106) Compensation policy choices pertain to pay level and compliance with legislation.
107) Companies that implement a market lead pay policy usually attract more highly qualified
applicants than lower paying firms in the same labor market.
108) The market lag policy is one of three pay mix policy choices.
109) As an HR manager, what tool would you most likely use to determine the compensation of
employees found in competitor firms?
A) job analyses
B) job evaluations
C) labor statistic reports
D) compensation surveys
110) Placing a dollar value on a job’s worth is called ________.
A) job analysis
B) job enlarging
C) job evaluation
D) market pricing
111) Which term refers to a grouping of similar jobs to simplify job pricing?
A) job analysis
B) pay range
C) pay grade
D) job pricing
112) Which tool is frequently used by managers to determine the appropriate number of pay
grades for a company?
A) bar graphs
B) pie charts
C) flow charts
D) scatter diagrams
113) In determining pay grades, each dot on a scatter diagram represents ________.
A) one job
B) one worker
C) a job cluster
D) a department
114) The fitting of plotted points to create a smooth progression between pay grades is known as
a ________.
A) job cluster
B) wage curve
C) wage range
D) pay range
115) What includes a minimum and maximum pay rate with enough variance between the two to
allow for a significant pay difference?
A) job cluster
B) pay curve
C) job rank
D) pay range
116) Pay differentials need to be greater to be meaningful, especially ________.
A) at lower job levels
B) at higher job levels
C) during periods of recession
D) during periods of inflation
117) What is a technique that collapses many pay grades into a few wide bands to improve
organizational effectiveness?
A) job banding
B) job clustering
C) downsizing
D) broadbanding
118) What creates the basis for a simpler compensation system that deemphasizes structure and
places greater importance on flexible decision making?
A) organic structures
B) broadbanding
C) gainsharing
D) clustering
119) Ryan, an HR manager at a publishing firm, may begin broadbanding jobs. Which of the
following is NOT a benefit of broadbanding?
A) focusing on vertical promotional options
B) simplifying the firm’s compensation system
C) encouraging employees to develop laterally
D) adding flexibility to the firm’s compensation system
120) As an HR manager at an electronics firm, you learn that the position of Technician I at your
firm is underpaid. What would be the best way to handle this situation?
A) Notify the affected workers and their union representatives.
B) Immediately increase the pay for workers in that job to at least the minimum pay level.
C) Give workers in that job a bonus at the end of the year.
D) Wait until the next broadbanding opportunity.
121) As an HR manager, you learn that an employee is being overpaid. What would be the best
way to handle this situation?
A) Promote the employee, if qualified, to a job in a higher pay grade.
B) Bring the job rate and employee into line with a pay cut.
C) Freeze the rate until cost-of-living increases bring it into line.
D) Redesign the job by quantifying it with the factor comparison method.
122) Entry-level engineers at A–1 Manufacturing are paid as much as engineers who have been
with the firm for five years. Which of the following best describes the situation at A-1?
A) single–rate pay system
B) competency–based pay
C) union representation
D) pay compression
123) Firms use compensation surveys to determine pay structures.
124) Pay grades and pay ranges are frequently used in the market-pricing process.
125) A pay grade is the grouping of similar jobs to simplify pricing jobs.
126) Firms typically prefer single pay rates rather than pay ranges because of the simplicity and
preciseness the system offers.
127) Job pricing is represented by a wage curve that represents a smooth progression between
pay grades.
128) During the recession of 2008/2010, pay compression was not a problem for HR managers
because of pay cuts and layoffs.
129) What is pay compression? How can firms overcome the problem of pay compression?
130) What is a compensation survey? How do organizations benefit from using compensation
surveys?
131) By design, which employee group may not be awarded a salary for the work he or she
performs?
A) contingent workers
B) sales professionals
C) laborers
D) administrative employees
132) In which method of sales compensation do salespersons receive a fixed salary regardless of
their sales levels?
A) straight commission
B) variable pay
C) straight salary
D) spot bonus
133) When continued service after the sale is essential, a firm will most likely compensate sales
representatives with ________.
A) bonus only
B) straight salary
C) straight commission
D) bonus plus commission
134) In which method of sales compensation is a salesperson’s pay totally determined as a
percentage of sales?
A) straight commission
B) part salary
C) straight salary
D) straight bonus
135) Which of the following is a problem inherent in compensating contingent workers?
A) external equity
B) more costly to employ contingent workers
C) internal equity
D) all of the above
136) Which of the following is TRUE about the percentage of access contingent workers have to
benefits compared to workers who are not classified as contingent workers?
A) A smaller percentage of full–time workers have access to employee benefits than part–time
workers.
B) A smaller percentage of part–time workers have access to employee benefits than full–time
workers.
C) Both groups have approximately equal access.
D) This relationship is unimportant to companies.
137) Contingent workers and noncontingent (regular) workers are paid approximately the same
amount for performing equal work because of Fair Labor Standards Act requirements.
138) Fewer part–time workers receive employee benefits than full–time workers.
139) Current trends in executive pay involve linking compensation with ________.
A) multiyear contract packages
B) deferred stock options
C) performance results
D) seniority systems
140) Which of the following allows the company to recover compensation if a later review
indicates that payments were not calculated accurately or performance goals were not met?
A) stock options
B) clawback policy
C) perquisites
D) golden parachute contract
141) In most cases, a firm prefers to link the salary growth of its highest level managers to
market rates and ________.
A) cost of living increases
B) public compensation policies
C) overall corporate performance
D) contingent worker compensation
142) What incentive plan allows executives to buy a specified amount of stock in the future at or
below the current market price?
A) stock option
B) indexed stock option
C) open-end stock option
D) closed-end stock option
143) Special benefits provided by a firm to a small group of key executives are known as
________.
A) incentive bonuses
B) golden parachutes
C) stock options
D) perquisites
144) An executive perquisite that protects executives in the event that the executive is forced to
leave the firm is known as a ________.
A) golden parachute contract
B) stock option plan
C) Scanlon plan
D) spot bonus
145) The ________ of the Dodd-Frank Act gives shareholders an advisory vote on executive
pay.
A) cap–and-trade proviso
B) clawback policy
C) say-on-pay provision
D) golden parachute clause
146) Bonuses and performance-based pay have become popular for executive compensation
packages because the U.S. tax laws do not allow firms to deduct more than $500,000 of an
executive’s salary.
147) A golden parachute contract is a perquisite that protects executives in the event that another
company acquires their firm.
148) Clawback contract provisions are required for companies to recover any incentive
compensation paid to top executives that was based on inaccurate financial data.
149) Explain the Dodd-Frank Act and its provisions that involve compensation.
150) Describe in a brief essay what say-on-pay policies and clawback policies are. Why do
corporations implement these policies?