Compensation 14th Edition By Barry Gerhart TEST BANK

Chapter 1

Chapter 1

1) Total CEO annual compensation at S&P 500 companies is roughly $12.3 million. At just over half that total ($6.5 million), which compensation component comprises the majority of that total compensation amount?

A) Stock option awards B) Salary C) Stock grants D) Bonuses

2) The "say on pay" and clawback provisions are included in which of the following federal laws?

A) The Dodd-Frank Wall Street Reform and Consumer Protection Act B) The Affordable Care Act of 2010 C) The Fair Labor Standards Act (FLSA) D) The Cost-of-Living Act (COLA)

3) One of the reasons why the great majority of the uninsured in the United States are from working families is that A) many larger employers do not offer health insurance as it does not guarantee an increase in productivity levels.

B) health insurance is costlier for larger employers.

C) many small employers are much less likely than larger employers to offer health insurance to their employees.

D) most workers decline health insurance when it is offered by their employers.

4) The degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n): Version 1

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A) sorting effect.

B) incentive effect.

C) turnover effect.

D) directional effect.

5)

Which of the following is an example of a relational return?

A) A short-term incentive B) Employment security C) Allowances D) Income protection

6) Which of the following is given as an increment to base pay in recognition of past work behavior?

A) Merit bonuses B) Relational returns C) Merit increases D) A short-term incentive

7) GreenRain Corp. faces an increase in its employee turnover rate. The CEO calls for a board meeting with the senior executives to discuss the issue. Who among the following suggests increasing the relational returns that employees receive to reduce the turnover rate at GreenRain?

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A) Tom, who suggests increasing the decision-making authorities given to the employees to make work more challenging B) Deena, who suggests providing more work/life balance to the employees by increasing the number of paid leaves C) Syed, who suggests increasing the medical insurance coverage offered to the employees D) Liam, who suggests increasing merit bonuses

8) Which of the following statements concerning cash compensation and the Fair Labor Standards Act is true?

A) Nonexempt employees have their pay calculated at an hourly wage.

B) Exempt workers receive overtime pay.

C) Managers and professionals usually fit the category of nonexempt worker.

D) Labeling all base pay as "salary" means the employer does not have to follow the FLSA regulations.

9)

Which of the following is true of incentives?

A) They are determined after past performance is evaluated.

B) They are linked to subjective performance measures.

C) They permanently increase labor costs.

D) They are re-earned each pay period.

10) Which of the following companies is taking efforts to improve the work/life balance of its employees?

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A) MH Corp., which increases the number of paid holidays given to its senior employees B) Kay Corp., which increases the transport allowance for its employees by 10 percent C) Haywire Corp., which allows its employees to buy company stocks at a reduced price of $30 per share D) Halo Corp., which increases the variable pay of its employees

11)

Variable pay may also be called A) relational returns.

B) merit increases.

C) COLAs. D) incentives.

12)

Which of the following is often the largest component in an executive pay package?

A) Base pay B) Stock options C) Merit bonuses D) Incentives

13)

Unlike merit increases, merit bonuses are A) distributed in every quarter.

B) based on duration of service.

C) paid in the form of a lump sum.

D) included in the base salary.

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14) Robert, the CEO of GameTrack Corp., wants to restructure its pay plan without increasing labor costs in the long run. He is most likely to achieve this, while retaining his top employees, by: A) increasing base pay and decreasing variable pay.

B) increasing incentive pay and decreasing base pay.

C) hiring more employees and reducing marginal product output requirements.

D) providing across-the-board increases on a monthly basis.

15)

Incentives do not permanently increase labor costs because: A) they rely on a subjective rating of performance.

B) they are given based on the past performances of employees.

C) they increase the base wage.

D) they are one-time payments.

16)

A difference between incentives and merit increases is that incentives

A) do not increase the base wage, whereas merit increases increase the base wage.

B) cannot be tied to the performance of an individual, whereas merit increases can be tied to the performance of an individual.

C) rely on a subjective measure of performance, whereas merit increases rely on an objective measure of performance.

D) are relational returns, whereas merit increases are part of the total compensation.

17)

Which of the following is a fundamental objective, and NOT a policy, of the pay model?

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A) Fairness B) Competitiveness C) Contributions D) Alignment

18)

Which of the following is a policy, and NOT an objective, of the pay model?

A) Ethics B) Competitiveness C) Efficiency D) Fairness

19) Which of the following are defined as comparisons among individuals doing the same job for the same organization?

A) Network of returns B) Compliance C) Employee contributions D) Relational returns

20)

________ refers to comparisons among jobs or skill levels inside a single organization.

A) External competitiveness B) Internal alignment C) Compliance D) Merit guidelines

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21)

In the context of pay relationships, which of the following is illegal in the United States?

A) Paying on the basis of the nature of jobs B) Paying on the basis of pay comparisons with competitors C) Paying on the basis of one's age D) Paying on the basis of one's skill level

22)

Managers seek internal alignment within their organization by: A) matching competitors' pay rates.

B) following Fair Labor Standards Act guidelines.

C) using fair merit increases.

D) paying on the basis of similarities among jobs.

23) Compensation policy choices that affect the pay level relative to other companies are most closely associated with the ________ aspect of the pay model.

A) internal alignment B) external competitiveness C) employee contribution D) pay system management

24) The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of ________ policy decisions.

A) internal alignment B) efficiency C) employee contribution D) management

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25)

According to the text, which of the following decisions should be made jointly?

A) Internal alignment and management decisions B) External competitiveness and employee contribution decisions C) Employee contribution and internal alignment decisions D) Management and external competitiveness decisions

26) Which of the following policy decisions directly affects employees' attitudes and work behaviors?

A) Employee contributions B) Internal alignment C) External competitiveness D) Management

27) You are an HR manager, and your boss has told you to find the best way to raise job performance. After some research, you find that ________ have the greatest instrumental value.

A) job responsibilities B) training and skill development programs C) goal setting and job enrichment D) monetary incentives

28)

In a study, causation can be best established by:

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A) considering a single explanation.

B) evaluating the methodologies used.

C) accounting for competing explanations.

D) analyzing the scope of the study.

29) the:

A measure of how changes in one variable are related to changes in another variable is

A) standard deviation.

B) analysis of variance.

C) correlation coefficient.

D) mean deviation.

30)

________ refers to the process used to make pay decisions.

A) Procedural fairness B) Relational return C) Regression analysis D) Internal alignment

31)

Describe compensation from the manager's perspective.

32) What are the different ways in which pay can influence employee motivation and behavior?

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33)

Describe the various returns received from work.

34)

List the three elements of the pay model.

35)

Explain the basic compensation objectives of pay systems.

36) When unemployment increases, the proportion of the population covered by health insurance decreases. ⊚ ⊚

true false

37) The degree to which pay influences individual and aggregate motivation among employees is called a sorting effect.

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true false

38) When looking at the total CEO compensation of U.S. public companies, salary was the largest, most significant compensation component. ⊚ ⊚

39)

Commissions are an example of incentives. ⊚ ⊚

40)

true false

true false

Most U.S. firms use merit pay increases. ⊚ ⊚

true false

41) Base wage reflects both the value of the work and individual employee skills and experience. ⊚ ⊚

true false

42) Pension and health benefits are a very large component of total compensation for many large companies such as American Airlines and GM. ⊚ ⊚

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43)

Merit bonuses are paid in a lump sum and do not become a permanent part of base salary. ⊚ ⊚

true false

44) Procedural fairness suggests that the way a pay decision is made is of less importance to employees than the results of the decision. ⊚ ⊚

true false

45) If the objective is to increase customer satisfaction, then incentive programs and merit pay might be used to pay for performance. ⊚ ⊚

true false

46) Objectives guide the design of pay systems and provide standards for evaluating their effectiveness. ⊚ ⊚

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47) Even if federal compensation laws change, it is unnecessary to change pay systems to ensure continued compliance. ⊚ ⊚

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48) Internal alignment pertains to the pay rates both for employees doing equal work and for those doing dissimilar work. ⊚ ⊚

true false

49) A manager can use one of four proven pay techniques that tie basic policies to the pay objectives. ⊚ ⊚

true false

50) Management and HR research has conclusively shown that goal setting and job enrichment produce the largest and most reliable increases in job performance. ⊚ ⊚

true false

51) Fairness is affected through employees' comparisons of their pay to the pay of others in the organization. ⊚ ⊚

52)

true false

Consultant surveys are often presented as studies that reveal cause and effect. ⊚ ⊚

true false

53) In Japan, the traditional characters for the word "compensation" are based on the symbols for logs and water, suggesting that compensation provides the necessities in life.

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⊚ ⊚

true false

54) The relationship between variables is most often addressed through the use of statistical analysis. ⊚ ⊚

true false

55) TheR2, which is an output from a regression analysis, is different from correlation in that it tells us what percentage of the variation is accounted for by the variables we are using to predict or explain. ⊚ ⊚

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Answer Key Test name: Chap 01_14e_Gerhart 1) C 2) A 3) C 4) B 5) B 6) C 7) A 8) A 9) D 10) A 11) D 12) B 13) C 14) B 15) D 16) A 17) A 18) B 19) C 20) B 21) C 22) D 23) B 24) C 25) B 26) A Version 1

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27) D 28) C 29) C 30) A 36) TRUE 37) FALSE 38) FALSE 39) TRUE 40) TRUE 41) FALSE 42) TRUE 43) TRUE 44) FALSE 45) TRUE 46) TRUE 47) FALSE 48) TRUE 49) FALSE 50) FALSE 51) TRUE 52) TRUE 53) FALSE 54) TRUE 55) FALSE

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Chapter 2 1) A compensation system that focuses on competitors' labor costs is most closely associated with a(n) ________ strategy.

A) innovator B) customer-focused C) cost-cutter D) differentiated

2) A compensation system using market-based pay is most likely to be part of a(n) ________ strategy.

A) innovator B) cost-cutter C) cost leadership D) customer-focused

3)

Flexible–generic job descriptions would most likely be used with a(n) ________ strategy.

A) innovator B) customer-focused C) differentiated D) cost-cutter

4) Mich Inc., a hardware store, has a rating system in place that rates employees on their friendliness, usefulness, and product knowledge. Based on the ratings an employee receives, he or she gets an incentive. The compensation strategy followed by Mich is most closely described as a(n):

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A) customer-focused strategy.

B) cost-cutter strategy.

C) innovator strategy.

D) differentiation strategy.

5) A compensation system focusing on system control and work specifications is most closely associated with a(n) ________ strategy.

A) innovator B) customer-focused C) cost-cutter D) differentiated

6) A compensation system focusing on operational excellence is most closely associated with a(n) ________ strategy.

A) differentiated B) cost-cutter C) innovator D) customer-focused

7) Your new fledgling company has innovation as the main objective and the internal alignment will be a minimized hierarchy. Looking at just these two dimensions of the compensation strategy, your new company will mostly resemble which company?

A) Nucor B) Google C) Starbuck's D) Merrill Lynch

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8) Whole Foods' shared-fate philosophy of limiting executive salaries to no more than 19 times the average pay of full-time employees is an example of which strategic pay decision?

A) External competitiveness B) Employee contributions C) Corporate responsibility D) Internal alignment

9)

Comparisons based on the forms of compensation used by other companies are part of: A) internal alignment.

B) external competitiveness.

C) employee contributions.

D) corporate responsibility.

10)

Which of the following statements is true of compensation strategies?

A) Compensation strategies may differ between industries but fail to differ between companies in the same industry.

B) Compensation strategies are static and only rarely evolve over time.

C) A simple strategy of "let the market decide our compensation" may work internationally, but not domestically.

D) Compensation strategies may differ within a company, especially one with a variety of business units.

11) When interpreting research evidence concerning compensation strategy, it is thought that embedding compensation strategy within the broader _____ affects results.

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A) business strategy B) HR strategy C) business unit strategies D) corporate strategy

12) Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select A) more supplemental insurance.

B) more job training.

C) a more flexible work schedule.

D) more personal days and family leave.

13) According to the Hudson survey, which of the following is the single thing that would make 41 percent of U.S. workers happier?

A) More personal days B) A flexible work schedule C) More money D) Better health insurance

14) ________ refers to a wide range of factors, including legal and regulatory requirements, cultural differences, changing workforce demographics, expectations, and the like.

A) Context B) Prominence C) Culture D) Transparency

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15) Choosing pay techniques to fit a strategy is a major factor in ________ a total compensation strategy.

A) assessing B) reassessing C) implementing D) mapping

16) In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of A) objectives.

B) internal alignment.

C) external competitiveness.

D) corporate responsibility.

17)

________ refers to openness and communication about pay.

A) Transparency B) Ownership C) Prominence D) Centrality

18) ________ is the measure of how important total compensation is in the overall HR strategy.

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A) Competitiveness B) Prominence C) Centrality D) Ownership

19)

The role non-HR managers play in making pay decisions is called A) ownership.

B) transparency.

C) technology.

D) decentralized decision making.

20) Issues of transparency, technology, and choice are most closely associated with the ________ aspect of mapping a total compensation strategy.

A) objectives B) management C) employee contributions D) internal alignment

21) Career growth, hierarchy, and flexible design are most closely associated with the ________ aspect of mapping a total compensation strategy.

A) objectives B) internal alignment C) external competitiveness D) employee contributions

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22) Work/life balance is most closely associated with the ________ aspect of mapping a total compensation strategy.

A) external competitiveness B) objectives C) internal alignment D) employee contributions

23) ________ is the key to attracting, retaining, and motivating employees with the abilities necessary to execute the business strategy and handle greater decision-making responsibilities.

A) Transparency B) Compensation C) Prominence D) Culture

24)

Which of the following tests of competitive advantage is probably the easiest test to pass?

A) The alignment test B) The differentiation test C) The integration test D) The value-addition test

25)

The alignment test

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A) is difficult to imitate.

B) is the most difficult test.

C) helps ensure passing the differentiation test.

D) becomes difficult if the differentiation test is not clear.

26)

Trying to measure an ROI for any compensation strategy implies that: A) it is possible to align and differentiate the compensation strategy and still fail to add

value.

B) people are "human capital," similar to other factors of production.

C) adding value is the most difficult test.

D) value created as a result of costs is difficult to specify.

27)

Which of the following is a fundamental strategic choice at the corporate level?

A) What business should we be in?

B) How do we gain and sustain competitive advantage in this business?

C) Which dimension of the pay strategy should we focus on?

D) How should total compensation help this business gain and sustain competitive advantage?

28) Research investigating high-performance workplaces found that performance-based pay ________ when combined with other high-performance practices.

A) improves attitudes and behaviors B) increases the number of middle men required C) reduces labor costs D) has little effect on quality

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29)

When organization performance declines: A) a virtuous circle may be created.

B) performance-based pay plans do not pay off.

C) managers must avoid changing pay practices.

D) the employee attrition rate declines considerably.

30) Research shows that ________ will effectively shift an organization in a downward performance spiral into an upward one.

A) reinforcing performance-based pay B) implementing team-based pay C) improving work/life balance D) it is unclear what compensation practices

31)

Define defenders and prospectors as referred to by Miles and Snow.

32) Compensation systems can be tailored to general business strategies. List and explain these strategies.

33)

Explain AMO theory.

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34)

List and briefly explain the four steps in developing a total compensation strategy.

35)

Write short explanations of virtuous and vicious circles.

36) Smaller internal pay differences and larger internal pay differences can both be a "best" practice, depending on the context. ⊚ ⊚

37)

true false

Strategy refers to the fundamental direction that an organization chooses. ⊚ ⊚

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38) An organization defines its strategy through the trade-offs it makes in choosing what to do and what not to do. ⊚ ⊚

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39) Compensation strategy, HR strategy, and business strategy ultimately seek to decrease costs or increase revenues, relative to competitors. ⊚ ⊚

40)

true false

Customer-focused pay strategies are most likely to use market-based pay. ⊚ ⊚

true false

41) Compensation systems focusing on competitors' labor costs typically follow a cost-cutter strategy. ⊚ ⊚

true false

42) The innovator business strategy stresses on delighting customers and bases employee pay on how well they do this. ⊚ ⊚

43)

true false

Most firms do not have generic strategies but use a blend of cost and innovation. ⊚ ⊚

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44) The easiest way to develop and implement a pay strategy is to simply copy the strategy of another company, preferably a competitor. ⊚ ⊚

true false

45) How an organization positions its total compensation against its competitors is part of external competitiveness strategic choices. ⊚ ⊚

true false

46) All organizations that pay their employees have a compensation strategy even though it may not be stated or written. ⊚ ⊚

47)

true false

A compensation strategy should reflect an organization's values. ⊚ ⊚

true false

48) A major challenge in the design of future pay systems is how to better satisfy individual needs and preferences. ⊚ ⊚

true false

49) Providing unlimited compensation choices to employees would meet with disapproval from the U.S. Internal Revenue Service.

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50) Since unions represent such a small fraction of the labor force, their influence on pay decisions is insignificant. ⊚ ⊚

true false

51) An organization whose profits or market share is increasing is able to pay larger bonuses and stock awards. ⊚ ⊚

52)

In a high-performance system, pay strategy always plays a lead role. ⊚ ⊚

53)

true false

true false

Compensation is often a company's largest controllable expense. ⊚ ⊚

true false

54) Declining organization performance increases the risks facing employees—risks of still smaller bonuses, demotions, wage cuts, and even layoffs. ⊚ ⊚

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55) In a virtuous circle, a pay-for-performance strategy results in the improvement of performance. ⊚ ⊚

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Answer Key Test name: Chap 02_14e_Gerhart 1) C 2) A 3) A 4) A 5) C 6) B 7) B 8) D 9) B 10) D 11) B 12) C 13) C 14) A 15) C 16) A 17) A 18) B 19) A 20) B 21) B 22) A 23) B 24) A 25) C 26) B Version 1

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27) A 28) A 29) B 30) D 36) TRUE 37) TRUE 38) TRUE 39) TRUE 40) FALSE 41) TRUE 42) FALSE 43) TRUE 44) FALSE 45) TRUE 46) TRUE 47) TRUE 48) TRUE 49) TRUE 50) FALSE 51) TRUE 52) FALSE 53) TRUE 54) TRUE 55) TRUE

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Chapter 3 1)

Which of the following is true of internal alignment?

A) It is the first issue in a strategic approach to pay.

B) It is often referred to as distributive justice.

C) It focuses on customer satisfaction and business growth.

D) It addresses pay relationships inside an organization.

2)

Common bases for modern pay structures include all but which of the following?

A) The content of the work B) The skills and knowledge required to perform the work C) The extent of external competitiveness and equity D) The work's relative value for achieving organizational objectives

3)

_____ refers to the process by which goods and services are delivered to the customer.

A) Line-of-sight B) Work flow C) Surplus value D) Marginal productivity

4)

A structure based on value typically ranks jobs on: A) problem-solving abilities.

B) the skills required to complete tasks.

C) the relative contribution of skills.

D) the complexity of the tasks involved.

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5)

The most common bases for determining internal structures are A) work content and its value.

B) seniority and experience.

C) use value and exchange value.

D) pay surveys and job evaluation.

6) Jackson and Dal both start working as "attendees" at the new full-service carwash, each starting at the same pay rate. Jackson gives the customer exactly what they request and is a friendly employee. Dal is very open and approachable and his shifts usually find the carwash selling more "extras" to the customers, such as upholstery detailing. Based on this, you could say that: A) Jackson has a higher exchange value than Dal. B) Dal has a higher use value than Jackson.

C) Dal has a higher exchange value than Jackson.

D) Jackson has a higher use value than Dal.

7) Work that requires more knowledge or skills, is performed under unpleasant conditions, or adds more value is usually paid more. This is usually reflected in the organization's _____.

A) levels B) job-based structure C) differentials D) egalitarian structure

8) ________ refers to the education, experience, knowledge, abilities, and skills required to perform work.

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A) Surplus value B) Internal alignment C) Marginal productivity D) Human capital

9) ________ refers to the process by which a decision is reached: the right to an attorney, the right to an impartial judge, and the right to receive a copy of the arresting officer's statement.

A) Distributive justice B) Outsourcing C) Procedural justice D) Delayering

10)

Marginal productivity theory argues that employers pay A) use value.

B) exchange value.

C) surplus value.

D) differential value.

11) Which of the following is NOT a factor in defining equal work according to the Equal Pay Act? A) Equal skill B) Equal effort C) Equal experience D) Equal responsibility

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12)

Most unions prefer which of the following?

A) Small pay differences among jobs and seniority-based promotions B) Large pay differences among jobs and seniority-based promotions C) Large pay differences among jobs and performance-based promotions D) Equal pay raises for employees

13)

Pay for temporary workers is based upon: A) the internal structure of their home employer.

B) the internal structure of the temporary workplace.

C) the strict requirements set by an international workers' union.

D) education only.

14)

External factors are dominant influences on jobs filled via: A) demotions.

B) promotions.

C) transferring employees.

D) hiring graduates.

15)

Which of the following is true of procedural justice?

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A) It suggests that the way pay decisions are made and implemented is insignificant.

B) It is concerned with whether the actual pay differences among employees are acceptable.

C) It addresses how design and administration decisions are made.

D) It refers to the fairness in the amount of rewards distributed to employees.

16) James says, "I don't trust the way the company determines pay rates in my department."

If James feels this way despite being happy with his current salary, he is most likely concerned about A) procedural justice.

B) distributive justice.

C) internal equity.

D) external equity.

17) Marie was hired as a clerk at a small local store and there was very little supervision.

Marie was expected to use her judgement and initiative to run the store and help customers during her shifts. Marie was one of five clerks who worked at the store, all working an equal number of hours. The owner worked any number of shifts to round out the weekly schedule. This is an example of a _____ structure.

A) tailored B) layered C) hierarchical D) delayered

18) The well-defined jobs at McDonald's and their small differences in pay are an example of a(n) ________ internal pay structure.

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A) closely tailored B) loosely coupled C) very competitive D) egalitarian

19) Jacob works at PrimeClean Corp., a car wash company. He is asked to follow a set of instructions in a predetermined order to wash a car. All the details including the amount of washing liquid to use for each type of car are clearly specified. In this case, Jacob's company is most likely to use a: A) closely tailored pay structure.

B) loosely coupled pay structure.

C) pay structure with large differences in pay among jobs.

D) pay structure that is highly flexible.

20) Joshua believes that treating employees equally will improve their job satisfaction, which in turn will increase their work productivity and performance. In accordance with his beliefs, he wants to reduce the number of job levels and the pay differentials between the levels. In this case, he is most likely to use a(n): A) highly layered pay structure.

B) hierarchical pay structure.

C) highly inequitable pay structure.

D) egalitarian pay structure.

21) Organizations in a turbulent and unpredictable environment requiring flexibility in jobs and work processes are likely to be more successful with a(n) ________ internal pay structure.

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A) egalitarian B) bureaucratic C) loosely coupled D) closely tailored

22)

Egalitarian pay structures have all but which of the following characteristics?

A) Few levels B) Small differentials C) Loose fit D) Individual performers

23) In the context of internal structures, which of the following is true of a delayered structure?

A) It involves the removal of employees' autonomy.

B) It sends the message that all employees are valued equally.

C) It is based on the assumption that workers perform better with less equal treatment.

D) It has eight levels and includes detailed descriptions of work done at each level.

24) The problem that is most likely to be faced by organizations using an egalitarian pay structure is A) the difficulty in external recruitment.

B) maintaining cooperation among employees.

C) the perception of excessive CEO pay.

D) the difficulty in performing teamwork.

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25) Nina is a high-performing individual who works best alone. Which of the following companies is the most appropriate for her?

A) A company that uses an egalitarian pay structure B) A company that pays its employees based on their seniority rather than their performance C) A company that uses a hierarchical pay structure to pay its employees based on performance D) A company that pays all its employees the same amount of money

26) Which of the following theories predicts that individual performance will be maximized when the pay differentials between job levels are large?

A) Tournament theory B) Equity theory C) Marginal productivity theory D) Reinforcement theory

27) When cooperation is important for successful organization performance, which of the following pay structures is most suitable?

A) A tournament theory–based pay structure B) An egalitarian pay structure C) A hierarchical pay structure D) A layered pay structure

28) true?

In the context of the impact of internal structures, which of the following statements is

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A) High performers quit more under more hierarchical systems when pay is based on performance rather than seniority.

B) The impacts of internal structures on organization performance remain unaffected by pay levels and employee performance.

C) Less hierarchical structures are related to greater performance when the work flow depends on individual contributors.

D) More egalitarian structures are related to greater performance when close collaboration and sharing of knowledge are required.

29) In firefighting and rescue squads and global software design teams, a(n) ________ structure is most closely associated with higher performance.

A) hierarchical B) pyramidal C) egalitarian D) layered

30) ________ are related to greater performance when the work flow depends on individual contributors.

A) More egalitarian structures B) More hierarchical structures C) More delayered structures D) More even-handed structures

31)

Provide a short definition of a pay structure.

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32)

State the theory of marginal productivity.

33)

How do employees judge the fairness of their pay?

34)

List as many consequences of internally aligned structures as you can recall.

35)

Explain tailored and loosely coupled structures.

36)

Internal alignment is sometimes called internal equity. ⊚ ⊚

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37)

Organizations design their pay structures around jobs and job levels. ⊚ ⊚

true false

38) Pay structure refers to the array of pay rates for different work or skills between competing companies. ⊚ ⊚

39)

true false

Pay differences among levels in an organization are called differentials. ⊚ ⊚

true false

40) The difference between exchange value and use value surfaces when one firm acquires another. ⊚ ⊚

41)

true false

A job-based structure focuses on skills, knowledge, or competencies. ⊚ ⊚

true false

42) The content of a job refers to the worth of the job and its relative contribution to the organization's objectives. ⊚ ⊚

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43)

Both external and organization factors shape internal pay structures. ⊚ ⊚

true false

44) In addition to supply and demand for labor, supply and demand for products and services also affect internal structures. ⊚ ⊚

45)

Wage legislation affects wage structure at both the minimum and the maximum pay level. ⊚ ⊚

46)

true false

true false

Pay structures are immune to changes in external factors such as skill shortages. ⊚ ⊚

true false

47) Technology used in producing goods and services influences the organizational design, the work to be performed, and the skills/knowledge required to perform the work. ⊚ ⊚

true false

48) Egalitarian pay structures send the message that an organization values differences in work content, individual skills, and contributions to the organization.

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⊚ ⊚

true false

49) CEOs of organizations with egalitarian pay structures usually have higher salaries than CEOs in organizations with hierarchical pay structures. ⊚ ⊚

true false

50) A layered pay structure is more hierarchical than a delayered pay structure and less egalitarian in terms of number of levels. ⊚ ⊚

true false

51) A potential problem in egalitarian pay structures is that high-performing employees may feel underpaid and quit. ⊚ ⊚

true false

52) Teachers will feel pay structures are fair even when they are relatively low in the internal structure if they work in a high-paying school district. ⊚ ⊚

53)

true false

Greater pay dispersion is related to lower turnover among executives. ⊚ ⊚

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54) The institutional model states that it is best to wait for other organizations to adopt innovative practices and then copy those practices. ⊚ ⊚

true false

55) An aligned structure should motivate employees to undertake training and increase their experience. ⊚ ⊚

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Answer Key Test name: Chap 03_14e_Gerhart 1) D 2) C 3) B 4) C 5) A 6) B 7) C 8) D 9) C 10) A 11) C 12) A 13) A 14) D 15) C 16) A 17) D 18) A 19) A 20) D 21) C 22) D 23) B 24) A 25) C 26) A Version 1

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27) B 28) D 29) C 30) B 36) TRUE 37) TRUE 38) FALSE 39) TRUE 40) TRUE 41) FALSE 42) FALSE 43) TRUE 44) TRUE 45) TRUE 46) FALSE 47) TRUE 48) FALSE 49) FALSE 50) TRUE 51) TRUE 52) TRUE 53) FALSE 54) FALSE 55) TRUE

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Chapter 4 1) The systematic process of collecting information that identifies the similarities and differences among jobs is known as A) job performance.

B) job analysis.

C) use value evaluation.

D) exchange value analysis.

2)

The list of tasks, duties, and responsibilities that make up a job is known as a A) job search.

B) job control.

C) job specification.

D) job description.

3)

Which of the following is true about a job specification?

A) It refers to a grouping of jobs based on their job-related similarities and differences and on their value to an organization's objectives.

B) It primarily focuses on a specific job rather than on individuals who are expected to perform that job.

C) It is the list of knowledge, skills, and abilities that are necessary for an individual to have to perform a specific job.

D) It is the list of tasks, duties, and responsibilities that make up a job.

4)

Which of the following occupations has the greatest susceptibility to automation?

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A) Physicians B) Real estate brokers C) Computer programmers D) Elementary school teachers

5)

A specific statement of what a worker does on a job is known as a(n) A) appraisal.

B) task.

C) position.

D) job structure.

6)

A group of tasks performed by one person makes up a(n) A) position.

B) job title.

C) appraisal.

D) job structure.

7)

A set of identical positions makes a A) procedure.

B) task.

C) title.

D) job.

8)

In the context of job analysis, engineering, office support, and marketing are examples of

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A) tasks.

B) job families.

C) job dimensions.

D) appraisals.

9)

In the context of job analysis, which of the following is the smallest unit of analysis?

A) A task B) A position C) A job family D) A job

10) Mike, a job analyst, conducts a job analysis at Great Bread, Inc. George, a first-level supervisor at Great Bread, conducts an initial tour of the work site for Mike. According to the conventional job analysis procedures developed by the U.S. federal government, which of the following steps should Mike perform immediately after the initial tour?

A) Mike should go on a second tour of the work site but with a different first-level supervisor, someone other than George.

B) Mike should prepare a preliminary list of duties that will serve as a framework for conducting interviews.

C) Mike should conduct an interview with George to get an overview of the job and to understand how the major duties fit together.

D) Mike should review existing documents in order to develop further familiarity with the job.

11) Identify a true statement about the step-by-step approach to conducting conventional job analysis developed by the U.S. federal government.

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A) For scheduling purposes, it is recommended that three to five interviews be conducted per day.

B) It is recommended that an interview should last for a minimum of five hours and a maximum of eight hours.

C) It is recommended that the same first-level supervisor-interviewee conduct the second tour of the work site.

D) It is recommended that the first interview be conducted with the jobholders rather than with the first-level supervisors.

12) The U.S. federal government has developed a step-by-step approach to conducting conventional job analysis. Identify a true statement about the verification process in this approach.

A) The verification phase involves the top managers rather than the first-level supervisors because managers are in a better position to provide an overview of the job.

B) Typed or legibly written copies of the job description are distributed to the first-level supervisors and the job incumbent interviewees.

C) It takes place immediately after the second tour of the work site is conducted by the first-level supervisors.

D) Past experience indicates that one minute of verification is required for every ten minutes of interviewing.

13)

A PAQ may be used to gather which type of information?

A) Task data B) Employee data C) Job content data D) Performance criteria data

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14) Which of the following acts requires that essential elements of a job—those that cannot be reassigned to other workers—must be specified for jobs covered by the legislation?

A) The Americans with Disabilities Act B) The Civil Rights Act C) The Fair Labor Standards Act D) The Equal Pay Act

15) In the context of a job analysis collecting sufficient information to adequately identify, define, and describe a job, which of the following information is most likely to be categorized as "related to the employee"?

A) Working conditions B) Conflicting demands C) Performance criteria D) Technical knowledge

16) Jane works as a copy editor at TreeTime, Inc. She receives an email from the company's human resources department with a link to a questionnaire that asks her to rate the necessary attributes required for her job. In this scenario, the approach used by TreeTime is characterized as: A) quantitative job analysis.

B) objective job analysis.

C) conventional job analysis.

D) paired-comparison job analysis.

17)

The most common way to collect job information is

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A) to interview incumbents.

B) to ask incumbents to fill out a questionnaire.

C) to ask supervisors to fill out a questionnaire.

D) to observe people at work and take personal notes.

18) The advantage of using conventional questionnaires in job analysis is that the involvement of employees A) increases their understanding of the process.

B) lowers the use value of the goods produced by the organization.

C) reduces the subjectivity of employment decisions.

D) increases the exchange value that is agreed upon by employees and employers.

19)

Conventional methods of collecting job information are A) open to bias and favoritism.

B) reliable and objective.

C) not well-suited to small organizations.

D) relatively less time consuming.

20)

Today, job analysis is typically performed by A) experienced job incumbents.

B) new employees.

C) human resource generalists and supervisors.

D) experienced workers.

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21) When job analysis shows that managers and employees disagree on parts of a job, the best answer is to: A) collect more data.

B) use quantitative job analysis.

C) refer the problem to the compensation committee.

D) hire an experienced compensation consultant.

22)

One readily accessible source for generic job descriptions is the A) Bureau of National Affairs.

B) Department of Labor.

C) Occupational Information Network.

D) Dictionary of Occupational Titles.

23) ________ looks at how an organization does its work: activities pursued to accomplish specific objectives for specific customers.

A) Job analysis B) Market analysis C) Job structure D) Work flow analysis

24)

Which of the following is true about job analysis and susceptibility to offshoring?

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A) Historically, manual, low-skill jobs were least susceptible to offshoring.

B) Susceptibility to offshoring is mainly limited to low-skill jobs, and white-collar jobs are safe.

C) Jobs are most susceptible to outsourcing when inputs and outputs can easily be transmitted electronically.

D) Susceptibility to outsourcing increases when the associated work is difficult to be routinized.

25) Gina announces that she is likely to lose her job due to automation. In this case, Gina is most likely to have which of the following occupations?

A) Clinical psychologist B) Police dispatcher C) Dietitian D) Loan officer

26) When judging job analysis, which of the following refers to the practicality of the information collected?

A) Validity B) Usefulness C) Acceptability D) Currency

27)

Which of the following statements about the reliability of job analysis is true?

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A) It is a measure of the practicality of the information collected.

B) It examines the convergence of results among sources of data and methods.

C) It is a necessary condition for validity.

D) It is a sufficient condition for validity.

28) If several incumbents, supervisors, and peers respond in similar ways to job analysis questionnaires, it suggests that the results are most likely to be A) useful.

B) valid.

C) invalid.

D) unreliable.

29)

All of the following EXCEPT ________ are ways to judge job analysis.

A) currency B) acceptability C) cost D) usefulness

30)

Apart from being reliable, a job analysis is also considered valid if: A) the results of the job analysis are consistent among various analysts.

B) the results of the job analysis are consistent among various methods.

C) the job analysis is found to be acceptable.

D) the results converge among various sources of data and methods.

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31) What are the usual steps in a conventional job analysis procedure? List them in their order of occurrence.

32)

What are the two critical uses of job analysis when applied to compensation?

33)

Describe the ways in which information can be collected.

34) What should the manager do if employees and their supervisors do not agree on what is part of the jobs?

35)

Briefly describe offshoring in job analysis and susceptibility to offshoring.

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36) In the context of the process for constructing a work-related internal structure, job-based and person-based structures use similar methods but have different underlying purposes. ⊚ ⊚

true false

37) Job analysis is best done by someone thoroughly familiar with the organization and its jobs and trained in how to do the analysis properly. ⊚ ⊚

true false

38) In the context of the job analysis process, verification often involves the jobholders as well as their supervisors to determine whether the proposed job description is accurate and complete. ⊚ ⊚

true false

39) Typical data collected for a job analysis would not include relationships with suppliers and customers. ⊚ ⊚

40)

true false

Occupations with higher education and higher pay are less susceptible to the use of AI. ⊚ ⊚

true false

41) ADA regulations state that "essential functions refers to the fundamental job duties of the employment position the individual with a disability holds or desires."

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⊚ ⊚

true false

42) The Americans with Disabilities Act has led to a significant increase in employment rates for people with disabilities. ⊚ ⊚

true false

43) The level at which a job analysis begins influences whether the work is similar or dissimilar. ⊚ ⊚

true false

44) The Americans with Disabilities Act's essential-elements requirement for hiring and promotion decisions seems to require less detail than what is required for pay decisions. ⊚ ⊚

true false

45) Many employers are easily able to justify the time and expense of collecting task-level information, particularly for flexible jobs with frequently changing tasks. ⊚ ⊚

true false

46) Reducing the number of job titles in an organization is likely to increase the opportunities to reinforce positive employee behavior. ⊚ ⊚ Version 1

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47) An increasingly common method of conducting job analysis is quantitative job analysis, which is usually conducted on a website. ⊚ ⊚

true false

48) Most organizations find it more practical and cost-effective to develop their own quantitative job analysis questionnaires from ground zero rather than to modify existing questionnaires. ⊚ ⊚

true false

49) In the context of the Position Analysis Questionnaire, similarities and differences among jobs are described in terms of specific aspects unique to each job rather than in terms of the seven basic factors. ⊚ ⊚

true false

50) Generic job descriptions results in the ability to move employees more easily due to changes in work flow. ⊚ ⊚

true false

51) Traditional job analysis that makes fine distinctions among levels of jobs has been accused of reinforcing rigidity in organizations. ⊚ ⊚ Version 1

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52) A study of three different jobs in the United States, China, Hong Kong, and New Zealand found that ratings of the importance and amount of work activities and job requirements were significantly different across countries. ⊚ ⊚

53)

Quantitative job analysis methods help increase reliability. ⊚ ⊚

54)

true false

true false

Most organizations do not engage in any regular updating of job analysis information. ⊚ ⊚

true false

55) The reliability and validity of the quantitative methods of job analysis have significantly reduced the importance of human judgment in job analysis. ⊚ ⊚

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Answer Key Test name: Chap 04_14e_Gerhart 1) B 2) D 3) C 4) B 5) B 6) A 7) D 8) B 9) A 10) C 11) C 12) B 13) B 14) A 15) D 16) A 17) B 18) A 19) A 20) C 21) A 22) C 23) D 24) C 25) D 26) B Version 1

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27) C 28) B 29) C 30) D 36) FALSE 37) TRUE 38) TRUE 39) FALSE 40) FALSE 41) TRUE 42) FALSE 43) TRUE 44) FALSE 45) FALSE 46) FALSE 47) TRUE 48) FALSE 49) FALSE 50) TRUE 51) TRUE 52) FALSE 53) TRUE 54) TRUE 55) FALSE

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Chapter 5 1) ________ is the process of systematically determining the relative worth of jobs to create a job structure for an organization.

A) Job analysis B) Job restructuring C) Job evaluation D) Job descriptions

2)

Which of the following is the underlying assumption in the assessment of job content?

A) Content has intrinsic value outside the external market.

B) Content has no artistic value.

C) Stakeholders are the best judge for assessing the quality of content.

D) Content can be determined with or without the external market.

3)

The exchange value of a job is its A) content value.

B) performance value.

C) internal market value.

D) external market value.

4)

Which of the following statements is true of a job evaluation plan?

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A) It is developed using benchmark jobs and then applied to nonbenchmark jobs.

B) It excludes the pay decisions made by a company.

C) It provides the impetus to increase job levels and titles.

D) It is always carried out separately for major domains of work.

5)

A major decision in job evaluation is to: A) choose which stakeholders to eliminate in the process.

B) figure out how to eliminate the use of multiple plans.

C) choose among alternative approaches.

D) figure out how to eliminate the use of single plans.

6) Which of the following is a job evaluation method that can group a wide range of work together in one system but leave too much room for manipulation?

A) Ranking B) Point C) Scaling D) Classification

7)

In the context of internal alignment, which of the following is the correct sequence?

A) Job description > Pay structure > Job evaluation B) Job evaluation > Job description > Job structure C) Pay structure > Job description > Job evaluation > Job analysis D) Job description > Job evaluation > Job structure

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8) Which of the following is NOT true of the usage of multiple plans versus single job evaluation plans?

A) Employers rarely evaluate all jobs in an organization at one time.

B) Many employers design different evaluation plans for different types of work.

C) Typically, a related group of jobs is used for evaluation.

D) A single universal plan is acceptable to employees if the work covered is highly diverse.

9)

Which of the following is a characteristic of benchmark jobs?

A) They are unique to specific employers.

B) They have unstable pay differentials.

C) They employ a reasonable proportion of the workforce.

D) Their contents are obscure and change over time.

10) MXB, Inc. is a carwash service provider. It orders the jobs in the company on the basis of the least important job to the most important job. In this case, MXB is most likely using the: A) alternation-ranking method.

B) paired-comparison method.

C) classification method.

D) point method.

11) TreeWind, Inc. is a bookstore that uses skill and responsibility as its compensable factors.

It assigns 20 percent weight to responsibility and 80 percent weight to skill. If the responsibility factor gets a score of 60 after multiplying the subfactors with their corresponding weights and if the skill factor has two subfactors that are rated as 4 and 5, what is the total weightage given to the job?

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A) 40 B) 120 C) 420 D) 990

12) KayDen Corp., a small organization with 15 employees, conducts job evaluation using the least expensive method for the first time. In this case, KayDen is most likely to have used the A) classification method.

B) point method.

C) ranking method.

D) Hay plan.

13)

Which of the following is a disadvantage of the ranking method of job evaluation?

A) It fails to tell employees what is important about their jobs.

B) It is initially more expensive than other job evaluation methods.

C) It consumes more time than other job evaluation methods.

D) It is difficult to explain to employees.

14) In the context of job evaluation methods, two common ways of ranking are alternation ranking and A) scaling.

B) paired comparison.

C) policy capturing.

D) classification.

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15)

The job evaluation method that most resembles a bookcase with many shelves is: A) ranking.

B) the Hay plan.

C) the point method.

D) classification.

16)

A job description is compared to class descriptions in the ________ of job evaluation.

A) Position Analysis Questionnaire method B) point method C) Hay Group Guide Chart—Profile MethodSM D) classification method

17)

The ________ method of job evaluation uses compensable factors.

A) classification B) Position Analysis Questionnaire C) point D) ranking

18) In the context of job evaluation methods, which of the following is a common way of ranking?

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A) Paired comparison B) Interval scaling C) Factor weights D) Compensable factors

19) The ________ method of job evaluation is the most commonly used method in the United States and Europe.

A) ranking B) factor comparison C) classification D) point

20)

In the point method, the second step in designing a plan is to: A) conduct job analysis.

B) scale the factors.

C) determine the compensable factors.

D) prepare a job evaluation manual.

21) In the context of the point method of job evaluation, ________ are job attributes that provide the basis for evaluating the relative growth of jobs inside an organization.

A) competitive skills B) compensable factors C) core competencies D) benchmark factors

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22)

Which of the following is a disadvantage of the point method?

A) It can leave too much room for manipulation.

B) It can become bureaucratic and rule-bound.

C) It does not allow for comparisons.

D) It does not communicate what is valued.

23) Which of the following methods requires evaluators to agree on which jobs are the most and least valuable, then the next most and least valued, and so on, until all the jobs have been ordered?

A) The alternation-ranking method B) The classification method C) The point method D) The paired-comparison method

24)

The final step in designing a point plan involves A) developing online software support.

B) selecting compensable factors.

C) communicating the plan and training users.

D) scaling the factors.

25)

The most widely used point method job evaluation is the:

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A) Hay Group plan.

B) Equal Pay Act generic plan.

C) factor comparison plan.

D) Position Analysis Questionnaire plan.

26)

Which of the following answer options is not one of the three Hay compensable factors?

A) Motivation B) Problem solving C) Know-how D) Accountability

27) Research shows that ________ factor(s) account(s) for 98 to 99 percent of the variance in job evaluation plans.

A) one B) two C) three D) four

28) Once the compensable factors are determined, _____ reflecting the different degrees, or levels, within each factor are constructed.

A) weights B) scales C) classifications D) rankings

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29) When compensable factor importance weights are inferred using statistical methods, it is called: A) policy capturing.

B) committee a priori judgment approach.

C) factor analysis.

D) regression analysis.

30)

________ are more likely to conduct job evaluations of senior management jobs.

A) Compensation analysts B) Compensation managers C) Peers D) Junior incumbents

31)

What are the major decisions in a job evaluation process?

32) Compensable factors play a pivotal role in the point plan. To be useful, compensable factors should be:

33)

What are the two aspect of diversity in work?

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34)

Discuss the two common methods of ranking.

35)

What are the steps in designing a point plan?

36) A job structure based upon job value orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization's goals. ⊚ ⊚

true false

37) A representative sample of benchmark jobs will include the entire domain of work being evaluated and capture the diversity of the work within that domain. ⊚ ⊚

true false

38) The number of job evaluation plans required depends only upon the number of employees in the organization.

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⊚ ⊚

true false

39) Paired-comparison and alternate-ranking methods may be more reliable than simple ranking. ⊚ ⊚

true false

40) A disadvantage of the ranking method is that the criteria on which the jobs are ranked are usually poorly defined. ⊚ ⊚

true false

41) Point plans represent a significant change from ranking and classification methods in that they make explicit the criteria for evaluating jobs: compensable factors. ⊚ ⊚

true false

42) The leadership of any organization is the best source of information on where the business should be going and how it is going to get there. ⊚ ⊚

true false

43) Work-related documentation helps gain acceptance by employees and managers, is easier to understand, and can withstand a variety of challenges to the pay structure. ⊚ ⊚ Version 1

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44) Since business strategies may change often, compensable factors should rarely be added or deleted. ⊚ ⊚

true false

45) The primary reason for documenting the views of employees and supervisors on compensable factors is to meet the requirements of the Equal Pay Act. ⊚ ⊚

true false

46) The National Electrical Manufacturers Association plan explicitly states that the compensable factor experience should be correlated with tenure. ⊚ ⊚

47)

true false

In the Hay plan, each of the three compensable factors are independent of each other. ⊚ ⊚

true false

48) One of the criteria for scaling compensable factors is to ensure that the number of degrees used is necessary to distinguish among jobs. ⊚ ⊚

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49) Generic factors and vague descriptions may be attractive to managers looking for flexibility, but they also reduce control and guidelines which make it more difficult to ensure people are treated fairly. ⊚ ⊚

50)

The most common way of allocating weights to factors is regression modeling. ⊚ ⊚

51)

true false

true false

A criterion pay structure is a pay structure that can be duplicated with a point plan. ⊚ ⊚

true false

52) The policy capturing approach and the committee a priori approach for developing pay structures yield the same pay structure. ⊚ ⊚

true false

53) Research shows that the weights assigned to compensable factors can affect the resulting pay structure. ⊚ ⊚

true false

54) In the past, compensation managers handled the appeal review procedures, but increasingly teams of managers and even peers are used.

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⊚ ⊚

true false

55) The final result of the job analysis–job description–job evaluation process is a hierarchy of work. ⊚ ⊚

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Answer Key Test name: Chap 05_14e_Gerhart 1) C 2) A 3) D 4) A 5) C 6) D 7) D 8) D 9) C 10) A 11) C 12) C 13) A 14) B 15) D 16) D 17) C 18) A 19) D 20) C 21) B 22) B 23) A 24) A 25) A 26) A Version 1

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27) C 28) B 29) A 30) B 36) TRUE 37) TRUE 38) FALSE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) TRUE 44) FALSE 45) FALSE 46) FALSE 47) FALSE 48) TRUE 49) TRUE 50) FALSE 51) TRUE 52) FALSE 53) TRUE 54) TRUE 55) TRUE

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Chapter 6 1)

The roots of job-based pay structures are traced to A) Frederick Taylor.

B) Karl Marx.

C) Adam Smith.

D) Ronald McFreyer.

2)

Routine work is also termed A) transactional work.

B) hygiene work.

C) tacit work.

D) system work.

3) ________ are often linked to mission statements that express an organization's philosophy, values, business strategies, and plans.

A) Job-based systems B) Bureaucratic systems C) Skill-based systems D) Core competencies

4) Which of the Big Five personality traits relate to the generic Great Eight competency of organizing and executing?

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A) Openness to new experience B) Conscientiousness C) Extraversion D) Agreeableness

5)

Which of the following is an advantage of skill-based pay plans?

A) They guarantee a low rate of employee turnover.

B) They aid in deploying workers in a way that better matches the work flow.

C) They are less expensive than job-based plans.

D) They are viewed more favorably by courts than any other type of pay plans.

6)

The majority of applications of skill-based pay have been in: A) education industries.

B) manufacturing industries.

C) health-care industries.

D) service industries.

7)

An employee's focus in a job-based approach is to A) seek promotions to earn more pay.

B) acquire skills.

C) acquire competencies.

D) utilize skills efficiently.

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8) One way to measure the validity of job evaluation is through _____ - the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs.

A) skill blocks B) tacit work C) hit rates D) depth

9)

Employees in a multiskill system earn pay increases: A) by increasing their productivity.

B) based on job content.

C) based on job assignments.

D) by acquiring new knowledge.

10) Which of the following is least likely to be used in establishing skill-based certification methods?

A) Tests B) College degree C) Peer review D) On-the-job demonstration

11)

________ is a crucial factor that affects the perception of fairness of a skill-based plan.

A) The design of the certification process B) The number of compensable factors C) The extent of alignment with an organization's strategy D) The number of weights and factor degrees

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12)

A camper is an employee who ________ in a skill-based pay system.

A) tops out B) is a jack-of-all-trades C) does not want to rotate jobs D) moves too quickly from job to job

13)

Skill-based plans tend to work best in organizations using a(n) ________ strategy.

A) innovator B) defender C) laissez-faire D) cost-cutter

14) ________ are the observable behaviors that indicate the level of competency within each competency set.

A) Competency generators B) Core competencies C) Competency indicators D) Behavior scale points

15)

________ translate each core competency into action.

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A) Competency indicators B) Multifunctional skills C) Skill-based structures D) Competency sets

16) The process of identifying competencies in person-based structures resembles identifying ________ as part of job evaluation in job-based structures.

A) compensable factors B) job descriptions C) employee requirements D) work flow outlays

17)

Which of the following reasons makes competencies a risky foundation for a pay system?

A) The number of stakeholders and the lack of a global standard B) Openness and nonquantifiable nature C) Vagueness and subjectivity D) Lack of motivation and objectivity

18) Focuses on results and seeks opportunities for self-development and career advancement define which of the Great Eight competencies?

A) Enterprising and performing B) Leading and deciding C) Adapting and coping D) Organizing and executing

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19) Leadership, customer orientation, and functional expertise are examples of which group of competencies?

A) Personal characteristics B) Visionary C) Organization specific D) Team dynamics

20) Competencies are derived from the ________ beliefs about the organization and its strategic intent.

A) executive leadership's B) stakeholders' C) competitors' D) customers'

21) Most studies report that when different people rank-order jobs, the correlations are between: A) 0.15 and 0.36.

B) 0.35 and 0.46.

C) 0.55 and 0.66.

D) 0.85 and 0.96.

22)

The reliability of job evaluation techniques is measured by:

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A) determining if different evaluators produce the same results.

B) asking the question "What does the evaluation measure?"

C) determining hit rates.

D) surveying employee attitudes about the evaluation.

23)

Who among the following is examining the validity of a job evaluation?

A) Keira, who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs B) Laila, who is measuring the effectiveness of a formal appeals process C) Keith, who is surveying employee attitudes about the job evaluation plan D) Rita, who is requesting the management for a reanalysis and a reevaluation of the required skills as she feels her job has been evaluated incorrectly

24)

A study of 400 compensation specialists revealed that: A) job evaluation data had a larger effect on pay decisions than market data.

B) current pay data had a larger effect on pay decisions than market data.

C) job titles had a larger effect on pay decisions than job evaluation data.

D) market data had a substantially larger effect on pay decisions than job evaluation data.

25) Which of the following is the reason why skill-based pay plans have maximum flexibility?

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A) They pay employees for the highest level of skill they have achieved regardless of the work they perform.

B) They focus on placing the right people in the right job.

C) They only pay as much as the work performed is worth, regardless of any greater skills the employee may possess.

D) They encourage employees to focus on how to get promoted rather than on how to get the required competencies.

26) Managers whose employers use ________ plans focus on placing the right people in the right job.

A) person-based B) skill-based C) competency-based D) job-based

27) A ________ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess.

A) performance-based B) competency-based C) job-based D) skill-based

28)

Which of the following is an advantage of the skill-based structure?

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A) Pay based on value of work performed B) Continuous learning and flexibility C) Cost control via certification D) Lateral movement

29) Lisa is a manager at Trell, Inc. When she hires her employees, she focuses on finding the right job for the right person. Which of the following pay plans is her employer most likely using?

A) A skill-based pay plan B) A competency-based pay plan C) An aptitude-based pay plan D) A job-based pay plan

30) Who among the following is most likely to be working for a company that uses a competency-based pay plan?

A) Julia, who focuses on getting promoted to get a pay increase B) Faiza, a manager who focuses on choosing the employees best suited for job roles C) Juan, a manager who focuses on controlling costs through budgets and work assignments D) Carlos, who focuses on obtaining certifications in her field to get a pay increase

31)

Define validity in relation to job evaluation and list the two ways validity is measured.

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32)

What is the relevance of certification in a multiskill system?

33)

How do skill-based plans motivate employees?

34)

What is relevance of flexibility in skill-based plans?

35)

How are organizations redefining the original definition of competencies?

36)

Transactional work is typically paid more than tacit work. ⊚ ⊚

true false

37) Fundamental skills include familiarity with company forms and procedures, basic product knowledge, safety, basic computer usage, and so on.

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⊚ ⊚

38)

true false

Skill-based pay plans can focus on both the depth and breadth of work. ⊚ ⊚

true false

39) By encouraging employees to take charge of their own development, skill-based plans may give them more control over their work lives. ⊚ ⊚

true false

40) Person-based plans have the potential to clarify new standards and behavioral expectations. ⊚ ⊚

true false

41) Compared to an on-demand review of certifications, scheduling fixed review points makes it easier to budget and control payroll increases. ⊚ ⊚

true false

42) Skill-based plans are generally well accepted by employees because it is easy to see the connection between the plan, the work, and the size of the paycheck. ⊚ ⊚

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43) There is far less uniformity in the use of terms in person-based plans than there is in jobbased plans. ⊚ ⊚

true false

44) When building a skill-based plan, executive management is the source of information on defining the skills, arranging them into a hierarchy, bundling them into skill blocks, and certifying whether a person actually possesses the skills ⊚ ⊚

45)

true false

Scaled competency indicators are similar to degrees of compensable factors. ⊚ ⊚

true false

46) As experience with competencies has grown, organizations are placing greater emphasis on business-related descriptions of behaviors. ⊚ ⊚

true false

47) While competencies hone in on information about specific tasks, skill- and job-based systems take the opposite approach. ⊚ ⊚

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48) Advocates of competencies say that by focusing on optimum performance rather than average performance, competencies can help employees maintain their marketability. ⊚ ⊚

true false

49) Core competencies are often linked to mission statements that express an organization's philosophy, values, business strategies, and plans. ⊚ ⊚

true false

50) While competency-based structures are tightly coupled to today's work, skills-based plans more loosely apply to work requiring more tacit knowledge such as in managerial and professional work. ⊚ ⊚

true false

51) In virtually all the studies on job evaluation, job-based evaluation is treated as a measurement device. ⊚ ⊚

true false

52) Validity refers to the degree to which an evaluation assesses the relative worth of jobs to an organization. ⊚ ⊚

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53) Communication and employee involvement are crucial for acceptance of resulting pay structures. ⊚ ⊚

true false

54) The reliability of a job evaluation can be improved by using evaluators who are familiar with the work and trained in the job evaluation process. ⊚ ⊚

true false

55) Defining the compensable factors and scales to include the content of jobs held predominantly by women is one of the methods to ensure that job evaluation plans are bias-free. ⊚ ⊚

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Answer Key Test name: Chap 06_14e_Gerhart 1) A 2) A 3) D 4) B 5) B 6) B 7) A 8) C 9) D 10) B 11) A 12) C 13) D 14) C 15) D 16) A 17) C 18) A 19) C 20) A 21) D 22) A 23) A 24) D 25) A 26) D Version 1

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27) C 28) B 29) D 30) D 36) FALSE 37) TRUE 38) TRUE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) TRUE 44) FALSE 45) TRUE 46) TRUE 47) FALSE 48) TRUE 49) TRUE 50) FALSE 51) TRUE 52) TRUE 53) TRUE 54) TRUE 55) TRUE

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Chapter 7 1)

Which of the following statements is true of pay level?

A) Pay level is the same across all organizations for the same job.

B) The higher the pay level relative to what competitors pay, the lower the relative costs to provide similar products or services.

C) Pay level is directly proportional to labor costs.

D) Pay level is independent of the number of employees in an organization.

2)

________ refers to the average of the array of rates paid by an employer.

A) Revenue margin B) Remuneration C) Compensation D) Pay level

3) ________ focuses attention on the competitive positions reflected in the pay relationships among organizations.

A) Labor demand B) External competitiveness C) Utility theory D) Pay satisfaction

4)

In the context of types of markets, which of the following statements is true?

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A) In both the bourse and the quoted market, employers are the sellers.

B) Ads that list a job opening's starting wage are examples of bourse markets.

C) Graduating students usually find themselves in a bourse market.

D) Bourse markets allow haggling over terms and conditions until an agreement is reached.

5)

Which of the following is an example of a quoted-price market?

A) Streetcash, a website that allows buyers to negotiate product prices with sellers B) Vidwom, a website that allows buyers to bid for items sold by other users C) Gramspot, a website where cars are auctioned by sellers for charity D) Nile, a website that allows sellers to sell their products for a fixed price

6) Theories of labor markets usually begin with four basic assumptions. Which of the following options is not one of those four assumptions?

A) People are interchangeable.

B) Employers face competitive markets.

C) Employers always seek to maximize profits.

D) Pay rates reflect the total costs of base pay.

7)

________ is an example of a bourse.

A) The stated starting wage of a job in an ad B) The total compensation for a top athlete C) The price of a product on Amazon D) The price of a box of cereal at a grocery store

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8)

Which of the following is an example of the demand side of labor?

A) The level of pay applicants will accept.

B) The qualifications of applicants.

C) The pay level offered by an employer.

D) The locations of potential employees.

9)

Which of the following is true of the marginal revenue product model?

A) It explains differences in workers' responses to offers.

B) It helps separate the contributions of labor from those of other resources.

C) It fails to tell managers how many people to hire.

D) It oversimplifies business conditions in the real world.

10) ________ is the additional output associated with the employment of one additional human resource unit, with other production factors held constant.

A) Productivity B) The marginal product of labor C) Incremental productivity D) The marginal revenue of labor

11) A small lawn care company has two mowers and four employees. If it hires another employee and the factors of production remain the same, how will the productivity of the fifth employee compare to that of the current four employees?

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A) The productivity will reduce.

B) The productivity will increase.

C) The productivity will remain the same.

D) There is not enough information to determine productivity.

12) Employers continue to hire until the marginal revenue of the last hire equals his or her wage rate. This is based on the first labor market theory assumption that: A) markets are competitive.

B) pay rates reflect all costs of employment.

C) employers seek to maximize profits.

D) workers are homogeneous and interchangeable.

13) In the short term, an employer cannot change any factor of production and can only change its level of human resources. Under such conditions, a single employer's demand for labor coincides with the _____.

A) compensating differentials B) marginal revenue of labor C) efficiency wage D) marginal product of labor

14) Which of the following is an assumption held by the labor supply model about the behavior of potential employees?

A) The number of job seekers is low.

B) Job seekers are unaware of job openings.

C) Job seekers do not face barriers to mobility.

D) Job seekers often lie on their résumés.

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15) If Company A raises its pay rate by one dollar per hour to hire additional workers and competitors immediately match the increase, what will be the most likely result?

A) The labor costs for Company A will increase, but it will be unable to hire additional workers.

B) Company A will hire the needed workers at a higher wage rate.

C) Competitors of Company A will lose employees to Company A. D) Company A will hire higher quality workers.

16) Druk, Inc. is a consulting firm with 10 employees. Each new client generates $10,000 in revenue. If the company hires another employee who brings in five new clients and all other factors of production are constant, which of the following statements is true?

A) Druk will break even if it hires a 12th employee for a wage of $50,000.

B) Druk needs to pay $10,000 as wage to the 11th employee to break even.

C) Druk will break even if it hires a 13th employee for a wage of $10,000.

D) Druk needs to pay $50,000 as wage to the 11th employee to break even.

17) Which of the following labor demand theories states that work with negative characteristics requires higher pay to attract or retain workers?

A) Job competition B) Compensating differentials C) Efficiency wage D) Sorting and signaling

18) ________ theory is based on the premise that higher earnings flow to those who improve their potential productivity by investing in themselves.

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A) Human capital B) Labor market C) The efficiency-wage D) The compensating differentials

19)

________ puts a lid on the maximum pay level an employer can set.

A) Government legislation B) The product market C) The labor market D) Labor market competition

20)

Wages tend to be the lowest in which of the following industries?

A) Education and health care B) Technology-intensive industries C) Professional services D) Pharmaceuticals

21) Which of the following is NOT true of the relationship between employer size and its ability to pay?

A) Talented individuals have a lower marginal value in a larger organization.

B) Talented people can influence more people and decisions.

C) The influence of talented people leads to more profits.

D) Talented people prefer to work in larger organizations.

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22) Evidence shows that in manufacturing, ________ is positively correlated with hourly wage level.

A) turnover B) productivity C) a job description D) total cost

23) The estimates of competitors' pay rates will be incorrect and the pay level and pay mix inappropriately established if: A) employees demand for an increase in wages.

B) the marginal revenue generated is low.

C) markets are incorrectly defined.

D) the cost for procuring labor is high.

24) In which of the following conditions would product market competitors' data be given more weight than data from labor market competitors?

A) Labor costs are a small share of total costs.

B) Employee skills are generic across all product markets.

C) Product demand is responsive to price changes.

D) The supply of labor is not responsive to changes in pay.

25)

Which of the following is linked to high pay levels?

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A) Increased absenteeism B) Poorly performing employees C) Reduced vacancy rates D) Higher training time

26)

The pay-level policy that is most likely to reduce pay dissatisfaction is a(n) A) lead policy.

B) employer of choice policy.

C) lag policy.

D) match policy.

27) ________ is an external competitiveness policy that offers employees substantial options among their pay forms.

A) A merit bonus B) A merit increase C) Total compensation D) Shared choice

28) Marie hired on with a tech company offering the usual benefits but paying below-market rates. She took the job because the company was promising generous stock options and hefty yearly bonuses if goals are met. Plus, they are paying her to relocate to Hawaii! Marie's new employer is using a _____.

A) pay-with-competition policy B) lag-pay-level policy C) security pay-mix policy D) lead pay-level policy

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29)

Among pay-mix alternatives, the percentage of base pay is highest in a A) work/life balance policy.

B) security or commitment policy.

C) performance-driven policy.

D) market match policy.

30) The pay-mix policy alternative in which the percentage of benefits is likely to be the highest is known as a A) work/life balance policy.

B) security policy.

C) performance-driven policy.

D) market match policy.

31)

Explain external competitiveness.

32)

What are the factors that influence decisions on pay level and pay mix?

33) What are the four common pay-mix strategy alternatives? Which of the four alternatives includes a larger portion of benefits compared to the other three?

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34)

What is the significance of marginal revenue?

35) According to efficiency-wage theory, how do increased wages increase efficiency and lower labor costs?

36) In determining the compensation strategy, a major strategic decision is whether to mirror what competitors are paying. ⊚ ⊚

true false

37) Both pay-level and pay-mix decisions focus on two objectives: (1) control costs and increase revenues and (2) attract and retain employees. ⊚ ⊚

true false

38) A manager of a company could be a factor affecting the company's external competitiveness.

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⊚ ⊚

true false

39) It may be that an employer's pay level will not gain any competitive advantage; however, the wrong pay level may put the organization at a serious disadvantage. ⊚ ⊚

40)

Graduating students usually find themselves in a quoted-labor market. ⊚ ⊚

41)

true false

true false

In a labor market, the demand side focuses on the actions of the employers. ⊚ ⊚

true false

42) In a labor market, the market rate is where the lines for labor demand and labor supply cross. ⊚ ⊚

true false

43) In both a bourse and a quoted market, employers are the buyers and the potential employees are the sellers. ⊚ ⊚

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44) An employer offering lower base pay with high bonuses is a likely signal that it is seeking risk-taking employees. ⊚ ⊚

true false

45) The most influential theory explaining pay-level differences is marginal revenue productivity. ⊚ ⊚

46)

true false

Human capital theory assumes that people are paid at the value of their marginal product. ⊚ ⊚

true false

47) Product demand and the degree of competition affect the ability of an organization to change what it charges for its products and services. ⊚ ⊚

true false

48) Employers tend to overestimate the importance of pay to employees and underestimate the role of relationships with the supervisor. ⊚ ⊚

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49) Employers in highly competitive markets are more able to raise prices without loss of revenues. ⊚ ⊚

50)

Segmenting sources of labor is a means of reducing labor costs. ⊚ ⊚

51)

true false

Each organization operates in a single homogeneous labor market. ⊚ ⊚

52)

true false

true false

Talented individuals have a higher marginal value in larger organizations. ⊚ ⊚

true false

53) The three factors usually used to determine the relevant labor markets are the occupation, geography, and competitors. ⊚ ⊚

true false

54) Combat pay premiums paid to military personnel to offset some of the risk of being fired upon is an example of a lead pay-level policy. ⊚ ⊚

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55)

Research shows that a lead pay strategy reduces turnover. ⊚ ⊚

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Answer Key Test name: Chap 07_14e_Gerhart 1) C 2) D 3) B 4) D 5) D 6) D 7) B 8) C 9) D 10) B 11) A 12) C 13) D 14) C 15) A 16) D 17) B 18) A 19) B 20) A 21) A 22) B 23) C 24) C 25) C 26) A Version 1

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27) D 28) B 29) B 30) A 36) TRUE 37) TRUE 38) TRUE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) TRUE 44) TRUE 45) FALSE 46) TRUE 47) TRUE 48) FALSE 49) FALSE 50) TRUE 51) FALSE 52) TRUE 53) TRUE 54) TRUE 55) TRUE

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Chapter 8 1) The first major decision in setting externally competitive pay and designing the corresponding pay structures is to A) specify the employer's competitive pay policy.

B) conduct a job evaluation.

C) select relevant market competitors.

D) construct a pay policy line that reflects external pay policy.

2) The second major decision in setting externally competitive pay and designing the corresponding pay structures is to A) specify relevant markets.

B) define the purpose of the survey.

C) specify the pay-level policy.

D) design grades and ranges.

3) The final major decision in setting externally competitive pay and designing the corresponding pay structures is to A) interpret survey results and construct the market line.

B) construct a pay policy line that reflects external pay policy.

C) design grades and ranges or bands.

D) select relevant market competitors.

4)

Which of the following is true of the Employment Cost Index?

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A) It is one of three types of salary surveys published regularly by the Department of Commerce.

B) It measures the rate of change in prices for goods and services in the product market.

C) It measures monthly changes in employer costs for compensation.

D) It allows a firm to compare changes in its average costs to an all-industry or specificindustry average.

5) When specifying relevant markets, include employers who compete in one or more of the following areas, except: A) the same products and services.

B) employees within the same geographic area.

C) total revenues.

D) the same occupation or skills.

6)

In most organizations, the responsibility for managing a pay survey lies with A) top management.

B) the facility or plant manager.

C) outside consultants.

D) the compensation manager.

7) In the United States, the ________ is a major source of publicly available pay data, and it also calculates the consumer price index.

A) Chamber of Commerce B) Bureau of Labor Statistics C) Compensation Association D) Department of Economics

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8) A company using a skill-based pay system prices the job of lead assembler between $10 and $22 per hour. Survey data showed that the job of assembler averaged $10 per hour and the job of assembly supervisor averaged $22 per hour. The company is using the ________ method of job matching.

A) benchmark job B) low-high C) survey leveling D) benchmark conversion

9) For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is A) the benchmark job approach.

B) the low-high approach.

C) survey leveling.

D) benchmark conversion.

10)

________ measures reveal competitors' use of performance-based cash payments.

A) Base pay B) Short-term incentive pay C) Total cash D) Long-term incentive pay

11) Revenue divided by number of employees or revenues divided by labor costs provides which basic calculation?

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A) Productivity B) Total labor costs C) Yield ratio D) Impact on the labor market

12) The process of matching survey jobs by applying an employer's plan to the external jobs and then comparing the worth of the external job with its internal "match" is called A) pay compression.

B) collective bargaining.

C) due diligence.

D) benchmark conversion.

13) Which of the following is true of weighted mean as a statistical measure to analyze survey data?

A) It is frequently used to set pay ranges or zones.

B) It captures the size of supply and demand in a market.

C) It tells how similar or dissimilar market rates are from each other.

D) It minimizes distortion caused by outliers.

14)

Which of the following is often used to set pay ranges?

A) Median B) Weighted mean C) Quartiles and percentiles D) Standard deviation

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15)

________ minimizes the distortion of the central tendency caused by outliers.

A) Weighted mean B) Mean C) Mode D) Median

16) Which of the following statistical measures shows how similar or dissimilar the market rates are from each other?

A) Weighted mean B) Mean C) Standard deviation D) Median

17) Because employers are raising employee pay at various times during the year, survey data must be updated using a process called A) aging.

B) leading.

C) matching.

D) gaining.

18)

Which of the following is a difference between ranges and bands?

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A) Ranges give managers "freedom to manage" pay, whereas bands give managers "freedom with guidelines."

B) Ranges offer recognition via titles or career progression, whereas bands offer crossfunctional experience and lateral progression.

C) Ranges are used by companies with global operations, whereas bands are used by companies with domestic operations.

D) Ranges eliminate layers of managerial jobs, whereas bands emphasize the importance of several layers of managerial jobs.

19) Gramhold, Inc., a pharmaceutical company, reduces its ten salary grades to just three broad bands. Which of the following statements is most likely to be true in this case?

A) Gramhold will face difficulty in defining job responsibilities broadly with the new structure.

B) Gramhold will find that the new structure hinders cross-functional growth.

C) Gramhold will experience more career moves within bands than career moves between bands.

D) Gramhold will offer recognition via titles rather than through cross-functional experience and lateral progression.

20)

Which of the following is an example of a company that uses broad banding?

A) A company in which there are more lateral movements with no pay adjustments and few promotions B) A company that has pay guidelines and controls designed right into the pay system C) A company that has an unlimited total salary budget D) A company that pays all its employees the same salary

21)

A market pay line

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A) reflects an organization's pay scale based on the ratings given by its employees.

B) links a company's benchmark jobs with market rates paid by competitors.

C) provides an accurate prediction of an organization's entry-level pay rates.

D) compares an organization's minimum and maximum pay rates for each skill level.

22)

In the regression equationy = a + bx, job evaluation points are denoted by A) a.

B) b.

C) x.

D) y.

23)

Aging market data to a point halfway through a plan year is called A) leveling.

B) updating.

C) lead/lag.

D) matching.

24) Asai uses a skill-based plan that establishes single flat rates for each skill level. Mark performs better than Steve even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario?

A) Mark will be paid more than Steve as his performance is better.

B) Steve will be paid more than Mark as he has more seniority.

C) Both Mark and Steve will be paid the same amount.

D) Steve will be given more incentives than Mark.

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25)

Which of the following statements is true of pay ranges?

A) They are flexible enough to deal with differences in quality but not with the productivity or value of these quality variations.

B) They usually lead to an increase in employee turnover.

C) They reflect the differences in performance or experience that an employer wishes to recognize with pay.

D) They cause employees to believe that their compensation cannot increase in the same job.

26)

Which of the following statements about pay grades is true?

A) All jobs within a single grade will have the same pay range.

B) Pay grades decrease flexibility.

C) An advantage of pay grades is their ease of design.

D) Jobs in different grades should be similar to those in other grades.

27)

The size of pay differentials between grades should A) be based upon differentials in market surveys.

B) be approximately 20 percent.

C) support career movement through the pay structure.

D) be between 10 and 25 percent.

28)

Which of the following statements is true regarding broad bands?

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A) They remove limits on total salary budgets.

B) They support recognition via titles or career progression.

C) They foster cross-functional growth.

D) They increase the hierarchical nature of organizations.

29) The ________ pay strategy emphasizes external competitiveness and deemphasizes internal alignment.

A) job structure B) broad banding C) reference rate D) market pricing

30)

Which of the following statements is true of market pricers?

A) They align pay structures with the business strategy.

B) Their pay structures are unique and difficult to imitate.

C) They assume that little value is added through internal alignment.

D) They emphasize pay structures based on unique technology or the way work is organized.

31)

What is a survey? What purpose does it serve in terms of compensation?

32)

Who should be involved in designing a compensation survey?

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33)

Explain the low-high approach in selecting jobs for inclusion in a compensation survey.

34) Explain the difference between the two common measures of variation: standard deviation and quartiles and percentiles.

35) Grades and ranges offer flexibility to deal with which three pressures from external markets and differences among organizations?

36) The final step in determining externally competitive pay levels and structures is the merging of internal and external pressures. ⊚ ⊚

true false

37) Adjustments to the different forms of pay competitors use and the relative importance they place on each form occur more frequently than adjustments to overall pay level.

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⊚ ⊚

38)

true false

Many employers use market surveys to validate their own job evaluation results. ⊚ ⊚

true false

39) When there is an unusual level of turnover in a job, an employer is likely to conduct a market survey. ⊚ ⊚

40)

true false

The distribution of rates around a measure of central tendency is called weighted mean. ⊚ ⊚

true false

41) Identifying pay survey participants by company name is considered price fixing under the Sherman Act. ⊚ ⊚

true false

42) If the purpose of a survey is to price the entire structure of a job, then benchmark jobs can be selected to include the entire job structure. ⊚ ⊚

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43) When designing the survey, three basic types of data are typically collected: information about the organization, information about the total compensation system, and specific pay data on each incumbent in the jobs under study. ⊚ ⊚

true false

44) In cases where the content of an organization's jobs does not sufficiently match that of the jobs in the salary survey, an effort can be made to quantify the difference via benchmark conversion. ⊚ ⊚

45)

true false

Regression smoothes large amounts of data while minimizing variations. ⊚ ⊚

true false

46) As a measure of compensation, base pay includes performance incentives, and therefore it gives a true picture if competitors offer low base but high incentives. ⊚ ⊚

47)

true false

A pay range exists whenever two or more rates are paid to employees in the same job. ⊚ ⊚

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48) Pay ranges for top-level management positions are smaller than pay ranges for entry-level managerial positions. ⊚ ⊚

49)

From an external competitiveness perspective, the range is a control device. ⊚ ⊚

50)

true false

true false

Smaller pay ranges may reduce the opportunities for promotion. ⊚ ⊚

true false

51) Skill-based plans establish single flat rates for each skill level regardless of performance or seniority. ⊚ ⊚

52)

true false

Career moves between bands are more common than within bands. ⊚ ⊚

true false

53) Managers often regard external market data as more objective than internal job evaluation.

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⊚ ⊚

true false

54) A pure market pricing strategy carried to its extreme tends to ignore internal alignment completely. ⊚ ⊚

true false

55) Market pricers emphasize any unique or difficult-to-imitate aspects of an organization's pay structure. ⊚ ⊚

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Answer Key Test name: Chap 08_14e_Gerhart 1) A 2) B 3) C 4) D 5) C 6) D 7) B 8) B 9) B 10) C 11) A 12) D 13) B 14) C 15) D 16) C 17) A 18) B 19) C 20) A 21) B 22) C 23) C 24) C 25) C 26) A Version 1

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27) C 28) C 29) D 30) C 36) FALSE 37) FALSE 38) TRUE 39) TRUE 40) FALSE 41) TRUE 42) TRUE 43) TRUE 44) TRUE 45) TRUE 46) FALSE 47) TRUE 48) FALSE 49) TRUE 50) TRUE 51) TRUE 52) FALSE 53) TRUE 54) TRUE 55) FALSE

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Chapter 9 1)

The motivation triangle includes A) selection.

B) organization design.

C) culture.

D) organization development.

2)

The ability triangle includes A) selection.

B) performance management.

C) compensation.

D) organization development.

3) When employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time, the most effective type of compensation is to offer A) a large base pay and low incentive pay.

B) an increase in base pay.

C) a variety of rewards with significant incentive pay.

D) monetary rewards with no benefits.

4) When an organization's performance has frequent highs and lows, but individual performance is fairly stable and performance measures are clear, the most effective compensation mix is to offer

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A) a base pay with low incentives and a variety of rewards.

B) monetary rewards with large incentives.

C) a large base pay and low incentive pay.

D) a wide range of rewards and significant incentives.

5) The corporate performance of Yellow Corp. is fairly stable. However, it is difficult to measure individual performance. In this case, the most effective compensation mix is to offer A) a high base pay with high incentives.

B) monetary rewards alone.

C) a large base pay and low incentive pay.

D) a wide range of awards beyond just money.

6) When employee performance is easily measured and the organization's performance is fairly stable over time, the most effective type of compensation is to offer A) a large base pay and low incentive pay.

B) a variety of rewards in addition to base pay.

C) a variety of rewards with significant incentive pay.

D) monetary rewards with large incentives.

7) When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer A) a base pay with low incentives and a wide array of awards.

B) monetary rewards with large incentives.

C) a large base pay and low incentive pay.

D) a wide range of rewards and significant incentives.

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8) Which of the following motivational theories states that performance-based payments work best when they closely follow performance?

A) Reinforcement theory B) Equity theory C) Expectancy theory D) Agency theory

9) According to the ________ theory of motivation, employees prefer certain or fixed income flows, such as wage or salary, to variable income flows, such as performance-based pay.

A) reinforcement B) equity C) agency D) expectancy

10) The ________ theory of motivation states that employee motivation is the product of instrumentality and valence.

A) equity B) expectancy C) reinforcement D) agency

11) ________ is the value employees attach to the organization rewards received for job performance.

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A) Equity B) Instrumentality C) Valence D) Reinforcement

12) ________ is employees' beliefs that higher job performance will be rewarded by the organization.

A) Valence B) Expectancy C) Instrumentality D) Utility

13) According to ________ theory, relative pay is important as employees evaluate the adequacy of their pay via comparisons with other employees.

A) equity B) expectancy C) agency D) reinforcement

14) ________ theory argues that pay should be based on outcomes if monitoring of behaviors is difficult or costly and if risk due to variability in outcomes is not large.

A) Reinforcement B) Goal-setting C) Agency D) Expectancy

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15) Which of the following theories states that people choose the behavior that leads to the most satisfactory exchange?

A) Maslow's need hierarchy B) Expectancy theory C) Herzberg's two-factor theory D) Goal-setting theory

16) ________ is a variable pay plan where payout depends not on company level performance such as profitability, but rather on performance at some subunit such as a plant or facility.

A) Individual incentive B) Profit sharing C) Merit bonus D) Gain sharing

17) Grabhouse, Inc. is experiencing an increase in the turnover rates of its top employees.

Upon consulting with its managers for the reasons for this increase, Grabhouse finds that employees are uneasy about the current pay mix as it involves too many risky elements. In order to make its pay mix less risky, Grabhouse needs to: A) increase the base pay component of its pay mix.

B) introduce a profit-sharing plan to its pay mix.

C) introduce a risk-sharing plan to its pay mix.

D) increase the merit bonus component of its pay mix.

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18) ________ is a nonpermanent (variable) payment (bonus or lump sum) form of variable pay granted to employee as function of some (typically primarily subjective) assessment of individual employee performance.

A) Risk sharing B) Gain sharing C) Merit bonus D) Success sharing

19) When designing a pay-for-performance plan, effectiveness is dependent on three things: efficiency, equity, and _____ in designing a pay system.

A) standards B) strategy C) structure D) compliance

20)

A person with low self-esteem is likely to seek A) a small, hierarchical organization with pay plans based upon individual performance.

B) a flat organization with a significant amount of pay based upon performance.

C) a small organization with large benefits based on group performance.

D) a large, decentralized organization with little pay for performance.

21)

Which of the following is an example of the sorting effect in action?

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A) An employee leaving a high-paying job for one that provides more work/life balance B) The provision of across-the-board pay increases by a company C) The provision of cost-of-living increases by a company D) An employee choosing fewer incentives in his flexible compensation plan

22) Droppiece, Inc. is a company that provides more performance-based pay and less base pay than its competitors. Who among the following is most likely to join Droppiece?

A) George, a recently married man who wants a stable income B) Stella, a recent college graduate who loves to take on a challenge C) Mark, a musician who wants to supplement his income D) Sara, a senior citizen who wants a job only to keep herself busy

23)

When pay is based on individual performance, turnover tends to be highest among A) poor performers.

B) good performers.

C) single women with children.

D) ethnic minorities.

24) When a company moves from an individual incentive plan to a group incentive plan, the company is most likely to experience A) higher turnover among high performers.

B) an increase in instrumentality.

C) higher turnover among poor performers.

D) an increase in perceived equity.

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25) Tim loves his job where he is paid very well for his individual performance. He is dismayed when the company announces a plan to transition to a group performance pay system.

Tim is already planning to switch companies to one that pays only on his individual performance. Tim is most likely _____.

A) risk-averse B) materialistic C) a risk taker D) an individualist

26) Company X pays for performance. Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards. This is an example of the: A) design effect.

B) compensation effect.

C) sorting effect.

D) incentive effect.

27)

The most obvious sorting factor is A) seniority.

B) ability.

C) experience.

D) educational qualification.

28) pay?

In the context of pay influencing turnovers, which of the following is a result of too little

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A) Higher individual performance among employees B) Feelings of unfair treatment among employees C) More employees requesting for training D) Employees finding the company more attractive

29) The key to designing a pay-for-performance system rests on standards — specifically: objectives, measures, eligibility, and _____.

A) structure B) funding C) equity D) strategy

30)

The amount of fairness given to employees refers to: A) total justice.

B) quantitative justice.

C) procedural justice.

D) distributive justice.

31)

What are the behaviors that compensation needs to enforce?

32) In the context of the pay model, explain how effectiveness is dependent on equity in designing a pay system.

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33)

Briefly explain the concept of flexible compensation.

34) An effective pay-for-performance pay system depends on several things, including efficiency. What the three general areas of concern regarding efficiency?

35)

Compare risk-sharing and success-sharing plans.

36)

In the formula "Behavior =f (M,A,O),"M denotes monetary incentives. ⊚ ⊚

true false

37) When pay raises are based on events over which employees lack significant control, they are likely to regard the system as unfair.

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⊚ ⊚

true false

38) Flexible compensation is based on the idea that only the individual employee knows what package of rewards would best suit personal needs. ⊚ ⊚

true false

39) The agency theory of motivation suggests that base pay must be set high enough to provide individuals with the economic means to meet their basic living needs. ⊚ ⊚

true false

40) According the self-determination theory, intrinsic motivation (such as enjoyment of performing the work itself) produces the highest-quality motivation. ⊚ ⊚

true false

41) An important implication of reinforcement theory is that the timing of payouts to employees is very important. ⊚ ⊚

true false

42) Goal-setting theory argues that employees' performance is maximized when performance targets are unchallenging and unspecific. ⊚ ⊚ Version 1

true false 11

43) Employee decisions to leave are influenced by their performance and the degree to which pay is performance-based. ⊚ ⊚

true false

44) According to agency theory, because employees prefer a salary, they will demand a wage premium in exchange for accepting performance-based pay. ⊚ ⊚

45)

true false

Workload and work variety are both components of a total reward system. ⊚ ⊚

true false

46) Employees increasingly are expected to bear a share of the risks that businesses have solely born in the past. ⊚ ⊚

47)

The trend today is toward less stable and less secure compensation packages. ⊚ ⊚

48)

true false

true false

Merit pay is a permanent wage increase based on employee performance.

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⊚ ⊚

49)

true false

Gain sharing poses greater risk to individual employees than profit sharing. ⊚ ⊚

true false

50) Risk-sharing plans include a provision for cuts in base pay that are only recaptured in years when an organization meets performance objectives. ⊚ ⊚

true false

51) Evidence suggests that talented people are motivated to join organizations with strong links between performance and pay. ⊚ ⊚

true false

52) Group incentive pay increases the turnover of better performers, while individual incentive increases the turnover of poorer performers. ⊚ ⊚

53)

true false

Evidence suggests that skill-based pay may not increase productivity. ⊚ ⊚

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54) A problem with incentive pay plans is workers may end up focusing exclusively on behaviors that are rewarded. ⊚ ⊚

55)

true false

Group pay is always more effective than individual pay. ⊚ ⊚

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Answer Key Test name: Chap 09_14e_Gerhart 1) C 2) A 3) C 4) C 5) D 6) D 7) A 8) A 9) C 10) B 11) C 12) C 13) A 14) C 15) B 16) D 17) A 18) C 19) D 20) D 21) A 22) B 23) A 24) A 25) D 26) C Version 1

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27) B 28) B 29) B 30) D 36) FALSE 37) TRUE 38) TRUE 39) FALSE 40) TRUE 41) TRUE 42) FALSE 43) TRUE 44) TRUE 45) TRUE 46) TRUE 47) TRUE 48) TRUE 49) FALSE 50) TRUE 51) TRUE 52) TRUE 53) TRUE 54) TRUE 55) FALSE

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Chapter 10 1)

Which of the following statements is true of a pay-for-performance (PFP) plan?

A) PFP plans signal a movement toward pay as an entitlement.

B) PFP plans are used less heavily in private sector organizations.

C) If a PFP plan is in use, it is used for all employee groups.

D) Of the pay components, only base pay and across-the-board increases do not fit the PFP category.

2)

Which of the following statements is true of merit pay?

A) Merit pay differentials based on performance are usually large enough to motivate performance.

B) Merit pay decreases fixed compensation costs over time.

C) Merit pay is inexpensive even when too many high-performance ratings are awarded.

D) Merit programs are commonly designed to pay different amounts depending on the level of performance.

3)

Which of the following statements is true of the Halsey 50–50 method?

A) It derives its name from the shared split between worker and employer of any savings in direct cost.

B) In this method, a worker's bonus increases as the time required to complete a task decreases.

C) In this method, the standard time for a task is purposely set at a level requiring high effort to complete.

D) It is usually offered to top managers and professionals to get them to focus on longterm organization objectives.

4)

Which of the following is true of merit bonuses?

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A) They are viewed as less of an entitlement than merit pay.

B) They are more expensive than merit pay in the long run.

C) Cost-conscious firms avoid using merit bonuses.

D) Employees receive merit bonuses that build into base pay.

5)

Which of the following statements is true of individual spot awards?

A) They are an example of long-term incentives.

B) They are more expensive than merit pay increases.

C) They are given to employees for exceptional performance as an add-on bonus.

D) They are given to all employees as a one-time cost-of-living adjustment.

6)

Which of the following statements is true of the Rowan plan?

A) It an individual incentive plan that motivates top managers and professionals to focus on long-term organization objectives.

B) In this plan, the standard time for a task is purposely set at a level requiring high effort to complete.

C) It is an individual incentive plan that provides for variable incentives as a function of a standard expressed as time period per unit of production.

D) In this plan, a worker's bonus remains constant irrespective of the time required to complete a task.

7)

One common feature of all types of incentive plans is

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A) an established standard of performance that is used to determine the magnitude of the incentive pay.

B) a sharing contract between the employees and employers, which stipulates that the losses incurred by the companies will be shared by both employees and employers.

C) an established formula that specifies the maximum percentage of base pay allocated as incentives.

D) a risk-sharing plan that increases pay depending upon the turnover rate of a company.

8)

Which of the following is an individual incentive plan?

A) A balanced scorecard system B) A stock ownership plan C) A gain-sharing plan D) A straight piecework system

9) of:

Paying a dime for every bottle collected and turned to a collection center is an example

A) a standard hour plan.

B) the Merrick system.

C) a straight piecework system.

D) the Rowan plan.

10)

The most frequently implemented incentive system is A) a standard hour plan.

B) a straight piecework system.

C) the Merrick system.

D) the Taylor differential piece-rate plan.

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11) ________ requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action.

A) A standard hour plan B) The Rowan plan C) A Bedeaux plan D) The Merrick plan

12)

An incentive system with three piecework rates is the A) Taylor plan.

B) Gantt plan.

C) Rowan plan.

D) Merrick plan.

13) If you had repair work done on your car, the shop most likely used ________ to pay the mechanic.

A) a Bedeaux plan B) a standard hour plan C) the Halsey 50–50 method D) a straight piecework plan

14) For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the

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A) Merrick plan.

B) Gantt plan.

C) Taylor plan.

D) Rowan plan.

15) Menthorp, Inc. wants to design a variable pay plan that fosters teamwork and increases the business knowledge of its employees. In order to ensure maximum motivation, Menthorp wants its variable pay plan to show a clear performance-reward link. Which of the following plans is most suitable for Menthorp?

A) A gain-sharing plan B) The Rowan plan C) A stock ownership plan D) The Merrick plan

16) TreeDen Corp. experiences an increase in its employee turnover rate. Upon investigating, it discovers that employees are dissatisfied with the company's pay. Employees cannot see a direct link between their performance and their pay. They are also unhappy about having to pay out of their pockets to obtain grants. In this case, TreeDen is most likely using a A) stock ownership plan.

B) cash profit-sharing plan.

C) gain-sharing plan.

D) team incentive plan.

17) Maxwell Construction Corp. employs a lot of uneducated laborers. The company wants to introduce a variable pay plan that is easy to understand and does not cost much to administer.

Which of the following variable pay plans is Maxwell most likely to introduce?

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A) A balanced scorecard plan B) A gain-sharing plan C) A stock ownership plan D) A cash profit-sharing plan

18)

Three major problems with team compensation involve the three Cs, which are A) costs, containment, and centrality.

B) complexity, control, and communications.

C) culture, conflict, and coverage.

D) cycle, classification, and concerns.

19) Horizon Inc. wants its employees to focus on organizational as well as individual goals. It also wants to motivate its employees to contribute toward increasing the company's shareholder value. It has implemented a variable pay plan that links incentive payouts to the company's financial targets. Horizon believes that this plan would help it clearly communicate its priorities to its employees. However, the downside of this plan is that the employees receive reduced payouts if the company's financial targets are not fulfilled. Which of the following variable pay plans is Horizon most likely using?

A) The Rowan plan B) A balanced scorecard plan C) A stock ownership plan D) The Merrick plan

20) Which of the following is an advantage of providing stock ownership as variable pay to employees?

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A) It reinforces team identity.

B) It is the simplest type of variable pay plan.

C) It defers a portion of taxes to employees.

D) It provides a direct pay-performance link.

21) ________ have indirect pay-performance links and require employees to put up money to exercise grants.

A) Bedeaux plans B) Balanced scorecard plans C) Stock options plans D) Merit pay plans

22) Of the following large group incentive plans, which type of plan uses financial measures to gauge performance, as opposed to operating measures to gauge performance?

A) Gain-sharing plans B) Improshare plans C) Scanlon plans D) Profit-sharing plans

23)

Which of the following is a disadvantage of gain-sharing plans?

A) Payouts can occur even if a company's financial performance is poor.

B) Pay-performance links are indirect.

C) Employees are required to put up money to exercise grants.

D) Mandatory stock ownership required by gain-sharing plans can increase turnover

rates.

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24) When implementing a gain-sharing plan, employee and union participation may lead to success due to the resulting _____.

A) perceived fairness of the formula B) ease of administration C) increased line of sight D) historical standards

25)

Which of the following is a disadvantage of team incentives?

A) They fail to reflect how work is performed.

B) They maximize distinctions between team members.

C) They are ineffective in stimulating ideas and problem solving.

D) They are administratively complex to implement.

26) A team leader with a free-rider problem in his team can most likely maximize the performance of his team by: A) instructing the team to do their best.

B) specifying performance levels and due dates.

C) assigning tasks only to the top performers in the team.

D) punishing free riders who fail to meet standards.

27)

In gain-sharing plan formulas,

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A) productivity measures are in the numerator and revenues are in the denominator.

B) productivity measures are in the numerator and labor inputs are in the denominator.

C) costs are in the numerator and revenues are in the denominator.

D) labor inputs are in the numerator and productivity outcomes are in the denominator.

28)

Components identified as vital to the success of both Scanlon and Rucker plans are A) top management support and primary focus on wage incentives.

B) a flexible payout formula and low turnover rates.

C) union and top management support.

D) a productivity norm and effective worker committees.

29)

Which of the following are an example of a long-term incentive plan?

A) Merit bonuses B) Performance plans C) Bedeaux plans D) Spot awards

30)

The trend in recent variable-pay design is to combine the best of A) individual and group incentive plans.

B) gain-sharing and profit-sharing plans.

C) the Halsey and Rowan plans.

D) balanced scorecard and cash profit-sharing plans.

31)

Discuss the trends that are leading to the increased interest in variable pay.

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32) Briefly describe the difference between a merit pay system and merit bonuses in a payfor-performance plan.

33) Discuss the plans that provide for variable incentives linked to a standard expressed as a time period per unit of production.

34)

Briefly explain the concept of sales value of production (SVOP).

35)

What is the difference between success-sharing plans and risk-sharing plans?

36)

Spot cash awards are the least used form of short-term incentive plans.

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⊚ ⊚

37) pay.

Merit pay can be given in the form of lump-sum payments or as increments to the base ⊚ ⊚

38)

true false

Merit pay is subject to incentive effects but not subject to sorting effects. ⊚ ⊚

39)

true false

true false

In the long run, merit bonuses cost employers less than merit pay. ⊚ ⊚

true false

40) All incentive plans share an established standard against which worker performance is compared to determine the magnitude of the incentive pay. ⊚ ⊚

true false

41) Standard hour plans are better for nonrepetitive jobs requiring numerous skills for completion. ⊚ ⊚

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11

42) A fast and efficient worker would earn more money under the Rowan plan than under the Halsey 50–50 plan. ⊚ ⊚

true false

43) The Rowan plan uses a standard that is purposely set high, requiring high performance levels. ⊚ ⊚

true false

44) Employees working under individual incentive plans tend to resist the introduction of new technology. ⊚ ⊚

45)

Individual incentives yield higher productivity gains than group incentives. ⊚ ⊚

46)

true false

true false

The free-rider problem is common in firms using individual incentive plans. ⊚ ⊚

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12

47) Unions prefer individual incentive pay plans to group incentive pay plans since members can earn more money. ⊚ ⊚

true false

48) A group performance–based pay plan is superior to an individual plan when production methods and labor mix must change to meet changing pressures. ⊚ ⊚

true false

49) Gain-sharing plans do not use a historical standard to set productivity standards since environmental conditions can change quickly. ⊚ ⊚

true false

50) An individual incentive plan should be used when a supervisor is viewed as biased and performance standards are not readily apparent. ⊚ ⊚

51)

Scanlon plans are designed to lower labor costs by lowering the level of a firm's activity. ⊚ ⊚

52)

true false

true false

An advantage of a group incentive plan is that it leads to increased line-of-sight.

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⊚ ⊚

true false

53) Many variable pay plans have some form of profit trigger linked to revenue growth or profit margins ⊚ ⊚

true false

54) Performance plans typically feature corporate performance objectives for a time three years in the future. ⊚ ⊚

true false

55) A combination plan often favored by chief executive officers who don't like to make payouts when the company loses money is a completely self-funding plan. ⊚ ⊚

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14

Answer Key Test name: Chap 10_14e_Gerhart 1) D 2) D 3) A 4) A 5) C 6) C 7) A 8) D 9) C 10) B 11) C 12) D 13) B 14) B 15) A 16) A 17) D 18) B 19) B 20) C 21) C 22) D 23) A 24) A 25) D 26) B Version 1

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27) D 28) D 29) B 30) B 36) FALSE 37) TRUE 38) FALSE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) FALSE 44) TRUE 45) TRUE 46) FALSE 47) FALSE 48) TRUE 49) FALSE 50) FALSE 51) FALSE 52) FALSE 53) TRUE 54) TRUE 55) TRUE

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Chapter 11 1)

Deming's major argument regarding performance appraisals is that: A) the work situation is the major determinant of performance.

B) performance appraisals reduce teamwork.

C) peer ratings are better than supervisor ratings.

D) lack of training makes performance appraisals redundant.

2) Telling raters that sometimes the work environment and system affect job performance more than the individual employee's behavior: A) makes the ratings completely accurate.

B) leads to higher ratings.

C) has no effect on the ratings.

D) leads to lower ratings.

3) In ________ ranking, raters look at a list of employees, decide who the best employee is, and cross that person's name off the list. From the remaining names, the manager decides who the worst employee is and crosses that name off the list—and so forth.

A) paired-comparison B) straight C) alternation D) forced distribution

4) Which of the following types of rankings would be least preferred by managers of more than 10–15 employees?

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A) Straight ranking B) Alternation ranking C) Paired-comparison ranking D) Forced ranking

5)

A major criticism of standard rating scales is that: A) raters have different definitions of scale levels.

B) raters find them hard to use.

C) they are expensive to develop.

D) they encourage halo and horn errors.

6)

The most common form of outcome-based appraisal is A) the essay method.

B) Management by Objectives.

C) the performance standards review.

D) Behaviorally Anchored Rating Scales.

7)

Which of the following is a negative outcome of the management by objectives method?

A) Increased difficulty of the planning process B) Decrease in superior/subordinate communication C) Increase in performance pressure and stress D) Lack of direction for work units

8)

Which of the following is the best appraisal format in terms of legal defensibility?

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A) Behaviorally Anchored Rating Scales B) Management by Objectives C) An essay format D) Ranking

9) Which of the following is an open-ended performance appraisal format that involves the use of descriptors ranging from comparisons with other employees to adjectives, behaviors, and goal accomplishment?

A) Behaviorally Anchored Rating Scales B) Management by Objectives C) An essay format D) Ranking

10) In the context of performance appraisal formats, which of the following criteria is concerned with whether the evaluation form initially requires a long time to be developed?

A) Employee development criterion B) Personnel research criterion C) Cost criterion D) Validity criterion

11)

Which of the following rating formats has the lowest rating errors?

A) Standard rating scales B) Behaviorally Anchored Rating Scales C) Management by Objectives D) Ranking

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12) When a job involves very routine, mechanistic tasks, the most appropriate appraisal format is: A) Behaviorally Anchored Rating Scales.

B) Management by Objectives.

C) standard rating scales.

D) alternation ranking.

13) In which of the following jobs is it most appropriate to use behaviorally anchored rating scales?

A) The job of a trainer that involves training new employees every month B) The job of a web designer that involves designing websites according to client expectations C) An assembly line job that involves tightening nuts on an engine D) A client relations job that involves bringing in new clients to a firm

14) In situations where the nature of the task is so uncertain that it may be difficult to specify expected goals, the most appropriate rating format is A) a Management by Objectives format.

B) a standard rating scale.

C) a behaviorally anchored rating scale.

D) an essay format.

15) In the context of the performance evaluation process, which of the following ensures that raters are motivated to rate accurately?

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A) Focusing on the person rather than the behavior while evaluating performance and providing feedback B) Making sure that managers are graded on how well they utilize and develop human resources C) Ensuring that employees do not have to participate in developing performance dimensions D) Conducting informal discussions with employees about progress on an irregular basis

16)

Among peer raters, the most objective evaluations are given by: A) workers who are friends of the ratees.

B) workers who are not close friends with ratees.

C) high-performing workers.

D) low-performing workers.

17) In the context of evaluation formats, which of the following is true of the alternation ranking method?

A) It simplifies the ranking process by forcing raters to make ranking judgments about discrete pairs of people.

B) It selects specific jobs based on certain predefined criteria and leaves out the rest.

C) It requires raters to evaluate employees on some absolute standard rather than relative to other employees.

D) It recognizes that raters are better at ranking people at extreme ends of a distribution.

18)

In the context of subordinates as raters, which of the following statements is true?

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A) Upward feedback has been historically viewed as countercultural.

B) Subordinates prefer to reveal their identity while giving their feedback to managers.

C) Upward feedback tends to be more reliable than those from other sources.

D) If their identity is hidden, subordinates give artificially inflated ratings of their supervisors.

19)

Allowing nonperformance factors to affect performance scores is known as A) a horn error.

B) affirmative action.

C) straight ranking.

D) criterion contamination.

20)

A horn error occurs when an employee is

A) consistently rated higher than deserved.

B) given a favorable rating on all job duties based on his or her impressive performance in just one job function.

C) downgraded across all performance dimensions because of poor performance on one dimension.

D) consistently rated lower than deserved.

21) Last year, your performance was not very good and your performance rating was below average; however, this year you have done very well by exceeding your performance goals. To your surprise, your boss gives you just an average performance rating. What error has your boss most likely committed?

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A) Horn error B) Halo error C) Severity error D) Spillover error

22) During the performance review of her employees, Sarah gives higher ratings to employees from her hometown, Oklahoma, as she believes that people from Oklahoma are hardworking and trustworthy. Which of the following rating errors is Sarah exhibiting?

A) Severity error B) Horn error C) Spillover error D) Clone error

23) As a strategy for measuring job performance, a(n) _____ acknowledges that success does not just happen and this approach looks at all aspects of the job performance that contributes value in an organization.

A) ongoing feedback approach B) balanced scorecard approach C) MBO approach D) ranking approach

24)

In the context of performance appraisals, which of the following statements is true?

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A) Race has no effect on layoff decisions and performance ratings.

B) All other things being equal, males are rated higher than females.

C) Raters who have traditional views rate females more accurately than raters who do not have traditional views.

D) The pattern of performance does not influence ratings when the overall level of performance is controlled.

25)

Which of the following statements is NOT true?

A) Workers who start out high in performance and then get worse are rated lower than workers who remain consistently low.

B) Workers whose performance improves over time are seen as more motivated.

C) Workers whose performance is consistently average are rated higher than those who perform better at the end of a rating cycle.

D) Workers whose performance varies over time are seen as less motivated.

26)

All of the following are categories of rater training EXCEPT ________ training.

A) rater-error B) performance-standard C) behavior modeling D) performance-dimension

27) Teaching raters what constitutes good, average, and bad performance is ________ training.

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A) performance-standard B) rater-error C) performance-dimension D) Six Sigma

28)

Which of the following statements is true regarding rater training?

A) Training programs lasting over two hours are less successful than shorter ones.

B) Rater-error training is more effective than performance-standard or performancedimension training.

C) Lectures to raters on how to improve ratings are always ineffective.

D) Training to reduce halo errors and improve accuracy has been most successful.

29)

Which of the following is statements is true of leniency error?

A) It is the error of consistently rating someone higher than is deserved.

B) It is the error of avoiding extremes in ratings across employees.

C) It is the error of downgrading an employee across all performance dimensions exclusively because of poor performance on one dimension.

D) It is the error of giving better ratings to individuals who are like the rater in behavior and personality.

30) Louie received the highest performance rating and is in the second quartile of his pay range. He received a pay increase of 8 percent. Bart also received the highest performance rating and is in the fourth quartile. Given the way most merit increase grids work, what size of pay increase would you expect Bart to receive?

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A) Less than 8 percent B) More than 8 percent C) 8 percent D) There is no relationship between ratings and position in pay range.

31)

What was Deming's major criticism against performance appraisals?

32)

Describe the paired-comparison ranking method.

33) When evaluating a performance appraisal format, good formats score well on what five dimensions?

34)

Why is it appropriate to define behavioral expectations only for highly routine tasks?

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35)

Briefly describe the 360-degree feedback method.

36) The performance of hourly workers is more accurately tied to quantifiable measures than the performance of managerial workers. ⊚ ⊚

37) pay.

true false

Employees who are dissatisfied with performance appraisals are less satisfied with their ⊚ ⊚

true false

38) Some experts argue that applying total-quality-management principles to performance appraisals can improve them. ⊚ ⊚

true false

39) Performance ratings are influenced by a host of factors besides the employee behaviors observed by raters. ⊚ ⊚

true false

40) A halo error is the error that occurs when an employee is downgraded across all performance dimensions exclusively because of poor performance in one dimension.

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⊚ ⊚

true false

41) During performance appraisals, managers tend to focus on either task performance, counterproductive performance, or both. ⊚ ⊚

true false

42) A balanced scorecard approach for measuring job performance has supervisors answer open-ended questions describing employee performance. ⊚ ⊚

true false

43) In contrast to ranking formats, rating formats require raters to evaluate employees on some absolute standard rather than relative to other employees. ⊚ ⊚

true false

44) Management by Objectives requires more paperwork than other rating methods and increases both performance pressure and stress. ⊚ ⊚

true false

45) One of the major strengths of using peers as raters is that they work more closely with the ratee and probably have an undistorted perspective of typical performance, particularly in group assignments.

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⊚ ⊚

46) use.

Behaviorally Anchored Rating Scales are inexpensive to develop but time-consuming to ⊚ ⊚

47)

true false

true false

MBO is particularly well suited as a basis for administrative decisions such as pay raises. ⊚ ⊚

true false

48) If the purpose of the evaluation is to divide up a fixed pot of merit increases, ratings tend to be more accurate. ⊚ ⊚

49)

true false

Supervisors tend to weigh negative attributes more heavily than positive attributes. ⊚ ⊚

true false

50) Keeping a performance diary can help employers defend against discrimination charges stemming from performance ratings. ⊚ ⊚

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51) When raters must justify their scoring of subordinates in writing, the rating is less accurate. ⊚ ⊚

true false

52) Performance-standard training provides raters with a standard of comparison or frame of reference for making appraisals. ⊚ ⊚

53)

Central tendency errors are the most difficult form of error to eliminate. ⊚ ⊚

54)

true false

true false

A good performance evaluation does not begin on the day of the performance interview. ⊚ ⊚

true false

55) For the same level of performance, employees low in a pay range receive higher percentage increases than employees higher in the range. ⊚ ⊚

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Answer Key Test name: Chap 11_14e_Gerhart 1) A 2) B 3) C 4) C 5) A 6) B 7) C 8) A 9) C 10) C 11) C 12) A 13) C 14) B 15) B 16) C 17) D 18) A 19) D 20) C 21) D 22) D 23) B 24) B 25) C 26) C Version 1

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27) A 28) D 29) A 30) A 36) FALSE 37) TRUE 38) TRUE 39) TRUE 40) FALSE 41) TRUE 42) FALSE 43) TRUE 44) TRUE 45) TRUE 46) FALSE 47) FALSE 48) FALSE 49) TRUE 50) TRUE 51) FALSE 52) TRUE 53) FALSE 54) TRUE 55) TRUE

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Chapter 12 1)

All of the following factors are reasons for the growth of benefits EXCEPT: A) foreign lawsuits.

B) unions.

C) cost effectiveness of benefits.

D) government impetus.

2) Which of the following benefits is NOT mandated by either the state or federal government?

A) Workers' compensation B) Work/life balance C) Social security D) Unemployment insurance

3)

Which of the following statements is true of employee benefits?

A) Employers can substitute insurance benefits for job security.

B) Group insurance has relatively easy qualification standards.

C) Most employee benefits are taxable.

D) Many group-based benefits are obtained at a higher rate than could be obtained by employees acting on their own.

4)

The typical employee can recall ________ percent of the benefits he or she receives.

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A) almost 50 B) less than 15 C) over 30 D) 40

5)

Surveys show that the most highly valued employee benefit is A) dental coverage.

B) life insurance.

C) paid vacation and holidays.

D) medical insurance.

6)

A survey shows that most employers are responding to increased benefit costs by: A) requiring employees to pay higher deductibles and copays.

B) laying off employees.

C) dropping health care plans.

D) relying on the Patient Protection and Affordable Care Act.

7)

The first issue in setting up a benefits package is: A) finding out who should be protected or benefited.

B) figuring out how much choice should employees have among benefits.

C) determining how benefits should be financed.

D) choosing legally defensible benefits.

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8) A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called a ________ plan.

A) a select choice B) a no-deductible C) a flexible benefit D) a flat dollar benefit

9) Which of the following can be an unintended consequence of consumer-driven health care?

A) It may induce employees to shop around for the lowest rate on a medical procedure.

B) Employees may pay a much higher deductible.

C) Employees may forego a health procedure due to cost.

D) The employer will likely see a huge cost savings.

10)

Which of the following is an advantage of flexible benefit plans?

A) They require no expenditure from the employers.

B) They decrease the administrative burdens of employers.

C) They ensure that employees pick only those benefits that they will use, thereby reducing costs.

D) They increase the involvement of employees in choosing benefit plans.

11)

All of the following are advantages of flexible benefits EXCEPT:

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A) containment of benefit costs.

B) increased understanding of benefits by employees.

C) reduced expense of introducing new benefits.

D) decreased administrative expenses.

12)

If a benefit forecast suggests future cost containment may be difficult, the benefit should: A) be completely paid for by employees.

B) be offered on a noncontributory basis.

C) not be used.

D) be offered to employees only on a cost-sharing basis.

13) DrenchFort Corp. is a small company that pays high wages. As its wages are high, it does not provide any benefits. Recently, it has noticed that its employee turnover has increased, so it decides to provide benefits to retain employees. Which of the following benefits is most likely to reduce turnover?

A) Counseling services B) An early retirement plan C) Medical coverage D) A profit-sharing plan

14) Which of the following best describes the impact of the Maintenance Act (1973) on employee benefits?

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A) It ensured that benefits were administered in a manner that did not discriminate against protected groups.

B) It created time-and-a-half overtime pay.

C) It required employers to offer alternative health coverage options to employees.

D) It mandated 12 weeks of leave for all workers at companies that employed 50 or more people.

15) Which of the following requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship?

A) The Maintenance Act (1973) B) The Fair Labor Standards Act (1938) C) The Consolidated Omnibus Budget Reconciliation Act (1984) D) The Patient Protection and Affordable Care Act (2010)

16)

Which legislation established 401(k) programs?

A) Tax reforms B) Maintenance Act C) COBRA D) Employee Retirement Income Security Act

17) Various studies have found that only two specific benefits curtailed employee turnover, namely ________ and ________.

A) vacation days; dental plans B) profit-sharing plans; life insurance C) retirement benefits; paid vacations D) pensions; medical coverage

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18) In an extensive review of employee preference literature, Glueck traced patterns of group preferences for particular benefits. Identify the results of the study.

A) Among the benefits available, profit sharing and early retirement are highly preferred benefits.

B) Among the benefits available, health/medical and stock plans are highly preferred benefits.

C) Contrary to expectations, families with no dependents have stronger preferences for health/medical coverage than families with dependents.

D) Contrary to expectations, younger workers show stronger preferences than older workers for pension plans.

19) How many weeks of leave does the Family Medical Leave Act (1993) mandate for all workers at companies that employ 50 or more people?

A) 4 weeks B) 8 weeks C) 12 weeks D) 16 weeks

20) ________ allows employees who resign or are laid off through no fault of their own to continue receiving health coverage under their employer's plan at a cost borne by the employee.

A) The Maintenance Act (1973) B) The Fair Labor Standards Act (1938) C) The Tax reforms of 1982 D) The Consolidated Omnibus Budget Reconciliation Act (1984)

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21) The _____ created time-and-a-half overtime pay and required that any benefits linked to pay increase correspondingly with those overtime hours.

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

22)

One of the most preferred benefits is A) stock plans.

B) profit sharing.

C) shorter working hours.

D) early retirement.

23) In the context of benefits communication methods, which of the following is mostly true about an information portal?

A) It fosters open communication.

B) It requires ongoing maintenance and an intuitive user interface.

C) It primarily allows for personalized communication methods.

D) It essentially requires coordination and planning.

24) Which of the following benefits communication methods allows for personalized communication methods and requires current contact information?

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A) Face-to-face methods B) Virtual methods C) Use of materials D) Use of information portals

25) Trumbrella Corp. is a pharmaceutical company. One of its employees reports that he has suffered an on-the-job injury caused by the slippery factory floor that resulted in severe damage to his backbone. When Trumbrella initiates its claims processing, it should first: A) determine whether the accident actually happened.

B) determine if the employee is eligible for any benefit.

C) calculate the payment required to be paid to the employee.

D) contact the insurance companies to enquire about the possibility of a joint payment.

26) Which of the following companies uses probationary periods as a cost-containment measure?

A) Alpha Corp., which combines the benefits offered for couples who work within the organization B) DLG Corp., which excludes its new recruits from benefit coverage until they complete a year C) Kimberly Corp., which requires employees in the lowest salary quartile to pay for 20 percent of their benefits D) Amethyst Corp., which limits its employees to coverage for only two dentist visits every six months

27) In the context of cost containment, which of the following best describes the practice of "copay"?

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A) Controlling costs through policies such as seeking competitive bids for program delivery B) Requiring that employees pay a fixed or percentage amount for coverage C) Negotiating the lowest possible fees by providers D) Limiting disability income payments to some maximum percentage of income

28)

The biggest cost-containment strategy in recent years is the movement to: A) benefit limitations.

B) HMOs. C) outsourcing.

D) high deductibles.

29) Which employer cost-containment practice is not permitted under health plans covered by the Affordable Care Act? A) Benefit limitations B) Deny service C) Probationary periods D) Copay

30) In an attempt to reduce the employee benefits cost to the company, GrindStop Corp. restricts the number of visits to the dentists covered in the dental plan to two per year for each employee. Which of the following cost-containment strategies is being used by GrindStop?

A) Copay B) Benefit limitations C) Administrative cost containment D) Wellness programs

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31) Explain how the government has played an important role in the growth of employee benefits.

32) Briefly describe how a market-based or consumer-driven health care plan generally works.

33)

What are the major disadvantages of a flexible benefits package?

34)

What can administrators do to control increasing benefits costs?

35) What are some of the common cost-containment practices with regard to benefits administration?

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36) In the context of employee benefits, many group-based benefits are usually obtained at a higher rate than could be obtained by employees acting on their own. ⊚ ⊚

true false

37) The U.S. private sector cost of total compensation (including both wages/salaries and benefits) per employee is higher in smaller firms than in larger firms. ⊚ ⊚

38)

true false

All employee benefits provided by employers are taxable. ⊚ ⊚

true false

39) A possible avenue to improve employer return on investment in benefits is to provide employees with greater choice in the benefits they receive. ⊚ ⊚

true false

40) The simple act of stating in an employment ad that benefits are generous leads to applicants' focusing on this characteristic and relying heavily on it in job choice. ⊚ ⊚

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41) There is some research to support the common assumption that benefits increase employee retention, and two studies found that higher benefits reduced employee mobility. ⊚ true ⊚ false

42) Cost pressures related to the increasing diversity of the workforce is one of the reasons why companies offer flexible benefit plans. ⊚ ⊚

true false

43) One benefit to the employee under a consumer-driven health plan is that they will likely have a much smaller deductible. ⊚ ⊚

true false

44) A disadvantage of flexible benefit programs is that they increase administrative burdens and expenses. ⊚ ⊚

true false

45) Employers prefer the noncontributory approach to financing benefit plans because this allows them to significantly control their costs. ⊚ ⊚

true false

46) A major reason for the proliferating cost of benefit programs is that too frequently the costs/advantages of a particular benefit inclusion are viewed in isolation.

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⊚ ⊚

true false

47) If a benefit forecast suggests future cost containment may be difficult, the benefit should be offered to employees only on a noncontributory basis. ⊚ ⊚

true false

48) Studies found that the only two specific benefits that curtailed employee turnover were pensions and medical coverage. ⊚ ⊚

true false

49) The Family Medical Leave Act (1993) mandates a minimum of 20 weeks of leave for all workers at companies that employ less than 10 people. ⊚ ⊚

true false

50) The Employee Retirement Income Security Act (1974) requires employers to mandatorily offer some form of pension. ⊚ ⊚

true false

51) A "bandwagon" effect, in which new benefits offered by a competitor are adopted without careful consideration, is particularly apparent for employers with strong commitments to maintaining a totally or partially nonunion workforce.

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⊚ ⊚

52)

One of the best strategies for determining external equity is to conduct a benefit survey. ⊚ ⊚

53)

true false

true false

No strong data exist linking benefits level and employee productivity. ⊚ ⊚

true false

54) The first step in claims processing is to determine if the employee who is claiming the payment is eligible for the payment benefits. ⊚ ⊚

true false

55) The practice of administrative cost-containment practice primarily focuses on providing accommodations for employees to return to work after illness or disability. ⊚ ⊚

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Answer Key Test name: Chap 12_14e_Gerhart 1) A 2) B 3) B 4) B 5) D 6) A 7) A 8) C 9) C 10) D 11) D 12) D 13) C 14) C 15) D 16) A 17) D 18) B 19) C 20) D 21) A 22) A 23) B 24) C 25) A 26) B Version 1

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27) B 28) C 29) B 30) B 36) FALSE 37) FALSE 38) FALSE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) FALSE 44) TRUE 45) FALSE 46) TRUE 47) FALSE 48) TRUE 49) FALSE 50) FALSE 51) TRUE 52) TRUE 53) TRUE 54) FALSE 55) FALSE

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Chapter 13 1) In the context of the Consolidated Omnibus Budget Reconciliation Act (COBRA), which of the following statements is true?

A) The biggest concern for individuals getting health insurance under COBRA is the relatively brief qualifying period, only 18 months.

B) COBRA is designed to lessen an employer's ability to deny coverage for a preexisting condition.

C) COBRA allows an employer to charge individuals up to 110 percent of the premium for supplying the coverage.

D) Employers having 50 or more employees are covered under COBRA.

2) The ________ was enacted by the Congress to provide current and former employees and their spouses and dependents with a temporary extension of group health insurance when coverage is lost due to qualifying events.

A) Health Insurance Portability and Accountability Act B) Social Security Act C) Consolidated Omnibus Budget Reconciliation Act D) Family and Medical Leave Act

3) Jennifer is hurt at work while driving a forklift. Her employer claims that she was injured as a result of her careless driving and is therefore not eligible for workers' compensation. What will be the outcome of the employer's challenge to her worker's compensation claim?

A) She will likely receive workers' compensation benefits.

B) She will get nothing.

C) Jennifer and her employer will share the blame and split the costs.

D) The employer has the final word in determining Jennifer's eligibility.

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4)

Which of the following statements is true of workers' compensation benefits?

A) Covered workers can sue the employer to recover costs for pain and suffering.

B) Workers' compensation benefits do not cover permanent disability.

C) States vary in the size of the payout for claims.

D) Employer costs are the same from state to state.

5) ________ relieve an employer's liability when a preemployment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone.

A) Collateral funds B) Second-injury funds C) Insolvency funds D) Preemployment funds

6)

Which of the following is an objective of the unemployment insurance program?

A) To cover injuries and diseases that arise out of the course of employment B) To offset lost income during voluntary unemployment C) To help employed workers plan for retirement D) To provide an incentive for employers to stabilize employment

7)

The rising costs of Social Security have been covered by: A) increases in the maximum earnings base and the rate at which that base is taxed.

B) a reduction in Social Security benefits by providing market-driven options.

C) progressive reduction in coverage under the scheme.

D) welfare grants and annual supplements from Congress.

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8)

Which of the following is a benefit under Social Security?

A) Lump-sum death payments B) Job security C) Work/life balance D) Overtime pay

9) In 1940, the ratio of social security covered workers (those paying into the fund) to beneficiaries was 159.4 to 1, and now it is: A) 3.4 to 1.

B) under 3.0 to 1.

C) under 2.0 to 1.

D) 5.1 to 1.

10) A key provision of the ________ allows employees in publicly traded companies the freedom to sell off any employer stock purchased through deferrals or after-tax contributions.

A) Consolidated Omnibus Budget Reconciliation Act B) Affordable Care Act C) Pension Protection Act D) Employee Retirement Income Security Act

11)

In the majority of states, unemployment insurance is financed exclusively by:

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A) joint contributions by employee unions.

B) the philanthropy of coworkers.

C) federal, state, and employee contributions.

D) employers that pay federal and state unemployment insurance.

12) Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and wants to continue that coverage. According to the Consolidated Omnibus Budget Reconciliation Act, how long can Larry continue his coverage through Steve's company after being laid off?

A) 36 months B) 24 months C) 18 months D) 0 months

13) The ________ is designed to lessen an employer's ability to deny coverage to an employee for a preexisting condition.

A) Consolidated Omnibus Budget Reconciliation Act B) Contract with America Advancement Act C) Health Insurance Portability and Accountability Act D) Family and Medical Leave Act

14) Michael was laid off by his company owing to budget cuts. Before being laid off, he earned $1,000 per week. If he has been receiving unemployment insurance benefits for 26 weeks, which of the following statements is true in this scenario?

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A) Michael can continue to avail unemployment benefits for another 26 weeks.

B) Michael is eligible for $1,000 per week if he can show that he has been earnestly searching for jobs.

C) Michael is no longer eligible for unemployment benefits.

D) Michael will now only be eligible for 20 percent of his previous income as unemployment benefits.

15)

The term "pension plan" most often refers to _____.

A) 401(k) plans B) defined contribution plans C) IRAs D) defined benefit plans

16) The majority of defined benefit plans calculate average earnings over the last ________ years of service for a prospective retiree.

A) 2 to 4 B) 3 to 5 C) 6 to 8 D) 7 to 9

17)

________ are defined benefit plans that look like a defined contribution plan.

A) Cash balance plans B) Profit-sharing plans C) Employee stock ownership plans D) Qualified deferred compensation plans

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18)

Which of the following is a feature of defined contribution plans?

A) They are faster to vest than defined benefit plans.

B) They are characterized by high contribution rates.

C) They are less portable than defined benefit plans.

D) They are fully funded by employers.

19) In a(n) ________, employees have a hypothetical account into which is deposited what is typically a percentage of annual compensation.

A) qualified deferred compensation plan B) employee stock ownership plan C) cash balance plan D) profit-sharing plan

20) Jacob, an 18-year-old, has been working at HoldVille Corp. for over a year. If HoldVille offers full vesting after one year, which of the following statements is true?

A) Jacob is eligible for full pension as he has worked for over a year at HoldVille.

B) Jacob is not eligible for pension as he is not over 21.

C) Jacob is eligible for 20 percent of his pension if he has dependents.

D) Jacob is not eligible for a pension if he quits of his own volition.

21) This type of defined contribution plan involves a company making a tax-deductible contribution of stock shares to cash to a trust which then allocates payments to employees based on earnings.

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A) A 401(k) plan B) An ESOP C) A cash balance plan D) A profit-sharing plan

22) An employer experiencing high turnover and seeking to reduce pension costs is likely to prefer: A) full vesting after three years.

B) full vesting after six years.

C) full vesting after seven years.

D) partial vesting after two years.

23) What is the first question that should be asked when determining the amount of retirement income an employer should provide?

A) Should Social Security payments be factored in when considering the level of income an employee should have during retirement?

B) How should seniority be factored into the payout formula?

C) What level of retirement compensation would the employer like to set as a target, expressed in relation to preretirement earnings?

D) Should other postretirement income sources be integrated with the pension payment?

24) An employee who changes jobs four or more times during his or her career will likely receive a pension that is approximately ________ as that of an employee whose working career is spent with one employer, assuming that both employees have the same starting salary and receive annual increases equal to inflation rate.

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A) twice as large B) the same size C) one-fourth the size D) half the size

25) Approximately ________ percent of private sector employees have access to paid life insurance.

A) 56 B) 26 C) 75 D) 90

26) A health maintenance organization pulls together a group of providers willing to provide services at an agreed upon rate in exchange for employers: A) limiting employees to these providers for health services.

B) paying 30 percent of employee salary to the health maintenance organization.

C) laying off all contingent workers who are not eligible for insurance.

D) providing free child care assistance to employees.

27) A ________ plan is a hybrid health plan combining the benefits of a health maintenance organization and a ________.

A) point-of-service; preferred provider organization B) managed care; preferred provider organization C) managed care; point of service D) consolidated health; preferred provider organization

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28)

Which of the following is true of the Affordable Care Act?

A) It helps an employer receive an income tax deduction even though employees may not yet have received any benefits.

B) It is aimed at expanding health care coverage through an individual mandate to purchase health insurance and an employer mandate to provide qualifying health insurance coverage.

C) It applies to all employers having 50 or more employees and entitles all eligible employees to receive unpaid leave up to 12 weeks per year for specified family or medical reasons.

D) It requires a worker to meet the state requirements for wages earned or time worked during an established period of time referred to as a "base period."

29) Child care may be considered a legitimate expense offered in a _____ funded with pretax dollars provided by the employee, the employer, or both.

A) TTO plan B) flexible benefit plan C) flexible spending account D) PTO plan

30) Which of the following statements concerning contingent workers, alternative work arrangements, and/or gig workers is not true?

A) Use of such workers reduces direct workforce costs.

B) Use of such workers permits easier expansion and contraction of the workforce.

C) Use of such workers allows employers to meet rapidly changing economic conditions.

D) Use of such workers represents less than 5% of all workers.

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31)

Describe a point-of-service plan.

32)

What are the eligibility requirements for unemployment insurance?

33)

Briefly describe the Pension Benefit Guaranty Corporation (PBGC).

34)

What are cash balance plans?

35)

Explain vesting and portability.

36) In 2021, the total Social Security Tax on earnings is 7.65 percent, which is paid by both employees and employers for a total of 15.3 percent.

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⊚ ⊚

true false

37) Worker's compensation costs have been declining since 2005 partly because of employer safety programs. ⊚ ⊚

38)

true false

Workers' compensation is covered by federal laws. ⊚ ⊚

true false

39) The Social Security Act has been designed and amended to provide a foundation of basic financial security for American workers and their families. ⊚ ⊚

true false

40) Life insurance is one of the benefits heavily affected by movement to a flexible benefit program. ⊚ ⊚

41)

true false

Medicare is not a part of Social Security. ⊚ ⊚

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42) Jim was a full-time student for four years, but he could not find a job after graduating.

Jim is eligible to collect unemployment insurance. ⊚ ⊚

true false

43) Every unemployed worker's unemployment benefits are "charged" against the firm or firms most recently employing that currently unemployed worker. ⊚ ⊚

true false

44) An eligible unemployed person may now collect unemployment insurance benefits for 36 weeks in most states. ⊚ ⊚

true false

45) All employers with less than 20 employees must comply with the Consolidated Omnibus Budget Reconciliation Act. ⊚ ⊚

46)

true false

Most employers prefer defined contribution pension plans to defined benefit plans. ⊚ ⊚

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47) Although stocks have the greatest historical rate of return, that is no guarantee of future performance, particularly over shorter time periods. ⊚ ⊚

48)

true false

A 401(k) is an example of a defined benefit plan. ⊚ ⊚

true false

49) Under a defined contribution plan, whether an employee will be able to afford to retire depends on decisions made by the employee. ⊚ ⊚

50)

true false

Employees are the sole contributors to their cash balance plans. ⊚ ⊚

true false

51) An individual retirement account is a tax-favored retirement savings plan that individuals can establish themselves. ⊚ ⊚

true false

52) The Employee Retirement Income Security Act states that employers must offer a retirement plan to their employees if they work for at least 1,250 hours per year.

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⊚ ⊚

true false

53) Vesting refers to the length of time an employee must work for an employer before he or she is entitled to employer payments made into a pension plan. ⊚ ⊚

true false

54) Under the Economic Growth and Tax Reconciliation Act of 2001, employers have three hundred vesting schedule options. ⊚ ⊚

true false

55) A profit-sharing plan can be considered a defined contribution plan if the distribution of profits is delayed until retirement. ⊚ ⊚

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14

Answer Key Test name: Chap 13_14e_Gerhart 1) A 2) C 3) A 4) C 5) B 6) D 7) A 8) A 9) B 10) C 11) D 12) D 13) C 14) C 15) D 16) B 17) A 18) A 19) C 20) B 21) B 22) A 23) C 24) D 25) A 26) A Version 1

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27) A 28) B 29) C 30) D 36) TRUE 37) TRUE 38) FALSE 39) TRUE 40) TRUE 41) FALSE 42) FALSE 43) TRUE 44) FALSE 45) FALSE 46) TRUE 47) TRUE 48) FALSE 49) TRUE 50) FALSE 51) TRUE 52) FALSE 53) TRUE 54) FALSE 55) TRUE

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Chapter 14 1) In which of the following situations would engineering jobs be most likely treated as a special compensation group?

A) Mechanical engineers employed by a large city corporation B) Computer engineers employed at a software firm C) Biomolecular engineers employed at a farm equipment manufacturer D) Acoustical engineers at a waste disposal company

2) Executives, supervisors, and sales staff often receive special compensation treatment because A) these jobs face conflicting demands.

B) these jobs are exempt under the FLSA. C) recruitment and retention are always difficult for these jobs.

D) these jobs are covered under the Sarbanes-Oxley Act.

3)

Which of the following often go for extended periods in the field with little supervision?

A) Sales staff B) Top management C) Supervisors D) Professional employees

4)

The biggest trend in supervisory pay centers on

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A) increased use of variable pay.

B) payment of wages that equal subordinate pay.

C) paying a wage that is above that of the highest paid superior.

D) payment of higher wages without benefits.

5) The differential between supervisors' base pay and their highest paid subordinate is typically ________ percent.

A) 0 to 5 B) 5 to 30 C) 30 to 50 D) 50 to 90

6) Which of the following face the possibility that disgruntled stockholders may sue over corporate strategies that do not ''pan out''?

A) Supervisors B) The board of directors C) Professional employees D) Sales staff

7) Annual bonuses often play a major role in executive compensation and are primarily designed to A) motivate better short-term performance.

B) reduce overtime pay.

C) decrease pay differentials between supervisors and subordinates.

D) increase employee turnover.

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8) ________ use cash or stock award that is determined by increase in stock price during any time chosen (by the executive) in the option period.

A) Phantom stock plans B) Restricted stock plans C) Stock appreciation rights D) Incentive stock options

9)

A(n) ________ uses cash or stock award if specific goals are achieved.

A) nonqualified stock option B) incentive stock option C) restricted stock plan D) performance share plan

10) A(n) ________ uses cash or stock award that is determined by an increase in stock price at a fixed future date.

A) phantom stock plan B) incentive stock option C) restricted stock plan D) nonqualified stock option

11)

Nonqualified stock options require

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A) purchase of stock at a stipulated price, not conforming with the Internal Revenue Code.

B) a cash or stock award to be determined by an increase in stock price at a fixed future date.

C) a cash or stock award to be determined by an increase in stock price during any time chosen in the option period.

D) a grant of stock at a reduced price with the condition that it may not be sold before a specified date.

12) At the time they are granted, which of the following have no tax implications for an executive?

A) Phantom stock plans B) Incentive stock options C) Stock appreciation rights D) Performance share/unit plans

13) Which of the following is a benefit under the Employee Retirement Income Security Act guidelines for qualified pension plans?

A) Additional life insurance B) Home security C) Payment of club dues D) Executive physicals

14)

Which of the following statements concerning "Say on Pay" is not true?

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A) Most shareholders disapprove of the compensation plans.

B) "Say on Pay" was a requirement introduced by the Dodd-Frank Act. C) The vote is nonbinding.

D) Shareholders vote to approve or disapprove executive's compensation plans.

15)

Generally, there are two types of sales compensation plans: unit rate plans and _____.

A) ramped commission plans B) add-on plans C) customer retention plans D) straight commission plans

16) ________ argues that executive pay rises to maintain the same relative relationship with the salaries of lower-level employees.

A) The economic approach theory B) The team production theory C) The social comparison theory D) Agency theory

17) Of the five basic elements of executive compensation packages, _____ accounts for the bulk of total CEO compensation.

A) base salary B) benefits C) bonuses D) long-term incentives

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18) A recent article analyzing the results from over 100 executive pay studies shows that the best predictor of executive pay is by far A) firm size.

B) the number of insiders on the board of directors.

C) the industry in which the firm operates.

D) firm performance.

19) The most common approach to motivating executives to make decisions that are in the best interests of stockholders is A) high base salaries with few bonuses.

B) average base salaries with significant firm performance bonuses.

C) a long-term incentive plan using stock options.

D) average base salary with performance-based perks.

20) In recent years, some firms have tried to deal with the plateau effect and also accommodate the different career motivations of mature scientists and engineers through a(n) A) individual career ladder.

B) alternative career path.

C) military-style career ladder.

D) dual-career ladder.

21) ________ curve expresses the relationship between years since last degree, performance, and salary.

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A) The Phillips B) The marginal productivity C) A tenure D) A maturity

22)

Popular stereotypes of salespeople characterize them as being heavily motivated by A) financial compensation.

B) personal growth and job security.

C) recognition and appreciation.

D) promotional opportunities.

23) If improved account retention became a major focus of attention, the performance measure stressed would be A) gross margin on sales or price per unit.

B) percentage account erosion.

C) a volume measure.

D) a customer satisfaction index.

24)

When designing a sales compensation plan, it should be kept in mind that: A) salespeople rank recognition as their number-one motivator.

B) salespeople under an incentive system will view customer service as an imposition.

C) compensation systems are independent of the nature of a product or service.

D) commissions for sales volume reduce the incentive to sell.

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25) Leah, the CEO of SteadyResults Corp., feels that she is underpaid, so she hires a compensation consultant to survey actual competitors of the company. According to agency theory, if SteadyResults performs poorly, her salary will most likely: A) remain the same as CEO salary is based only on performance.

B) be withheld and paid at a later date as the company is doing poorly.

C) be increased in order to retain her.

D) remain the same as the company is doing poorly.

26) Hannah is the CEO of JF Corp., a steel manufacturing company. She finds that the market is exhibiting the signs of a maturing market. She wants to revise the compensation package for her sales employees to adapt to the changing market conditions. In this case, Hannah is most likely to: A) increase base pay.

B) provide a commission-based incentive plan.

C) provide incentives based on new customer generation.

D) include a significant incentive component.

27) NaxWell Corp. sells a smart wristband that, apart from monitoring heart rate and blood pressure, also reminds users to stand and walk every half hour. As part of its promotional efforts, a celebrity starts wearing the wristband, thereby increasing its popularity and ease of sale. Which of the following is most likely to happen?

A) NaxWell will set lower sales targets for its employees.

B) NaxWell is likely to increase base salaries and decrease incentives.

C) NaxWell is likely to lower its executive compensation in order to increase stock price.

D) NaxWell will hire only contingent workers.

28)

With easily sold products,

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A) companies prefer a more aggressive sales force.

B) the base compensation tends to be more important.

C) the incentives provided in the form of commissions tend to be more important.

D) companies tend to set lower sales targets.

29)

Working through a temporary-help agency usually means: A) high recognition for the work done.

B) lower work stress in comparison to permanent employees.

C) higher benefits in comparison to permanent employees.

D) low pay in administrative or day labor positions.

30)

A compensation consultant is hired to survey actual competitors of the company: A) if the CEO is overpaid and the company is doing poorly.

B) if the CEO is truly overpaid.

C) if the CEO is truly underpaid.

D) if the CEO is not underpaid and the company is doing poorly.

31)

Who are special groups? What are the characteristics that special groups share?

32)

List the basic components of most executive compensation packages.

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33)

List the six major factors influencing the design of sales compensation packages.

34)

What is the type of conflict faced by contingent workers?

35)

Describe how executives ensure themselves high compensation.

36) Engineers in almost all companies are treated as special compensation cases because of their education and training. ⊚ ⊚

true false

37) Contingent workers may work alongside permanent workers yet often receive lower wages and benefits for the same work.

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⊚ ⊚

true false

38) Members of boards of directors are not categorized as candidates for special compensation. ⊚ ⊚

true false

39) The most popular method of providing special compensation to supervisors is by paying overtime. ⊚ ⊚

40)

The compensation committees of boards of directors typically set executive salaries. ⊚ ⊚

41)

true false

The majority of Americans feel CEO pay levels and pay ratio are fair. ⊚ ⊚

42)

true false

true false

Incentive stock options may be deducted as a company expense. ⊚ ⊚

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43) ERISA and the tax code specify that the average value of benefits for low-paid employees must be at least 75 percent of those of highly paid employees. ⊚ ⊚

true false

44) In 2010, the Dodd-Frank Act gave power to shareholders by giving them a nonbinding (but image important) vote on appropriateness of an executive's compensation. ⊚ ⊚

45)

true false

The best predictor of CEO pay is the performance of the company. ⊚ ⊚

true false

46) In good economic climates with roaring sales, companies can afford to hire mid- and low-level sales personnel to capture the extra sales. ⊚ ⊚

true false

47) Organizations rely very heavily on external market data in pricing scientists' and engineers' base pay. ⊚ ⊚

true false

48) Unlike executives, scientists and engineers are less likely to receive lavish athletic facilities and large offices.

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⊚ ⊚

true false

49) Carl was an electronics salesman who received an extra incentive every time he sold a piece from the stores new line of products. This is an example of an add-on compensation plan. ⊚ ⊚

true false

50) In maturing markets, companies focus both on performance-based pay tied to customer satisfaction and on greater base salaries to retain conservative salespeople. ⊚ ⊚

true false

51) Compensation packages for salespeople must be competitive because salespeople tend to compare their pay with competitors. ⊚ ⊚

true false

52) In a recession environment, companies need to react to the decreasing level of sales by rewarding top-level performers that achieve high levels of sales despite the economic downturn. ⊚ ⊚

53)

true false

Independent contractors always earn less than their permanently employed counterparts. ⊚ ⊚

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54) Independent contractors generally are less expensive for employers as they receive no benefits. ⊚ ⊚

true false

55) At least for high-skilled contingent workers, it is increasingly popular to view careers as a series of opportunities to acquire valuable increments in knowledge and skills. ⊚ ⊚

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Answer Key Test name: Chap 14_14e_Gerhart 1) B 2) A 3) A 4) A 5) B 6) B 7) A 8) C 9) D 10) A 11) A 12) B 13) A 14) A 15) B 16) C 17) D 18) A 19) C 20) D 21) D 22) A 23) B 24) B 25) C 26) A Version 1

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27) B 28) B 29) D 30) C 36) FALSE 37) TRUE 38) FALSE 39) FALSE 40) TRUE 41) FALSE 42) FALSE 43) TRUE 44) TRUE 45) FALSE 46) TRUE 47) TRUE 48) FALSE 49) TRUE 50) TRUE 51) TRUE 52) TRUE 53) FALSE 54) TRUE 55) TRUE

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Chapter 15 1) In the context of the impacts of unions on compensation, which of the following statements is true?

A) Unions do not make a difference in wages, across all studies and all time periods.

B) Since 2000, the union wage premium has been unstable overall and has risen slightly in the private sector.

C) Employees in service or production occupations have the least from union wage advantage.

D) Management and professional employees do not enjoy union wage advantage.

2)

Which of the following is true of lump-sum awards?

A) They are noncash payments such as certificates and trophies.

B) They are added to an employee's base wages.

C) They are given to employees every year.

D) They are typically given in lieu of merit increases.

3) Company A and Company B are in the same industry, but Company A is unionized and Company B is not. Therefore, A) it can be argued with assurance that any wage differences between the two firms are due to the presence of a union in Company A and the absence of a union in Company B. B) it is difficult to argue with assurance that wage differences between the two firms are attributable to the presence of a union, although the possibility exists.

C) Company B has to form a union to compete with Company A. D) any wage differences between the two firms can never be attributed to the presence of a union in Company A.

4)

Which of the following statements concerning the role of unions in discipline is true?

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A) In contrast to nonunion workers, most union workers can be fired at will.

B) Some unions negotiate a formal grievance procedure for discipline issues, but this is rare.

C) With a union, an arbitrator can deliver a binding decision on an unsettled grievance.

D) Unions are more dedicated to wage issues rather than discipline issues.

5) When compared to the impact of unions during strong economies, the impact of unions during periods of higher unemployment is A) unknown.

B) the same.

C) smaller.

D) larger.

6)

Which of the following issues most commonly reach arbitration?

A) Layoffs B) Discharge and disciplinary issues C) Transfers D) Complexity of work assignments

7) Since 1983, in the private sector, the number of workers in unions has dropped as well as the membership rate. Which of the following is not an explanation offered for this decline?

A) Workers do not view unions as a solution to their problems.

B) Organization efforts have declined.

C) Growing industries are less unionized.

D) The structure of American industry is stagnate.

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8) In the context of contracts, which of the following is most appropriate when the necessary job skills are within the grasp of most employees?

A) Merit progression B) A gain-sharing plan C) Automatic progression D) A profit-sharing plan

9) In a(n) ________ pay plan, a contract is negotiated that specifies that employees hired after a given target date will receive lower wages than their higher-seniority peers working on the same or similar jobs.

A) skill-based B) efficiency-based C) one-tier D) two-tier

10) Basically a phenomenon of the union sector, two-tier wage structures differentiate pay based upon the A) type of work.

B) hiring date.

C) place of work.

D) length of contract, if applicable.

11) The phenomenon where nonunion management continues to enjoy the freedom from union "interference" in decision making and the workers receive the rewards already obtained by their unionized counterparts is known as

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A) automatic progression.

B) the spillover effect.

C) an experience differential.

D) the equal mirror effect.

12) MaxTrain Corp. recognizes that its competitor GlasWell Corp., which is unionized, offers higher wages and benefits. To avoid unionization demands from its workers, MaxTrain decides to offer the same wages and benefits to its employees as GlasWell. Which of the following phenomena is exemplified in this case?

A) The sorting effect B) The halo effect C) The leniency effect D) The spillover effect

13)

Which of the following statements about single rates is true?

A) Single rates are usually specified for workers within a particular job classification.

B) Single-rate agreements differentiate wages on the basis of seniority.

C) Single rates are only specified for workers employed by a firm in different geographic

areas.

D) Single-rate agreements differentiate wages on the basis of merit.

14) ________ is movement through the wage ranges where seniority is specified as the basis of the movement.

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A) Length-of-stay progression B) Automatic progression C) A merit differential D) A performance differential

15) In ________, employees who are evaluated more highly receive larger or more rapid increments than average or poor performers.

A) a two-tier pay plan B) automatic progression C) a union spillover D) merit progression

16)

A deferred wage increase

A) specifies that wages will be renegotiated at a specified time.

B) specifies that such nonwage items as pension and benefits will be renegotiated under certain conditions.

C) is negotiated at the time of initial contract negotiations with the timing and amount specified in the contract.

D) involves periodic adjustments based typically on changes in the consumer price index.

17) Which of the following involves periodic adjustments based typically on changes in the consumer price index?

A) A COLA clause B) A deferred wage increase C) A reopener clause D) An annual improvement adjustment

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18) In the negotiation stage of a multiyear wage contract, Mark, the manager of SifCo Corp., specifies that changes will be made to the wage based on the changes in the consumer price index and mentions the effective dates of adjustment. Which of the following types of clauses has Mark introduced in the contract?

A) A halo clause B) A spillover clause C) An escalator clause D) A reopener clause

19) Which of the following is the most likely reason for most unions to insist on group-based performance measures with equal payouts to members?

A) It enables employees to learn new skills.

B) It cuts down on strife and internal quarrels.

C) It encourages individual differences.

D) It causes a leniency effect.

20) The CEO of BoardCom, Inc., James, negotiates a new union contract with the union leader. If James wants to reduce expenses and keep the union happy, which of the following suggestions is most likely to be helpful?

A) Introduce merit increases based on individual-based performance.

B) Provide lump-sum awards in exchange for merit pay increases.

C) Introduce a gain-sharing plan that substitutes wages.

D) Provide a 20 percent increase to base wages.

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21) The Big Three U.S. automakers have been able to get the UAW to agree to greater use of _____ in lieu of wage increases to allow labor costs to vary more with their ability to pay rather than carry large fixed labor costs even when times are bad.

A) gainsharing B) profit sharing C) ESOPs D) merit increases

22) ________ are one-time cash payments to employees that are not added to an employee's base wages.

A) Relational returns B) Merit increases C) Lump-sum awards D) Cost-of-living increases

23) In recent years, a stable ________ of all major collective bargaining agreements in the private sector have contained a provision for lump-sum payouts.

A) three-fourths B) one-half C) one-quarter D) one-third

24)

Which of the following plans give employees part ownership in a company?

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A) ESOPs B) Pay-for-knowledge plans C) Gain-sharing plans D) Profit-sharing plans

25)

Which of the following actions is most likely to be favored by unions?

A) Increasing the pricing of products to cover for increases in wages B) Substituting wages with gain-sharing plans C) Making each individual worker more expendable to the firm D) Introducing lump-sum awards

26)

Pay-for-knowledge plans do all of the following EXCEPT A) make employees less expendable to their firms.

B) increase the probability of work being subcontracted out to nonunion organizations.

C) make each individual employee more valuable.

D) pay employees more for learning a variety of different jobs or skills.

27)

Which of the following is a reason for unions favoring gain-sharing plans?

A) Increased peer pressure to perform B) Increased involvement with job activities C) Increased flexibility in moving employees quickly into high-demand areas D) Increased clarity in bonus calculations

28)

Which of the following is a reason for unions opposing gain-sharing plans?

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A) Reduced job security B) Decreased peer pressure to perform C) Decreased feeling of achievement or contributing to the organization D) Reduced need for jobs due to increased productivity

29)

Which of the following is true regarding a gain-sharing plan?

A) It involves paying employees for learning new skills.

B) It creates difficulty in maintaining employment levels in marginal organizations.

C) It becomes ineffective when union members participate in plan development.

D) Not all unions would be in favor of this type of plan.

30)

With gain-sharing plans, the most common union strategy is to A) delay taking a stand until real benefits are more apparent.

B) be very enthusiastic.

C) have direct opposition to the plans as soon as they are suggested by the management.

D) have no concern for the plans.

31)

What are two-tier pay plans?

32) In a multiyear contract, some provision is usually made for wage adjustments during the term of the contract. List the three major ways these adjustments are usually specified and provide a brief description of each.

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33)

What is meant by automatic progression?

34)

Briefly summarize lump-sum awards and ESOPs.

35)

Briefly describe gain-sharing plans.

36) A summary of over a hundred labor relations studies finds that unions do make a difference in wages, across all studies and all time periods. ⊚ ⊚

37)

true false

Unions respond relatively rapidly to wage increases during inflationary periods. ⊚ ⊚

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38)

During strong economies, the union-nonunion gap is relatively small. ⊚ ⊚

true false

39) In a two-tier wage system, employees hired after a specific date are placed in a higher wage scale than those hired before that date. ⊚ ⊚

true false

40) Tiers can be used as a cost control strategy to allow expansion or investment or as a costcutting device to allow economic survival. ⊚ ⊚

true false

41) The vast majority of contracts specify that one or more jobs are to be compensated on an hourly basis. ⊚ ⊚

true false

42) Many contracts specify a premium be paid above the worker's base wage for working nonstandard shifts. ⊚ ⊚

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43) Most contracts recognize that jobs in the same occupations should receive different wage rates. ⊚ ⊚

44)

true false

Single rates are not usually specified for workers within a particular job classification. ⊚ ⊚

true false

45) Moving employees through pay ranges using merit increases is more popular than automatic progression. ⊚ ⊚

true false

46) In automatic progression, seniority is used as the basis for movement through job classifications. ⊚ ⊚

47)

Few contracts specify special rates for part-time and temporary employees. ⊚ ⊚

48)

true false

true false

A deferred wage increase is negotiated at the time of initial contract negotiations. ⊚ ⊚

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49) A reopener clause specifies that wages will be renegotiated at a specified time or under certain conditions. ⊚ ⊚

true false

50) Even in a nonunion firm, compensation managers will adjust rewards when there is a hint of nearby union activity. ⊚ ⊚

51)

true false

Lump-sum awards are added to base wages. ⊚ ⊚

true false

52) Openness in sharing financial and production data, key elements of putting a gain-sharing plan in place, are important in building trust between the two parties. ⊚ ⊚

true false

53) An alternative strategy for organizations hurt by intense competition is to control base wages in exchange for giving employees part ownership in the company. ⊚ ⊚

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54) There are numerous possible costs and benefits to union members for agreeing to a gainsharing plan. ⊚ ⊚

true false

55) One reason unions may oppose gainsharing is they believe employees really do not want more involvement. ⊚ ⊚

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Answer Key Test name: Chap 15_14e_Gerhart 1) D 2) D 3) B 4) C 5) D 6) B 7) D 8) C 9) D 10) B 11) B 12) D 13) A 14) B 15) D 16) C 17) A 18) C 19) B 20) B 21) B 22) C 23) D 24) A 25) D 26) B Version 1

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27) B 28) D 29) D 30) A 36) TRUE 37) FALSE 38) TRUE 39) FALSE 40) TRUE 41) TRUE 42) TRUE 43) FALSE 44) FALSE 45) FALSE 46) TRUE 47) TRUE 48) TRUE 49) TRUE 50) TRUE 51) FALSE 52) TRUE 53) TRUE 54) TRUE 55) TRUE

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Chapter 16 1) ________ is an example of a country with a highly decentralized approach to pay setting with higher wage flexibility.

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

2) 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

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

A) To use incentives that are based on an employee's performance B) To ensure that employees remain integrated into groups, usually around their families C) To focus on group-based pay rather than on individual-based pay D) To ensure that all employees are entitled to equal pay increases

4)

Which of the following countries ranks the lowest in uncertainty avoidance?

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A) China B) Germany C) Japan D) The United States

5) In the context of Hofstede's national culture dimensions, this culture is more likely to remain integrated into groups, usually around the family.

A) Collectivist societies B) Feminine societies C) Individualist societies D) Masculine societies

6) Which of the following statements is true of how useful the notion of national culture is when managing international pay?

A) The importance of national culture when managing international pay is understated.

B) National culture is only a starting point.

C) Managers should rely on the national culture to manage international pay.

D) The variance between countries is far larger than the variance between individuals within countries.

7)

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

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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.

8) 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.

9)

Managerial autonomy is inversely related to the A) degree of centralization.

B) internal alignment.

C) national culture.

D) productivity level.

10)

Traditionally, Japan's employment relationships were supported by

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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.

11) 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

12)

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.

13)

Which of the following statements is true about the German traditional national system?

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A) In Germany, companies place much greater emphasis on external markets than on internal alignment.

B) Labor markets in Germany remain highly regulated, and tariff agreements set pay for union workers.

C) In Germany, workers are entitled to a maximum of 15 days of vacation and receive a maximum of 10 national holidays annually.

D) Performance-based bonuses have been an integral part of a traditional German pay system for unionized workers.

14)

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

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

15)

Unlike German companies, Japanese organizations A) encourage flexible workers.

B) focus on the shorter term.

C) are less egalitarian.

D) are market-sensitive.

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

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A) Nearly one in ten 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 than before.

D) Many of the changes in Germany are the result of global competitive pressures and technological changes.

17) In the context of the general compensation strategies, identify a true statement about localizers.

A) The corporate headquarters and the operating units are heavily networked to share ideas and knowledge.

B) Managers around the world share a common vocabulary and a clear message about what the leadership values.

C) They are virtually similar to exporters.

D) They operate independently of the corporate headquarters.

18)

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.

19)

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

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A) foreign country national.

B) third-country national.

C) parent-country national.

D) local country national.

20)

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.

21)

Which of the following is true of hiring LCNs? A) Companies incur relocation expenses and other substantial expenses when hiring

LCNs. B) Companies need to be concerned about LCNs' being able to adapt to the local culture.

C) Rarely do organizations decide that hiring LCNs is appropriate.

D) Employment of LCNs satisfies nationalistic demands for hiring locals.

22) 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 did KYZ use?

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

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23)

The base salary plus incentives for expatriates is usually determined by A) job evaluation.

B) market pay.

C) competitors' pay levels in the host country.

D) international pay schedules.

24) 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.

25) 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

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

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A) It is more expensive than the balance sheet approach regardless of the location.

B) It ties an expatriate's salary to the host country's salary scales.

C) It ties an expatriate's salary to the home country's salary scales.

D) It ensures that an expatriate's pay is equalized without the need for relocation bonuses.

27) 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 European Union countries. Which of the following approaches to expatriate compensation is exemplified in this situation?

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

28)

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

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

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

30)

According to research, which of the following is true about U.S. expatriates?

A) More than 75 percent believe their company values overseas experience.

B) More than 50 percent of U.S. expatriates are promoted.

C) Only 7 percent of returning expatriates leave their company within one year.

D) Only 13 percent of U.S. expatriates are women.

31) A global study of pay systems used by companies with worldwide operations identifies three general compensation strategies: localizer, exporter, and globalizer. Briefly describe each of these three types of compensation strategies.

32)

Explain the dimensions of national cultural attributes proposed by Hofstede.

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

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

35)

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

36) How people get paid around the world depends on variations in economic, institutional, organizational, and employee characteristics. ⊚ ⊚

true false

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

true false

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

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⊚ ⊚

true false

39) In the context of Hofstede's national culture dimensions, masculine societies emphasize assertiveness, performance, and competition. ⊚ ⊚

40)

true false

In cultures that emphasize respect for status, egalitarian pay structures work the best. ⊚ ⊚

true false

41) A re-analysis of Hofstede's work on national differences in culture finds the variance between individuals within countries is far larger than the variance between countries. ⊚ ⊚

true false

42) When comparing labor unions in the U.S. and Europe, the terms and conditions of employment are much more likely to be covered by a union contract in the U.S., even for those not members of a union. ⊚ ⊚

43)

true false

Unionization rates are higher in Europe than in Asia. ⊚ ⊚

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12

44) While state-owned enterprises still play a major role in China, now, township enterprises, wholly privately owned enterprises, joint ventures with foreign companies, and wholly owned foreign enterprises play a much larger role in China than in the past. ⊚ ⊚

true false

45) Generally, it is difficult to compare the total compensation of a U.S. firm with that of a foreign competitor. ⊚ ⊚

true false

46) It is easier and less complex to compare living costs and standards across countries than comparing total compensation. ⊚ ⊚

true false

47) In Japan, person-based factors (seniority, ability, and performance) carry important weight in setting base pay. ⊚ ⊚

true false

48) Both the Japanese system and the German system place much greater emphasis on external markets than on internal alignment. ⊚ ⊚

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49) In Japan, base pay is not based on job evaluation or market pricing, nor is it attached to specific job titles. ⊚ ⊚

true false

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

true false

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

true false

52) Japanese pay systems tend to emphasize promotions based on a combination of supervisory evaluation of trainability, skill/ability levels, and performance rather than on performance alone. ⊚ ⊚

true false

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

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54) An alternative to the balance sheet approach to expatriate pay is the localization, or local plus pay system which ties salary to a region. ⊚ ⊚

true false

55) In some sections of major cities, there are expatriate colonies where different international companies group their expatriates. ⊚ ⊚

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Answer Key Test name: Chap 16_14e_Gerhart 1) D 2) B 3) A 4) D 5) A 6) B 7) C 8) C 9) A 10) A 11) B 12) D 13) B 14) D 15) A 16) D 17) D 18) C 19) D 20) B 21) D 22) A 23) A 24) B 25) B 26) B Version 1

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27) A 28) C 29) C 30) D 36) TRUE 37) TRUE 38) FALSE 39) TRUE 40) FALSE 41) TRUE 42) FALSE 43) TRUE 44) TRUE 45) TRUE 46) FALSE 47) TRUE 48) FALSE 49) TRUE 50) FALSE 51) TRUE 52) TRUE 53) TRUE 54) FALSE 55) TRUE

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Chapter 17 1)

The executive branch of the federal government A) enforces laws through agencies and its other bodies.

B) passes new laws.

C) interprets laws and considers their constitutionality.

D) changes existing laws.

2) The ________ Act extends the prevailing-wage concept to manufacturers or suppliers of goods for government contracts.

A) Sarbanes-Oxley B) Walsh-Healey Public Contracts C) Fair Labor Standards D) Davis-Bacon

3)

The Davis-Bacon Act A) states that income from most stock plans need not be included in calculating overtime

pay.

B) increases the burden of proof on employers to rebut some discrimination claims.

C) requires that mechanics and laborers on public construction projects be paid the prevailing wage in an area.

D) extends the prevailing-wage concept to manufacturers or suppliers of goods for government contracts.

4) Under the ________ Act, executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company.

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A) Worker Economic Opportunity B) Davis-Bacon C) Walsh-Healey D) Sarbanes-Oxley

5) The "Say on Pay," a nonbinding vote by shareholders to approve or disapprove executive pay is a provision in the _____.

A) Dodd-Frank Act B) Lilly Ledbetter Fair Pay Act C) Sarbanes-Oxley Act D) Fair Labor Standards Act

6)

The Worker Economic Opportunity Act A) states that income from most stock plans need not be included in calculating overtime

pay.

B) requires the value of all employee stock options to be expensed at estimates of fair value on financial statements.

C) gives the Securities and Exchange Commission the authority to grant shareholders proxy access to nominate directors.

D) extends the Securities and Exchange Commission pay disclosure requirements to highly paid executives.

7) Under the ________, employers can be liable for current pay differences that are a result of discrimination that occurred many years earlier.

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A) Sarbanes-Oxley Act B) Lilly Ledbetter Fair Pay Act C) Equal Pay Act D) Fair Labor Standards Act

8) Which of the following includes a provision that requires public companies to set policies to allow executive compensation to be taken back if it was based on inaccurate financial statements that did not comply with accounting standards?

A) The American Recovery and Reinvestment Act B) The Troubled Asset Relief Program C) The Financial Accounting Standards Board Statement 123 R D) The Dodd-Frank Wall Street Reform and Consumer Protection Act

9) Which of the following is a test that must be met to qualify for the administrative employee exemption?

A) The employee must be compensated on a salary or fee basis at a rate not less than $684 per week.

B) The employee's primary duty must be performance of manual work.

C) The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent.

D) The employee must have the authority to hire or fire other employees.

10) Which of the following groups can qualify for the exemptions under the Fair Labor Standards Act of 1938?

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A) Computer employees B) Police and other first responders C) Paramedics D) Fire fighters

11) The ________ specifies the number of breaks that must be provided in an eight-hour workday.

A) Portal-to-Portal Act B) Occupational Safety and Health Administration legislation C) Walsh-Healey Public Contracts legislation D) Equal Pay Act

12) Susan works in a sterile laboratory that requires her to scrub and put on protective clothing. Which of the following acts determines whether she should be paid for this time?

A) The Fair Labor Standards Act B) The Occupational Safety and Health Administration Act C) The Portal-to-Portal Act D) The Health Care Workers Protection Act

13)

In the context of child labor, which of the following statements is true?

A) The steepest declines in child labor in Brazil and Mexico are among children 17 years and younger.

B) Population growth in Latin American countries has led to replacement of child laborers with adult workers.

C) The lowest rates of child labor are in sub-Saharan Africa.

D) Child labor has decreased in most countries across the world in recent years.

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14)

The highest rates of child labor are in A) China.

B) India.

C) Latin America.

D) sub-Saharan Africa.

15)

Who among the following has violated the Fair Labor Standards Act of 1938?

A) Rachel, who pays all her workers a minimum wage of $13 B) Sally, who does not consider the time her employees spend travelling to work as compensable time C) Jeremy, who employs his 16-year-old cousin in his meat-packing plant D) Randy, who employs his 17-year-old son in his stationery store as a cashier

16) An early study of the effects of the living wage law in Los Angeles found all of the following EXCEPT that A) 7,735 of the employees covered by the law received an average wage increase of 20 percent.

B) 1 percent of covered jobs were lost.

C) a higher proportion of new hires were female.

D) turnover and absenteeism declined.

17)

Prevailing-wage laws

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A) set pay for work done to produce goods and services contracted by the state government.

B) specify that a government-defined prevailing wage is the maximum wage that must be paid for work done on covered government projects.

C) give contractors the right to drive down wages using their size.

D) were passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression.

18) The denial of jobs, promotions, or training opportunities to qualified women or minorities are examples of A) access discrimination.

B) valuation discrimination.

C) treatment discrimination.

D) hostile environment.

19) ________ is defined by the Department of Labor as experience, training, education, and ability as measured by the performance requirements of a particular job.

A) Effort B) Skill C) Responsibility D) Working condition

20) Meltrop Corp. employs two store clerks, Sam and Stella. Stella sues Meltrop claiming unequal pay as she earns $500 a week less than Sam does despite doing the same work as Sam. Which of the following is most likely to be the result of the litigation?

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A) Meltrop will win the litigation as blue-collar workers are exempt from the Equal Pay Act. B) Meltrop will win the litigation if it can prove that Stella is Sam's senior.

C) Meltrop will lose the litigation as it has committed access discrimination.

D) Meltrop will lose the litigation as it has committed valuation discrimination.

21)

Which of the following is true of the Age Discrimination in Employment Act?

A) It protects employees aged 30 and over against age discrimination.

B) It was amended in 1990 to include the Older Workers Benefit Protection Act. C) It mandates employers with 50 or more employees to provide qualifying health insurance coverage or face financial penalties.

D) It formed the Securities and Exchange Commission, which ensures that companies having more than $10 million in assets report information periodically.

22) In which of the following types of cases is the focus on the discriminatory consequences rather than the intent to discriminate?

A) Disparate treatment B) Access discrimination C) Disparate impact D) Valuation discrimination

23) MNTX University requires that all its female professors score higher than the male professors in their appraisal rating to qualify for a pay bonus as there are more female professors than male professors in the university. Which of the following statements is true in this case?

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A) MNTX is liable for access discrimination against women.

B) MNTX is liable for disparate treatment of women.

C) MNTX's pay policy is legal as educational institutions are exempt under the Equal Pay Act. D) MNTX's pay policy is legal as its intention is to reduce the overall costs of the company and not to discriminate.

24) ________ prohibits discrimination on the basis of race, color, religion, sex, or national origin.

A) Executive Order 11452 B) The FMLA C) Executive Order 11246 D) The Rehabilitation Act

25)

The Equal Pay Act is a part of the A) the Securities Exchange Act. B) the Title VII of Civil Rights Act. C) the Fair Labor Standards Act. D) the Walsh-Healey Public Contracts Act.

26)

Regarding pay differences for different jobs, A) courts continue to rely on the use of employer opinion surveys to justify differences.

B) the courts favor reliance on the use of statistical models.

C) court decisions have been inconclusive.

D) courts continue to uphold the use of market data to justify differences.

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27) The determination of pay discrimination on jobs of dissimilar content requires a standard that allows jobs of dissimilar content to be declared comparable and that allows pay differences for jobs that are not comparable. This standard is A) job evaluation.

B) comparable worth analysis.

C) disparate impact analysis.

D) point factor market comparison.

28) Which of the following is one of the basic steps in establishing a comparable-worth pay plan?

A) Adopting multiple gender neutral point job evaluation plans for all jobs within a unit B) Paying jobs with different evaluation results with different wage rates C) Basing the wage-to-job evaluation point ratio on the wages paid for female-dominated jobs D) Identifying the percentages of male and female employees in each job group

29)

Establishing a comparable-worth plan should include all of the following except:

A) All jobs with equal job evaluation results should be paid the same.

B) Adopt a single "gender neutral" point job evaluation plan for all jobs within a unit.

C) Identify the percentage of males and female employees in each job group.

D) The wage-to-job evaluation point ratio should be based on the wages paid for femaledominated jobs.

30) Which of the following statements regarding wage differences in industries and firms is NOT true?

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A) Wages of men in large firms are 54 percent higher than wages of men in small firms.

B) Hispanic men are concentrated in construction and service firms.

C) Female employment is more heavily concentrated in large firms.

D) The pay premium associated with changing jobs is enjoyed primarily by white males.

31) Differences in pay between men and women doing equal work are legal if these differences are based on any one of four criteria. What are the four criteria? What is it called when an employer uses one of the criteria to justify their differences in pay? Which of the four criteria has prompted the most court cases?

32) What are the definitions of skill, effort, responsibility, and working conditions according to the Department of Labor? What are the conditions that must be met for an employer to support a claim of unequal work?

33)

Compare and contrast disparate treatment and disparate impact.

34)

What are the four basic steps in establishing a comparable-worth plan?

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35)

What are the sources of earnings gaps?

36) Whether a worker is classified as an employee or an independent contractor can have substantial cost implications for an employer. ⊚ ⊚

true false

37) While government affects the supply of labor through legislation, it has no effect on the demand for labor. ⊚ ⊚

true false

38) The Mental Health Act of 1997 requires that mental illness be covered to the same extent that other medical conditions are covered. ⊚ ⊚

true false

39) One of the main contributors to career earnings is advancement, either at one's present company or another company.

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⊚ ⊚

true false

40) The Wage and Hour Division of the Department of Labor, which is charged with enforcement of the FLSA, provides strict criteria that must be met in order for jobs to be exempt from minimum-wage and overtime provisions. ⊚ ⊚

true false

41) As the lowest rates paid in the software, chemical, oil, and pharmaceutical industries are already well above minimum, any legislation to increase minimum wage would have little direct impact on them. ⊚ ⊚

true false

42) Astute professionals must be aware of legislative and judicial currents to protect both employers' and employees' interests and to ensure that compensation practices conform to judicial interpretation. ⊚ ⊚

true false

43) A GAO study found that 9 of 10 cases brought by GAO undercover agents posing as workers were mishandled by the Wage and Hour division of the Labor Department. ⊚ ⊚

true false

44) A government-defined prevailing wage is the minimum wage that must be paid for work done on covered government projects or purchases.

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⊚ ⊚

45)

true false

Prevailing wages protect foreign workers working as registered nurses. ⊚ ⊚

true false

46) The two types of discrimination recognized by law are valuation discrimination and access discrimination. ⊚ ⊚

true false

47) It is illegal to pay men and women who perform substantially equal work differently if the pay system is designed to recognize differences in performance, seniority, quality, and quantity of results. ⊚ ⊚

true false

48) Of the four affirmative defenses for unequal pay for equal work, "a factor other than sex" has prompted the most court cases. ⊚ ⊚

true false

49) The Department of Labor defines "effort" as either mental or physical; the degree of effort (not type of effort) actually expended in the performance of a job. ⊚ ⊚ Version 1

true false 13

50) The two standards of discrimination – disparate treatment versus disparate impact – remain difficult to apply to pay issues, since pay differences are legal for dissimilar work. ⊚ ⊚

true false

51) The key to a comparable-worth system is a single job evaluation plan for jobs with dissimilar content. ⊚ ⊚

true false

52) The wage gap between men and women varies according to wage level, being relatively large at very high wages and even larger at very low wage levels. ⊚ ⊚

true false

53) The gender wage gap is moderate for recent college graduates and decreases as the cohort ages. ⊚ ⊚

54)

true false

A higher proportion of women are employed by small firms compared to large firms. ⊚ ⊚

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55) The gender pay gap is common across countries and is smaller in some countries than in the United States. ⊚ ⊚

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Answer Key Test name: Chap 17_14e_Gerhart 1) A 2) B 3) C 4) D 5) B 6) A 7) B 8) D 9) A 10) A 11) B 12) C 13) D 14) D 15) C 16) C 17) D 18) A 19) B 20) D 21) B 22) C 23) B 24) C 25) C 26) D Version 1

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27) A 28) D 29) D 30) C 36) TRUE 37) FALSE 38) TRUE 39) TRUE 40) TRUE 41) TRUE 42) TRUE 43) TRUE 44) TRUE 45) TRUE 46) TRUE 47) FALSE 48) TRUE 49) TRUE 50) TRUE 51) TRUE 52) TRUE 53) FALSE 54) TRUE 55) TRUE

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Chapter 18 1) Which of the following is a factor to control in order to manage labor costs in a simple labor cost model?

A) Ethics B) Communication C) Employment D) Behavior

2) Total compensation in many organizations makes up at least ________ of operating expenses.

A) 80 percent B) 70 percent C) 60 percent D) 50 percent

3) The average company match for 401(k) retirement plans is ________ on the dollar up to 6 percent of pay.

A) 50 cents B) 40 cents C) 30 cents D) 20 cents

4) A major advantage of a ________ is that it reduces benefits costs, something that the other cost-cutting options ordinarily do not achieve.

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A) reduction in work hours B) furlough C) pay cut D) reduction in force

5) Bottom-up budgeting includes the process of distributing forecasting instructions and worksheets where: A) managers are trained in the concepts of a sound pay-for-performance policy.

B) firms furnish managers with the forms and instructions necessary to preplan increases.

C) each manager's forecast is examined and changes based on noted inequities are recommended.

D) managers are presented statistical summaries of the forecasting data by each department.

6) The ________ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees.

A) WHO B) FMLA C) OSHA D) ADEA

7)

If red circle rates become common throughout an organization, then: A) the employees are paid below the minimum range.

B) the design of the ranges and the evaluation of the jobs should be reexamined.

C) outstanding employees receive a number of rapid promotions and pay increases.

D) the organization's labor costs become more flexible.

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8) The percentage increase in average pay that is expected for an organizational unit or company is called A) a decentralized budget.

B) a bottoms-up budget.

C) a planned pay-level rise.

D) the current year's rise.

9) ________ is the budgetary approach that begins with an estimate from the highestranking executives of the pay increase budget for an entire organization.

A) Bottom-up budgeting B) Top-down budgeting C) Managerial plan D) Executive estimate budgeting

10) Financially healthy employers may wish to maintain their competitive positions in the labor market or share financial success through A) increases in employees' copay.

B) increases in deductibles for benefits.

C) bonuses and profit sharing.

D) decreases in base wages.

11)

The denominator for calculating the current year's pay rise is the

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A) average pay at the beginning of the year.

B) average pay at the end of the year.

C) average number of employees during the year.

D) average employment level.

12) The ________ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage.

A) productivity effect B) conflict effect C) turnover effect D) morale effect

13) HoldDesk, Inc. has an annual labor cost of $3,000,000. It has a turnover rate of 10 percent and a planned average increase of 5 percent. The turnover effect is A) $10,000.

B) $45,000.

C) $15,000.

D) $30,000.

14)

Changes in wages in labor markets are measured A) using the producer price index.

B) using the modified balance sheet approach.

C) through pay surveys.

D) by examining the personal expenditure of each employee.

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15) Which of the following is a measure of changes in prices of goods and services in the product and service markets over time?

A) Producer price survey B) Product market competitor wage survey C) Labor market competitor wage survey D) Consumer price index

16) If Philadelphia has a CPI of 165 and Houston has a CPI of 145 and if both cities started with bases of 100, it means that A) prices have risen faster in Philadelphia since the base year than in Houston.

B) it essentially costs more to live in Philadelphia than in Houston.

C) it costs less to live in Houston than in Philadelphia.

D) pay in Philadelphia is, on average, 20 percent higher than in Houston.

17) When employees are paid more than the maximum of their pay grade, these rates are called A) red circle rates.

B) yellow circle rates.

C) blue circle rates.

D) green triangle rates.

18)

A compa-ratio reflects the

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A) rate paid for satisfactory performance.

B) relationship of actual salaries to the midpoint of the going rates in the market.

C) maximum value of red circle rates.

D) relationship of the average actual salary in each range to the midpoint of the range.

19)

A compa-ratio of less than 1 means that, on average, A) employees are senior employees.

B) the turnover rate of the organization is low.

C) employees are high performers.

D) employees in a range are paid below the midpoint.

20) GronLan, Inc., a company with a majority of workers with high seniority, decides to hire 1,000 college graduates to meet the sudden productivity requirements generated by a growth in the market. Which of the following statements is most likely to be happen in this situation?

A) The compa-ratio of the company will become greater than 1.

B) The average pay actually paid by the company will fall below its range midpoint.

C) The salary range midpoint of the company will become less than the compa-ratio.

D) The number of employees being paid red circle rates will increase.

21) MerTon, Inc. decides to reduce labor costs by using exit incentives to encourage some of its senior, high-earning members to leave the organization. It replaces the employees who quit with new employees and pays them low wages. Which of the following statements is most likely true in this scenario?

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A) The number of employees being paid red circle rates will increase.

B) The salary range midpoint of the company is less than the compa-ratio.

C) The salary range midpoint of the company is higher than the actual salary paid.

D) The compa-ratio of the company is greater than 1.

22) The European Union has issued the ________, which is significantly stronger than U.S. regulations.

A) Minimum Wage Convention B) Non-Retaliation for Disclosure of Compensation Information C) Data Privacy Directive D) Convention on Contingent Workers

23)

Which of the following statements about anchoring/framing is true?

A) It states that initial data strongly affect decisions/beliefs.

B) It is the reluctance to accept evidence that contradicts existing beliefs.

C) It refers to the tendency to follow fashions in programs/techniques.

D) It states that people discover patterns in random events.

24)

Typing budgets or payments to the CPI is called _____.

A) variable pay B) green circle rates C) bottom-up budgeting D) indexing

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25) ________, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay.

A) Communication portals B) Enterprise resource planning systems C) Cafeteria plans D) Content delivery networks

26) When contemplating compensation communications, remember that _____ occurs when a company follows trends in programs and techniques, and the company needs to benchmark selectively.

A) anchoring/framing B) herding C) pattern recognition D) persistence of beliefs

27) A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is A) known as a centralized strategy.

B) known as a decentralized strategy.

C) the best approach to design.

D) rarely done in today's organizations.

28) Which of the following is the basic question to ask to improve quality and ensure that value is added by each technique and at each stage in the compensation system?

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A) Who should do the activity?

B) How should the technique be redesigned?

C) Does each specific activity directly contribute to our objectives?

D) Should the activity be done in-house, or can others do it more effectively?

29) Controls on managers' pay decisions come from two different aspects of the compensation process: (1) controls that are inherent in the design of the techniques and (2) _____.

A) broad bands B) range minimums and maximums C) job analysis and evaluation D) the formal budgeting process

30) Replacing merit grids with ________ eliminates the link between the pay increase and the employees' salary position in the range and performance rating.

A) bands B) skill- or competency-based plans C) job evaluation plans D) bonuses

31)

What are the potential problems associated with headcount reductions?

32)

What is the top-down method of budgeting?

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33)

What is the turnover effect? Explain how it is calculated with an example.

34) Explain the difference between a centralized and a decentralized system when constructing the compensation function. Identify one type of company a centralized system and a decentralized system would likely to be found.

35)

Briefly summarize compa-ratios.

36) Budgets account for the costs of updating the pay structure, increasing merit pay, or instituting gain sharing. ⊚ ⊚

true false

37) Labor costs equal the number of workers and hours worked multiplied by the average cash compensation plus average benefit cost.

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⊚ ⊚

38)

true false

Exit incentives are likely to result in the loss of high-performing employees. ⊚ ⊚

true false

39) Many employers achieve flexibility and control employment costs by utilizing contingent workers rather than expanding and contracting the core workforce. ⊚ ⊚

40)

true false

Rather than define employment as hours of work, number of employees is often used. ⊚ ⊚

true false

41) Compensation strategy influences effectiveness not only by its influence on (labor) costs, but through its influence in helping increase revenues or returns as well. ⊚ ⊚

42)

true false

The CPI accurately reflects an individual employee's cost of living. ⊚ ⊚

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43) Outsourcing is a viable alternative as organizations struggle with activities that do not directly contribute to objectives. ⊚ ⊚

true false

44) An individual employee cannot earn more pay than the maximum of the pay grade of their current job. ⊚ ⊚

true false

45) If red circle rates become common throughout an organization, then the design of the ranges and the evaluation of the jobs should be reexamined. ⊚ ⊚

true false

46) Broad bands provide managers greater discretion in pay for their subordinates compared to a grade-range design. ⊚ ⊚

47)

true false

A compa-ratio is the average actual pay divided by the midpoint of the pay grade. ⊚ ⊚

true false

48) A compa-ratio greater than 1 means that, on average, the rates exceed the intended policy.

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⊚ ⊚

true false

49) The inherent financial insecurity built into variable plans may adversely affect employees' financial well-being, especially for lower-paid workers. ⊚ ⊚

50)

Pay policies are more open in the public sector than in the private sector. ⊚ ⊚

51)

true false

true false

Cost savings are the major potential advantage of outsourcing. ⊚ ⊚

true false

52) The marketing approach of communication tends to focus on explaining practices, details, and the way pay is determined. ⊚ ⊚

true false

53) A key reason to communicate pay information is that the goodwill engendered by the act of being open about pay may affect perceptions of pay equity. ⊚ ⊚

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54)

A pay secrecy policy in a private sector organization may be illegal. ⊚ ⊚

true false

55) The most important components of a pay communication program are the businessrelated and work-related rationales on which the pay systems are based. ⊚ ⊚

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14

Answer Key Test name: Chap 18_14e_Gerhart 1) C 2) D 3) A 4) D 5) B 6) D 7) B 8) C 9) B 10) C 11) A 12) C 13) C 14) C 15) D 16) A 17) A 18) D 19) D 20) B 21) C 22) C 23) A 24) D 25) A 26) B Version 1

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27) B 28) C 29) D 30) D 36) TRUE 37) TRUE 38) TRUE 39) TRUE 40) FALSE 41) TRUE 42) FALSE 43) TRUE 44) FALSE 45) TRUE 46) TRUE 47) TRUE 48) TRUE 49) TRUE 50) TRUE 51) TRUE 52) FALSE 53) TRUE 54) TRUE 55) TRUE

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