CHAPTER 11
1. A compensation scatter diagram plots the points or dots on a chart where each point represents a
(a) wage grade
(b) job rate of pay
(c) class level
(d) point of central tendency
2. Some different procedures available for developing a trend line from a scatter plot in determining
a pay policy include all but
(a) line of sight procedure
(b) least squares procedure
(c) paired-comparison procedure
(d) two-point procedure
3. When designing a pay structure, the first step involved is
(a) determining the number of pay grades
(b) determining a pay policy line
(c) establishing the minimum and maximum of the pay structure
(d) locking overlapping pay structures
4. Which one of the following statements best describes a scatter diagram?
(a) a line that represents the middle pay value of jobs
(b) points or dots on a chart that represent jobs
(c) a chart representative of the highest and lowest rates of pay
(d) a chart of average rates of pay for all jobs in a pay survey
5. When designing a pay structure, one should be able to
(a) recognize the differences in internal relationships among the jobs of the organization
(b) follow Equal Pay Act guidelines
(c) make use of the multiprocedure approach to job data collecting
(d) compete against all organizations in the market
6. The factor that most influences the midpoint value is probably
(a) profitability of the firm
(b) market value of the job
(c) minimum wage legislation
(d) desired wage spread
7. Relatively new or different jobs in which demand far exceeds the supply of qualified applicants
are known as
(a) key jobs
(b) exotic jobs
(c) high-tech jobs
(d) benchmark jobs
8.
In which one of the following industries would it not be unusual to find jobs with single rates of
pay?
(a) unionized
(b) low paying
(c) service
(d) mature
9. The pay of which one of the following groups of workers would be least likely to be influenced
by regional or national labor markets?
(a) engineers
(b) clerical
(c) skilled trades
(d) technicians
10. Which one of the following does not describe a nonparametric distribution?
(a) mean, mode, median are the same
(b) mean is greater than the median
(c) mean is less than the median
(d) mean and median are the same but the mode is less
11. The term “going rate” implies that there is
(a) a standard rate for a job in a community
(b) a rate of pay that eliminates discriminatory actions
(c) union contract established rates of pay
(d) single rate of pay for which employees will work
12. Grades
(a) are convenient groupings of a wide variety of jobs that are similar in work difficulty
and require comparable responsibility
(b) are necessary for designing pay structures
(c) ensure equality and equity of pay
(d) are used only for exempt jobs
13. For which one of the following groups of employees would it not be unusual to see a range that is
less than 25%?
(a) clerical
(b) unskilled workers
(c) technicians
(d) first-level managers
14. The optimal number of pay grades to be included within a pay structure is
(a) 10
(b) 25 to 30
(c) 18
(d) there is no right number
15.
In the majority of companies using rate ranges, where is the market value of a job considered to
be? (a) the minimum
(b) the maximum
(c) the midpoint
(d) the 75th percentile
16. Many specialists who make extensive use of survey data believe that _______ values provide
valuable information for establishing minimum and maximum pay values for a job or a grade.
(a) first and second quartile
(b) first and third quartile
(c) second and third quartile
(d) first and fourth quartile
17. The spread of a range within a pay grade will normally vary anywhere from _____ to _____
percent on either side of the midpoint of a pay scale.
(a) 5-40
(b) 10-50
(c) 50-100
(d) 25-75
18. Advantages to having a small number of pay grades within a pay structure include all of the
following issues except
(a) it normally results in less overlap between grades
(b) it requires assignment of more jobs to each pay grade
(c) it allows for rates of pay to relate more closely to differences in job worth
(d) it permits greater spread, allowing increased recognition of growth of job knowledge
through seniority and merit in-grade pay increases
19. Which of the following should be provided for in salary ranges?
(a) longevity increases
(b) growth opportunity over time
(c) little or no salary growth
(d) cost of living adjustments
20. A possible solution to market pay demands for the job in high demand where the internally
evaluated worth of the job is out of line with the market demand rate is to establish
(a) an overlapping pay structure
(b) multiple pay structures
(c) a bimodal distribution
(d) a shadow range
21. If analysis of a pay scatter diagram reveals disjointed or distinct breaks in the rates of pay of
various jobs, it may be determined
(a) that the scatter diagram is drawn to the wrong scale
(b) that the least squares procedure should be used
(c) that more than one trend line will be required for setting up a workable pay system
(d) that the organization has discriminatory pay practices
22.
A pay grade has a minimum of $1000 and a maximum of $1600. The spread of the range is
(a) 40%
(b) 50%
(c) 60%
(d) 80%
23. Pay grade 1 has a minimum of $1000 and a maximum of $1600, while pay grade 2 has a
minimum of $1400 and a maximum of $2400. What is the overlap between pay grade 1 and pay
grade 2?
(a) 10%
(b) 20%
(c) 33%
(d) 60%
Chapter 11