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1. Strategic compensation is the term used for all the processes used to determine the market rates to pay employees.
a.
True
b.
False
2. If rates of pay are high, which creates a large applicant pool, then organizations may choose to raise their selection
standards.
a.
True
b.
False
3. Raising selection standards and hiring better-qualified employees can reduce training costs.
a.
True
b.
False
4. A Bloomberg National Poll showed that most Americans believe that large bonuses for Wall Street companies that
took taxpayer bailouts should be prohibited.
a.
True
b.
False
5. Rewarding an employee's past performance is not a goal of a strategic compensation policy.
a.
True
b.
False
6. Among the goals of a strategic compensation policy are rewarding past performance, attracting new employees, and
reducing turnover.
a.
True
b.
False
7. A formal statement of compensation policy would typically include the rate of pay within the organization and whether
it is to be above, below, or at the prevailing market rate.
a.
True
b.
False
8. Pay-for-performance programs have little, if any, effect on employee productivity.
a.
True
b.
False
9. While most managers agree that pay should be linked to performance, employees do not.
a.
True
b.
False
10. Pay equity is achieved when employees' compensation is equal to the value of the work they perform.
a.
True
b.
False
11. Expectancy theory predicts that people expect to be paid as much or more than individuals in a similar job class.
a.
True
b.
False
12. The expectancy theory of motivation predicts that one's level of motivation depends on the attractiveness of the
rewards sought by employees and the probability of obtaining those rewards.
a.
True
b.
False
13. The compensation scorecard creates a comparative tool within the organization that can reinforce desired outcomes
that are unique to the company’s strategy.
a.
True
b.
False
14. Managers in companies with compensation scorecards often struggle to know if the promotions, raises, bonuses, and
pay adjustments they make are in line with the rest of the organization and its strategy.
a.
True
b.
False
15. Pay secrecy is still prevalent in organizations despite its negative effect on motivation and employee trust.
a.
True
b.
False
16. Employees who are compensated on an hourly basis are referred to as salary earners.
a.
True
b.
False
17. Nonexempt employees are not covered by overtime requirements under the Fair Labor Standards Act.
a.
True
b.
False
18. Nonexempt employees are covered by the Fair Labor Standards Act and must be paid at the rate of a rate of one and a
half times their regular pay rate for time worked in excess of forty hours in their workweek.
a.
True
b.
False
19. Exempt employees are not covered by the overtime provisions under the Fair Labor Standards Act.
a.
True
b.
False
20. Under the Fair Labor Standards Act, most of hourly workers involved in interstate commerce are considered
nonexempt.
a.
True
b.
False
21. Internal factors that influence wage rates include the worth of a job and the employer's ability to pay.
a.
True
b.
False
22. The worth of a job is determined formally through the wage and salary survey.
a.
True
b.
False
23. The worth of a job, as it is determined by its comparative worth with jobs in other firms, is an external factor in the
wage mix.
a.
True
b.
False
24. American President Obama enacted a five-year freeze on federal salaries to help the government achieve its objectives
of reducing the deficit.
a.
True
b.
False
25. A critical concern for a successful pay-for-performance system is the perceived fairness of the pay decision.
a.
True
b.
False
26. Pay levels are limited in part by profitability of the firm and productivity of employees.
a.
True
b.
False
27. The consumer price index tracks the change in price over time of a "market basket" of goods and services.
a.
True
b.
False
28. The consumer price index is available in separate indexes by size of city and region of the country.
a.
True
b.
False
29. Real wages represent the difference between wage increases and cost-of-living increases.
a.
True
b.
False
30. Wages of unionized employees are generally higher than those of nonunion employees.
a.
True
b.
False
31. Job evaluation is a non-systematic, qualitative process of determining the relative worth of jobs in order to establish a
comparison with the prevailing market and regional value of a job within a job family.
a.
True
b.
False
32. The job ranking system ranks jobs on the basis of relative worth and can be done by a single person familiar with all
jobs.
a.
True
b.
False
33. Job ranking is a simple method that provides a precise measure of each job's worth.
a.
True
b.
False
34. The job classification system is a quantitative job evaluation procedure that determines a job's relative value by
calculating the total points assigned to it.
a.
True
b.
False
35. The job classification system is used commonly by smaller employers.
a.
True
b.
False
36. The point system of job evaluation permits jobs to be evaluated quantitatively based on compensable factors.
a.
True
b.
False
37. Compensable factors include skills, efforts, responsibilities, and working conditions.
a.
True
b.
False
38. Point manuals contain job descriptions and the number of points assigned to each job type.
a.
True
b.
False
39. A point manual can be used to determine the external equity of a job.
a.
True
b.
False
40. The Hay profile method is useful for evaluating jobs of all types and levels.
a.
True
b.
False
41. The three factors that constitute the evaluation in the Hay profile method are knowledge, mental activity, and
accountability.
a.
True
b.
False
42. Employers refer to the area from which they obtain certain types of workers as the labor market.
a.
True
b.
False
43. Equity theory is also referred to as distributive fairness.
a.
True
b.
False
44. The National Compensation Survey published by the Bureau of Labor Statistics can provide local, regional, and
national compensations statistics.
a.
True
b.
False
45. An advantage of published wage surveys is compatibility with the organization's jobs.
a.
True
b.
False
46. For employees, pay equity is achieved when the compensation received is equal to the value of the work performed.
a.
True
b.
False
47. The wage curve represents the wages paid to jobs after adjustment for cost-of-living.
a.
True
b.
False
48. Managers group similar jobs into a pay grade in order to help with the setting of wages for all jobs.
a.
True
b.
False
49. Employees are likely to accept a promotion if succeeding rate ranges are larger in size.
a.
True
b.
False
50. Steps within a rate range allow pay increases based on merit or seniority.
a.
True
b.
False
51. Red circle rates are above the maximum for the pay range and are often frozen until the range shifts upward through
market wage adjustments.
a.
True
b.
False
52. When employees are paid according to the skills and knowledge they have rather than the specific jobs they perform,
they are paid according to competence-based compensation.
a.
True
b.
False
53. One of the major criticisms of job-based compensation systems is that they often fail to reward employees for their
skills or the knowledge they possess.
a.
True
b.
False
54. A major benefit of job-based compensation systems is that they encourage employees to learn new skills and
capabilities.
a.
True
b.
False
55. An advantage of competence-based pay from the employee's perspective is that there is no limit to what they can earn
by learning new skills.
a.
True
b.
False
56. A major criticism of competence-based pay systems is that after achieving the top wage, employees may be reluctant
to continue their educational training.
a.
True
b.
False
57. Broadbanding refers to collapsing of many traditional salary grades into a few wide salary bands.
a.
True
b.
False
58. Pay secrecy seems to be an accepted practice in many organizations.
a.
True
b.
False
59. Companies are more heavily scrutinized than they have been historically by shareholders, government, and the public
for how much they pay their people.
a.
True
b.
False
60. Strategic compensation is the compensation of employees in ways that enhance motivation and growth while
concurrently aligning their efforts with the goals of the organization.
a.
True
b.
False
61. Because management positions are more difficult to evaluate and involve certain demands not found in jobs at the
lower levels, some organizations do not attempt to include them in their job evaluation programs for hourly employees.
a.
True
b.
False
62. Under the Fair Labor Standards Act (FLSA), an employer must pay an employee for whatever work the employer
“suffers or permits” the employee to perform, even if the work is done away from the workplace and even if it is not
specifically expected or requested.
a.
True
b.
False
63. Indirect compensation includes healthcare benefits and commissions.
a.
True
b.
False
64. Seniority, merit, and individual incentive plans are factors affected under the Equal Pay Act.
a.
True
b.
False
65. Wages paid above the range maximum are called blue square rates.
a.
True
b.
False
66. Competence-based pay systems represent a fundamental change in the attitude of management regarding how work
should be organized and how employees should be paid for their work efforts.
a.
True
b.
False
67. A compensation scorecard can cloud the transparency of how people are rewarded and makes managers responsible
for how they spend company money.
a.
True
b.
False
68. Which of the following is an example of a nonfinancial compensation?
a.
Bonuses
b.
Commissions
c.
Health insurance
d.
Employee recognition programs
69. _____ encompasses employee wages and salaries, incentives, bonuses, and commissions.
a.
Nonfinancial compensation
b.
Indirect compensation
c.
Direct compensation
d.
Component compensation
70. _____ includes employee recognition programs, rewarding jobs, organizational support, work environment, and
flexible work hours to accommodate personal needs.
a.
Financial compensation
b.
Nonfinancial compensation
c.
Direct compensation
d.
Indirect compensation
71. A Bloomberg National Poll showed that more than _____ of Americans thought big bonuses should be banned for
Wall Street companies that took taxpayer bailouts.
a.
90 percent
b.
80 percent
c.
85 percent
d.
70 percent
72. Pay-for-performance programs:
a.
tie rewards to firm profitability.
b.
are easy to implement and measure.
c.
tie rewards to employee effort.
d.
result in negligible increases in output.
73. The term pay-for-performance can encompass all of the following EXCEPT:
a.
merit pay.
b.
base salary.
c.
cash bonuses.
d.
gainsharing plans.
74. Which of the following compensation options would not qualify under the term pay-for-performance?
a.
Seniority-based pay
b.
Group incentive
c.
Pay banding
d.
Gainsharing plans
75. Which of the following is NOT a common goal of a strategic compensation policy?
a.
To reward employees’ past performance
b.
To mesh employees’ past performance with organizational goals
c.
To remain competitive in the labor market
d.
To attract new employees
76. The fact that people make comparisons to others is central to:
a.
expectancy theory.
b.
the need for pay secrecy.
c.
pay-for-performance programs.
d.
equity theory.
77. When the organization pays wages that are relatively equal to that of other employers for similar work, it is the basis
of:
a.
comparable worth.
b.
external equity.
c.
compensable factors.
d.
equal pay.
78. The concept that employees should exert greater work effort if they have reason to expect it will result in a valued
reward forms the basis of:
a.
expectancy theory.
b.
equity theory.
c.
instrumentality.
d.
internal equity.
79. Instrumentality refers to:
a.
wage rates of acceptable level.
b.
development of both internal and external pay equity.
c.
wage rates above the pay range maximum.
d.
rewards that are valued and motivate employees.
