum wage levels differ from that imposed by the FLSA?

A) Pay employees FLSA minimum wages.
B) Pay employees state minimum wages.
C) Pay employees the lesser of the two rates.
D) Pay employees the higher of the two rates.