Deck 10: Compensating Employees

Question 1

When the jobs within an organization valued appropriately relative to each other this is known as:

A) equity theory.
B) internal alignment.
C) job evaluation.
D) external alignment.
E) job ranking.

Answer 1

B

Question 2

When evaluating an individual's pay,:

A) those with red-circled pay rates should be moved into a lower pay grade.
B) performance based pay systems are the least popular and organizations rely on across the board increases.
C) green-circled pay rates should be moved to the midpoint of the range.
D) if their pay rate is red-circled you may want to consider reviewing the job evaluation to be sure it was completed properly.
E) freezing the pay rate of those who are green-circled and allowing them to catch up with market is the best option in order to save money.

Answer 2

D

Question 3

When using market data to determine pay rates, which of the following describes the steps you would most likely take?

A) Complete job pricing, determine wage curve, conduct salary a survey, plot market results for benchmark jobs.
B) Determine wage curve, complete job pricing, conduct a salary survey, plot market results for benchmark jobs.
C) Plot market results for benchmark jobs, complete job pricing, determine wage curve, conduct a salary survey.
D) Complete job pricing, conduct a salary survey, plot market results for benchmark jobs, determine wage curve.
E) Conduct a salary survey, complete job pricing, plot market results for benchmark jobs, determine wage curve.

Answer 3

E

Question 4

The jobs of warehouse technician, supply coordinator, and forklift operator were ranked based on the physical requirements of each position. This would be an example of:

A) factor comparison.
B) a job grade.
C) internal alignment.
D) job classification.
E) job ranking.

Question 5

When using the point method of job evaluation all of the following are ways to ensure the objectivity of the method EXCEPT:

A) selecting appropriate benchmark jobs.
B) ranking benchmark jobs based on skill level required.
C) correctly identifying the compensable factors.
D) assigning appropriate weights to each compensable factor.
E) correctly using the point manual.

Question 6

Grouping jobs based on similar tasks, duties, responsibilities and qualifications is known as:

A) equity theory.
B) job ranking.
C) job classification.
D) internal alignment.
E) point method.

Question 7

Which of the following statements is most accurate regarding wage curves?

A) It is used to plot current organization salaries against salaries from five years ago to determine the amount of increases that have occurred.
B) It will compare the difference in wages between benchmark jobs.
C) Both a market wage curve and an organizational wage curve can exist on the same graph.
D) The market wages are shown on one axis and the organization's wages are shown on the other axis of the graph in order to compare them accurately.
E) A wage curve is most often in the shape of a bell curve.

Question 8

Which of the following statements about the spread, or width or narrowness, of pay ranges is most accurate?

A) Pay ranges for entry level positions in an organization tend to be wider.
B) All pay ranges in an organization should have the same width.
C) Management level positions tend to have a more narrow range.
D) Pay ranges for higher level positions in an organization tend to be wider.
E) Professional level positions have a narrower range than clerical level positions.

Question 9

All of the following are methods of job evaluation EXCEPT:

A) factor comparison.
B) job ranking.
C) point factor.
D) job pricing.
E) job classification.

Question 10

Pay grades in your organization have been adjusted due to a recent salary survey. The Mechanic I position now has a pay range which starts at $15.00 per hour and has a maximum of $22.00 per hour. Joshua is a Mechanic I who started about a year ago and is making $14.25 therefore he would be considered:

A) at the midpoint.
B) red-circled.
C) green-circled.
D) benchmarked.
E) broadbanded.

Question 11

When trying to convey the total rewards your company provides to its regional salespeople you would include all of the following in your explanation EXCEPT:

A) base salary.
B) Social Security.
C) company car.
D) health insurance .
E) pension plan.

Question 12

A store manager, a marketing coordinator, and accounting supervisor positions all require a Bachelor's degree and at least 3 years of experience in the respective fields. Although very different in specific job duties these positions could be:

A) job priced together.
B) placed on the same wage curve.
C) direct market priced.
D) eligible for the same merit increase.
E) broadbanded.

Question 13

In order to be considered a benchmark job, the job needs to be all of the following EXCEPT:

A) currently at an appropriate wage rate.
B) well known and recognized.
C) never previously used to set wage rates in the external labor market.
D) clearly and concisely described.
E) stable over time in regard to responsibilities.

Question 14

Jeffrey has been a machine operator for about 12 years. He is fully qualified and functions well in his role. The pay range for his position is $11.00 to $17.00. Jeffrey is currently making $13.25. What may be a more appropriate pay rate for Jeffrey, given his experience and performance level?

A) $11.50
B) $14.00
C) $15.50
D) $17.00
E) $20.00

Question 15

All of the following statements are accurate in regard to using broadbanding EXCEPT:

A) when using bands jobs that require similar education levels, years of experience and have similar levels of responsibility can be put in the same band.
B) using broadbanding increases the number of pay grades overall.
C) the spread of the bands can be well over 100%.
D) higher wages sometimes result thereby increasing salary expenses for an organization.
E) training needs to occur to teach managers how to determine start rates within the bands to eliminate subjectivity.

Question 16

All of the following statements about job evaluation are accurate EXCEPT:

A) each method takes a qualitative approach to evaluating a job.
B) thorough job analysis is important in order to have effective job evaluation.
C) well written job descriptions are vital to have before any job evaluation approach is used.
D) the process determines the relative worth of jobs within a company.
E) qualitative approaches tend to have more subjective outcomes.

Question 17

Andrew has mastered the shipping label machine so that it prints the labels at a faster output, thereby getting the boxes to the warehouse sooner and on the trucks in a more efficient way. His expertise with this piece of equipment and innovativeness in improving the labeling process earned him a pay increase. Andrew's organization follows:

A) skill based pay.
B) competency based pay.
C) knowledge based pay.
D) direct market pricing.
E) both A and C.

Question 18

Bill has recently completed his Associates degree in Accounting, thereby moving him from an A/R Representative I to a level II position. Due to his degree Bill received a 6% wage adjustment, as do all employees who obtain their degree. Bill's organization follows:

A) skill based pay.
B) competency based pay.
C) knowledge based pay.
D) direct market pricing.
E) both A and C.

Question 19

This method of job evaluation is developed by first identifying compensable factors which are needed for the job in order for the company to achieve its goals and then a score is determined for each job based on those factors.

A) Job ranking
B) Job classification
C) Factor comparison
D) Point method
E) Internal alignment

Question 20

Your organization pays its Marketing Manager a considerably high annual salary compared to other marketing executives in your area. However when compared to marketing executives in your industry your Marketing Manager is paid about the industry average. Which of the following best describes this positions pay policy in the market as well as in the industry?

A) leading, lagging
B) following; lagging
C) leading; following
D) following; leading
E) lagging; following

Question 21

When labor supply is less than labor demand which of the following is True?

A) Less money is needed to recruit.
B) Wages can remain unchanged.
C) The labor market is considered loose.
D) Wages are generally increased.
E) This is considered an ideal scenario for employers.

Question 22

If an organization's culture values "green" behaviors in order to help the environment, their compensation system may include:

A) offering direct deposit.
B) providing employee's "perks," such as free bus passes to limit commuting.
C) reimbursement for educational activities.
D) commissions based on the number of sales each week.
E) a fixed base pay with merit increases.

Question 23

Which of the following company characteristics would prevent an employer from paying wages that lag the market?

A) smaller employer
B) larger employer
C) older employer
D) highly technological employer
E) global employer

Question 24

When determining how to set their level of wages, an organization should consider the following:

A) Leading the market will not attract more or better applicants.
B) Paying at market will help control labor expenses.
C) Lagging the market will lead to increased pay satisfaction.
D) Leading the market will create turnover.
E) Paying at market will decrease the number of applicants.

Question 25

Giving an employee a pay increase based on how well they have performed over the course of the last evaluation period is known as a:

A) COLA.
B) commission.
C) variable pay.
D) merit increase.
E) skill-based pay plan.

Question 26

Which of the following company characteristics would be an example of an employer most likely to use both fixed and variable compensation in relatively equal amounts?

A) smaller employer
B) larger employer
C) older employer
D) highly technological employer
E) global employer

Question 27

Technology has impacted compensation practices in all of the following ways EXCEPT:

A) how compensation information is tracked.
B) how salary survey data is collected.
C) how expatriate pay rates are determined.
D) how wage information is shared with employees.
E) how to determine compensable time for employees who telecommute.

Question 28

All of the following statements are True regarding pay strategies EXCEPT:

A) Wages lagging the market may be paid when recruiting for entry level positions.
B) Jobs that are in demand in the market should be paid wages that lead the market.
C) Pay strategies may be combined based on the labor supply for certain positions.
D) Receiving a large number of applicants for a job may signal that you could pay below market for that job.
E) If critical to the company's success, a job should be paid at market.

Question 29

When using the direct market pricing approach for employee compensation decisions all of the following are accurate EXCEPT:

A) an internal structure based on the value the organization places on each job is unnecessary.
B) collecting internal information must be completed before external information can be used.
C) external data is collected on as many of the organization's jobs as possible.
D) accurate external data is critical for this approach to be effective.
E) small sample sizes can lead to incorrect assumptions being made about the external data.

Question 30

Salary compression is viewed as a/an:

A) positive thing because it ensures internal alignment throughout the organization.
B) negative thing because pay grades are eliminated and new hire wages are determined only by market rates.
C) negative thing by long time employees because their wages are close to those who are new on the job.
D) interactional justice issue because it occurs when supervisors don't communicate compensation changes.
E) positive thing because it eliminates merit increases and adjusts all employees' pay by the same amount each year.

Question 31

An organization's culture can impact compensation by:

A) determining the organization's ability to pay.
B) establishing the priorities for the pay policy.
C) sets employee expectations and attitudes about compensation.
D) dictating whether the organization will offer COLAs.
E) both B and C.

Question 32

Which of the following would cause an organization to increase their starting rate for a position and thereby create wage compression for current employees?

A) Increase in interest rates
B) Labor shortage
C) Decrease in inflation rates
D) Labor surplus
E) COLAs

Question 33

The business strategy a company uses can impact all of the following in regard to its compensation system EXCEPT:

A) the wages it pays.
B) the pay mix it uses.
C) the technology used to collect wage data.
D) the internal value of its jobs.
E) both C and D.

Question 34

When administering a compensation program:

A) actual pay rates should not be shared outside of the human resources department.
B) open pay systems support the notion that compensation is too complicated to try to explain to employees and should be kept confidential.
C) managers who make compensation decisions must receive training on the process and how they should communicate about compensation.
D) reviewing external market data and internal alignment every five years would be sufficient.
E) changes should be made when employees raise questions and after careful market surveys have been completed rather than updating for the sake of updating.

Question 35

Which of the following statements describes what is meant by compensation mix?

A) The number of perks, such as free parking, offered to an employee.
B) The amount of base pay versus variable pay offered to an employee.
C) Providing employees with a market leading benefits package.
D) The number of organizations included in a salary survey in order to get valid data.
E) The method of increasing an employee's base pay through merit increases.

Question 36

Having to disclose executive pay rates due to legal requirements is an example of:

A) direct market pricing.
B) a closed pay system.
C) competency based pay system.
D) an open pay system.
E) broadbanding.

Question 37

An organization which follows a cost leadership strategy would be most likely to select which of the following compensation methods?

A) Offer a bonus to those who make cost savings suggestions which are successfully implemented.
B) Provide an incentive program for those who create new product ideas.
C) Offer the leading benefits package in their market area.
D) Use a pay policy which emphasizes leading the market in starting wages.
E) Provide many variable pay options to enhance employee salaries.

Question 38

Judy has never really gotten along well with her supervisor. In addition, she has concerns about the evaluation process in that it doesn't take into account individual productivity and she does not get credit for the number of outputs she produces compared to others. Judy has concerns about ________ and ________ justice.

A) distributive; procedural
B) procedural; distributive
C) interactional; distributive
D) interactional; procedural
E) procedural; interactional

Question 39

The purpose of a cost of living adjustment (COLA) is:

A) to give employees a 3% pay adjustment each year to adjust for increasing housing costs.
B) to provide money employees can set aside for their retirement funds.
C) to offset the increases in the price of goods and services employees purchase to prevent wages from lagging in the market.
D) to offset stock market declines so employees have money to withdraw when they incur large losses.
E) to provide a performance reward to those employees that exceed productivity expectations.

Question 40

An organization following a differentiation strategy would most likely offer a compensation mix which was made up of:

A) annual salary.
B) performance bonus.
C) comprehensive benefits.
D) B and C are correct.
E) all of the above.

Question 41

To aid in determining what is compensable work time:

A) managers need to verify the accuracy of time records submitted.
B) clear polices should be in place explaining what is considered compensable time.
C) consistently enforce a compensable time policy and discipline as appropriate.
D) A and B are correct.
E) All of the above

Question 42

When determining where pay decisions are made, a global company should consider:

A) that a centralized system ensures better internal and external equity.
B) that decentralized systems provide a better link between results and rewards.
C) that decentralized systems have job grades that apply globally.
D) that centralized systems fail to consider differences between countries.
E) that decentralized systems integrate pay grades into a single framework.

Question 43

Job ranking as well as the point method are used in the factor comparison approach to job evaluation.

Question 44

All of the following statements are True about determining wages for employees in a global organization EXCEPT:

A) HCN is normally paid at the host country wage level.
B) PCN wages may be much higher than a HCN or TCN if they are from a country with a higher wage level than the host country.
C) TCN is normally paid at the host country wage level.
D) PCN wages are adjusted down when placed in an area with a lower cost of living.
E) Equity concerns between HCNs, TCNs and PCNs occurs when living costs are less than normally experienced by the PCN.

Question 45

Which of the following regulations is applicable to those contractors with over $10,000 in contracts who are involved in either manufacturing or providing goods and services to the U.S. government.

A) Walsh-Healey Act
B) Equal Pay Act
C) FLSA
D) Davis-Bacon Act
E) Wage and Hour law

Question 46

As COLAs occur an employer's fixed compensation costs increase.

Question 47

The Fair Labor Standards Act regulates all of the following EXCEPT:

A) federal minimum wage.
B) child labor law.
C) overtime rules.
D) pay grade minimums.
E) exempt job classifications.

Question 48

Larger, long term organizations generally use simple pay structures due to the number of positions and pay grades that it would have to keep track of.

Question 49

Under the FLSA all of the following pieces of information must be recorded and maintained EXCEPT:

A) Employee birthdate
B) Total hours worked each week
C) Employee's supervisor's name
D) Employee gender
E) Pay period dates

Question 50

Merit increases are a temporary increase in an employee's pay as long as they continue to perform at a certain level to deserve the increase.

Question 51

In a company culture where creativity is valued, such as a marketing or PR firm, compensation systems should be set up to reward new and innovative marketing ideas, such as bonuses for each new account an employee wins based on their creative ad designs.

Question 52

Which of the following statements is accurate in regard to exempt and non exempt employees?

A) Exempt employees must be paid at time and one half their rate for hours work over 40 in one week.
B) Employees who hold outside sales types of positions are mostly likely exempt.
C) Only those in executive level positions are eligible to be exempt.
D) Non-exempt employees can be paid less than minimum wage.
E) Overtime worked on weekend days should be paid at double time.

Question 53

An organization following a differentiation strategy will most likely pay wages that lead the market in order to attract the very best applicants.

Question 54

Public organization's must create closed pay systems in order to protect confidentiality and abide by legal requirements.

Question 55

Providing a fair wage to a person so that basic living needs can be met is known as:

A) minimum wage.
B) living wage.
C) comparable worth.
D) internal equity.
E) external equity.

Question 56

The midpoint of a pay range represents the wage that an employee who is fully trained, qualified and functioning at an acceptable level would receive.

Question 57

Under child labor laws, minors who are 16 years old and older can work how many hours each day?

A) 3 hours a day on a school day
B) 8 hours a day on a non-school day
C) 10 hours a day between June 1 and Labor Day
D) 5 hours a day on a non-school day
E) There is no work hour restriction.

Question 58

As long as human resources representatives are available to answer compensation questions and explain how the organization's compensation system works it is unnecessary for managers to understand the details of the system.

Question 59

Direct market pricing involves determining what an employees competencies are and then basing their pay grade on how well they meet those competencies in comparison to those in similar jobs in the market.

Question 60

When jobs in an organization are valued against each other rather than against some external standard of what is typically a "male" job or a "female" job this is known as:

A) minimum wage.
B) living wage.
C) comparable worth.
D) internal equity.
E) external equity.

Question 61

Employees believing they are compensated at the right level for the work they are doing and in turn being motivated to work harder is the premise of the ________.

Question 62

The Walsh-Healey Act introduced the concept of paying "prevailing wage" to employees who worked for employers with federal contracts.

Question 63

Because the Marketing Department Secretary, the Administrative Assistant and the Medical Secretary all have similar tasks, duties and responsibilities they would most likely be part of the same ________.

Question 64

When a labor shortage occurs and employers pay higher wages to attract employees, most likely salary compression will occur within the organization.

Question 65

When a job is valued appropriately relative to every other job in the same organization in terms of its ability to help the organization achieves its objectives is considered ________.

Question 66

Providing fair compensation to an employee so that their basic needs can be met is known as paying a comparable worth wage.

Question 67

Decentralizing the compensation system of a global organization ensures that wages are consistent based on each country employees are located in.

Question 68

If labor supply is greater than labor demand an organization would most likely follow a "lead the market" strategy in regard to compensation.

Question 69

The process of comparable worth ensures that the value a company places on a job is what determines the level of wages paid to an individual in that job, rather than the labor market determining the wages.

Question 70

If an individual's job is classified as non-exempt then they are not paid overtime for any hours worked over 40 in one week.

Question 71

________ in large companies is more difficult to do than in a small company due to the greater number of positions within a larger organization.

Question 72

Rather than referring to the monetary and nonmonetary things an employee receives as compensation the term ________ is used.

Question 73

Ensuring that employees understand the compensation program at their organization and know they are being treated fairly is important in order to demonstrate interactional justice.

Question 74

According to the FLSA no child under the age of 16 may be employed in any capacity.

Question 75

When using telecommuting employees it is especially important to put guidelines in place as to how time should be logged and what is considered compensable time.

Question 76

Cost of living is irrelevant when setting compensation rates for jobs overseas.

Question 77

It is illegal to pay an employee at their regular hourly rate for any hours that they work over 40 in one week.

Question 78

Deciding to follow a "lagging the market" pay philosophy will enable an organization to attract top notch candidates for its entry level jobs.

Question 79

When the labor market is loose employee pay preferences are a major concern for employers trying to recruit employees.

Question 80

A tipped employee may receive less than minimum wage if they earn over $30 in tips during the month.