55) What is the first step in the ranking method of job evaluation?
A) developing class or grade descriptions
B) selecting and ranking jobs by department
C) identifying appropriate compensable factors
D) gathering job information from a job analysis
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
56) Which of the following statements is most likely true about the ranking method of job
evaluation?
A) Jobs are typically ranked based on the whole job.
B) Several compensable factors are commonly used to rank jobs.
C) The ranking method is typically more time consuming than other methods.
D) Ranking is usually appropriate for large employers because of the method’s cost.
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
57) What is a drawback associated with the ranking method of job evaluation?
A) high costs
B) subjective aspects
C) time-consuming
D) highly complex
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
21
58) A ________ pay system involves setting pay rates based on a comparison between internal
pay and external pay.
A) ranking
B) salary survey
C) market-competitive
D) compensable factor
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
59) The purpose of conducting a salary survey is to ________.
A) compare internal and external equity
B) determine prevailing wage rates
C) identify compensable factors
D) rank benchmark jobs
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
60) What is the first step in creating a market-competitive pay plan?
A) choosing benchmark jobs
B) selecting compensable factors
C) reviewing relevant job descriptions
D) evaluating external and internal wage curves
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
22
61) Kayla, an HR manager, is in the process of creating a market-competitive pay plan. For an
accounting job at the firm, she has assigned the following weights: 70% for job complexity, 25%
for effort, and 5% for working conditions. What is the next step Kayla must take in the process?
A) drawing the internal and external wage curves
B) converting percentage weights into point values
C) defining the degree for each compensable factor
D) reviewing job descriptions and specifications
AACSB: Analytical Thinking
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Application
62) Kayla, an HR manager, is in the process of creating a market-competitive pay plan. For an
accounting job at the firm, she has assigned the following weights: 70% for job complexity, 25%
for effort, and 5% for working conditions. Assuming that Kayla is working with a total number
of 1,000 points, what is the maximum number of points for job complexity?
A) 7,000 points
B) 700 points
C) 70 points
D) 7 points
AACSB: Analytical Thinking
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Application
23
63) Employers use salary surveys in all the following ways EXCEPT to ________.
A) collect employee benefits data
B) price jobs in the marketplace
C) price benchmark jobs
D) create wage curves
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
64) A(n) ________ wage curve would most likely indicate whether a firm’s pay rates are too low
compared to what other firms pay.
A) current
B) internal
C) factored
D) market
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
65) Which term refers to a series of steps or levels within a pay grade and is usually based on
years of service?
A) wage grade
B) pay range
C) compa ratio
D) wage curve
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
24
66) Which of the following equals an employee’s pay rate divided by the pay range midpoint for
his or her pay grade?
A) pay grade
B) rate range
C) wage curve
D) compa ratio
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
67) Which of the following would most likely help an HR manager determine how many jobs in
each pay grade are paid above or below competitive market pay rates?
A) compa ratio
B) salary survey
C) wage structure
D) internal wage curve
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
68) Mario, an HR specialist, is conducting a job evaluation. Mario ranks different components of
the job, including complexity, experience, and education required, and then adds up the points
for each component. Mario is most likely using the ________ method of job evaluation.
A) ranking
B) job classification
C) factor comparison
D) alternative point
AACSB: Application of knowledge
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Application
25
69) What is a disadvantage of the job classification method?
A) vague benchmarking
B) reliance on competencies
C) complexity of grouping jobs
D) difficulty writing grade descriptions
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
70) What is the benefit of using pay ranges for each pay grade?
A) facilitates the administration of a total rewards system
B) gives employers more flexibility in the labor market
C) identifies and corrects out-of-line pay rates
D) eliminates the need to use a compa ratio
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
71) The Equal Pay Act focuses on three compensable factors—know-how, problem solving, and
accountability.
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
26
72) Unlike other job evaluation methods, the ranking method relies heavily on job specifications.
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
73) When splitting each factor into degrees in the process of creating a market-competitive pay
plan, the number of degrees should not exceed two or three in most cases.
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Concept
74) Why do employers use pay ranges for each pay grade?
AACSB: Application of knowledge
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Application
27
75) After establishing a market-competitive pay plan, an employer realizes that some employees
are being underpaid and some are being overpaid. How should these two situations be
addressed?
AACSB: Analytical Thinking
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
Skill: Critical Thinking
76) What are the similarities and differences between developing compensation plans for
professionals and lower-level employees? What role does job evaluation play in each?
AACSB: Analytical Thinking
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
10.3: Explain how to price managerial and professional jobs.
Skill: Synthesis
28
77) What is comparable worth? Discuss the connection between comparable worth and the point
method.
AACSB: Application of knowledge
Chapter: 10
LO: 10.2: Define and give an example of how to conduct a job evaluation and set pay rates.
10.4: Explain the difference between competency-based and traditional pay plans.
Skill: Synthesis
78) Supplemental executive retirement plans and supplemental life insurance are classified as
________ in executive compensation packages.
A) base salary
B) short-term incentives
C) deferred long-term incentives
D) executive benefits and perks
Chapter: 10
LO: 10.3: Explain how to price managerial and professional jobs.
Skill: Concept
79) Why would a firm most likely offer executive stock options in a compensation package?
A) to offer the executive long-term retirement security
B) to provide the executive with guaranteed bonuses
C) to encourage the executive to increase the firm’s value
D) to prevent the executive from negotiating with other firms
AACSB: Application of knowledge
Chapter: 10
LO: 10.3: Explain how to price managerial and professional jobs.
Skill: Application
29
80) Which of the following is most likely a short-term incentive given to top executives?
A) pension plans
B) stock bonuses
C) life insurance
D) stock options
Chapter: 10
LO: 10.3: Explain how to price managerial and professional jobs.
Skill: Concept
81) According to research, what is the LEAST likely factor that determines CEO pay?
A) ability to pay
B) job complexity
C) job evaluation
D) human capital
Chapter: 10
LO: 10.3: Explain how to price managerial and professional jobs.
Skill: Concept
82) Tighter restrictions on what firms pay top executives have been triggered by ________.
A) job analysis
B) ranking methods
C) publicized demotions
D) shareholder activism
Chapter: 10
LO: 10.3: Explain how to price managerial and professional jobs.
Skill: Concept
30