78) Which statement is true about pay ranges?
A) Pay ranges are most common for blue-collar jobs and those covered by union contracts.
B) Pay ranges are widest for employees who are at lower levels in terms of their job evaluation
points.
C) Pay ranges generally are designed so they do not overlap.
D) The market rate or the pay policy line generally serves as the midpoint of a range for the job.
E) The less overlap, the more flexibility in transferring employees among jobs.
79) Overlapping ________ give the organization more flexibility in transferring employees
among jobs, because transfers need not always involve a change in pay.
A) pay rates
B) pay ranges
C) pay policies
D) pay differentials
E) pay ranks
80) Assuming an organization wants to motivate employees through promotions, and assuming
enough opportunities for promotions are available, the organization would want to
A) increase the overlap from one level to the next.
B) reduce its compa-ratio to less than 1.
C) implement a broadband pay structure.
D) limit the overlap from one pay range to the next.
E) use a fixed interval promotion policy.
81) Ryan and Peggy hold the same position at Vineyard Rustica. However, Ryan earns more
than Peggy. In the context of pay structure, which statement justifies the organization’s decision
to pay Ryan more than Peggy?
A) Ryan works the night shift, and night hours are less desirable for most workers.
B) Ryan is a U.S. citizen; therefore, his pay should be higher than that of non-Americans.
C) Peggy is pregnant; therefore, her productivity is assumed to be lower.
D) Ryan is physically disabled; therefore, he should be paid more than Peggy.
E) Peggy lives in a location where living expenses are higher.
82) Ron and Yin are welders working for two different divisions of the same company. Both
have the same level of experience. However, Ron earns more than Yin. Under the Fair Labor
Standards Act (FLSA), which statement justifies the organization’s decision to pay Ron more
than Yin?
A) Ron lives in a location where living expenses are higher.
B) Yin is younger than Ron.
C) Ron is a U.S. citizen.
D) Yin is physically disabled.
E) Yin works the night shift.
83) What is an adjustment to a pay rate to reflect differences in working conditions or labor
markets?
A) bonus
B) pay differential
C) green-circle rate
D) rank-and-file adjustment
E) red-circle rate
84) Which statement is true about job-based pay structures?
A) A pay structure that rewards employees for winning promotions will encourage them to gain
valuable experience through lateral career moves.
B) Their focus on higher pay for higher status can work in favor of efforts for empowerment.
C) They typically reward desired behaviors, particularly in a rapidly changing environment.
D) Organizations may avoid change because it requires repeating the time-consuming process of
creating job descriptions and related paperwork.
E) They always encourage flexibility, innovation, quality, and customer service.
85) What is a disadvantage of a pay structure that rewards employees for winning promotions?
A) It does not focus on setting pay for groups of jobs.
B) It does not make adjustments to a pay rate to reflect differences in labor markets.
C) It discourages employees from gaining valuable experience through lateral career moves.
D) It rewards employees for acquiring skills but does not provide a way to ensure that employees
can use their new skills.
E) It places the employer at an economic disadvantage relative to other employers that pay the
market rate by raising the pay for some jobs.
86) What is a characteristic of delayering?
A) It increases an organization’s flexibility.
B) It increases the opportunities for promoting employees.
C) It sets pay according to the employees’ level of knowledge.
D) It encourages a climate of learning.
E) It decreases the flexibility of managers in making assignments.
87) MTX Co., a manufacturing company, has a pay structure based on job descriptions. As the
company moves toward customizing production to meet customers’ specific needs, it finds that
managers are lacking flexibility in both job assignments as well as awarding pay increases to
their employees. In this case, which alternative to job-based pay structures would best help the
organization to respond to this problem?
A) straight piecework plan
B) skill-based pay system
C) delayering
D) quality-based pay system
E) benchmarking
88) What is the result of combining more assignments into a single layer, thus giving managers
more flexibility in making assignments and awarding pay increases?
A) outsourcing
B) broad bands
C) rightsizing
D) benchmarks
E) downsizing
89) What is a disadvantage of broad bands?
A) They reduce managers’ flexibility in making assignments.
B) They always result in pay decreases.
C) They increase the number of levels in the organization’s job structure.
D) They reduce the opportunities for promoting employees.
E) They discourage employees from gaining valuable experience through lateral career moves.
90) Heightened Homes is a real estate firm based in Texas. The company ensures that
employees’ pay is dependent on what they are capable of doing. The company also supports
efforts to empower its employees by encouraging them to be independent and to make decisions
in various areas. This, in turn, ensures job enrichment. Based on this information, identify the
pay structure being utilized by Heightened Homes.
A) straight piecework plan
B) skill-based pay systems
C) merit pay system
D) differential piece rates
E) standard hour plan
91) What is a disadvantage of skill-based pay systems?
A) It makes organizations inflexible.
B) It reduces employee empowerment.
C) It may result in paying employees for skills they don’t use.
D) It reduces opportunities for promoting employees.
E) It limits the number of pay levels by delayering.
92) Which statement is true about skill-based pay?
A) Skill-based pay provides a way to ensure that employees can use their new skills.
B) Gathering market data about skill-based pay is easy.
C) Skill-based pay ensures that the employer pays the employee for learning skills that benefit
the employer.
D) Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork
of traditional pay structures.
E) Skill-based pay does not require records related to skills, training, and knowledge acquired.
93) Compa-ratio
A) is defined as the ratio of average pay to the midpoint of the pay range.
B) is defined as the ratio of the average pay for the grade divided by the minimum pay for the
grade.
C) can range from 0 to 100 percent.
D) uses data from market-pay surveys.
E) measures the degree to which new skills learned are consistent with the increases in pay.
94) Fresher Inc. is a whole-foods distributor. Its human resource department gathers the
following data for computing compa-ratios of some positions. Based on the data, for which
position is Fresher Inc. most likely underpaying for human resources?
A) shipping clerks: average salary of $22,000, range midpoint of $24,000
B) inventory clerks: average salary of $20,000, range midpoint of $30,000
C) order packers: average salary of $24,000, range midpoint of $22,000
D) purchasing agents: average salary of $30,000, range midpoint of $25,000
E) warehouse workers: average salary of $20,000, range midpoint of $20,000
95) At Methods Corp., a maker of premium art pencils, the human resource department is
evaluating its pay structure. A compensation specialist computes the compa-ratio of the
designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio
of this size?
A) The company may have difficulty keeping costs under control.
B) The company may have difficulty attracting and keeping qualified employees.
C) The company may be in violation of the Fair Labor Standards Act.
D) The company may have misclassified these employees as exempt when they are nonexempt.
E) The company may not have met minimum-wage requirements.
96) The ________ requires employers to make jobs available to their workers when they return
after fulfilling military duties for up to five years.
A) Uniformed Services Employment and Reemployment Rights Act
B) Fair Labor Standards Act
C) Equal Employment Opportunity Act
D) National Labor Relations Board
E) Family and Medical Leave Act
97) Executive pay has drawn public scrutiny in recent years. Which statement best explains the
reason?
A) Top executives’ pay is much higher than average workers’ pay.
B) Most of the top executives’ pay is in the form of a salary.
C) Top executives come under the category of exempt employees.
D) Top executives are paid in the form of commissions.
E) Executives are denied short-term or long-term incentives with their pay.
98) Discuss the three major provisions of the Fair Labor Standards Act (FLSA).
99) How do employees judge the fairness of a pay structure?
100) What is skill-based pay? What are its advantages and disadvantages?
101) How do organizations compare actual pay to pay structure?
102) How does equity theory explain how workers are likely to interpret the high pay of CEOs?
103) Define job structure, pay level, and pay structure.
104) What is benchmarking?
105) What is a pay policy line? What is its relevance?
106) Define hourly wage, piecework rate, and salary.
107) List three limitations of using a job-based pay structure.