Deck 9: Evaluating the Market

Question 1

What term describes the process of adjusting survey results to account for the dated nature of compensation surveys,while at the same time,taking into consideration potential market increases in the following year?

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

Answer 1

B

Question 2

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

Answer 2

True

Question 3

It is easier to use third-party surveys and data than to design and conduct an in-house survey.

Answer 3

True

Question 4

Which statement best describes the compa-ratio?

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

Question 5

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) 25 percent
C) 40 percent
D) 50 percent

Question 6

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 7

You determined that $65,000.00 in salary represents the 85th percentile of total compensation paid by employers for the heavy-duty mechanic job in British Columbia.Which statement is most accurate,given the aforementioned statement?

A) 15% of employers compensate above $65,000.
B) $65,000.00 represents the median.
C) 15% of employers compensate below $65,000.
D) 85% of employers compensate above $55,250.

Question 8

In broad terms,wages paid for a particular "labourer" depend on the relationship between supply and demand for labour,and a specific company's ability to pay.

Question 9

A very large interquartile quotient tends to indicate that all jobs in the sample are equivalent.

Question 10

Which of the following is generally NOT a determinant of employees' pay in the public sector?

A) collective bargaining
B) employees' ability to generate revenues
C) employers' ability to pay
D) budget available for pay increases

Question 11

For public sector organizations,the key factor determining wages is the employees' ability to generate revenue.

Question 12

In conducting a compensation survey,the first step should be to identify the jobs to be surveyed.

Question 13

In order to calibrate a compensation system,a sample of 25 to 45 percent of sample of jobs should be a minimum.

Question 14

In analyzing compensation data that include extreme values,what would be an advisable measure of central tendency to use?

A) compa-ratio
B) mean
C) median
D) inter-quartile range

Question 15

Which condition tends to explain why jobs in the higher hierarchy positions of the public sector tend to be paid less than similar positions in the private sector?

A) a strong union
B) publicly visible salaries
C) the levels of indirect pay provided to senior public sector positions
D) a poor industry reputation

Question 16

What is a potential drawback associated with using compensation consultants to gather labour market information?

A) The data is usually not presented in a "user-friendly manner"; hence,it is difficult to use.
B) The data is usually old and not relevant.
C) The data may be restricted to client firms; hence,it does not necessarily comprise an appropriate sample.
D) The data tends to be more expensive compared to designing and administering your own survey.

Question 17

The textbook identifies two in-house methods that may be used to collect compensation data.Which of the following is classified as an "in-house" source?

A) formal surveys
B) government agencies
C) consultants
D) industry groups

Question 18

Existing companies tend to lower wages when demand for labour exceeds supply.

Question 19

Informal surveys have poor reliability and validity.

Question 20

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

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

Question 21

Which topic would typically NOT be included in survey questions asked by most consultants in the process of populating their compensation databases?

A) number of employees
B) criteria associated with movements within the pay range
C) base pay,performance pay,and indirect pay
D) turnover rates

Question 22

What is a key concern related to using data from free compensation data websites?

A) complexity of the data
B) cost of the data
C) proprietary issues
D) validity of the data

Question 23

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 24

What are three of the 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 25

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 26

Which survey source raises concerns among HR professionals about the validity of their data?

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

Question 27

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

A) Employees,on average,are being paid above the midpoint in the pay range.
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 28

Which of the following is NOT a possible limitation of compensation surveys?

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

Question 29

Which of the following is generally NOT collected in compensation surveys?

A) base pay
B) performance appraisal methods
C) performance pay
D) benefits

Question 30

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 31

What is NOT a main step in conducting a proper compensation survey?

A) identifying jobs to be surveyed
B) identifying employees to be surveyed
C) determining the information needed
D) determining how you will collect the data

Question 32

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 33

Which characteristic is NOT typically considered 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

Question 34

Which method is used to measure dispersion of salary data across employers?

A) percentiles
B) weighted mean
C) simple mean
D) median

Question 35

What critical assumption underpins labour market compensation surveys that may serve to illustrate the need for pay equity legislation?

A) Usage of compensation surveys assumes that the market values jobs in a fair manner.
B) The market demand and supply of labour tends to operate at an equilibrium in the short term.
C) Calibration of the pay system will insure a near-perfect labour price.
D) Targeting a compa-ratio of 1 eliminates the need for pay equity legislation.

Question 36

Which of the following provides the best-quality compensation data?

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

Question 37

Which of the following best explains why current employers do not seem to reduce wages for existing employees in the short term when the supply for a particular set of skills far outstrips the demand?

A) because of the wage compression phenomenon
B) because of the negative impact on performance and increased turnover
C) because labour budgets tend to be determined on an annual basis
D) because fewer potential employees tend to put upwards pressure on wages

Question 38

Which compa-ratio suggests that,on average,employees are being paid above the mid-point of the range?

A) 0.01
B) 0.92
C) 1.00
D) 1.03

Question 39

As a human resource specialist,you recommend an international scope when defining the relevant labour market for a nuclear physicist to be responsible for the safety of a Canadian nuclear reactor.Which variable is likely to be informing your decision?

A) the level of job specialization
B) the international nature of the industry
C) the highly visible nature of the role
D) the high profile nature of the role

Question 40

An employer is contemplating conducting their own in-house compensation surveys.What would you caution them about?

A) There is a lack of control over process.
B) There is no need to involve outside consultants.
C) Skills and abilities associated with survey methodology are needed.
D) They are likely to sample the wrong jobs and/or industry.

Question 41

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

Question 42

Briefly describe the process for analyzing and interpreting survey data.

Question 43

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

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.