Deck 9: Evaluating the Market

Question 1

Which of the following characteristics is not typically considered by a given firm in the selection of market comparator firms?

A) the type of product or service the firm provides
B) whether the firm has achieved pay equity
C) whether the firm is union or non-union
D) the geographic area over which it operates

Answer 1

B

Question 2

Collecting data can be done by personal interviews,random sampling and questionnaires.

Answer 2

False

Question 3

Third party surveys may not cover the desired jobs or compensation characteristics needed to do comparisons.

Answer 3

True

Question 4

Which of the following conditions best explains why professional athletes command the kinds of fees they do for endorsing various products and services?

A) wage compression
B) labour scarcity
C) compensating differentials
D) union wage premiums

Question 5

The compa-ratio is calculated by taking the average pay of all employees holding a particular job title and then dividing this by the midpoint of the pay range for that job.

Question 6

In general,unionized employees receive a lower level of compensation than do non-union employees in comparable jobs.

Question 7

What determines the geographic scope of the market for occupational groups?

A) the level of job specialization
B) the size of the firm
C) whether the firm is union or non-union
D) whether the firm is in the private or public sector

Question 8

Which of the following conditions can cause a compensating differential?

A) a strong union
B) publicly visible salaries
C) a long term pay equity plan
D) a poor industry reputation

Question 9

What are two main advantages of using third party surveys?

A) data custom-designed for company needs
B) availability of technology and short time frames
C) covers all jobs and relevant data
D) simplicity and economy

Question 10

Which of the following is not considered a general pattern in compensation levels?

A) Union employees receive more compensation than comparable non-union employees.
B) Male employees earn more than female employees on average.
C) Resource sector employees earn more than those in the service sector.
D) The wage gap between public-sector organizations and private-sector firms is narrow for top-level employees.

Question 11

Compensation surveys reflect the value placed on jobs by the labour market but this does not always mean that the market values jobs fairly.

Question 12

In understanding labour markets,three kinds of competitors are relevant.

Question 13

According to the text,sources of compensation market data include government agencies,trade journals,and compensation consultants.

Question 14

What does compensation survey data establish?

A) wage competitiveness
B) pay equity
C) internal equity
D) market comparators

Question 15

Which of the following identifies two crucial dimensions of the labour market?

A) occupational grouping and geographic scope
B) unemployment rate and turnover in the area
C) availability of labour and types of legislation
D) education levels and experience ratings

Question 16

Which of the following describes a compensating differential?

A) an adjustment to job rates based on survey results
B) an adjustment to gender specific jobs
C) offering more compensation to overcome undesirable aspects of the job
D) assessing the distribution of employees within their pay range

Question 17

In analyzing compensation survey data,a key element is the mean base pay.

Question 18

In regard to compensation market data,the key thing an employer needs to know is what its competitors are paying their employees.

Question 19

Two of the least important aspects of pay data are the actual distribution of employees within their pay ranges and the amounts actually paid to employees.

Question 20

Which of the following identifies the three main "third party" sources of compensation data?

A) Statistics Canada, trade journals, and government agencies
B) private agencies, trade journals, and government agencies
C) government agencies, industry groups, and consulting firms
D) consulting firms, boards of trade, and publishers

Question 21

Used to identify the jobs that are to be surveyed,this approach involves selecting certain jobs that are well understood and numerous in the job market and asking employers to compare their jobs with these jobs.

A) pay trending
B) calibrating
C) market comparing
D) key job matching

Question 22

Which of the following statements refers to compa-ratio?

A) calculated by averaging the pay ranges in the quartiles
B) a measure of pay dispersion across employers
C) derived by dividing mean base pay by the midpoint of the pay range
D) a calculation based on average base pay for each job

Question 23

Which of the following is not a procedure used to analyze and interpret survey data?

A) central tendency
B) dispersion
C) compa-ratio
D) data aging

Question 24

How does the use of questionnaires to collect data compare to personal interviews and telephone interviews?

A) the most complete and efficient method of surveys
B) the least expensive and least reliable method
C) the most favourable and user friendly
D) the least efficient and most expensive method

Question 25

Which of the following questions is not appropriate to ask when conducting a compensation survey?

A) Are the employees in this job union members?
B) What is your annual compensation budget?
C) On what basis do employees move through the pay range?
D) What is your annual sick leave allowance?

Question 26

Which of the following survey sources creates the least confidence about the validity of their data?

A) industry groups
B) in-house
C) free websites
D) consultants

Question 27

What measure of central tendency should be used to avoid information being distorted by extreme values?

A) median
B) weighted average
C) simple average
D) mode

Question 28

Which of the following measures can be used to assess the central tendency of pay?

A) dispersion
B) standard deviation
C) quartiles and deciles
D) mean

Question 29

Which of the following is the first step in analyzing compensation survey data?

A) establishing pay grades and ranges
B) calculating a compa-ratio
C) assessing the number of job evaluation points that each job has received
D) assessing central tendency of pay and the variation across employers

Question 30

You have surveyed 5 companies and obtained the following data regarding the midpoints of the base pay range for the job of "benefit clerk": $32,000 (Company A),$31,000 (Company B),$30,000 (Company C),$29,000 (Company D),and $29,000 (Company E). What is the mean for this set of data?

A) $30,000
B) $29,800
C) $30,200
D) $29,000

Question 31

You have determined that the lowest-paying employer pays it secretaries a mean total compensation of $30,000,and the highest-paying employer pays its secretaries a mean total compensation of $42,000. What is the dispersion in secretarial compensation across firms?

A) 12 percent
B) 40 percent
C) 50 percent
D) 25 percent

Question 32

Although very costly to use on a significant scale,which method of data collection provides the best quality of information?

A) internet surveys
B) personal interviews
C) telephone interviews
D) questionnaires

Question 33

Which of the following disadvantages does not apply to in-house surveys?

A) lack of qualified researcher in the firm
B) time consumption of doing a survey
C) a hired consultant needs to validate the information gathered
D) lack of employee cooperation due to the confidential nature of requested information

Question 34

What does a compa-ratio of greater than 1 mean?

A) Employees, on average, are being paid above the midpoint at that firm.
B) The majority of employees are in the first pay quartile.
C) The firm is paying their employees in the bottom half of the pay range.
D) The firm has only a minority of their employees in the top pay bracket.

Question 35

Which of the following sources of compensation data may have poor reliability and validity?

A) informal surveys
B) government agencies
C) consultants
D) formal surveys

Question 36

Which of the following situations is an indication that the pay level for a particular job in your firm is inappropriate?

A) excessively high employee turnover
B) internal equity conflicts with market data
C) a 1.07 compa-ratio
D) a high dispersion between your rate and the highest-paying firms

Question 37

How do you apply your survey data results to a skill-based pay system?

A) Use information from jobs that match the bottom of the skill grid and the top of the skill grid.
B) Develop a market line and calibrate your system against that.
C) Apply the market rates to your jobs
D) Surveys don't capture the appropriate information, and misrepresent actual pay trends.

Question 38

Which of the he following is not a possible limitation of compensation surveys?

A) Free labour market data is not readily available.
B) Cannot surmise anything about compensation strategies practised by other firms.
C) May misrepresent actual pay trends.
D) Markets may not value jobs fairly.

Question 39

Which of the following terms refers to the process of adjusting the survey data to bring it up to date?

A) benchmarking
B) aging the data
C) data alignment
D) pay trending

Question 40

Which of the following is not a main step in conducting a compensation survey?

A) identify the jobs to be surveyed
B) determine the information to be collected about each job
C) determine who will conduct the survey
D) determine the method of data collection

Question 41

Briefly discuss the factors to be considered in defining the relevant labour market for a given firm.

Question 42

Discuss some of the advantages and disadvantages of in-house surveys.

Question 43

Briefly describe the process for analyzing and interpreting survey data.

Question 44

Briefly discuss some of the limitations of compensation surveys.

Question 45

Identify and briefly describe the four main steps in conducting a compensation survey.