Human Resource Management, 14e, Global Edition (Dessler)
Chapter 11 Establishing Strategic Pay Plans
1) Which of the following terms refers to all forms of pay or rewards going to employees and
arising from their employment?
A) salary
B) employee benefits
C) wage reimbursement
D) employee compensation
2) Which of the following is NOT a type of direct financial payment?
A) wages
B) insurance
C) incentives
D) commissions
3) Which of the following terms refers to pay in the form of financial benefits, such as
insurance?
A) direct financial payments
B) out-of-pocket expenses
C) indirect financial payments
D) sales commissions
4) John is a sales representative in a jewelry store. He typically works 40 hours per week and his
pay is completely based on his sales. He earns a 5% commission for every sale he makes. Which
of the following terms best describes John’s situation?
A) performance-based compensation
B) indirect financial compensation
C) time-based compensation
D) piecework pay
5) Which of the following factors has the LEAST effect on the design of an organization’s pay
plan?
A) legal
B) union
C) company vision
D) company policy
6) Which of the following was enacted in 1931 for the purpose of setting wage rates for laborers
and mechanics employed by contractors working for the federal government?
A) Walsh-Healey Public Contract
B) Fair Labor Standards Act
C) Civil Rights Act
D) Davis-Bacon Act
7) Which of the following sets basic labor standards for employees working on any government
contract that amounts to more than $10,000?
A) Davis-Bacon Act
B) Walsh-Healey Public Contract
C) Fair Wages Act
D) Fair Labor Standards Act
8) Which compensation-related law contains provisions for minimum wage, maximum hours,
overtime pay, equal pay, record-keeping, and child labor?
A) Davis-Bacon Act
B) Fair Wages Act
C) Fair Labor Standards Act
D) Walsh-Healey Public Contract
9) Which of the following issues is NOT addressed by the Fair Labor Standards Act?
A) record-keeping
B) overtime pay
C) child labor
D) termination
10) Which law makes it illegal to discriminate against any individual with respect to
compensation because of race, color, religion, sex, or national origin?
A) Fair Labor Standards Act
B) Title VII of the Civil Rights Act
C) Equal Pay Act
D) Taft-Hartley Act
11) According to the Fair Labor Standards Act, what rate of normal pay would a covered
employee receive for working more than 40 hours in a workweek?
A) 50%
B) 100%
C) 150%
D) 200%
12) Jill works as a cashier at a grocery store. She earns $10 an hour (or $400 for a 40-hour
week). Last week, she worked 46 hours. What is the minimum amount that Jill earned last week?
A) $460
B) $490
C) $520
D) $550
13) Joseph worked 6 hours of overtime this week but has decided to take time off instead of
overtime pay. How many hours will Joseph receive in time off from work?
A) 3 hours
B) 6 hours
C) 9 hours
D) 18 hours
14) Which of the following is true for employers who use independent contractors?
A) Fair Labor Standards Act overtime requirements do not apply.
B) Social Security taxes are higher than for regular employees.
C) Federal income taxes are charged at a reduced rate.
D) Payroll taxes are paid by the employer.
15) In most cases, which of the following occupations is NOT exempt from the overtime
provisions of the Fair Labor Standards Act?
A) physicians
B) engineers
C) paralegals
D) teachers
16) Which of the following jobs is most likely categorized as nonexempt from the overtime pay
provisions of the Fair Labor Standards Act?
A) taxicab driver
B) personnel director
C) newspaper writer
D) computer systems analyst
17) Anita, a manager at a department store, needs to determine whether one of her employees is
exempt or nonexempt under the Fair Labor Standards Act. Which of the following would be the
best resource for Anita?
A) organizational chart
B) performance appraisal
C) business plan
D) job description
18) Which of the following states that employees of one sex may not be paid wages at a rate
lower than that paid to employees of the opposite sex for doing roughly equivalent work?
A) Americans with Disabilities Act
B) Title VII of the Civil Rights Act
C) Social Security Act
D) Equal Pay Act
19) Which act regulates vesting rights and portability rights?
A) Fair Labor Standards Act
B) Title VII of the Civil Rights Act
C) Employer Retirement Income Security Act
D) Equal Pay Act of 1963
20) Which of the following terms refers to the ownership employees build up in their pension
plans should their employment with a firm end prior to retirement?
A) portability
B) equity
C) vesting
D) shares
21) Which of the following laws has the LEAST amount of influence on compensation
decisions?
A) Americans with Disabilities Act
B) Labor Management Relations Act
C) Family and Medical Leave Act
D) Age Discrimination in Employment Act
22) Bonnie, a data analyst, needs to take time off from work to care for her elderly mother.
According to the Family and Medical Leave Act, what is the maximum number of weeks of
unpaid, job-protected leave that Bonnie may take?
A) 4
B) 6
C) 12
D) 16
23) Which of the following gives employees the right to organize, bargain collectively, and
engage in concerted activities for the purpose of collective bargaining?
A) Equal Pay Act
B) Civil Rights Act
C) Fair Labor Standards Act
D) National Labor Relations Act
24) What has historically been the key issue in collective bargaining?
A) wage rates
B) income security
C) health care benefits
D) cost-of-living adjustments
25) Which of the following issues would LEAST likely be negotiated by unions?
A) income security
B) time off with pay
C) health care benefits
D) unpaid medical leave
26) Which of the following terms refers to a compensation plan that advances a firm’s strategic
goals?
A) strategic management
B) performance pay plan
C) aligned reward strategy
D) workers’ compensation package
27) Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the
past few years, the company’s market share has dropped significantly, and employee turnover has
increased. Upper management is considering the implementation of a new compensation policy
in its efforts to turn the company around. Historically, the company has paid all employees
similarly with some variation for seniority but no distinction between high and low performers.
Which of the following questions is LEAST relevant to Homelife’s decision to develop an
aligned reward strategy?
A) What compensation programs should Homelife use to reinforce necessary employee
behaviors?
B) How well does Homelife’s current compensation program match the company’s strategic
aims?
C) What compensation programs should Homelife use to reinforce desired employee behaviors?
D) What are the results of Homelife employee salary surveys in regards to wage satisfaction?
28) Which of the following is the LEAST likely way that an employer would address a cost-of–
living differential?
A) paying a nonrecurring amount spread over one to three years
B) paying a nonrecurring, lump sum amount
C) raising an employee’s base salary
D) raising commission percentages
29) What theory of motivation states that people are strongly motivated to maintain a balance
between what they perceive as their contributions and their rewards?
A) Two-factor theory
B) Equity theory
C) Learned needs theory
D) Expectancy theory
30) Which of the following is NOT one of the forms of equity related to compensation issues?
A) group
B) external
C) individual
D) procedural
31) Which form of equity refers to how a job’s pay rate in one company compares to the job’s
pay rate in other companies?
A) distributive
B) internal
C) external
D) procedural
32) Jason is an information systems technician in a town in North Carolina with a population of
100,000. He receives an annual salary of $35,000. He recently found out that a nearby town with
a similar population pays people in the same position $40,000 annually. With which of the
following is Jason most concerned?
A) distributive
B) procedural
C) internal
D) external
33) Which form of equity refers to the fairness of a job’s pay rate in comparison to other jobs
within the same company?
A) external
B) internal
C) distributive
D) individual
34) Trevor, a sales manager at IBM, recently learned that an IBM human resources manager with
comparable responsibilities and spans of control earns a higher salary than Trevor. Which form
of equity is of most concern to Trevor?
A) external
B) internal
C) distributive
D) individual
35) Which form of equity refers to the fairness of an individual’s pay as compared with what his
or her co-workers are earning for the same or very similar jobs within the company, based on
each individual’s performance?
A) internal
B) distributive
C) individual
D) procedural
36) Audrey is a lawyer in a mid-size firm in Chicago. She recently learned that another lawyer
who joined the firm at the same time earns a lower salary than she does. Which form of equity is
most relevant to Audrey’s situation?
A) internal
B) distributive
C) individual
D) procedural
37) Which form of equity refers to the perceived fairness of the processes used to make decisions
regarding the allocation of pay?
A) internal
B) distributive
C) individual
D) procedural
38) External equity refers to ________.
A) how a job’s pay rate in one company compares to the job’s pay rate in other companies
B) the fairness of an individual’s pay as compared to a co-worker’s pay for the same job
C) the perceived fairness of the processes and procedures used to make decisions about
compensation
D) the use of salary surveys and job evaluation comparisons to monitor pay levels within an
industry
39) Which of the following best defines internal equity?
A) how a job’s pay rate in one company compares to the job’s pay rate in other companies
B) how fair the job’s pay rate is, when compared to other jobs within the same company
C) the fairness of an individual’s pay as compared to a co-worker’s pay for the same job
D) the perceived fairness of the processes and procedures used to make compensation decisions
40) Which of the following is used to maintain internal equity?
A) job analysis comparisons
B) organizational charts
C) incentive pay
D) salary surveys
41) What type of equity is a manager most likely trying to maintain through the use of
performance appraisals and incentive pay?
A) internal
B) external
C) individual
D) procedural
42) Beth, a small business owner, wants to ensure external equity when establishing pay rates.
Beth should most likely ________.
A) use wage curves to price each pay grade
B) compare performance appraisals
C) conduct a salary survey
D) check online pay sites
43) Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the
past few years, the company’s market share has dropped significantly, and employee turnover has
increased. Upper management is considering the implementation of a new compensation policy
in its efforts to turn the company around. Historically, the company has paid all employees
similarly with some variation for seniority but no distinction between high and low performers.
Which of the following, if true, best supports the argument that Homelife executives should
primarily address internal equity issues when developing a new compensation plan?
A) Homelife employees receive annual performance appraisals at which time they set career
goals.
B) Salary surveys indicate dissatisfaction among the Homelife managers in different
departments.
C) Online pay sites show the pay range for sales associates at both Homelife and its competitors.
D) Homelife pays its sales managers commissions in addition to base salaries and health
benefits.
44) Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the
past few years, the company’s market share has dropped significantly, and employee turnover has
increased. Upper management is considering the implementation of a new compensation policy
in its efforts to turn the company around. Historically, the company has paid all employees
similarly with some variation for seniority but no distinction between high and low performers.
Which of the following, if true, best supports the argument that Homelife should distribute salary
surveys before establishing new pay rates?
A) Homelife executives want to identify benchmark jobs before determining the worth of other
jobs.
B) Homelife executives plan to use the compensable factors emphasized by the Equal Pay Act.
C) Computerized job evaluation systems will be used by Homelife to generate questionnaires.
D) A wage curve needs to be established by Homelife for the purpose of federal compliance.
45) Which of the following is used to anchor the employer’s pay scale?
A) grades
B) job metric
C) benchmark job
D) human resource metric