Strategic Compensation in Canada, 7th Edition

Type:

Test Bank

Resource:

Strategic Compensation in Canada

Edition:

7th Edition

Author(s):

Richard Long Parbudyal Singh

1. There is no one best compensation system that fits all firms. *a. True b. False

2. An effective compensation system is important to most organizations because it can mean the difference between company success and failure. *a. True b. False

3. The main similarity between extrinsic rewards and intrinsic rewards is that they both satisfy so-called higher order needs such as survival and security. a. True *b. False

4. A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means through which they will be provided. *a. True b. False

5. Compensation strategy includes the “how― and “how much― in terms of compensation to be paid. *a. True b. False

6. The main difference between a reward system and a compensation system is that a reward system rewards only good performance while a compensation system provides pay to all employees. a. True *b. False

7. A compensation system has two components: base pay and performance pay. a. True *b. False

8. The optimal compensation system is one that adds the most value to the organization, after considering all its costs.

*a. True b. False

9. There is often one so-called best compensation system that applies to a broad spectrum of organizations. a. True *b. False

10. According to the "Road Map to Effective Compensation," the first step is formulating your reward and compensation strategy. a. True *b. False

11. Which of the following statements is supported by evidence in the textbook? a. Canadian firms spend 50 to 80 percent of their capital budgets on compensation. b. Properly designed compensation systems usually promote unproductive behaviour. c. Reward systems should be static and rarely reviewed. *d. Canadian firms spend 40 to 70 percent of their operating budgets on compensation.

12. Which of the following statements most accurately describes extrinsic rewards? a. They focus on factors inherent in the work itself-the job content. b. They satisfy higher-order human needs. *c. They include monetary and nonmonetary rewards and come from the job context. d. They involve skill variety, task identity, task significance, autonomy, and feedback.

13. Jackson, a service manager, loves his job. He particularly appreciates the level of autonomy his job provides. From a rewards perspective, which kind of reward appears to be motivating Jackson? a. Extrinsic b. Incentives *c. Intrinsic d. Compensation

14. Compensation means different things to different stakeholders. For shareholders, what is an important consideration? a. take-home pay of employees

b. effectiveness of the compensation system in attracting employees *c. financial value of the compensation system to the firm’s bottom line d. fairness of the compensation system

15. As a small business owner committed to the total rewards approach to compensation, what do you need to establish before you start to develop your compensation system? a. a reward system b. an incentive program c. a compensation strategy *d. a reward strategy

16. Which item is considered part of a compensation system? *a. performance pay b. flexible work schedules c. positive organizational culture d. work/life programs

17. Which of the following best describes the term “reward strategy―? a. the means through which performance bonuses are paid *b. the mix of rewards provided to organization members c. the means for recognizing outstanding achievement d. the means for identifying the key contextual variables for an organization

18. An owner of an enterprise asks you to describe the major components of a compensation system. What would you exclude from your description? a. base salary b. performance pay c. employee benefits *d. flexible work schedules and some element of job autonomy

19. Which of the following best explains intrinsic rewards? a. Intrinsic rewards focus on increasing an employee’s financial position. *b. Intrinsic rewards are provided by job content. c. Intrinsic rewards provide security and employee services. d. Intrinsic rewards relate to bonuses based on performance.

20. The compensation system typically refers to which aspect of the reward system? a. the mix of intrinsic and extrinsic rewards *b. the economic or monetary part c. the entire spectrum of rewards d. incentives

21. You have offered your sales associate an all-expenses-paid trip for two to Australia if she doubles her annual sales volume from last year.

What type of inducement are you offering? a. intrinsic reward b. extrinsic reward *c. incentive d. job enrichment

22. Which of the following would be an example of an extrinsic reward? a. interesting and meaningful work *b. pay for performance based on the number of units produced per hour c. being able to see the company’s product being used by a satisfied customer d. work that allows for enhanced personal development

23. According to Maslow’s theory, what is the most basic need? a. safety needs b. self-actualization needs c. respect and self-esteem needs *d. physiological needs

24. Your company has a high turnover and poor work quality. According to exit interviews, a large percentage of employees cite boredom as the primary cause for leaving your company. Almost all of them were satisfied with their compensation packages. Which of the following actions could help you reduce your high turnover rate? a. providing a pension option and offering a retirement planning service b. introducing pay-for-performance plans *c. trying to enrich the jobs to make them more interesting d. offering dental and medical coverage

25. Which statement best describes the key aspect of Maslow’s theory of needs? a. Extrinsic rewards are more important than intrinsic rewards.

b. Intrinsic rewards are more important than extrinsic rewards. *c. Humans tend to first satisfy their basic needs before higher order needs. d. Self-esteem needs are more closely tied to rewards than the other needs.

26. Which statement is most accurate regarding the reward strategy? a. The reward system is the blueprint for creating the reward strategy. b. Intrinsic awards alone will not motivate the needed behaviour. c. Determining the mix of rewards to be provided is an easy process. *d. Various combinations of intrinsic and extrinsic rewards need to be considered for developing the optimal reward strategy.

27. Which of the following items is a component of the compensation strategy? *a. employee benefits b. employment security c. promotion criteria d. job enrichment

28. A group of unionized employees negotiating a new contract is holding out for a better indirect pay plan. What should management offer the group in order to reach an agreement? *a. better services and benefits b. better training and development opportunities c. pay for performance d. a more competitive base pay

29. As head of the human resources department for a new company, you have been asked to formulate a compensation strategy. What is the first thing you need to determine? *a. the role that compensation will play in the reward system b. the correct mix of performance and base pay c. the total amount of compensation to be provided d. the role the reward system will play in the compensation strategy

30. You are a newly hired director of human resources for a new software company. Your CEO has asked you to provide the board of directors with recommendations relating to the company’s yet-to-beestablished reward system. What should you tell the board?

*a. The various combinations of intrinsic and extrinsic rewards need to be considered. b. The optimal strategy is the least expensive. c. Like most companies in Canada, we should adopt a total compensation approach. d. The plan for creating the compensation system is the most important aspect of the strategy.

31. Which of the following would be the best choice for a compensation system? a. A competitive base pay and incentives are offered. b. Employees share in the organization’s profits. c. Compensation is linked to knowledge. *d. The system is cost effective and achieves company goals.

32. Which statement most accurately describes the optimal reward system? *a. It adds the most value to the organization after considering all its costs. b. It maximizes opportunities for learning and development. c. It identifies best practices. d. It provides whatever will satisfy the employee’s needs.

33. According to the textbook, what is a key argument about compensation systems in Canada? a. Organizations should keep wages low. b. There is one best compensation system that can be applied to organizations. c. Compensation systems are more important than all other management systems in organizations. *d. An equitable compensation system offers a competitive advantage for organizations.

34. You have been given the responsibility to develop an effective compensation system for your company. Which of the following should serve as your first focus? *a. understanding your organization and your people b. formulating and determining budgets c. designing your performance pay and indirect pay plans d. implementing, managing, evaluating, and adapting the system

35. Which statement best describes current compensation practices and expectations related to the key criteria for evaluating the success of a compensation system?

a. It is realistic to expect that a reward system will achieve all eight of the effectiveness criteria. *b. Organizations must constantly assess the effectiveness of their reward and compensation systems. c. Successful organizations all have equitable reward systems. d. Most firms have found the right answers to the compensation puzzle.

36. What is the last step to effective compensation according to the “Road Map to Effective Compensation―? a. developing new job descriptions and performance evaluation criteria *b. implementing, managing, and evaluating the compensation system as circumstances change c. securing senior management approval and implementing the compensation system d. determining the compensation mix to be used in the compensation system

37. According to the textbook, what is the primary reason for organizations' increased use of compensation consultants? a. Corporations are contracting out most human resource functions. b. Given greater standardization associated with compensation systems, it makes sense to use dedicated outside consultants. *c. The level of complexity of compensation systems has increased. d. It is often cheaper to use to use consultants.

38. Which statement best describes the context of compensation management within a firm? a. All organizations need a human resources department to deal with compensation issues. *b. The larger the firm, the greater the need for compensation specialists. c. In smaller organizations, compensation consulting firms are responsible for compensation strategy. d. Within a large firm, all managers require extensive knowledge of compensation.

39. In small organizations, who is typically responsible for compensation strategy? a. Vice-President of Human Resources *b. owner or chief executive officer c. Board of Directors d. government

40. After graduation, you were offered a position as a job analyst with a local bank. Which of the following would best describe your new job? a. designing and implementing compensation policies b. formulating compensation strategy and ensuring congruency with corporate objectives c. evaluating market data from organizations of similar size and scope *d. developing job descriptions and conducting job evaluations

1. If a particular compensation system has been successful in one organization, it is very likely that replicating that compensation system will bring success in another organization. a. True *b. False

2. The strategic framework for compensation helps to identify the corporate strategy that will best suit a firm’s compensation strategy. a. True *b. False

3. An organization’s vision refers to its long-term, optimal desired state. *a. True b. False

5. An organization’s domain is simply another term for managerial strategy or plan. a. True *b. False

6. The three main managerial strategies described in the textbook are: the classical strategy, the human relations strategy, and the high involvement strategy. *a. True b. False

7. The classical managerial approach to management assume employees are inherently lazy and require constant vigilance. *a. True b. False

9. Group and organizational pay systems characterize firms that use a classical managerial strategy. a. True *b. False

10. According to Miles and Snow, business strategies are classified into three types: defender, prospector, and analyzer, with a residual

type reactor to cover firms that do not have a distinct overall strategy. *a. True b. False

11. 3M and Apple have organizational strategies that encourage innovation. As a result, their compensation strategies support innovative behaviours by employees. Which term refers to this alignment of strategies? a. tight fit b. loose fit c. horizontal fit *d. vertical fit

12. The training, compensation, and performance management functions at Technology Today Inc.. are all focused on helping the organization achieve its goals. What is this alignment of strategies called? a. cross fit b. functional fit *c. horizontal fit d. vertical fit

13. You recently transferred from a smaller manufacturing firm to a larger one and discovered that, although entirely different, both compensation systems are effective. How is this possible? a. Both companies have well-trained managers. b. Both companies do similar work and hire the same kinds of employees. *c. Both systems fit the organization and its strategy. d. Both provide compensation packages that lead the marketplace.

14. What can you determine by examining a firm’s contextual variables? a. the managerial strategy that a firm is actually using *b. the type of structure the organization should be using c. the firm’s competitive advantage and required resources d. organizational goals, mission, and vision

15. Which term refers to the vehicle used by an organization for executing its business strategy? *a. its structure b. its culture c. horizontal fit

d. vertical fit

16. As a human resources consultant, you decided to recommend to a business owner that they should use a contingency view to organizational design. In order to support your recommendation, what would you look at first from a business structure perspective? a. structural variables b. job design variables c. financial variables *d. contextual variables

17. Which of the following is a structural variable interrelated with compensation? a. business strategy *b. job design c. organization size d. technology

18. What should an effective organizational structure provide an organization? a. It identifies sources of required inputs for an organization. b. It reduces internal uncertainty while increasing external uncertainty for an organization. c. It increases internal uncertainty while decreasing external uncertainty for an organization. *d. It decreases both internal and external uncertainty for an organization.

19. What can you determine by examining a firm’s structural variables? *a. the managerial strategy a firm is actually using b. the managerial strategy a firm should be using c. a firm’s corporate strategy d. the corporate strategy a firm should be using

20. Which of the following is classified as a “main― managerial strategy? a. job design management strategy b. laissez-faire management strategy c. transformational management strategy *d. human relations management strategy

21. You have been asked to explain to a manager the notion of structural variables within the context of a strategic framework for compensation. Which variable would you elaborate on? *a. how work is divided into subtasks b. the market the company serves c. the level of differentiation in the products and services offered by the company d. the company’s products’ life cycle

22. Which of the following is a contextual variable to consider when deciding on the managerial strategy to be used? *a. business strategy b. job design c. reward system d. control system

23. Which variable indicates to management the most appropriate managerial strategy to use in an organization? a. organizational processes b. factors of production *c. contextual variables d. structural variables

24. What are the two main categories of organizational variables? *a. contextual and structural b. horizontal and vertical c. classical and human relations d. Miles and Snow

25. You have recently been hired by a manufacturing company in Vancouver, British Columbia. You conclude that the company is using a high-involvement management strategy. What would you review to support your aforementioned conclusion? *a. structural variables b. organizational policies and procedures c. contextual variables d. behaviours of managers

26. Which set of strategies reflects different assumptions about employees and how they should be managed? *a. classical, human relations, and high-involvement b. low-cost, differentiator, and focused differentiator c. corporate, competitive, and business

d. defender, prospector, and analyzer

27. Which term best describes the scope of business operations undertaken by an organization? a. integration b. differentiation c. craft *d. domain

28. Which characteristics are common in a classical organization? a. joint employeeâ€"management planning and goal setting b. intrinsic rewards often being used as a reward system c. loyal employees who are dedicated to the norms of the organization *d. strong management control over employees

29. Which rewards are normally associated with a high-involvement managerial strategy? a. high levels of pay and benefits *b. providing employees with the opportunity to grow professionally c. providing employees with a pleasant team environment d. promotions based on a high level of production

30. Which reward strategy is appropriate for companies using a human relations approach to management? *a. Rewards are mainly extrinsic and focus on loyalty to the organization. b. A wide variety of both intrinsic and extrinsic rewards are used. c. Only extrinsic rewards are offered. d. Only intrinsic rewards are offered.

31. Tariq, a new employee, is told by a more experienced employee to do only the minimum and not attempt to be a “superstar.― What variable best describes what Tariq is experiencing? a. engagement b. commitment c. structure *d. culture

32. Which key cultural value would be detrimental to a high-involvement organization?

a. honesty b. trustworthiness *c. doing things the way they have always been done d. open communication

33. Which organizational variable would complement a classical management strategy? *a. strong policies and procedures dictating work processes b. high level of horizontal communication c. significant autonomy given to employees d. employee-focused organizational culture

34. Marie is the new owner of a large apple farm in British Columbia.

She hires seasonal workers to pick apples during the months of October and November each year. Historically, there has been an abundance of labour supply. Which managerial strategy would best fit this farm’s situation? a. human relations *b. classical c. hybrid d. high-involvement

35. Which term describes an organization’s core values and understandings shared by its members? a. organizational structure *b. organizational culture c. organizational domain d. organizational strategy

36. Which managerial strategy most highly values an organization’s culture? a. classical b. human relations *c. high involvement d. hybrid

37. A prospector strategy, short life cycle products, a highly skilled work force, and a relatively small organization would be a good combination of variables for which managerial strategy? a. classical b. human relations *c. high-involvement d. mechanical

38. According to the textbook, which term would best describe an analyzer business strategy? a. speed b. slow *c. balance d. classical

39. Which condition has NOT made it increasingly difficult for Canadian firms to make the classical managerial strategy work for them? a. Educational levels have increased. *b. Globalization has allowed work to be outsourced to a variety of developing countries. c. Economic security and social security have improved. d. Social values have become more democratic and egalitarian.

40. You have been asked to provide some element of rationale why some companies using a human relations strategy sometimes attempt to change to a more classical framework. Which statement would best describe the most important issue associated with your explanation? a. It is simply very hard on management to pursue a human relations strategy. b. There is pressure from owners to increase profitability. *c. Companies fail to react fast enough to changes in the environment. d. Greater worker mobility makes a human relations strategy obsolete.

1. A sales organization rewards employees for the number of client contacts made via telephone. A review of client contact quality determines that most of these contacts will never convert into sales.

As it relates to reward problems, this exemplifies a lack of congruency between rewards and behaviour. *a. True b. False

2. The three key employee behaviours that may be desired by employers are membership, task, and citizenship. *a. True b. False

3. The key employee attitudes are flexibility, citizenship, and individual goal commitment. a. True *b. False

4. Reward dissatisfaction can result from perceived inequity. *a. True b. False

6. Job satisfaction is a key employee behaviour. a. True *b. False

7. Distributive justice refers to the fairness of the process in giving rewards. a. True *b. False

8. The principal source of citizenship behaviour is organizational identification. *a. True b. False

9. Classical management strategies generally require a reward system that focuses on task behaviour. *a. True

b. False

10. The first step in designing a reward system that will produce the behaviour the organization needs is to develop rewards that address salient employee needs. a. True *b. False

11. At a unionized firm, workers went on strike even after management offered them a two percent increase in pay. The union representing the workers said that the proposed increase did not match the workers’ contributions to the firm. What type of reward problem is evident in this situation? a. failure to produce the desired behaviour b. production of the desired behaviour and undesirable consequences *c. production of reward dissatisfaction d. lack of task behaviour

12. You operate an inbound call centre serving the various needs of your customers. Over the last several months, you notice that customers are waiting on hold for several minutes before being served. To motivate operators, you introduce an incentive program that rewards those operators that answer over 200 calls per 8-hour shift. Shortly thereafter, wait times drop but service complaints escalate. What kind of reward problem does this vignette describe? a. failure to produce desired behaviour *b. production of desired behaviour and undesirable consequences c. production of reward dissatisfaction d. unfair compensation practices

13. Which short scenario best describes organizational citizenship behaviour? *a. Marek, a shop mechanic, approaches management with an initiative that will improve customer service. b. Ahmed, a faculty member, starts and finishes his lectures on time as per his syllabus. c. Mari, a university graduate, was so impressed with company ABC that she decided to join the company. Ten years later she was still working for ABC. d. Colin “volunteers― for special community events on behalf of his company only when he is paid overtime.

14. You are extremely happy with your job and would not hesitate to recommend your company as a good place to work. Which key employee attitude are you expressing?

a. organizational identification b. motivation *c. job satisfaction d. commitment

15. What is the definition of membership behaviour? a. paying ones dues on time b. being polite with others *c. a decision to join and stay with a firm d. the attitude one holds toward one’s job and the workplace

16. You have been asked to explain to a client the notion of work motivation. Which of the following would best characterize an employee’s work motivation? a. someone that is happy with his job *b. someone that puts forward great effort to perform a task well c. someone that shares the organization’s goals and aspirations d. someone that is happy and satisfied with the job content and his/her performance

17. Which of the following is associated with job satisfaction? a. increased job effort *b. lower employee turnover c. higher training costs d. job security

18. Which of the following is NOT a key employee attitude? a. job satisfaction b. work motivation c. organizational identification *d. organizational citizenship

19. An employee survey at a particular company indicated very strong employee job satisfaction levels. Management was elated with the outcome of the survey. What is a likely consequence of having satisfied employees? *a. decreased grievances b. employees who are more innovative c. employees who are more cooperative d. improved interdepartmental integration and communication

20. When a potential employee joins an organization, there is often an implied contract between the employee and the organization, based on expectations of rewards and contributions. Which of the following best describes this contract? a. provincial labour code b. deprivation contract *c. psychological contract d. perceived equity

21. Your employer has not kept his promises in relation to pay, benefits, and ongoing training and development opportunities. Which of the following best describes your situation? a. unethical behaviour b. lack of organizational justice c. perceived inequity *d. violation of the psychological contract

22. Which theory is most applicable in explaining why a hockey player who earns $10 million per year is dissatisfied with his pay? *a. equity b. relative deprivation c. psychological contract d. reinforcement

23. You think your salary is unfair compared to others in your department, and you threaten to quit your job. Which theory best explains your actions? a. psychological contract b. expectancy theory c. procedural justice *d. equity theory

24. Organizational justice has two key dimensions. Which pair of variables best captures these two dimensions? a. distributive and integrative justice *b. distributive and procedural justice c. psychological and tenure-based justice d. psychological and task justice

25. Which of the following would be an example of distributive justice? *a. Based on your performance, you believe you were given the pay raise you deserved. b. You have the opportunity to appeal your pay raise.

c. Your managers openly share the reward decision-making process with all employees. d. Reward decisions are based on job-related performance and free of bias.

26. Which scenario is reflective of an organization displaying procedural justice in their reward system? a. Pay is not similar for employees performing at the same general level. b. Pay is attached to increases in consumer price indexes regardless of actual performance. *c. Employees are able to appeal pay increase decisions using a transparent appeal process. d. Employees are not able to articulate when and how pay increases are provided.

27. A particular employee becomes dissatisfied with a decision by an organization to decrease pay. Which of the following could be considered an attempt by the employee to increase rewards? a. taking longer coffee breaks b. increased absenteeism *c. padding their expense accounts d. seeking a less demanding job in a different company

28. In an effort to improve the relationships with employees, management at ABC recently implemented policies to make their pay more consistent across jobs that were similar. What would this change help with? a. improving the psychological contract *b. improving perceptions of procedural justice c. improving perceptions of distributive justice d. decreasing perceptions of relative deprivation

29. Arlo is committed to his organization out of a sense of belongingness and loyalty. What type of commitment is Arlo displaying? *a. affective b. continuance c. task d. moral

30. Which of the following refers to content theories of motivation? a. theories based on reinforcement theories b. theories that focus on managerial strategies

c. theories that focus on understanding the means by which people make choices *d. theories that focus on human needs

31. In what way is there congruency between Maslow’s theory and Herzberg’s theory? *a. The higher-order needs correspond to motivators, and lowerorder needs correspond to the hygienes factors. b. Both Maslow and Herzberg assume that a satisfied need no longer motivates. c. Both Maslow’s and Herzberg’s theories could be classified as “process theories.― d. Both Maslow and Herzberg explicitly describe the distinction between job satisfaction and work motivation.

32. Which term is used to describe the degree of urgency an individual attaches to the satisfaction of a particular need? a. hierarchy of needs b. need deprivation c. needs analysis *d. need salience

33. Hanif was generously rewarded by his parents when he received excellent grades. His parents are hoping that the rewards will help Hanif get similar grades in the future. Which theory helps to explain this scenario? a. Maslow’s theory b. Herzberg’s theory c. expectancy theory *d. reinforcement theory

34. According to reinforcement theory, what happens when organizationcontrolled rewards stop? a. Employees are motivated to work on their own. b. Intrinsic motivation disappears. *c. Desired behaviours eventually disappear. d. There is no change in behaviour.

35. Which scenario best describes the notion of expectancy, according to the expectancy theory of motivation? *a. Paul believes he can complete the project in five days. b. Paul is under the impression that even if he finishes the project in five days, the company will not provide him with the promised promotion.

c. Paul does not value the promised promotion. d. Paul would like to be recognized as a valued employee by being given a large pay increase.

36. According to expectancy theory, which of the following would be an example of negative instrumentality? *a. You believe that no matter how hard you work your performance will not be recognized. b. You do not have confidence in your ability to perform the required task. c. You do not value the reward. d. You are not motivated to exert any effort.

37. Which term refers to the individual’s perception of how likely it is that the effort they give will lead to the successful performance of the desired behaviour? a. valence *b. expectancy c. instrumentality d. salience

38. You are the human resource manager for a non-profit organization focusing on cleaning local parks. The vast majority of staff are volunteers from the local community. You are so pleased with their commitment that you approach a consultant looking for advice on what kinds of additional rewards you should provide. Which of the following would be an appropriate recommendation, according to the attribution theory of motivation? *a. Offer to pay the attendance fee to any volunteer willing to attend a conference dealing with the value of green space in cities. b. Offer to pay $100.00 per month if volunteers show up for all their shifts. c. Offer to pay volunteers $.50 for every pound of garbage collected from local parks. d. Offer to pay a nominal fee for members that find other volunteers willing to join the organization.

39. Economic theory of motivation is closely aligned with which management strategy? a. differentiation management strategy b. high-involvement management strategy c. human relations management strategy *d. classical management strategy

40. Zara would typically go “well beyond the call of duty― in the workplace to help her organization achieve its goals. What is Zara displaying? a. membership behaviour *b. organizational citizenship behaviour c. task behaviour d. proactive behaviour

1. The two key questions that must be addressed in designing any compensation system are: a) What role should each of the three compensation components play in the compensation mix? and b) What total level of compensation should be provided? *a. True b. False

2. An advantage of base pay is that it directly links pay with output or performance. a. True *b. False

3. Generally, research supports the notion that employees prefer compensation strategies that have performance pay as the key compensation mechanism. a. True *b. False

4. The main types of individual performance pay are piece rates, commissions, merit pay, and goal-sharing plans. a. True *b. False

5. According to research cited in the textbook, performance pay plans have relatively high discontinuation rates. *a. True b. False

6. An advantage of indirect pay is that benefits receive more favourable income tax treatment than direct pay. *a. True b. False

7. Competitive pressure may force some firms to provide indirect pay. *a. True b. False

8. One major advantage of job evaluation programs is that they require the use of comprehensive job descriptions.

a. True *b. False

9. Pay-for-knowledge systems are beneficial for organizations that require great task flexibility from their labour force. *a. True b. False

10. Competency-based pay is usually applied at the managerial and professional levels. *a. True b. False

11. Which of the following steps is NOT considered in designing a compensation system? *a. determining actual dollar values for jobs and individual employees b. determining the total level of compensation to provide c. determining how each of the mix choices should be structured d. determining the mix of compensation components

12. For the majority of employees in Canada, what is the largest component of the pay package? a. benefits b. performance pay c. indirect pay *d. base pay

13. Jung is compensated based on a rate of $25.00 per hour worked.

Which term best describes the manner in which Jung is compensated? a. commission *b. wage c. piece rate d. salary

14. Why might employees prefer base pay over performance pay? a. Performance pay is more predictable. b. Base pay is directly related to their performance level. *c. They dislike uncertainty about their compensation. d. Market conditions are always changing.

15. As a human resource consultant, you have been asked to provide some rationale on why an organization may decide to use base pay as a cornerstone for a compensation scheme. Which of the following should you use to back up your argument? *a. It provides an organization with more labour flexibility in the allocation of tasks. b. It guarantees employee performance and aligns salaries to performance. c. It encourages team work. d. Unions are most likely to agree with management’s approach, given this scheme encourages individual performance.

16. Which of the following conditions makes using output-related pay impractical? a. Output is easy to measure. b. Output is very stable. *c. Output cannot be controlled by the individual employee. d. Output is easy to price in terms of its value to the employer.

17. As an employer, you believe it is always a good idea to pay people for their contributions to organizational results. Which plan would likely be the key component of the compensation plan? a. indirect pay b. base pay c. pay for knowledge *d. performance pay

18. A particular organization wants to include in their compensation system some element of organizational performance linkage, while at the same time it wants to encourage employee commitment. In addition to base pay, what would most likely be included in this compensation mix? a. merit pay b. piece rates *c. profit sharing d. targeted incentives

19. As the CEO of a small start-up firm, you would like to reward employees based, in part, on organizational performance. However, cash flow is low. Which pay plan should you consider using? *a. employee stock plans b. high base pay c. extensive benefits d. commissions

20. Which of the following is a group performance pay plan? *a. gain sharing b. profit sharing c. stock options d. piece rates

21. Which pay type usually makes up a small proportion of total compensation, and may not be used at all by some employers? a. mandatory benefits b. wages *c. merit pay d. salaries

22. In Canada approximately what percentage of an employer’s total compensation costs are employee benefits? *a. 10-20 b. 20-30 c. 30-40 d. 40-50

23. Which of the following is an example of mandatory indirect pay? a. major health benefits such as medical coverage b. registered retirement savings plans (RRSPs) benefits c. employee services *d. workers’ compensation benefits

24. Your company offers you pay for time not worked, disability benefits, supplemental medical coverage, and a full range of free employee services. Which component of the compensation mix includes these items? a. direct pay b. base pay *c. indirect pay d. performance pay

25. As a consultant, you were asked by an organization to provide a list of indirect benefits that the employer is not required by law to provide. Which of the following items would you NOT put on your list? *a. employment insurance b. company pension plan c. psychological counselling d. supplemental medical coverage

26. Why can medical and dental coverage can be purchased more cheaply by the employer than the employee? a. indexation *b. economies of scale c. utility d. dividends

27. Which statement best explains the reason for the decrease in popularity of “defined benefit plans― by employers in Canada? *a. There has been increased longevity of employees. b. Defined benefit plans are simply not popular among employees. c. They help organizations plan more accurately; hence, they make it easier to fund these liabilities. d. Employers believe defined contribution plans are much more unpredictable from a funding perspective.

28. Which of the following is NOT a method used to determine employee base pay? *a. profit sharing b. pay-for-knowledge c. job evaluation d. market pricing

29. As a general rule, organizations using a high-involvement managerial strategy use indirect pay as a way to encourage which of the following relationships? a. employerâ€"community b. employeeâ€"task *c. employerâ€"employee d. employerâ€"union

30. Which methods are used to establish base pay? *a. market pricing, job evaluation, and pay for knowledge b. job analysis, competency testing, and demographics c. tenure, job preview, and environmental analysis d. knowledge, education, and market pricing

31. Which of the following refers to job evaluation? a. determining how well a job is performed b. surveying the market *c. ranking all jobs according to their value to the firm d. establishing the skill level of each employee

32. ABC Inc. is a very small firm. It has decided to pay its employees at rates that are similar to other small firms in its geographic area.

What method of pay is ABC Inc. using? a. job evaluation *b. market pricing c. competency-based pay d. geographic-based pay

33. What are two key advantages of market pricing? *a. simplicity and cost b. equity and fairness c. equity and efficiency d. range and depth

34. Which statement best describes the difference between pay-forknowledge systems (PKS) and job-based pay systems? *a. Pay-for-knowledge systems involve basing pay on the capabilities of individuals, and job-based pay is based on the characteristics of the job. b. Pay-for-knowledge systems are applied to managerial employees, and job-based pay is applied to operational-level employees. c. Pay-for-knowledge systems are more widely used by Canadian firms than job-based pay systems. d. Pay-for-knowledge systems involve low training costs and are easier to administer than job-based pay systems.

35. Which statement best describes the notion of pay-for-knowledge systems? *a. There is little empirical evidence supporting the validity of competency-based pay models. b. Competency-based pay models are usually associated with operational level roles. c. Pay for knowledge requires very detailed job descriptions for every role in an organization. d. Pay for knowledge fits well with classical management styles, requiring employee flexibility in skill sets.

36. As the owner of a large hotel, you expect your employees to be flexible, learn a variety of skills, and be able to shift from one job to another as needed. Which plan will best fit your needs? a. stock options *b. skill-based pay c. team-based pay

d. piece rates

37. Which base pay method best supports behaviours needed by highinvolvement firms? a. market pricing *b. pay-for-knowledge c. job evaluation d. broad banding

38. A manager at a local manufacturing firm is perplexed that employees frequently respond to management’s request with the dreaded “That is not on my job description,― or “That is above my pay grade.― From a compensating perspective, which base pay method is normally associated with the aforementioned responses? a. market pricing *b. job evaluation c. competency-based pay d. skill-based pay

39. Your executive vice president has asked you to explain the basic notion of “skill blocks― within the context of skill-based pay systems design. What two variables would you emphasize? *a. different skills and depth of each skill b. skill certification and criterion c. key competencies and training requirements d. broad banding and market value

40. Which of the following is NOT a key issue in competency-based pay systems? a. identifying competencies that demonstrably affect performance b. devising methods to measure achievement of each competency c. providing learning opportunities *d. developing the merit pay grid

1. The central issue associated with attendance incentives is the notion that these programs treat only the symptoms while ignoring the underlying issues that cause absenteeism in the first place. *a. True b. False

2. Piece rates have experienced high discontinuation rates. *a. True b. False

3. Sales commissions are usually appropriate in situations where individual sales people exercise significant independence. *a. True b. False

4. All things being equal, goal-sharing programs are thought to be less motivational than gain-sharing programs. a. True *b. False

5. One of the problems with gain-sharing plans is that they do not encourage employee participation. a. True *b. False

6. Unions generally oppose profit-sharing plans on the basis of potential manipulation of profits by management and the uncertainty associated with profit sharing when compared with base pay. *a. True b. False

7. The three main types of employee stock plans are: stock bonus plans, stock purchase plans, and stock option plans. *a. True b. False

8. Employee stock plans are often used by companies using a classical management strategy a. True

*b. False

9. Profit-sharing plans can reduce the need for employee supervision. *a. True b. False

10. The current distribution profit-sharing plan is sometimes called a “cash plan.― *a. True b. False

11. Which of the following is an organizational-level pay performance plan? a. goal-sharing plans b. merit-pay plans c. special-purpose incentive pay plans *d. profit-sharing plans

12. What is the most common form of performance pay used by medium to large Canadian firms? *a. merit raises b. profit sharing c. merit bonuses d. commissions

13. You work for a company that assembles plastic toys. Generally speaking, employees working at similar assembly plants receive $15.00 per hour. Internal corporate data indicate that the average worker should be able to assemble 20 toys per hour. Your organization has made a strategic decision to pay assembly line workers on the basis of their output. What is the piece rate you are contemplating paying your assembly line workers? a. $300.00 per day b. $1.33 per toy *c. $0.75 per toy d. $150.00 per day

14. What is a key advantage of piece rate pay systems? *a. They reduce the need for external control of employees through supervision. b. They create team work. c. They link pay to group effort.

d. They encourage “rate busters.―

15. Which statement best explains why, despite their motivational potential, piece rate systems often do not motivate maximum effort? *a. Work group norms define acceptable rates of production. b. Piece rates are used in conjunction with base pay. c. Workers may be tempted to cut corners on quality. d. Workers are more concerned with production than safety.

16. Which of the following would NOT be an ideal scenario in which to consider using a piece rate plan? a. Quality standards can be monitored effectively. *b. Significant teamwork is needed to complete a particular task. c. Each unit of production can be easily measured. d. Tasks tend to be fairly static over time.

17. John works for an aerospace company selling satellites to communication companies. He receives a set percentage of the overall sale price of the satellite in the form of compensation. He does not receive a fixed salary or benefits. Which term best describes John’s compensation plan? a. hybrid commission plan b. leverage commission plan c. percentage commission plan *d. straight commission plan

18. In what way are piece rates and commissions similar to each other? a. Employees don’t have to worry about working themselves out of a job. *b. They reduce the need for external control of employees through supervision. c. Both types are commonly used in conjunction with base pay. d. Both are popular systems widely used in the service sector.

19. John’s employer decides to provide him with regular advances against his future commissions as a way to smooth out John’s income.

Which term best describes the pay plan used by John’s employer? a. sales stipend system *b. draw system c. pay advance system d. security income

20. Which type of selling requires the most initiative on the part of the sales representative? a. maintenance b. conversion c. leverage *d. new market

21. In the public sector, what is one factor that should be considered when designing merit pay? a. role of consultants *b. role of unions c. pay mix with profit sharing d. pay mix with stock options

22. Which statement best describes how North American employees view merit raises? a. They are viewed as not promoting employeeâ€"employer relationships. *b. They are viewed with significant scepticism by employees. c. They are not viewed in a positive light because of the objective nature of performance reviews. d. They are viewed in a positive light by unionized employees.

23. One of the problems with merit raises is the risk of providing a long-term future reward for a short-term past performance. What is one way to address this problem while maintaining the performance appraisal system? *a. Replace merit raises with merit bonuses. b. Use stock options instead of merit raises. c. Use a team to assess performance. d. Outsource merit systems.

24. Your employer is considering tying the bonus pool to the firm’s profitability and then allocating this amount to employees based on individual merit. With reference to expectancy theory, which component of the merit system will be weakened and thus make it less motivational for you as an employee? a. valence b. expectancy *c. instrumentality d. effort

25. As a human resource specialist, you have been asked by your organization to lead a discussion on the merits of using internal

promotions as a main reward mechanism. Which point would you most likely NOT raise? *a. They are an expensive process, as promotions are typically associated with pay increases. b. They often carry both intrinsic and extrinsic rewards. c. They recognize contributions made by strong performers. d. They are often seen as a key motivation tool for employees.

26. Which of the following is NOT a suitable condition for merit pay? a. Individual performance varies. *b. Performance is not controllable by the individual. c. Individual performance can be separated out. d. Undesirable side effects are readily manageable.

27. An automotive shop wants to reward employees for demonstrating creative customer service that leads to repeat business. A particular employee received a 10 percent bonus for suggesting that the company contact customers 24 hours after repairs to ensure customers are satisfied. What type of incentive would be the most appropriate in this scenario? a. merit-raise plans b. goal-sharing plans c. gain-sharing plans *d. special-purpose plans

28. Which of the following is a group level organizational pay performance system? *a. gain sharing b. piece rates c. merit raises d. commissions

29. According to the textbook, what is the main drawback associated with attendance plans? a. There are costs associated with administering the program. b. Both intended and unintended behaviours are not easy to observe. c. It is difficult to deal with the so-called “legitimate― absences. *d. They do not deal with the underlying cause of the issue.

30. From an employer’s point of view, what is the most attractive feature of properly designed gain-sharing plans?

*a. The plans are self-funding. b. Positive work group norms develop. c. The need for supervisory control is reduced. d. Employees monitor each other’s performance.

31. What is a key difference between gain-sharing and organizational performance pay plans? *a. Unlike organizational level plans, gain sharing can be applied to not-for-profit and government organizations. b. Gain sharing results in more pay for employees. c. Unions support organizational level pay plans but not gain sharing. d. There are more free riders in gain-sharing plans.

32. As the owner of a real estate firm with multi-office operations, you provide a bonus to all sales personnel in the highest-producing office each month. What type of performance pay plan are you using? a. goal-sharing *b. competitive bonus c. pooled performance d. group commissions

33. Which are the main types of profit sharing plans? a. current assessment plan, deferred plan, and blended plan b. deferred plan, cash plan, and group plan *c. combination plan, deferred plan, and current distribution plan d. current distribution plan, combination plan, and employee plan

34. Your CEO is concerned that employees are not saving enough for their retirement. At the same, the CEO wants to have some of the company’s profits shared with all employees. To address these issues, your CEO asks you, a human resource compensation specialist, to recommend the most appropriate profit-sharing plan to address this retirement issue. Which profit-sharing plan would you recommend? *a. deferred b. combination c. current distribution d. cash plan

35. Which characteristic of profit-sharing plans may be viewed as negative from the perspective of an employer? a. They align employee and employer interests.

b. They eliminate the “free rider― principle by holding everyone accountable. c. They are more complex than gain-sharing plans. *d. They require the sharing of potentially confidential information with employees.

36. What do employees receive under an employee stock bonus plan? *a. shares at no cost to themselves b. cash value of phantom shares c. a bonus equivalent to the increase in their share value d. free financial advice on stocks

37. A publicly traded Canadian corporation provides employees with one year of continuous service and the opportunity to place 6% of their pre-tax income in a plan that may be invested in the company’s stock.

Furthermore, the company matches the shares by 50% up to a limit of 4% of the employees’ pre-tax income. From the perspective of the employee, what are the potential drawbacks of participating in this program? a. Administrative costs associated with these plans are normally very high. b. It is extremely difficult for an employee to determine the performance of their stock. c. They pose too much of a tax burden. *d. If the company does poorly, your job and savings may be at risk.

38. An HR Manager bought 1000 shares in his company at a price that was a little less than market prices. What type of stock plan is this? a. stock option b. stock bonus *c. share purchase d. market share

39. Which plans are set up so that a payout is contingent on the achievement of three- to five-year performance goals? a. pension plans *b. long-term incentives c. deferred profit-sharing plans d. goal-sharing plans

40. Which of the following is normally seen as an advantage associated with long-term incentives plans? *a. They may encourage a better understanding of the business.

b. They tie rewards to the company’s ability to pay. c. They usually dilute shareholder equity for existing shareholders. d. Goals are easy to determine, particularly in dynamic industries.

1. In developing a compensation strategy, the two key questions that must be addressed are: “How much is to be paid?― and “When should it be paid?― a. True *b. False

2. Pay equity legislation falls under employment standards in all Canadian provinces. a. True *b. False

3. Jurisdiction over labour markets is primarily within the realm of the federal government of Canada. a. True *b. False

5. Salaries are the major component of total compensation for the highest paid executives in Canada. a. True *b. False

6. A “lead-the-market― compensation policy should be deployed only in situations when organizations face very tight labour markets. a. True *b. False

7. ABC Inc. tends to offer compensation packages below market for entry-level positions, while compensating significantly above market for more highly skilled senior positions in the company. ABC Inc. is utilizing a hybrid compensation policy. *a. True b. False

8. Before adopting a compensation strategy, it must be able to pass through three screens: affordability, legality, and employee attraction. *a. True b. False

9. Golden parachutes generally assure large severance payments for dismissed executives. *a. True b. False

10. The key reason that executives earn so much more than other employees is because their base pay is so much higher. a. True *b. False

11. In Canada, organizations face numerous legislated constraints creating so-called “boundaries― to their compensation systems.

Which of the following is NOT categorized as a legislated constraint or boundary? a. Employment Standards Act or the Canada Labour Code b. Human Rights Act *c. management strategy constraints d. income tax, both individual and corporate

12. Which of the following is NOT covered by employment standards legislation in Canada? a. minimum wages b. minimum age for employment *c. pay equity d. hours of work

13. Trucks Are Us Ltd. is a British-Columbiaâ€"based trucking company providing long-haul services across Canada. Which level of government has the primary responsibility for passing labour-related legislation covering employees of Trucks Are Us Ltd.? a. British Columbia and other provinces in which Trucks Are Us Ltd. operates b. British Columbia government c. municipalities and provincial governments in which Trucks Are Us Ltd. operates *d. federal government

14. A particular organization wants to explore the potential for converting many of their employees into contractors. Which characteristic would potentially lead the Canada Revenue Agency to reject this change in classification? a. The worker has the ability to refuse or accept work from the organization.

*b. The company directs how and where the work should be completed. c. The worker has control over who actually completes the work. d. The worker can choose the manner in which the work is completed.

15. Which type of legislation covers issues such as overtime pay rates, paid time off, and minimum wage levels? a. human rights *b. employment standards c. trade union d. tax

16. Which statement best explains the legal difference between an employee and a contractor? a. Only employees are allowed on the work site. b. Contractors cannot hire another person to complete the work. *c. Contractors are exempt from employment standards legislation. d. Employees can be forced to work overtime.

17. Which of the following workers are NOT covered under minimum wage legislation in some jurisdictions? a. students b. employees working from home *c. domestic servants d. commissioned salespeople

18. All Canadian jurisdictions have passed human rights legislation prohibiting employment discrimination based on specific employee factors. What is NOT covered under these broad human rights legislation? a. marital status b. race c. gender *d. education

19. A male forklift operator thinks that his employer is discriminating against him with respect to his pay because of his age. Which legislation would be applicable in this case? a. labour standards legislation b. pay equity legislation *c. human rights legislation d. trade union legislation

20. When we discuss labour market constraints, what are we specifically referring to? a. union constraints on labour allocation *b. availability of employees versus demand c. cost-of-living constraints on pay demands d. managerial strategy in recruitment methods

21. The demand for carpenters far outstrips the supply in British Columbia. In fact, many of the construction companies are relying on the international market to fill vacancies. Which term best describes the labour market for carpenters in British Columbia? *a. tight b. loose c. contingent d. contractual

22. Your organization is facing significant competition, putting pressure on your profit margins. Labour costs account for a significant percentage of your cost structure, and you are concerned with your profitability, moving forward. Furthermore, you are finding that it is extremely difficult to find production workers willing to work for minimum wage in Canada. As a result, you decide to move operations to Vietnam so you can take advantage of lower labour costs. Which type of key constraint has caused you to make this decision? a. tax *b. financial c. legislated d. service market

23. What should be your first step when you formulate the compensation strategy? *a. Define the required behaviour. b. Determine the compensation mix. c. Evaluate the proposed strategy. d. Determine the compensation level.

24. In which organization would compensation have a low role? *a. UNICEF store b. chicken-processing plant c. tree-planting firm d. used car dealership

25. Which pair of job characteristics is likely associated with a highinvolvement managerial strategy? a. individual and low customer contact jobs b. low task interdependence and narrow-in-scope jobs c. simple and repetitious jobs *d. broad and creative jobs

26. To keep work interesting and provide higher compensation opportunities for your design engineers, you have created a compensation system that allows them to move from an entry level to an expert specialist level. What term is used to describe this system? a. management pathing *b. technical ladder c. competency-based d. leader development

27. You are attempting to define the role compensation will play in your reward strategy. What is a key factor that needs to be examined? *a. the nature of intrinsic and other extrinsic rewards offered b. the compensation level strategy c. the indicators of goal achievement d. the compensation system behavioural objectives

28. In which circumstance does the compensation system need to be relied on less heavily to motivate behaviour? a. food processing plant *b. shelter helping the homeless c. underground coal mine d. tire manufacturer

29. In which situation would a “lag the market compensation strategy― be applicable? *a. Turnover costs are low. b. Turnover costs are high. c. Recruitment costs are high. d. The demand for labour is high.

30. As a human resource compensation specialist, you are recommending that your company compensate entry-level factory workers 10 percent below market, while paying 10 percent above market for engineers. What type of compensation policy are you recommending to your organization? a. lag b. lead

c. match *d. hybrid

31. Lag strategies are cost-effective for which type of firms? *a. firms that are labour-intensive b. firms needing to attract top-quality applicants c. firms that value employee stability d. firms that invest heavily in training and development

32. A particular company operates several food processing plants across Canada. An internal audit of the company determined that several plants were paying above-market wages while other plants were paying belowmarket wages. What systemic issue could be causing this situation? *a. The company most likely uses one pay scale across Canada. b. Workers in some of the plants appear to be negotiating higher wages. c. Different management strategies are being used in each plant. d. The compensation mix is likely the cause.

33. Which method involves using a “what if― scenario to determine which compensation-level strategy is most efficient for your organization? a. cost-benefit analysis b. market share analysis c. trial analysis *d. utility analysis

34. Who is primarily responsible for the employee compensation strategy for most Canadian organizations? a. government and chambers of commerce *b. top leadership, human resources professionals, and compensation specialists c. compensation survey firms and human resource managers d. government and human resource managers

35. As the owner of a medium-sized engineering consulting firm, you decide to implement a compensation level policy that compensates your employees based on market rates. Which type of compensation policy have you adopted? a. lead *b. match c. hybrid d. lag

36. A hybrid compensation-level strategy is one that varies across which of the following? *a. employee groups b. managerial strategies c. business segments d. industrial sectors

37. Before implementing a compensation strategy, human resources professionals must ensure the appropriate screens are in place to evaluate the strategy’s appropriateness. Which screen is NOT considered one of the so-called “must pass screens―? a. Costs are within the financial means of the organization. b. The new compensation strategy meets the minimum standards under employment standards legislation. c. The new compensation strategy attracts potential employees with the required skill sets. *d. Current employees will be happy with the new compensation strategy.

38. Which of the following is generally NOT one of the reasons why firms use contingent workers? a. to address the shortage of qualified full-time employees b. to cut on labour costs *c. to screen candidates for future employment d. to improve employee productivity and job satisfaction

39. Which variable in executive compensation packages accounts for the majority of the value associated with executive pay in Canada? a. annual bonuses b. base pay *c. stock grants and stock options d. perks

40. What is the most important factor driving executive compensation? *a. firm size b. firm performance c. fraud d. political connections on boards

1. The job evaluation process focuses on how to evaluate individual employee performance to produce a solid foundation for a merit pay system. a. True *b. False

2. Job analysis is derived from job specifications, which in turn are the foundation of all job evaluation systems. a. True *b. False

3. A job description serves several purposes, including providing guidance in the selection and recruitment process. *a. True b. False

5. Of the four main methods used to conduct job analysis, interviews and questionnaires are by far the most effective when dealing with organizations that do not currently have examples of jobs to be reviewed. a. True *b. False

6. The Position Analysis Questionnaire (PAQ) focuses on behaviours that make up a job. *a. True b. False

7. Two methods of job evaluation are ranking/paired comparison and classification/grading. *a. True b. False

8. Red-circling applies to employees who are below the pay range for their jobs. a. True *b. False

9. Under Ontario pay equity legislation, going through the pay equity process is unnecessary if your firm has no female job classes.

*a. True b. False

10. The Ontario Pay Equity Act covers all employers in the province. a. True *b. False

11. Which process is used to determine the relative importance of the employee’s job to the organization and the placing of those jobs in the same hierarchy level? a. job analysis b. market analysis c. performance appraisal *d. job evaluation

12. Which process is looked upon as the process of gathering data and information about the characteristics required for specific jobs? *a. job analysis b. job evaluation c. job description d. job specifications

13. Which job analysis method is used for organizations that are being created or when new jobs are introduced? a. observation b. interviews c. questionnaires *d. functional job analysis

14. As a human resource professional, you have been asked by your organization to develop a job description for the heavy-duty mechanic role. What are you likely NOT to include in the job description? a. some statement describing the conditions under which the mechanic will work under *b. the appropriate pay grades, ranges, and future pay increase scales c. the level of skill and certification required for the role d. the fact that the mechanic will be working under the supervision of a senior technician

15. What is the term generally used to describe employees who are below the pay ranges for their jobs?

*a. green-circled b. red-circled c. targeted for promotion d. discriminated

16. Which of the following is NOT a valid purpose for conducting job evaluation? *a. to control employee performance b. to control wage costs c. to create an equitable pay structure d. to create perceptions of equitable pay among those covered by the system

17. Which statement would NOT describe an appropriate usage of job descriptions? a. determining necessary employee qualifications b. creating questions in the interview process *c. supporting the development of business level strategies d. developing training plans

18. What do job specifications focus on? a. job activities b. reporting structure *c. employee qualifications d. performance

20. The textbook introduces four main approaches to conducting job analysis. Which approach would you NOT likely use to collect information on the teller role at an existing Canadian bank? a. Observe several bank tellers performing their jobs. *b. Perform a functional job analysis. c. Interview several tellers at a local branch. d. Provide questionnaires to several tellers.

21. Because your company is newly created, you do not have any job descriptions. Which method of job analysis will you need to use? a. interviews b. questionnaires *c. functional d. observation

22. Carlos decides to use a time-and-motion study to gather information about a particular job. What kind of job analysis method is Carlos using? *a. observations b. interviews c. questionnaires d. functional job analysis

23. XYZ. Inc. uses a group of judges to examine its job descriptions and determine the value of these jobs to the organization. What job evaluation method is XYZ Inc. using? a. point method b. functional job analysis *c. ranking method d. policy capturing method

24. Which job evaluation method has historically been popular with government civil service organizations? a. ranking *b. classification/grading c. factor comparison d. paired comparison

25. You have been asked to present to management potential drawbacks associated with using a job analysis process at your company. Which of the following would likely NOT be included in your list of drawbacks? a. analyzing the jobholder rather than the job b. gender bias c. use of technical language *d. use of incorrect benchmark jobs

26. One of the shortcomings associated with job analysis in dynamic work environments is the potential for obsolete data to be used for a variety of human resource decisions. What proactive steps would you recommend to an organization facing this issue? *a. Update job descriptions systematically. b. Stop conducting job analysis. c. Contract out most of your human resource functions. d. Allow each manager in the organization to create actual job descriptions.

27. Which of the following is NOT one of the methods of job evaluation discussed in the textbook?

a. ranking method *b. forced distribution method c. factor comparison method d. statistical/policy capturing method

28. Which job evaluation method is intended mainly for management and executive jobs? a. ranking b. job classification *c. Hay Plan d. expert method

29. An Ontario-based organization asks you to recommend a job evaluation method that may meet pay equity legislation. What job evaluation method are you likely NOT to recommend? a. point b. factor comparison *c. ranking d. classification

30. Which job evaluation method is like sorting books among a series of carefully labelled shelves in a bookcase? a. ranking b. paired comparison *c. classification d. factor comparison

31. Which evaluation method uses questionnaires to capture time spent on certain activities and the importance of those activities to the successful completion of the job? a. point b. factor comparison c. classification *d. statistical/policy capturing

32. Which term is used to describe key characteristics of jobs that are valued by organizations and differentiate jobs from one another? a. core job dimensions b. job facts *c. compensable factors d. benchmarks

33. Organizations need to answer a series of questions in order to conduct job evaluations effectively. What question would a job evaluation process NOT address? a. Who conducts the job evaluations? *b. Which jobs should be changed? c. What appeal mechanisms are to be established? d. How should the job evaluation results be applied?

34. Joel, whose pay was above the pay range, was forced to take a substantial pay cut. He has decided to challenge his employers in the courts. What will he likely claim? a. discrimination *b. constructive dismissal c. demotion d. red-circling

35. Mario performs his job at a very high standard. Unfortunately, a job evaluation process determined that he is currently being paid at a level below the minimum in a new pay scale. Which statement best describes Mario’s current position in the new pay scale? a. Mario would be classified as a “constructive employee.― b. Mario would be classified as an “exception-to-the-payscale― employee. *c. Mario would be classified as a “green-circled employee.― d. Mario would be classified as a “red-circled employee.―

36. Which of the following is NOT a valid reason to re-evaluate jobs? a. Labour market conditions change significantly. b. The strategy of the organization changes. *c. A new performance system is implemented. d. There is a high level of appeals.

37. Which procedure is NOT required under the Ontario Pay Equity Act? a. identifying job classes by gender b. collecting job information c. comparing jobs using gender neutral system *d. checking for performance appraisal biases

38. The textbook identifies several methods that may be used when comparing female and male job classes. Which method would you consider to be inappropriate? a. proxy b. job-to-job

*c. equality d. proportional value

39. In Ontario, once completed, pay equity plans should be shared with employees, including both process and outcomes. Which of the following organizations would be exempt from posting their pay equity plans? a. a global manufacturer in Ottawa employing 250 workers b. a car manufacturer employing 1,000 workers at its Toronto plant c. a food processing factory employing 200 full-time employees *d. a farming operation in Ontario employing 25 employees annually

40. Which of the following practices can NOT be used to achieve pay equity? *a. Pay levels for male comparator jobs will be lowered. b. All positions in a job class will receive adjustments in dollar terms. c. Each female job class must receive a yearly adjustment until pay equity is achieved. d. Inequitable female job classes with the lowest job rate must receive a greater adjustment.

1. The final step in developing a job evaluation system using a point method requires that the job hierarchy scheme meet certain criteria, including validity and market fit. *a. True b. False

2. Job evaluations help to establish internal equity. *a. True b. False

3. Under pay equity legislation, organizations need to evaluate three out of the four main categories of compensable factors in evaluating jobs. a. True *b. False

4. The two methods for deriving factor weightings are statistical analysis and expert judgment. *a. True b. False

5. Reliability of the job evaluation system means that the system will produce the same results even if different evaluators are used. *a. True b. False

6. The primary drawback associated with using the point method of job evaluation is that it provides an illusion of a scientific process when in fact the method relies significantly on the judgment of evaluators in selecting appropriate weights *a. True b. False

7. Broad banding results in fewer jobs in a pay grade. a. True *b. False

8. A pay grade is the same as a pay range. a. True

*b. False

9. A living wage is the same as the minimum wage. a. True *b. False

10. One possible solution to excessive pay scale overlaps is to ensure that the maximum pay in a lower scale is less than the midpoint of the next higher pay scale *a. True b. False

11. Which of the following is NOT a component of the point method of job evaluation? a. compensable factors b. total points c. factor degrees *d. competencies

12. What is generally NOT considered an advantage of the point method of job evaluation? a. It gives the relative value of jobs. b. It helps to establish internal equity among jobs. *c. It helps to establish market rates for jobs. d. It has a high degree of precision.

13. Four main categories of compensable factors are used widely in industry. Which of the following could be included in the skill category? a. Arvind often exposed to chemicals. *b. Nina needs to solve a variety of problems at work. c. Alain is held accountable for error rates. d. Dorcas often has to be able to lift 25 kg boxes.

14. Under the point method scheme of job evaluation, what is the main characteristic that distinguishes one job from another thereby making a job more valuable to an organization? a. market comparators b. regression analysis c. base pay structure *d. point scores of the jobs

15. Which of the following is NOT a job evaluation compensable factor required by pay equity legislation in Ontario? a. skill b. effort c. working conditions *d. market comparability

16. Which statement best describes the use of job evaluations and pay equity in Ontario? a. Multiple plans can be used for a bargaining unit in unionized organizations. *b. A single plan is required for a bargaining unit in unionized organizations. c. The job evaluation system must use between 8-12 compensable factors. d. If the organization is not unionized, Ontario legislation requires the use of different plans for blue-collar and whitecollar jobs.

17. Which compensable factor would you include under the main category of “working conditions―? *a. requirements associated with being exposed to health hazards b. requirements associated with educational levels c. requirements associated being responsible for the safety of coworkers d. requirements associated with having to produce certain levels of output

18. Assume that options (a), (b), (c), and (d) below represent degree 1, 2, 3, and 4, respectively, for the formal education factor on your summary rating chart for the point method of job evaluation. Based on the degree definitions, which of the following degrees is arranged out of place on the chart? a. degree 1: completion of high school b. degree 2: one year of post-secondary education c. degree 3: three year college diploma or university degree *d. degree 4: completion of grade 9

19. Two thousand points are distributed between compensable factors, based on the following: education 750 points, time pressure 350 points, customer contact 500 points, and communication skills 400 points. Which step in developing a job evaluation system using the point method recognizes these variations in importance? a. defining the factors

*b. weighting the factors c. scaling the factors d. testing the system

20. Which approach for deriving factor weights tends to be seen as being rather complex and difficult to understand? a. the “a priori― method *b. the statistical analysis method c. the testing and functional method d. the benchmark scallion method

22. In calibrating job evaluation results with the market, we select “key― organizational jobs for market comparisons. What are these “key― jobs called? *a. benchmark jobs b. market comparators c. market calibrators d. compensable jobs

23. After plotting a regression (market line), you determine that the slope is very steep. What possible conclusion can you make from observing the slope of the regression line? a. The correlation coefficient is approaching â€"1 (negative one). b. There is too much spread in job evaluation points between lowvalue and high-value jobs. *c. There is not sufficient spread in job evaluation points between low-value and high-value jobs. d. Lower-value jobs appear to be compensated above market rates.

24. What does the market line determine? a. whether the firm should lead, lag, or match the market *b. the relationship of job evaluation results to market pay rates c. the relationship of job evaluation results to a firm’s pay grades d. a pay rate based on a market survey

25. What does a â€"1 (negative one) correlation coefficient mean? a. There is a positive relationship between job evaluation points score and pay levels. *b. There is an inverse relationship between job evaluation points score and pay levels. c. Your regression equation has a very steep upwards slope.

d. There is very little relationship between job evaluation points score and pay levels.

26. In exploring solutions to job evaluation problems, what is NOT one of the main steps? a. Check that benchmark jobs are equivalent to market comparator jobs. b. Determine if the wrong factors have been included in the job evaluation system. *c. Adjust the point totals of the outlier jobs to improve the correlation coefficient. d. Examine whether jobs have been badly evaluated.

27. The textbook identifies four possible pitfalls associated with the point method of job evaluation. Which category of pitfalls would include a situation whereby the factor is poorly defined, creating a situation in which the evaluator is not clear what the factor is designed to pick up? a. hierarchical grounding b. factor overlaps c. gender bias *d. inconsistent construct

28. What does the correlation coefficient of the market pay line tell you? *a. “goodness of fit― between the job evaluation points and market pay b. pay equity adjustments to be made c. degree of freedom in market rates d. accuracy of the market data

29. Which of the following is NOT a source of gender bias associated with developing a point method job evaluation process? *a. excessive range in the degree statements b. excluding factors often associated with female dominated positions c. biased job descriptions d. separate job families

30. What type of gender bias problem is exemplified by the belief that “any of the skills needed to work with young children should not be highly rated because care giving comes natural to women―? a. ignoring factors found in female jobs *b. confusing job content with stereotypes

c. biased job descriptions d. differential evaluation of factors

31. The following are hypothetical points provided to the following jobs:↵∙ heavy-duty mechanic: 900↵∙ human resource specialist: 900↵∙ technician: 900↵↵The organization sees these positions as having equal value from a base pay perspective; hence, there is no difference in pay. What term best describes the grouping of these jobs? *a. pay grade b. range tightness c. pay range d. pay structure

32. You have been asked to provide rationale for clustering jobs into so-called pay grades. What is NOT likely to be included in your rationale? *a. Clustering of organization tends to reduce labour costs. b. It facilitates the administrative process; one pay range can cover several jobs. c. Slight changes in job content do not necessarily trigger a review. d. It accounts for the fact job evaluations are to a large degree subjective in nature.

33. Which term refers to the actual minimum and maximum pay rate, in dollar terms, for all the jobs that fall in a particular pay grade? *a. pay range b. broad banding c. market anchor d. step progression

34. What is a negative consequence of clustering jobs into pay grades? a. Pay grades make it difficult to justify and explain pay rates to employees. b. Pay grades create less stability for the pay system. *c. There may be pressure to reclassify borderline jobs or to promote people to get more money. d. Similar jobs are grouped into the same grades.

35. Which of the following is an inevitable outcome of broad banding? a. There are increased labour costs, as everyone is paid more for specific jobs. b. It decreases the level of flexibility within the pay grades. c. It tends to lead to “skinny― pay grades.

*d. Jobs with significantly different scores end up in the same “band.―

36. Which statement best explains how to establish pay grade sizes using the equal interval approach? a. Look for natural breaks between clusters of jobs when setting up the grades. b. Increase the grade widths for higher-value jobs but not necessarily by an equal percentage. c. Reduce the number of pay grades by creating large bands. *d. Make the point spreads equal for all pay grades.

37. The pay policy line is used to establish which pay structure component? *a. midpoint of the pay range b. range spreads c. overlaps between ranges d. pay grade size

38. Which statement best reflects the relationship between the minimum wage and a living wage? a. They are the same. *b. A living wage tends to be higher than the minimum wage. c. The minimum wage tends to be higher than a living wage. d. A living wage is two times the minimum wage.

39. Which practice is a threat to the integrity of the job evaluation system? a. wider pay grades as the system goes up b. equal dollar differences between the range midpoint and the range minimum, and between the range midpoint and the range maximum c. wider range spreads for higher pay grades *d. excessive overlaps between pay ranges

40. After reviewing pay ranges for your organization, you realize a significant number of pay ranges do not overlap or do not connect. For example, the maximum of the pay range for pay grade number 2 is $50,000 and the minimum range for pay grade number 3 is $60,000.00. What is a potential root cause of this issue? *a. Ranges are too narrow and/or there are not enough pay grades. b. An equal approach method was used to establish pay grades. c. An equal percentage method was used to establish pay grades. d. Poor benchmark jobs were used to establish pay grades.

1. In broad terms, wages paid for a particular “labourer― depend on the relationship between supply and demand for labour, and a specific company’s ability to pay. *a. True b. False

2. Existing companies tend to lower wages when demand for labour exceeds supply. a. True *b. False

3. For public sector organizations, the key factor determining wages is the employees’ ability to generate revenue. a. True *b. False

4. It is easier to use third-party surveys and data than to design and conduct an in-house survey. *a. True b. False

5. Informal surveys have poor reliability and validity. *a. True b. False

6. In order to calibrate a compensation system, a sample of 25 to 45 percent of sample of jobs should be a minimum. a. True *b. False

7. In conducting a compensation survey, the first step should be to identify the jobs to be surveyed. *a. True b. False

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

b. False

9. A very large interquartile quotient tends to indicate that all jobs in the sample are equivalent. a. True *b. False

10. Compensation surveys reflect the value placed on jobs by the labour market, but this does not always mean that the market values jobs fairly. *a. True b. False

11. Which of the following best explains why current employers do not seem to reduce wages for existing employees in the short term when the supply for a particular set of skills far outstrips the demand? a. because of the wage compression phenomenon *b. because of the negative impact on performance and increased turnover c. because labour budgets tend to be determined on an annual basis d. because fewer potential employees tend to put upwards pressure on wages

12. Which of the following is NOT considered a general pattern in compensation levels? a. Union employees receive more compensation than comparable nonunion employees. b. Male employees earn more than female employees on average. c. Resource sector employees earn more than those in the service sector. *d. The wage gap between public-sector organizations and privatesector firms is narrow for top-level employees.

13. Which of the following is generally NOT a determinant of employees’ pay in the public sector? a. collective bargaining *b. employees’ ability to generate revenues c. employers’ ability to pay d. budget available for pay increases

14. Which condition tends to explain why jobs in the higher hierarchy positions of the public sector tend to be paid less than similar positions in the private sector? a. a strong union *b. publicly visible salaries c. the levels of indirect pay provided to senior public sector positions d. a poor industry reputation

15. Which of the following identifies two crucial dimensions of the labour market? *a. occupational grouping and geographic scope b. unemployment rate and turnover in the area c. availability of labour and types of legislation d. education levels and experience ratings

16. As a human resource specialist, you recommend an international scope when defining the relevant labour market for a nuclear physicist to be responsible for the safety of a Canadian nuclear reactor. Which variable is likely to be informing your decision? *a. the level of job specialization b. the international nature of the industry c. the highly visible nature of the role d. the high profile nature of the role

17. Which characteristic is NOT typically considered in the selection of market comparator firms? a. the type of product or service the firm provides *b. whether the firm has achieved pay equity c. whether the firm is union or non-union d. the geographic area over which it operates

18. What is a potential drawback associated with using compensation consultants to gather labour market information? a. The data is usually not presented in a “user-friendly manner―; hence, it is difficult to use. b. The data is usually old and not relevant. *c. The data may be restricted to client firms; hence, it does not necessarily comprise an appropriate sample. d. The data tends to be more expensive compared to designing and administering your own survey.

19. What are three of the main “third-party― sources of compensation data?

a. Statistics Canada, trade journals, and government agencies b. private agencies, trade journals, and government agencies *c. government agencies, industry groups, and consulting firms d. consulting firms, boards of trade, and publishers

20. What is a key concern related to using data from free compensation data websites? a. complexity of the data b. cost of the data c. proprietary issues *d. validity of the data

21. Which survey source raises concerns among HR professionals about the validity of their data? a. industry groups b. formal in-house *c. free websites d. consultants

22. Which topic would typically NOT be included in survey questions asked by most consultants in the process of populating their compensation databases? a. number of employees b. criteria associated with movements within the pay range c. base pay, performance pay, and indirect pay *d. turnover rates

23. Which of the following provides the best-quality compensation data? *a. personal interviews b. questionnaires c. telephone interviews d. mail surveys

24. An employer is contemplating conducting their own in-house compensation surveys. What would you caution them about? a. There is a lack of control over process. b. There is no need to involve outside consultants. *c. Skills and abilities associated with survey methodology are needed. d. They are likely to sample the wrong jobs and/or industry.

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

a. identifying jobs to be surveyed *b. identifying employees to be surveyed c. determining the information needed d. determining how you will collect the data

26. The textbook identifies two in-house methods that may be used to collect compensation data. Which of the following is classified as an “in-house― source? *a. formal surveys b. government agencies c. consultants d. industry groups

27. In analyzing compensation data that include extreme values, what would be an advisable measure of central tendency to use? a. compa-ratio b. mean *c. median d. inter-quartile ranger

28. Although very costly to use on a significant scale, which method of data collection provides the best quality of information? a. internet surveys *b. personal interviews c. telephone interviews d. questionnaires

29. Which method is used to measure dispersion of salary data across employers? *a. percentiles b. weighted mean c. simple mean d. median

30. Which of the following is NOT a procedure used to analyze and interpret survey data? a. central tendency b. dispersion c. compa-ratio *d. data aging

31. Which of the following is generally NOT collected in compensation surveys? a. base pay *b. performance appraisal methods c. performance pay d. benefits

32. You have determined that the lowest-paying employer pays its administrative assistants a mean total compensation of $30,000, and the highest-paying employer pays its administrative assistants a mean total compensation of $42,000. What is the dispersion in administrative assistant compensation across firms? a. 12 percent b. 25 percent *c. 40 percent d. 50 percent

33. Which measure can be used to assess the central tendency of pay? a. dispersion b. standard deviation c. quartiles and deciles *d. mean

34. You determined that $65,000.00 in salary represents the 85th percentile of total compensation paid by employers for the heavy-duty mechanic job in British Columbia. Which statement is most accurate, given the aforementioned statement? *a. 15% of employers compensate above $65,000. b. $65,000.00 represents the median. c. 15% of employers compensate below $65,000. d. 85% of employers compensate above $55,250.

35. Which statement best describes the compa-ratio? a. It is calculated by averaging the pay ranges in the quartiles. b. It is a measure of pay dispersion across employers. *c. It is derived by dividing mean base pay by the midpoint of the pay range. d. It is a calculation based on average base pay for each job.

36. What does a compa-ratio of greater than 1 mean? *a. Employees, on average, are being paid above the midpoint in the pay range. b. The majority of employees are in the first pay quartile.

c. The firm is paying their employees in the bottom half of the pay range. d. The firm has only a minority of their employees in the top pay bracket.

37. What term describes the process of adjusting survey results to account for the dated nature of compensation surveys, while at the same time, taking into consideration potential market increases in the following year? a. benchmarking the data *b. aging the data c. data alignment d. pay trending

38. Which compa-ratio suggests that, on average, employees are being paid above the mid-point of the range? a. 0.01 b. 0.92 c. 1.00 *d. 1.03

39. What critical assumption underpins labour market compensation surveys that may serve to illustrate the need for pay equity legislation? *a. Usage of compensation surveys assumes that the market values jobs in a fair manner. b. The market demand and supply of labour tends to operate at an equilibrium in the short term. c. Calibration of the pay system will insure a near-perfect labour price. d. Targeting a compa-ratio of 1 eliminates the need for pay equity legislation.

40. Which of the following is NOT a possible limitation of compensation surveys? *a. Free labour market data is not readily available. b. We cannot surmise anything about compensation strategies practised by other firms. c. They may misrepresent actual pay trends. d. Markets may not value jobs fairly.

1. The majority of medium to large Canadian firms use performance appraisals. *a. True b. False

2. Three main categories capture the primary reasons why companies conduct performance appraisals: administrative, symbolic, and supervisory. a. True *b. False

3. Performance appraisals accurately reflect employees’ performance. a. True *b. False

4. A major reason why performance appraisals may not work effectively is that they are applied in circumstances that are not appropriate. *a. True b. False

5. Evidence appears to support the notion that supervisors often have desired outcomes in mind before they start a performance appraisal process. *a. True b. False

6. Merit pay is one of the developmental reasons for performance appraisals. a. True *b. False

7. The “beauty effect― is a rating error in performance appraisals. *a. True b. False

8. Including a self-appraisal component in the performance appraisal process encourages employees to reflect on the performance of peers. a. True *b. False

9. The 360-degree feedback method usually gathers data/information from three sources: subordinates, supervisors, and at times, customers. a. True *b. False

10. In an effort to “provide something to everyone,― organizations may lump merit pay and cost of living increases together. This action dilutes the relationship between merit pay increases and performance. *a. True b. False

11. Which statement best summarizes the general sentiment expressed by stakeholders in describing performance appraisals in Canada? a. Managers find the process much more worthwhile than employees b. A great majority of companies tend to pick one process and stick with it over long periods of time *c. Managers and employees have little faith that the process leads to valid and reliable results d. Employees are much more likely to embrace and find the process valuable

12. From your perspective as a compensation officer, what is the most important category of reasons for doing performance appraisals? a. supervisory *b. administrative c. developmental d. symbolic

13. Karima's performance appraisal provided almost identical results when six different managers evaluated her performance. Which conclusion could you make about the performance appraisal process experienced by Karima? *a. It appears to be reliable; however, no conclusions can be made about its validity. b. It appears to be reliable; hence, is it also valid. c. Issues of central tendency need to be addressed. d. It appears to be a very effective process.

14. Nathan has fabulous interpersonal skills. This causes raters to ignore some of his weaknesses, which include time management, technical, and leadership skills. Which perceptual error is likely impacting Nathan’s rating?

a. central tendency error *b. halo error c. leniency effect d. contrast effect

15. Which of the following is NOT an administrative reason for doing performance appraisals? a. to identify employees for merit pay b. to identify employees for promotion *c. to provide useful feedback to employees d. to monitor the overall quality of performance of the firm

16. As a supervisor you have a tendency to rate all employees as “average― in everything. You are guilty of using which perceptual error? a. halo error b. contrast effect *c. central tendency error d. recency effect

17. Which performance appraisal method is congruent with a management approach that dictates that no more than 15 percent of employees are to be rated as excellent, commanding a top percentage increase in merit pay? *a. forced distribution b. paired comparison c. behaviourally anchored rating scales d. field review

18. Which performance appraisal method could be described as “winâ€"lose,― creating a situation whereby in order to improve his/her standing, an employee has to displace another team or department member? a. graphic rating scale b. paired comparison method *c. forced distribution d. field review

19. ABC Inc. uses “mystery shoppers― to appraise staff at its departmental stores. What type of performance appraisal method is ABC Inc. using? a. graphic rating scales *b. field reviews

c. management by objectives d. behavioural observation scales

20. Which performance appraisal method builds on the behavioural anchored rating scales by requiring that management provide a “frequency rating― associated with positive behaviour? a. behaviourally anchored rating scales b. graphic rating scale *c. behavioural observation scale d. ranking and forced distribution

21. A sales manager with a local coffee distributor sits down with each salesperson at the beginning of the fiscal year to determine performance targets for the year. Then, on a regular basis, the manager reviews each employee’s performance against these jointly determined targets. What performance appraisal method is the manager likely using? a. graphic rating scale *b. management by objectives c. results anchored rating scales d. behavioural observation scales

22. XYZ Inc. appraises its employees on key traits such as “initiative―, on a scale of 1 to 6, with 1=inferior performance and 6=outstanding. What method of performance appraisals is XYZ Inc. using? *a. graphic rating scales b. management by objectives c. behavioural anchored rating scales d. behavioural observation scales

23. What two key elements make management by objectives a highly effective approach to employee motivation? *a. goals and feedback b. trust and open communication c. core competencies and engagement d. involvement and business strategy

24. Which statement associated with Management by Objectives (MBO) is NOT accurate? a. Goals should be determined jointly between a manager and an employee b. To be effective, goals should be realistic *c. Broad general goals are congruent with the MBO approach d. Regular evaluation and feedback against targets is critical

25. What is NOT generally a source of employee performance appraisals? a. supervisors *b. board of directors c. subordinates d. professional raters

26. Which statement best describes peer evaluation ratings? *a. Peers tend to be more lenient than superiors b. Peers tend to be less lenient than superiors c. There is no difference between peer and superior ratings d. Peer ratings are the most valid of the sources of appraisals

28. A particular organization uses a forced ranking system to appraise employees. As a peer appraiser, why might an employee be tempted to give colleagues a low rating? a. Rating errors can be balanced out *b. A limited amount of merit pay is available c. Conflict and ill will among peers is reduced d. You can all benefit if you rate each other low

29. Which statement best describes self-appraisals? a. They tend to be deflated *b. They tend to be inflated c. Poor performers tend to deflate their ratings the most d. Self-appraisals are of high value for pay purposes

30. Which source is much less accurate in assessing the performance of managers? a. peers b. professional raters *c. subordinates d. supervisors

31. Which source of appraisals can be expected to work well only in classical organizations? a. peers *b. supervisors c. self d. subordinates

32. Kam tends to demonstrate behaviours that are counterproductive to strong work performance. Which appraisal method would most likely provide the most inaccurate ratings? a. peer *b. self c. subordinate d. supervisor

33. Which source uses many different rating groups to evaluate the employee’s performance? a. professional raters b. tiered supervisors *c. 360-degree feedback d. field review

34. Which statement would you NOT associate with a multisource/360degree feedback process? a. They tend to be seen by recipients as fair b. They are more accurate than single-source processes *c. They tend to be more effective when results are linked to merit pay d. They are more credible to the recipient

35. What is NOT a key element of performance management? a. goal setting b. encouragement and support c. feedback *d. multisource input

36. Which statement does NOT accurately describe performance management? a. Goal setting is central to its application *b. Although 90 percent or more of Canadian companies use some performance management process, only 10 percent find it “effective or very effective― c. It tends to work best in organizations using a highinvolvement or human relations strategies d. Development of benchmarks that are valid and reliable is critical

37. Many organizations do not offer merit raises to employees who are at the top of their pay ranges. This can cause morale problems for these employees. What is a potential solution to this issue?

a. Cut pay for employees who are below the top of the pay range *b. Give merit bonuses to the affected employees c. Re-evaluate the performance appraisal methods d. Increase minimum pay for all employees

38. Senior management decides how much money will be available for merit pay against performance metrics identified at the beginning of the fiscal year, and then distributes those funds across departments.

Which approach has senior management used to determine the total amount of money available for merit pay? *a. top-down b. across the board c. organizational performance indicators d. bottom-up

39. What is the first issue to decide when designing a merit pay system? *a. the objectives of the system b. the amount of money to be distributed c. how appraisals will be linked to pay d. the methods to appraise employee performance

40. There are several critical issues that need to be addressed in designing an effective merit system. According to the textbook, which of the following is NOT identified as a critical issue? a. ultimate goal(s) of the merit system b. process for training evaluators c. manner in which feedback will be provided *d. process that ensures equal increases across employee job ratings

1. In order for the Scanlon plan to work, organizations must be able to predict future cost of inputs, particularly labour. a. True *b. False

2. The Scanlon Plan helps in the development of a cooperative relationship among workers, unions, and management. *a. True b. False

3. The Scanlon plan has changed over the years. A central reason for these changes is the notion that employees can reduce labour input as a function of output by increasing other costs. *a. True b. False

4. Gain sharing is not a viable plan to use if no valid historical benchmark can be set. *a. True b. False

5. Goal-sharing plans have increased in popularity over the last decade. a. True *b. False

6. Employee participation is not necessarily a component of goalsharing plans. *a. True b. False

7. Financially funded plans combine at least two criteria in establishing goal-sharing bonuses. Often, one of those variables is organizational profitability, making such plans highly motivational to employees. a. True *b. False

8. Deferred profit-sharing plans are often used as quasi pension plans, particularly in medium-sized companies.

*a. True b. False

9. A phantom stock plan ties an employee’s bonus to the performance of company stock, but that employee never actually receives any stock. *a. True b. False

10. Research supports the notion that if adequate monetary compensation is in place, coupled with an open and supportive managementâ€"employee environment, nonmonetary-based recognition tends to offer little value to stakeholders. a. True *b. False

11. Which gain-sharing plan requires that management has access to historical data so as to be able to calculate a so-called “normal labour cost―? a. Rucker plan b. family of measures plan *c. Scanlon plan d. Improshare plan

12. Working as a human resources compensation specialist for a manufacturing company, you become concerned employees will attempt to reduce labour costs “by any means― so as to enhance available bonuses via the company’s gain-sharing plan. This behaviour may potentially lead to more work-related accidents or dissatisfied customers. What would you do to mitigate this reduction in labour costs due to “by any means― mentality? a. Expand the pool. *b. Introduce a modifier. c. Use a Scanlon plan. d. Introduce a “top hat― program.

13. Which plan does NOT make employee involvement an important part of the system? a. Rucker b. Scanlon *c. Improshare d. family of measures

15. Which of the following is NOT an issue to be considered when designing a gain-sharing plan? a. deciding on the split among employees *b. deciding on the share price c. deciding on the frequency for payout d. developing procedures for communicating results

16. In designing gain-sharing plans, why is there a need to decide on the historical baseline against which to compare productivity? *a. to determine whether real productivity gains actually occurred b. to satisfy the unions c. to allow for flexibility d. to increase employee participation

17. The authors identified eight major issues that should be considered when designing a gain-sharing plan. Which potential issue is NOT identified by the authors of the textbook? a. making a decision on the bonus plan b. making a decision on frequency of payouts *c. making a decision to use a fixed or discretionary plan d. making a decision on how to communicate results

18. Which condition makes a gain-sharing plan NOT viable and requires you to consider another option? *a. No valid historical benchmark can be set. b. Employee involvement is not an integral part of the system. c. The plan involves large expenditures to implement. d. Employees receive only 50 percent of the share.

19. Which of the following is NOT associated with gain-sharing plans? a. cooperation between employees and management b. teamwork among employees c. equality in gains *d. individual rewards

20. Which bonus allocation method best supports the philosophy of gain sharing? *a. Everyone receives an equal share after minor adjustments are made for time worked. b. Higher performers receive a greater share. c. Higher-paid employees receive a greater share. d. Part-time and newly hired employees receive nothing.

21. You have been tasked with providing management with a list of factors distinguishing goal-sharing plans from gain-sharing plans.

Which of the following should NOT be included in your list? a. Both have lost popularity in recent years. b. Goal-sharing plans typically include several levels of attainment. *c. Goal-sharing plans quantify cost savings and then share those benefits with both employees and the company using a fixed formula. d. Both require that management identify the group participating in the plan.

22. What is NOT a necessary component of goal-sharing plans? *a. employee participation b. performance goals c. bonus payouts d. achievement levels

23. Human resource professionals have identified three types of goalsharing plans. Which of the following is NOT one of those types? *a. standard plus plans b. single-goal plans c. multi-goal plans d. financially funded plans

24. What is generally NOT considered in allocating the bonus in goalsharing plans? a. seniority b. salary *c. organizational performance d. individual performance

25. A group of farm workers normally pick 10,000 kilograms of cherries during a regular eight-hour shift. The operations manager decides to provide each picker in the group with a meaningful monetary reward if the farm workers are able to meet a new “stretch goal― of 12,500 kilograms per eight-hour shift. Which term best describes this new “stretch goal―? a. standard plus *b. goal plus c. goal level d. red circle plus

26. Your company has decided to distribute a goal-sharing bonus according to the salary levels of employees. What is likely to be a natural outcome of this decision? a. It discourages free riding by some employees. b. It is the most egalitarian distribution method. *c. It maintains the same proportion of goal-sharing compensation in the compensation mix for all employees. d. It adjusts for actual time worked during bonus period.

27. In which type of organization is profit-sharing the most common? *a. high-involvement b. human relations c. defender d. classical

28. As a medium-sized company owner, you believe that it is morally just that employees receive a portion of the profits they help generate, and you want to provide them with some form of pension plan.

Which type of plans should you consider using? *a. deferred profit sharing b. share appreciation rights c. registered retirement savings d. current distribution

29. ABC Ltd. generated one million Canadian dollars in profits this year. ABC Ltd. decides to place 200,000 Canadian dollars (20 percent of pre-tax profits) in a bonus pool. In previous years, this figure has ranged from zero to 50 percent of pre-tax profits. What type of formula is ABC Ltd. using to determine contributions into the pool? a. fixed percentage b. fixed threshold *c. discretionary d. percentage approach

30. According to research on Canadian firms, which employees are included in the profit-sharing plan in the majority of cases? a. all full-time and part-time employees b. non-unionized employees only c. designated employees only *d. all full-time employees

31. What is the least common basis for allocating profit-sharing bonuses across employees in Canadian firms?

a. seniority b. individual performance c. salary level *d. equal distribution across all employees

32. Which statement does NOT accurately describe a profit-sharing plan? a. For motivational reasons, fixed formula profit-sharing plans are recommended. *b. Stock bonus plans provide employees with the right to purchase shares in the future at a fixed price. c. Deciding the split is an important issue in gain-sharing plans. d. A key issue in designing profit-sharing plans is the form of the bonus payout.

33. Management decides to allocate 1,000 shares to a particular employee at a market value of $50.00 per share under a share appreciation rights plan. One year later, the value of these shares has increased to $65.00. How many shares would this employee actually receive as a bonus at the end of the year? a. 15.4 shares b. 20 shares *c. 230.8 shares d. 1,000 shares

34. Which group has historically had the most access to stock options? *a. top executives b. human resource managers c. full-time employees d. unionized employees

35. Which statement does NOT accurately describe employee share purchase plans? *a. Employees receive shares at no cost to themselves, usually as a bonus. b. Employees provide a direct payment of some sort in exchange for the shares. c. Often the price employees pay for the shares is less than market value. d. Often employers will match the amount of shares purchased by the employee up to a set limit.

36. Which statement best explains a phantom stock plan?

*a. Although their bonus is tied to the performance of company stock, the employees never receive any stock. b. Rewards are based on the stock performance of client firms. c. Employees are awarded stock at no cost to themselves. d. Employees can purchase stock at a fixed price within a set period of time.

37. An employer issues Johnny 2,000 stock options in recognition of a very good year. These particular options vest after 24 months from the date of issuance with an exercise price of $21.00 per share. After 24 months, these shares trade in the open market at $25.00 per share, and Johnny decides to exercise his 2,000 options, generating a gain of $8,000 (minus transaction fees). Which statement best describes Johnny’s tax situation pursuant to these gains? a. Because these options were a bonus provided by the employer, there are no tax consequences attributable to Johnny. b. Because these shares are “under water,― Johnny’s employer is responsible for any taxes on the gains. c. Johnny will have to pay taxes based on the corporate tax rate. *d. Johnny’s gain will be deemed as income, but taxes will be paid at the capital gains rate.

38. Full-time employees at ABC Company are given the opportunity to purchase company stock at a future time at a fixed price. What type of performance-based pay is ABC Company using? *a. stock option plan b. stock purchase plan c. stock bonus plan d. phantom share plan

39. What is NOT the “best practice― when designing nonmonetary reward plans? a. For large organizations, the usage of an elected committee of employees and managers should be considered when providing significant rewards to employees. b. A champion or group of champions should be considered to keep the program “alive.― *c. Whenever possible, reward only those employees in the top 10 percent. d. Whenever possible, all deserving employees should be recognized.

40. Which of the following is NOT an example of a nonmonetary award? *a. stock bonuses b. a pat on the back for a job well done c. a company picnic d. an all-expenses-paid holiday

1. Life insurance is among the top three nonmandatory benefits offered

by Canadian firms with at least 10 employees. *a. True b. False

2. Deferred profit-sharing plans tend to be classified as “contributory benefits.― a. True *b. False

3. Defined contribution plans ultimately transfer retirement income risk from the employer to the employee. *a. True b. False

4. It is not cost effective having employers purchase dental coverage on behalf of their employees instead of the employees themselves. a. True *b. False

5. A force promoting flexible benefits plans is the increasing diversity of the work force. *a. True b. False

6. A force hindering flexible benefits plans is loss of economies of scale in the purchase of benefits. *a. True b. False

7. Defined contribution plans are riskier for employees versus defined benefit plans. *a. True b. False

8. Firms with pension plans have higher turnover rates among employees. a. True *b. False

9. One drawback associated with outsourcing routine benefits administration is the notion that employers will begin to lose touch with benefit needs and issues important to employees. *a. True b. False

10. Research shows that satisfaction with a benefits plan declines as employees learn more about it. a. True *b. False

11. Which nonmandatory major benefit is the most common among Canadian organizations with 10 or more employees? *a. life insurance b. supplemental unemployment benefits c. formal pension plans d. group RRSPs

12. For most organizations, what component of its benefits package is second only to mandatory benefits in terms of cost for an organization? a. employment assistance programs b. wellness and recreational plans *c. retirement plans d. pay for time not worked plans

13. Which of the following is NOT a government-regulated benefit? *a. outplacement services b. rest breaks c. vacation time d. statutory holidays

14. Which variable is NOT used to determine the income level provided to employees upon retirement under a “defined benefit program―? a. some variable (percentage) of the average income over a certain period of time, usually three to five years *b. the company’s profit level over a period of three to five years c. employees’ years of service d. employees’ salary level

15. Keenan has worked for a local company for the last 25 years. Upon retirement, Keenan has been guaranteed a salary of $2,000.00 per month under the company’s retirement plan. What kind of retirement benefit program is this company using? a. defined contribution plan b. tax-deferred plan *c. defined benefit plan d. registered retirement savings plan

16. As a result of a recent human resource audit, it was determined that a particular company has an “underfund liability― associated with its retirement plan, requiring an immediate injection of cash.

What type of pension plan or retirement plan is this company likely using? a. hybrid flexible plan b. registered retirement savings plan (RRSP) c. mandatory retirement plan *d. defined benefit plan

17. Which variable has NOT caused Canadian organizations to move away from pensions that have defined benefits? a. inflationary pressures during the early 1980s *b. tax issues associated with the manner in which pension plans are funded c. market returns associated with pension funds d. rising life expectancies of employees

18. Which of the following are all Canadians entitled to? *a. Old Age Security b. defined pension plans c. defined contribution plans d. deferred profit-sharing plans

19. Which term refers to a company pension plan that guarantees a certain benefit to retirees regardless of market conditions? *a. defined benefit plan b. money purchase plan c. defined contribution plan d. Canada Pension Plan

20. As a member of the company’s defined benefit plan, employees receive a pension based on one percent of the average of their best three years’ earnings for each year of service. What will be your

annual pension if you retire after 30 years of service and have averaged $50,000 per year during your three best years? *a. $15,000 b. $28,000 c. $30,000 d. $50,000

22. From a funding obligation perspective, why do employers prefer to use a defined contribution pension plan? *a. Liability is limited to the amount placed into the plan. b. Actuarial predictions are made easier. c. Pensioners are guaranteed a fixed sum of money. d. This avoids “underfunded― plans.

23. Which statement best describes pension plans in Canada? a. Defined contribution plans have been decreasing. *b. Defined contribution plans have been increasing. c. Hybrid plans have been decreasing. d. Defined benefit plans have not changed in terms of their use.

24. From an employee’s point of view, what advantage do defined contribution plans have over defined benefit plans? a. The employer assumes the risk of investments. *b. They tend to be more portable. c. They provide a higher pension for those who join the company later in life. d. Risk is averaged over a large group of employees.

25. Life and accident insurance is almost always included in benefit plans. Which statement does NOT accurately describe life and accident insurance? a. Often a spouse or partner may be included under the coverage. b. Coverage amounts may be increased at the employee’s expense, or on a cost-sharing basis. c. Often the coverage is based on a multiple of the employee’s annual salary. *d. Recent changes to the tax code have made group life insurance products much more tax-friendly to employees.

26. Teresa has a dental plan through her employer. Recently, she has undergone dental work costing the plan $2,500. Luckily for Teresa, this particular dental work was covered completely by her dental plan. What are the tax consequences as a result of Teresa not having to pay for the dental work?

a. Her employer will add the $2,500 as an expense in their income statement. b. She will have to include the $2,500 as additional income. *c. There are no tax consequences at all as benefits are taxfree. d. Teresa will have to claim half of the benefit as income.

27. Which term usually describes severance packages for executives? a. RRSPs b. termination benefits *c. golden parachutes d. just cause severance

28. Which type of employee services are free onsite massages during peak times, fitness club memberships, and Internet stations in lounge areas examples of? a. workâ€"life balance b. outplacement services c. employee assistance programs *d. wellness and recreational

29. Which benefit will reinforce your strong commitment to helping your employees in balancing work and personal activities? a. group banking package discount rates *b. paid time off for community service c. subsidized meals and free hot drinks d. computer purchase plan

30. What is usually NOT considered by courts in establishing awards relating to notice periods or severance in lieu of notice? a. whether some element of enticement was involved b. the likelihood that the employee will secure employment quickly c. the employee’s age *d. the employee’s gender

31. What benefit system provides employees with the choice between two or more fixed plans? *a. modular benefits plan b. “core― benefits plan c. flexible benefits plan d. “Beneflex― plan

32. Which plan allows you to tailor your benefit plan to suit your needs and even trade off benefits that are not important to you? a. health care spending accounts b. simplified flex plan *c. flexible benefits plan d. fixed benefits plan

33. What is NOT a possible reason for implementing flexible benefit plans? a. cutting benefit costs b. developing a more diverse work force *c. lowering overall administrative costs d. shifting employee perspective away from an entitlement approach

34. Firms with flexible benefit plans may enjoy a competitive advantage in terms of recruitment. What is the likely reason for this? a. Flexible plans can lower administrative costs. *b. Prospective employees may find the idea of choosing their benefits appealing. c. Flexible plans enjoy economies of scale. d. Flexible plans imply higher wages.

35. What is the first issue in developing an effective benefit system? a. determining the tax implications b. examining the compensation cost structure of the organization c. establishing the administration process *d. determining the role of indirect pay in compensation strategy

37. Experts will support the notion that employee participation in the process of designing a benefits plan is highly desirable. Which goal do experts NOT identify as a positive outcome of having employee involvement? a. better understanding of needs b. support mechanism in communicating the plan c. increased level of acceptance *d. decreased overall plan costs

38. What is NOT a consideration in deciding whether to include a particular benefit in indirect pay? a. whether it contributes to the objectives of indirect pay *b. whether or not there is a union

c. whether it is valued by employees d. whether it adds much net value to the compensation package

39. Which statement best describes benefits for full-time versus parttime employees in Canada? *a. Most jurisdictions do not legally require firms to have the same benefits for full-time and part-time employees. b. Most firms have the same benefits for both categories of employees, regardless of the law. c. All employees who work more than 20 hours a week are entitled to nonmandatory benefits. d. All employees who work more than 25 hours a week are entitled to nonmandatory benefits.

40. Which process of evaluating benefits systems considers the net benefits associated with a particular benefit system? a. competitive analysis b. cost break-even analysis *c. cost analysis d. employee surveys

1. In the bottom-up approach to compensation budgeting, a budgeted amount is allocated to compensation and given to department managers for distribution to their employees. a. True *b. False

2. A compensation budget is a forecast of what the firm expects to spend on compensation in the coming year. *a. True b. False

3. Of all the human resource functions, payroll activities were one of the first functions to be computerized in medium and large organizations in Canada. *a. True b. False

4. Because of complexity and resistance by stakeholders, computers have taken on a secondary role in communicating compensation policies and procedures. a. True *b. False

5. Information technology is particularly useful for pay and remittance calculations. *a. True b. False

6. Organizations frequently outsource a portion of their benefits administration to "product providers." *a. True b. False

7. The more strategic the compensation system is to the organization, the more it should be outsourced. a. True *b. False

8. To avoid resistance to a new compensation system, it is best to discontinue use of the old system before fully testing the new system.

Otherwise, employees will gravitate to the old and familiar system. a. True *b. False

9. Research suggests that employee satisfaction with their compensation is directly related to their understanding of the compensation system. *a. True b. False

10. In evaluating a new compensation system, two main sets of employee attitudes should be examinedâ€"job attitudes and compensation attitudes. *a. True b. False

11. Your organization has asked you to prepare a compensation budget by taking into account the following variables: current employees’ wages, anticipated merit increases, seniority increases, as well as expected turnover. What kind of compensation budgeting process is your organization using? a. zero-based b. top-down *c. bottom-up d. break-even

12. Which statement best describes outsourcing among Canadian firms? *a. Outsourcing of HR functions is on the decline. b. Outsourcing of HR functions is increasingly used. c. Larger firms outsource their HR functions more than smaller firms. d. Outsourcing does not offer any benefits

13. What would a human resource professional consider to be a necessary part of documenting the compensation system? *a. ensuring stakeholders have up-to-date job evaluation manuals b. deciding to use an external service provider c. designing job evaluation criteria that are valid and reliable d. deciding on the compensation strategy

14. Which of the following is NOT a component of compensation administration? a. collecting the necessary information b. performing pay calculations *c. establishing accountability d. preparing and distributing remittances

15. What is NOT an advantage of outsourcing the compensation function? a. cost savings from economies of scale b. expertise provided by outside personnel c. in-house managers may be able to spend more time focusing on strategic issues *d. increased internal capacity to understand the compensation system

16. What is a major issue for most organizations when planning for information technology? a. whether to use computers b. whether to use consultants *c. how advanced the system should be d. whether to protect employee privacy

17. When does communication occur in compensation communications? *a. not until understanding passes from the sender to the receiver b. once the communication tool, such as a podcast, is launched c. only after evaluations prove that the communications were effective in increasing employee satisfaction d. not until employee attitudes are changed

18. You are a human resource professional at a large accounting firm in Ontario. Part of your mandate requires that you investigate processes that will streamline basic human resource functions, such as remittance of pay stubs to employees. You are currently thinking about automating this process. What are the minimum requirements you must meet in order to make this process compliant with Bill 88 (Electronic Commerce Act)? a. Make the statements available via the company’s intranet to employees. b. Send out a quarterly summary to each employee via a “personalized email,― and make the biweekly stubs available via the Intranet. c. It is impossible to be compliant with the act while automating the process. *d. On a biweekly basis, send out the statements to each employee via the company’s email platform.

19. You work in a human resource department and have access to the personal health information of employees. A front line manager contacts you and requests that you look at an employee’s file and let them know if there are any health issues that could explain an employee’s “bizarre behaviour― (the employee seems extremely quiet). Which of the following actions should you take, so as to be compliant with Bill C-6 (PIPEDA)? a. Email the file to the manager but scrub it so only information that may be related to the “bizarre behaviour― is included. b. Email the employee’s file to the manager, including any health-related information you may have. *c. Do not share any health-related information with the manager, even if they tell you they are going to escalate the request. d. Email the requested information but tell the manager not to share it with anyone.

20. According to a recent survey of HR professionals, what is the predominant use of human resources management systems? a. planning and research b. time and attendance *c. payroll d. benefits

21. Which statement does NOT support the notion of outsourcing some human resource functions to third-party service providers? *a. It provides internal staff with a better sense of issues facing employees. b. It reduces costs. c. It leverages the specialized knowledge of external experts. d. It allows internal staff to focus on strategic human resource activities.

22. Which factor is NOT normally a consideration when organizations make the decision to outsource human resource functions? a. size of the organization *b. activities competitors are undertaking with their human resource functions c. level of internal expertise d. strategic role played by compensation in the organization

23. What is NOT a key aspect in implementing the compensation system? a. putting infrastructure in place b. testing the system

*c. conducting job evaluations d. conducting training

24. A training process is critical to the launch of a new compensation system. The textbook identifies three groups of stakeholders that should be trained so as to facilitate the introduction of an effective compensation system. Which stakeholder should have very detailed system knowledge? a. recruiters and secretarial personnel b. front-line supervisors and managers *c. support personnel in the human resource department d. all customer-facing employees

25. Which statement does NOT accurately describe developing a communication plan to introduce a new compensation system? a. Employees need to know the rationale behind the change. b. Ensure it is an on-going process; communicate often. c. Various modes of communications should be used. *d. It is often a recipe for failure if frontline managers are told of impending changes early in the process.

26. Which of the following is NOT one of the steps in implementing the compensation system? a. Establish the implementation task forces. *b. Decide on the compensation level. c. Test the system. d. Conduct the training.

27. Why is it useful to conduct surveys of key employee attitudes before system implementation? a. to provide information about the new system *b. to have a baseline for future comparisons c. to solicit recommendations for changes d. to create perception of employee involvement

28. Which statement does NOT accurately describe compensation communication? a. Employers may be found legally liable for poor benefits communication. b. Two-way communication is extremely important. c. The move towards defined contribution plans has increased the need for effective communication. *d. Employees who understand their compensation system are less satisfied with it.

29. You have been tasked with providing senior management with a plan to evaluate the effectiveness of a new compensation system to be launched by an organization. What is NOT a typical approach associated with evaluating the impact of a compensation system? *a. impact on a company’s return on equity b. impact on compensation objectives c. impact on compensation costs d. impact on employees’ attitudes and behaviours

30. Which statement does NOT accurately describe the act of evaluating the compensation system? a. Most organizations don’t even try to evaluate their systems. b. A slipshod attempt at evaluation may do more harm than good. *c. Compensation costs below budgeted levels should make you happy. d. If the budget was not realistic in the first place, comparisons are meaningless.

31. What is the logical time for the first evaluation of the compensation system? a. immediately after implementation *b. six months after implementation c. one year after implementation d. two years after implementation

32. A particular company notices that performance, as measured by the accuracy of entries by managers in a new human resource management system, decreased during the early stages of launch. What phenomenon may account for this decrease in performance? a. socialization *b. initial dip c. integration d. freedom to act

33. What main indicators should firms examine in the process of examining compensation costs? a. budgeted costs and actual costs b. compensation cost ratios and budget ratios c. net profit per employee and average employee earnings *d. compensation cost ratios and average employee earnings

34. Which employee attitude towards the compensation system should be evaluated? *a. satisfaction with the process by which compensation is determined b. work motivation c. job satisfaction d. organizational identification

35. When evaluating a new compensation system, you notice that the compensation cost ratio increased, while total compensation or average earnings remained static. What is a likely explanation? a. All employees have received some kind of raise. *b. Total costs and/or revenues have decreased. c. Benefits have been removed from total compensation. d. There is an error in the data; this situation is not possible.

36. Which change to the compensation system is likely to be triggered by an aging workforce? a. more vigorous job evaluations b. more focus on tuition reimbursements *c. more focus on pension plans d. increased pay equity

37. Katrina works at a factory assembling plastic toys. She prides herself in producing the most units with the lowest rejection rates.

What kind of behaviour is Katrina displaying? a. loyalty b. citizenship c. membership *d. task

38. As a result of focusing your recruitment efforts on attracting recent university graduates, your workforce has become younger. What impact does this change have on your compensation system? a. It needs greater focus on pension plans and retirement income. *b. It needs to offer more cash and family benefits. c. It needs to adopt a job evaluation system. d. It needs to adopt a new managerial strategy.

39. Given changes in financial circumstances of an organization, senior management requests recommendations geared towards containing compensation costs. What would NOT be a recommendation that you would bring forward?

a. Enact a hiring freeze. b. Contain benefit costs. c. Replace some raises with bonuses. *d. Replace variable pay with fixed pay.

40. A good employee threatens to leave your firm because she has received a higher pay offer from a competitor. The offer is well outside your company’s pay range for the job the employee is performing. What should you tell the employee? a. You will match the other offer. b. You will beat the other offer to be sure you won’t lose her. c. You will try to get her job put into a higher pay grade. *d. You wish her all the best in her new job with the competitor.