Deck 16: International Pay Systems

Question 1

Which of the following is a factor determining base pay in the Japanese traditional national system?

A)Job evaluation
B)Career category
C)Market pricing
D)Specific job title

Answer 1

B

Question 2

In the comparison of the pay systems of two well-known Japanese companies Toyota and Toshiba, Toyota _____.

A)places greater emphasis on external market rates
B)places lesser emphasis on individual-based merit pay
C)uses far more levels in its structure
D)places lesser emphasis on individual-based performance pay

Answer 2

A

Question 3

The degree of discretion managers have to make total compensation a strategic tool is referred to as _____.

A)managerial accountability
B)democratic accountability
C)managerial autonomy
D)managerial liability

Answer 3

C

Question 4

KayLeaf Inc.wants to set up a unit in China.To facilitate this, it sends its manager to China to gather information.Which of the following is most likely to be a suggestion from its manager?

A)Use a hierarchical pay structure as there is high power distance in China.
B)Use individual spot awards rather than stock options in the pay mix as the people in China have a long-term orientation.
C)Use incentives linked to individual performance as China has a collectivistic culture.
D)Have a rigid structure as the people in China have the highest level of uncertainty avoidance.

Question 5

_____ is an example of a country with a highly decentralized approach to pay setting with higher wage felxibility.

A)Sweden
B)Germany
C)Belgium
D)The United States of America

Question 6

Which of the following statements about evolution and change in the traditional German model is true?

A)Nearly one in 10 German adults owns stock.
B)High birth rates are pushing up the costs of the social support system.
C)A relatively flexible labor market means that employers are finding it easier to move to other EU countries.
D)Many of the changes in Germany are the result of global competitive pressures and technological changes.

Question 7

Slow growth and competition has led Japanese companies to

A)use more performance-based pay.
B)focus on maintaining lifetime employment rather than long-time employment.
C)switch over to seniority-based pay.
D)offer benefits such as gyms, dating services, and exotic vacations.

Question 8

A Korean citizen working for Toshiba, a Japanese company, in Canada is a _____.

A)host-country national
B)third-country national
C)parent-country national
D)local country national

Question 9

Which of the following statements about ownership and financial markets is true?

A)In the United States, corporate ownership and access to capital is far more concentrated than in most other countries.
B)Ninety percent of American households own stock in companies either directly or indirectly through mutual funds and pension funds.
C)Recent tax law changes in many countries have made stock options more attractive, but limited ownership of many companies remains the rule.
D)Large conglomerates in Germany link performance bonuses to increased shareholder value as it is the most effective pay system.

Question 10

In Japan, internal alignment based on _____ is far more important than other factors.

A)skills
B)jobs
C)accountabilities
D)seniority

Question 11

Bonuses paid in Japan are _____.

A)additional pay equivalent to two weeks of annual salary
B)typically paid once a year
C)not an expectable additional payment
D)not necessarily related to performance

Question 12

A Japanese citizen working for Toyota in Georgetown, Kentucky, is a _____.

A)host-country national
B)third-country national
C)parent-country national
D)local country national

Question 13

Uncertainty avoidance is _____.

A)the distribution of emotional roles between the genders
B)the extent to which a culture programs its members to accept delayed gratification of their material needs
C)the extent to which the less powerful members of organizations accept and expect that power is distributed unequally
D)the extent to which a culture programs its members to feel either uncomfortable or comfortable in unstructured situations

Question 14

An Indian citizen working for a Japanese company in India is a _____.

A)foreign country national
B)third-country national
C)parent-country national
D)local country national

Question 15

Which of the following is NOT true of the tariff agreements in Germany?

A)Small organizations use them as guidelines.
B)Managerial jobs are covered by the agreements.
C)Job evaluation methods are part of the agreements.
D)Tariff agreements are different for each industrial sector.

Question 16

Which of the following countries has the highest number of people in the workforce belonging to unions?

A)Japan
B)Sweden
C)Italy
D)South Korea

Question 17

Individualism is _____.

A)the degree to which people are supposed to look after themselves or remain integrated into groups, usually around the family
B)the distribution of emotional roles between the genders
C)the extent to which a culture programs individuals to accept delayed gratification of their emotional needs
D)the extent to which a culture programs individuals to feel either uncomfortable or comfortable in unstructured situations

Question 18

Traditionally, Japan's employment relationships were supported by _____.

A)lifetime security within the company
B)performance-based pay systems alone
C)centralized unions representing workers across several companies within an industry
D)performance-based promotion systems alone

Question 19

A(n) _____ approach to compensation involves designing a total pay system at headquarters and applying it globally.

A)delayered
B)inpatriate
C)localizer
D)exporter

Question 20

According to Hofstede's cultural dimensions, in Malaysia and Mexico, where there is high power distance, _____ pay structures are appropriate.

A)equitable
B)hierarchical
C)egalitarian
D)parallel

Question 21

When taxes are deducted from employees' earnings up to the same amount of taxes they would pay had they remained in their home country, it is known as _____.

A)expat tax
B)tax equalization
C)compensatory tax
D)tax protection

Question 22

Companies in the United States, United Kingdom, and some central European countries are most likely to have centralized wage bargaining.

Question 23

Which of the following is NOT true of expatriates?

A)68 percent of expatriates do not know what their jobs will be when they return home.
B)Only five percent of expatriates believe their company values their overseas experience.
C)11 percent are promoted when they return.
D)49 percent of U.S.expatriates are women.

Question 24

Which of the following statements is true of the localization approach to expatriate compensation?

A)It is more expensive than the balance sheet approach regardless of the location.
B)It ties salary to the host country's salary scales.
C)It ties salary to the home country's salary scales.
D)It ensures that the expatriate's pay is equalized without the need for relocation bonuses.

Question 25

KYZ Inc., a U.S.firm, sends its manager, Ryan, to London to manage its operations there.Ryan's salary is still based on the U.S pay system, however KYZ offers him a lump-sum payment to offset the additional standards-of-living expense in London.In this case, which of the following approaches to expatriate compensation is used by KYZ?

A)The cafeteria approach
B)The localization approach
C)The local plus approach
D)The balance sheet approach

Question 26

Which of the following approaches seeks to ensure that employees on overseas assignments have the same spending power as they would in their home country?

A)The assets-liability approach
B)The balance sheet approach
C)The compensatory tax approach
D)The income statement approach

Question 27

The base salary plus incentives for expatriates is usually determined by _____.

A)job evaluation
B)market pay
C)competitors' pay level in the host country
D)international pay schedules

Question 28

Which of the following is true of hiring LCNs?

A)Companies incur relocation expenses and other substantial expenses associated with the use of LCNs.
B)Companies have to be concerned about LCNs' adapting to the local culture.
C)Only rarely do organizations decide that hiring LCNs is appropriate.
D)Employment of LCNs satisfies nationalistic demands for hiring locals.

Question 29

Evidence indicates that MNCs are influenced by both the institutional pressures in their home country and in the local context.

Question 30

_____ sets salaries according to the home-country system and simply offers employees lump sums of money to offset differences in standards of living.

A)The modified balance sheet approach
B)The localization approach
C)The cafeteria approach
D)The balance sheet approach

Question 31

Understanding international compensation begins with recognizing differences and similarities and figuring out how to best manage them.

Question 32

A study of both U.S.and Slovenian MBAs found that risk taking was higher among Slovenians.

Question 33

The country with the highest unionization rate in Europe is France, where 90 percent of workers are union members.

Question 34

MayFly Inc., a firm headquartered in Paris, France, sends one of its employees to Frankfurt, Germany and Barcelona, Spain to manage its operations in these cities.The employee would be required to alternate between the two cities every six months.Mayfly offers only a moving expense on top of the base pay as the employee would be moving only within the European Union countries.Which of the following approaches to expatriate compensation is exemplified in this situation?

A)Modified balance sheet approach
B)Localization approach
C)Local plus approach
D)Lump-sum/cafeteria approach

Question 35

In Malaysia and Mexico, egalitarian pay structures fit best with the culture.

Question 36

Neither works councils nor co-determination are legally required in the United States and are quite rare.

Question 37

Generally, it is difficult to compare total compensation of a U.S.firm with a foreign competitor.

Question 38

Which of the following ties salary to a region?

A)The cafeteria approach
B)The localization approach
C)The modified balance sheet approach
D)The lump-sum approach

Question 39

Unionization rates are higher in Europe than in Asia.

Question 40

In China, while state-owned enterprises employ two-thirds of all workers, wholly privately owned enterprises, joint ventures with foreign companies, and WOFEs account for half of all profits.

Question 41

Base pay for a Japanese employee is usually not based on job evaluation or market pricing.

Question 42

Distinguish between parent-country nationals, local-country nationals, and third-country nationals with examples.

Question 43

Japanese pay systems typically emphasize pay based upon competitors' market rates rather than internal alignment.

Question 44

What is the balance sheet approach? What is its objective?

Question 45

In Germany, an employee's pay is affected by his or her age.

Question 46

It is easier and less complex to compare living costs across countries than total compensation.

Question 47

According to the Japan Institute of Labour, for most employees bonuses are variable pay that help control the employer's cash flow and labor costs.

Question 48

Only 5 percent of U.S.expatriates believe their company values their overseas experience.

Question 49

Briefly summarize the degree to which the social contract constrains the employment relationship in organizations with an example.

Question 50

How do the differences in the ownership and financing of companies around the world impact international pay?

Question 51

Since the Japanese system is so seniority-based, labor costs decrease as the average age of the workforce increases.

Question 52

Approximately 20 percent of expats leave their company within a year of their return to the U.S.

Question 53

Japanese pay systems are more person-based than job-based.

Question 54

Explain the dimensions of national cultural attributes proposed by Hofstede.