Strategic Compensation A Human Resource Management Approach, Global Edition, 8th edition By Joseph J by TBtutors

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Test Bank

Strategic Compensation A Resource: Human Resource Management Approach Edition:

8th Edition

Author(s):

Joseph J. Martocchio

Strategic Compensation, 8e, Global Edition (Martocchio) Chapter 1 Strategic Compensation: A Component of Human Resource Systems 1) What is the primary factor that will prevent companies from growing in the next decade? A) increased government regulations B) the inability to attract and retain employees C) caps on executive pay in some organizations D) increased global competition Answer: B Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 2) Protection programs are what type of compensation benefits? A) external B) non-monetary C) internal D) monetary Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 3) Which of the following would be an example of a non-monetary reward? A) medical insurance B) vacations C) day care assistance D) all of the above Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 4) This law made it illegal to pay women less for performing equal work as men. A) Equal Pay Act of 1963 B) Civil Rights Act of 1964 C) Davis - Bacon Act of 1931 D) Fair Labor Standards Act of 1938 Answer: A Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1)

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5) What is the typical annual Cost-of-living adjustment (COLA) in recent years? A) 0 to 1 percent B) 2 to 3 percent C) 3 to 5 percent D) 8 to 10 percent Answer: B Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 6) What type of pay system rewards employees for partially or completely attaining a predetermined work objective? A) seniority pay B) merit pay C) incentive pay D) skill-based pay Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 7) Jason works at a call center for an insurance company, and he has been answering calls regarding auto insurance. Recently, he started to attend a training program about home insurance. Upon successful completion of this training program, Jason will be able to handle home insurance questions and queries as well. If this insurance company has a compensation policy that rewards Jason's completion of this training, then what type of pay system does it employ? A) incentive pay B) merit pay C) seniority pay D) pay-for-knowledge Answer: D Difficulty: Easy AACSB: Application of Knowledge Learning Obj.: Describe what compensation is. (1) 8) Which of the following is NOT one of the three broad categories that are considered discretionary benefits? A) worker's compensation laws B) paid time off C) protection programs D) services Answer: A Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1)

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9) Samuel is a recently hired HR professional working at XYZ Motor Co. His current project involves recording the time it takes assembly workers to complete their tasks. With the help of industrial engineers in the manufacturing plant, the aim of this project is to identify the most effective ways of assembly operations. Which of the following is NOT related to Samuel's project? A) scientific management practices B) time-and-motion studies C) job analysis D) welfare practices Answer: D Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Summarize at least two historical events in the evolution of compensation practice leading to the current strategic compensation era. (2) 10) These are positive employer gestures that go beyond what was required by law, created in part to thwart potential union activity. A) employee benefit plans B) welfare practices C) scientific management practices D) compensable factors Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Summarize at least two historical events in the evolution of compensation practice leading to the current strategic compensation era. (2) 11) A company's ability to sustain market share and profitability for several years running is referred to by what term? A) differentiation B) personnel administration C) compensation practices D) competitive advantage Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Summarize at least two historical events in the evolution of compensation practice leading to the current strategic compensation era. (2)

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12) This term suggests that a loss is likely for the firm, and that the individual will be left with little control. A) reverse opportunity B) negative equity C) threat D) foreclosure Answer: C Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 13) What strategy describes the use of benefit and compensation packages in order to support both HR and competitive strategies? A) worker welfare strategies B) total compensation strategies C) total quality management strategies D) worker satisfaction strategies Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 14) Ryanair uses one type of aircraft in its fleet and requires their passengers to carry their luggage to the plane. Ryanair's decisions exemplify which of the following competitive strategies? A) differentiation strategy B) high quality strategy C) brand notoriety D) lowest-cost strategy Answer: D Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 15) A company using this competitive strategy seeks to offer a product or service that is completely unique from other competitors in their market segment. A) differentiation strategy B) defender strategy C) prospector strategy D) lowest-cost strategy Answer: A Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3)

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16) Which of these actions would HR seek to encourage in attempting to create a lowest-cost competitive strategy? A) an employee's long-term focus B) unpredictable employee behavior C) high concern for the quantity of output D) high concern for the quality of output Answer: C Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 17) This group is directly involved in producing goods and delivering services for a company. A) staff employees B) line employees C) managers D) executives Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 18) This agreement describes the terms of employment that are set between management and union bargaining representatives. A) employee relationship agreement B) collective bargaining agreement C) joint employment agreement D) workplace requisite agreement Answer: B Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 19) Sandra's position changed from supervisor at the planning department to supervisor at the new projects department. In terms of career development, which of the following is more applicable to Sandra's situation? A) maintaining focus with less responsibilities B) a lateral move across the company's hierarchy C) moving upward through a company's hierarchy D) maintaining the focus and assume greater responsibilities Answer: B Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Name and summarize the goals of compensation professionals. (4)

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20) Which of the following plans is considered a company sponsored program that provides income to workers throughout their retirement? A) pension plans B) severance plans C) loyalty plans D) longevity plans Answer: A Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 21) Oftentimes, companies use this method to trim their payroll responsibilities by encouraging higher paid workers with more seniority to voluntarily leave the company earlier than previously planned. A) resignation plans B) severance plans C) early retirement programs D) employee expenditure plans Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 22) What U.S. federal law established a national minimum wage for employees involved in commerce (rather than just those employed by companies working for the U.S. government), as well as prohibit most employment of minors in oppressive child labor? A) The Equal Pay Act of 1963 B) The Civil Rights Act of 1964 C) The Fair Labor Standards Act of 1938 D) The Family and Medical Leave Act of 1993 Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 23) These ordered sets of jobs make it easy for compensation managers to give a clear relative value for all jobs within a company. A) externally consistent compensation systems B) internally consistent compensation systems C) market-wide consistent compensation systems D) comparably consistent compensation systems Answer: B Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4)

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24) What is a systematic process for gathering, documenting, and analyzing information in order to describe jobs? A) job evaluation B) internal consistency C) job analysis D) strategic analysis Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 25) What do compensation managers use to recognize differences in the relative net worth of jobs and to establish pay differentials based upon management priorities? A) job evaluation B) internal consistency C) job analysis D) strategic analysis Answer: A Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 26) These compensation systems go a long way in attracting and retaining the most qualified employees and are based upon market and compensation surveys. A) internally consistent compensation systems B) market-competitive pay systems C) job evaluation compensation systems D) externally consistent compensation systems Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 27) Which analysis allows business professionals to determine where they currently stand in the market based on both the external market context and internal factors? A) market analysis B) comparative analysis C) 360 degree analysis D) strategic analysis Answer: D Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4)

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28) Which of the following represents the pay rate differences for jobs and employee contributions of unequal worth to a company? A) merit pay B) incentive pay C) retention pay D) pay structures Answer: D Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 29) These build upon pay grades and include maximum, minimum, and mid-point pay rates for jobs in particular pay grades. A) pay ranges B) pay slopes C) piece rates D) pay determinates Answer: A Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 30) Which of the following are stakeholders within a company? A) line managers B) executives C) unions D) all of the above Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Identify the stakeholders of the compensation and summarize their stake in the work compensation professionals perform. (5) 31) ________ compensation refers to the mental state of employees as a result of their performance on the job. Answer: Intrinsic Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 32) ________ pay systems reward employees with base pay raises according to their length of service on the job. Answer: Seniority Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Describe what compensation is. (1) 8 © Pearson Education Limited 2015

33) ________ decisions are made in order to support the fulfillment of strategic decisions. Answer: Tactical Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 34) Strategic management involves distinguishing between ________ and ________ in attempting to achieve company goals, thus making strategic management an imprecise process. Answer: threats, opportunities Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 35) Competitive ________ is the use of company resources (such as capital, technology, and human resources) to promote and sustain competitive advantage. Answer: strategy Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 36) P&G uses a ________ strategy based on brand image and price premium in between its Iams and Eukanuba brands. Answer: differentiation Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Discuss at least two differences between strategic and tactical compensation. (3) 37) Human resource professionals are ________ employees because they exist to provide support services for line employees. Answer: staff Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 38) Companies that are implementing ________ plans generally increase the amount of classroom and on-the-job training as these types of plans make training necessary rather than optional. Answer: pay-for-knowledge Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4)

39) Employment ________ occurs when an employee's agreement to perform work is ended, whether it is voluntarily or involuntarily. Answer: termination Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4) 40) Due to recent economic downturn, XYZ Co. decided to shut down one of its appliance manufacturing plants in the United States, and therefore around 300 workers need to be laid off. XYZ Co. will award these laid off workers with 6 months of ________ pay. Answer: severence Difficulty: Difficult AACSB: Application of Knowledge Learning Obj.: Name and summarize the goals of compensation professionals. (4) 41) Compensation represents both the intrinsic and extrinsic rewards employees receive for performing their jobs. Together, both intrinsic and extrinsic compensation describe a company's total compensation system. Briefly describe both types of rewards and indicate the professionals who are responsible for managing them. Answer: Intrinsic compensation reflects employees' psychological mind-sets that result from performing their jobs. Extrinsic compensation includes both monetary and nonmonetary rewards. Organizational development professionals promote intrinsic compensation through effective job design. Compensation professionals are responsible for extrinsic compensation. Extrinsic compensation includes both monetary and nonmonetary rewards. Compensation professionals establish monetary compensation programs to reward employees according to their job performance levels or for learning job-related knowledge or skills. As we will discuss shortly, monetary compensation represents core compensation. Nonmonetary rewards include protection programs (e.g., medical insurance), paid time off (e.g., vacations), and services (e.g., day care assistance). Most compensation professionals refer to nonmonetary rewards as employee benefits. Difficulty: Moderate AACSB: Synthesis Learning Obj.: Describe what compensation is. (1) 42) How did scientific management methods influence compensation practices? Answer: Scientific management methods gave rise to the use of piecework plans. Under piecework plans, an employee's compensation depends on the number of units she or he produces over a given period. Specifically, these plans reward employees on the basis of their individual hourly production against an objective output standard, determined by the pace at which manufacturing equipment operates. For each hour, workers receive piecework incentives for every item produced over the designated production standard. Difficulty: Moderate AACSB: Synthesis Learning Obj.: Summarize at least two historical events in the evolution of compensation practice leading to the current strategic compensation era. (2)

43) What is a constituency? How does it affect the HR department? Answer: The HR department does not exist in isolation. Rather, it must respond to a variety of parties, each with their own interests. In fact, the success of an HR department may depend on how well it serves various constituencies. Constituencies can include employees, line managers, executives, unions, the U.S. government, and customers. Each of these groups expects certain actions by the HR department, rates these actions according to their own standards, and tries to set up goals or present constraints within their realm of understanding. As a result, the HR department plays the role of a juggler trying to meet often-competing goals presented by multiple constituencies. Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify the stakeholders of the compensation and summarize their stake in the work compensation professionals perform. (5) 44) What are the three goals of compensation professionals? Answer: Compensation professionals promote effective compensation systems by meeting three important goals: internal consistency, market competitiveness, and recognition of individual contributions. Internally consistent compensation systems clearly define the relative value of each job among all jobs within a company. This ordered set of jobs represents the job structure or hierarchy. Companies rely on a simple, yet fundamental, principle for building internally consistent compensation systems: Employees in jobs that require greater qualifications, more responsibilities, and more complex job duties should be paid more than employees whose jobs require lesser qualifications, fewer responsibilities, and less-complex job duties. Internally consistent job structures formally recognize differences in job characteristics, which therefore enable compensation managers to set pay accordingly. Market-competitive pay systems play a significant role in attracting and retaining the most qualified employees. Compensation professionals build market-competitive compensation systems based on the results of market surveys and compensation surveys. Recognizing Individual Contributions are captured in pay structures, which represent pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions. No two employees possess identical credentials or perform the same jobs equally well. Companies recognize these differences by paying individuals according to their credentials, knowledge, or job performance. When completed, pay structures should define the boundaries for recognizing employee contributions. Well-designed structures should promote the retention of valued employees. Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Name and summarize the goals of compensation professionals. (4)

Strategic Compensation, 8e, Global Edition (Martocchio) Chapter 2 Contextual Influences on Compensation Practice 1) This amendment to the U.S. Constitution gives Congress the power to regulate commerce with foreign nations, individual states, and Indian Tribes. A) First Amendment B) Fourteenth Amendment, Section 1 C) Fifth Amendment D) Article I, Section 8 Answer: D Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: List four groups of federal laws that apply to compensation tactics. (1) 2) Which amendment to the U.S. Constitution made it illegal to restrict the freedom of religion, speech, and press, as well as protect the right of people to peacefully assemble? A) Article 1, Section 8 B) First Amendment C) Fifth Amendment D) Fourteenth Amendment, Section 1 Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: List four groups of federal laws that apply to compensation tactics. (1) 3) Which branch of the federal government is responsible for interpreting laws? A) service branch B) legislative branch C) executive branch D) judicial branch Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: List four groups of federal laws that apply to compensation tactics. (1) 4) This program grants income to workers who are unable to work due to injuries sustained while on the job. A) sick leave B) FMLA C) workforce restitution D) workers' compensation Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 1 © Pearson Education Limited 2015

5) Which of the following is NOT addressed by the Fair Labor Standards Act of 1938? A) minimum wage B) overtime pay C) executive compensation D) child labor provisions Answer: C Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 6) An employee has a regular hourly rate equal to $12. According to FLSA, how much should her/his employer pay this employee for each additional hour worked beyond the regular 40 hours within a period of 7 consecutive days? A) $12 B) $14 C) $16 D) $18 Answer: D Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 7) An employee has a regular hourly rate equal to $10 and works 45 hours within a period of 7 consecutive days. How much should the employer pay this employee for 45 hours in total? A) $425 B) $450 C) $475 D) $500 Answer: C Difficulty: Difficult AACSB: Application of Knowledge Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 8) What are the revised guidelines introduced in 2004 for determining whether jobs are exempt from FLSA overtime pay provisions called? A) Glass Ceiling Act B) Overtime Nonexempt Rules C) Bennett Amendment D) Fair Pay Rules Answer: D Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 2 © Pearson Education Limited 2015

9) Which of the following examples is NOT considered as a compensable work activity? A) a fireman who plays checkers while waiting for an alarm B) an employee attends an employer-mandated training C) an employee travels from home before the regular workday and returns to his/her home at the end of the workday D) an employee takes a 15-minute rest during work time Answer: C Difficulty: Moderate AACSB: Application of Knowledge Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 10) Based upon the FLSA child labor provisions, what is the minimum age that a child must be in order to be legally employed? A) 10 B) 12 C) 14 D) 19 Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 11) Which of the following is NOT a protected characteristic by Title VII of the Civil Rights Act of 1964? A) sexual orientation B) race C) national origin D) gender Answer: A Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 12) Intentionally treating women less favorably than men solely based upon their gender would be what form of discrimination? A) disparate treatment B) disparate impact C) disparate causality D) situational discrimination Answer: A Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 3 © Pearson Education Limited 2015

13) A policy that applies to all company employees, but unintentionally hurts a protected group disproportionately, would be what form of discrimination? A) disparate treatment B) disparate impact C) disparate causality D) situational discrimination Answer: B Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 14) This act strengthened the Equal Pay Act of 1963 by requiring employers to show that pay disparities are job related rather than sex-based. This act also prohibits employers from retaliating against employees who share their salary information. A) The Paycheck Fairness Act B) The Civil Rights Act of 1964 C) The Age Discrimination in Employment Act of 1967 D) The Davis Act Answer: A Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 15) The "equal benefit or equal cost principle" is part of which Act? A) The Older Workers Benefits Protection Act (OWBPA) B) The Americans with Disabilities Act (ADA) C) The Employee Retirement Income Security Act of 1974 (ERISA) D) The Fair Labor Standards Act of 1938 (FLSA) Answer: A Difficulty: Difficult AACSB: Analytic Thinking Learning Obj.: Define at least two federal laws that shape discretionary benefits practices and identify the relevant employee benefits practices to which they apply. (3)

16) As a result of this law enacted by Congress, employers must now show that employment practices that create disparate impact are a business necessity. This law also made it legal for U.S. citizens working abroad for U.S. companies to file suit. A) Americans with Disabilities Act of 1990 B) Executive Order 11246 C) The Civil Rights Act of 1991 D) The Older Workers Benefit Protection Act Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 17) This law makes it illegal to discriminate against people with physical and mental disabilities both within and outside employment settings, including public transportation, public accommodations, and employment. A) Americans with Disabilities Act of 1990 B) Executive Order 11246 C) The Civil Rights Act of 1991 D) The Older Workers Benefit Protection Act Answer: A Difficulty: Easy AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2) 18) The Americans with Disabilities Act of 1990 (ADA) applies to companies that employ at least how many workers? A) 50 B) 25 C) 15 D) 100 Answer: C Difficulty: Moderate AACSB: Analytic Thinking Learning Obj.: Identify and describe at least one law in each of the four groups of federal laws that apply to compensation practices. (2)