Lussier, Human Resources Management 3e
SAGE Publishing, 2019
Chapter 11: Compensation Management
Test Bank
Multiple Choice
1. ______ is the total of an employee’s pay and benefits.
A. Expectancy
B. Compensation
C. Equity
D. Salary
2. ______ is now the top reason for job satisfaction, overtaking job security as the top
driver of satisfaction back in 2013.
A. Pay
B. Equity
C. Expectancy
D. Overtime
3. ______ costs are frequently the largest part of total production costs at today’s
business organizations.
A. Waste
B. Equity
C. Expectancy
D. Compensation
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
4. An organization designs and implements a(n) ______ system to focus worker
attention on the specific efforts the organization considers necessary to achieve its
desired goals.
A. expectancy
B. equity
C. compensation
D. pay
5. Rewards must meet the demands of ______ to be useful in stimulating desired
behavior.
A. employers
B. managers
C. employees
D. equity
6. The ______ of an organization includes anything that an employee may value and
that the employer is willing and able to offer.
A. expectancy
B. equity
C. rate
D. compensation system
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
7. All rewards that can be classified as monetary payments and in-kind payments
constitute the ______ component of the compensation system.
A. compensation
B. noncompensation
C. equity
D. non-salary
8. All rewards other than monetary and in-kind payments constitute the ______
component of the compensation system.
A. compensation
B. noncompensation
C. equity
D. non-salary
9. Base pay, any add-ons, and incentive pay are known as ______ compensation.
A. salary
B. indirect
C. direct
D. equity
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
10. Benefits are ______ compensation.
A. salary
B. wage
C. job
D. indirect
11. Jamaal is paid $11 an hour as a cafeteria attendant. Jamaal’s pay is considered
______.
A. benefits
B. wages
C. salary
D. incentives
12. Julianna is paid $60,000 a year as a computer programmer. She gets paid
regardless of how many hours she works. Julianna’s pay is considered ______.
A. benefits
B. wages
C. salary
D. incentives
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
13. Colton’s salary is $40,000 per year. This part of his compensation is considered
______.
A. base pay
B. wage and salary add-on
C. incentive pay
D. benefits
14. Atandwa earns $12 per hour during regular shifts. However, when he has to work
the night shift, his pay goes up to $14 per hour. This part of his compensation is
considered ______.
A. base pay
B. a wage and salary add-on
C. incentive pay
D. benefits
15. If Auli’i reaches her sales goals for this quarter, she will receive a $2,000 bonus.
This part of her compensation is considered ______.
A. base pay
B. a wage and salary add-on
C. incentive pay
D. benefits
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
16. Casey’s compensation includes health and dental insurance. These parts of her
compensation are considered ______.
A. base pay
B. a wage and salary add-on
C. incentive pay
D. benefits
17. Expectancy theory is a ______ theory of motivation.
A. process
B. structure
C. culture
D. rate
18. ______ theory proposes that employees are motivated when they believe they can
accomplish a task and that the rewards for doing so are worth the effort.
A. Equity
B. Expectancy
C. Motivation
D. Reward
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
19. In expectancy theory, ______ is the person’s perception of their ability to
accomplish or probability of accomplishing an objective.
A. expectancy
B. equity
C. reward
D. motivation
20. In expectancy theory, ______ is the perception that a particular level of performance
is likely to provide the individual with a desired reward.
A. reward
B. rate
C. pay
D. instrumentality
21. In expectancy theory, ______ refers to the value a person places on the outcome or
reward, because not all people value the same reward.
A. rate
B. instrumentality
C. valence
D. equity
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
22. In expectancy theory, ______ is based on the individual employee’s perception of
fairness.
A. valence
B. expectancy
C. instrumentality
D. equity
23. The result of ______ theory is that our employees will either be motivated by their
outcomes, including compensation, or be demotivated by them.
A. instrumentality
B. equity
C. expectancy
D. valence
24. ______ theory proposes that employees are motivated when the ratio of their
perceived outcomes to inputs is at least roughly equal to that of other referent
individuals.
A. Motivation
B. Referent
C. Expectancy
D. Equity
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
25. According to ______ theory, people compare their inputs, financial rewards, and
intangible outcomes to those of relevant others.
A. referent
B. valence
C. equity
D. expectancy
26. According to equity theory, a ______ other could be a coworker or a group of
employees from the same or different organizations.
A. referring
B. relevant
C. motivating
D. valent
27. According to ______, a comparison with relevant others leads to one of three
conclusions: the employee is either underrewarded, overrewarded, or equitably
rewarded.
A. equality theory
B. learning theory
C. expectancy theory
D. equity theory
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
28. According to equity theory, people will be ______ if they feel (perceive) that they are
not fairly compensated.
A. rated
B. motivated
C. demotivated
D. expectant
29. Martha was promised a 10% raise if she wins a contract with the city government.
Martha could use the money to pay off some debts. However, she happens to know that
another company is very close to securing the contract. There is a slim chance that she
could win the contract away from the other organization, but she does not believe she
can do it. According to expectancy theory, Martha is unmotivated to try to win the
contract because she lacks ______.
A. valence
B. instrumentality
C. expectancy
D. significance
30. Yashar has received steady pay increases over the years for his solid sales
performance. This year, the organization merged with another organization and money
has become tight. Yashar doubts there’s any money available for raises. Therefore, he
has not been motivated to work as hard. According to expectancy theory, Yashar is
unmotivated because ______ is lacking.
A. valence
B. instrumentality
C. expectancy
D. significance
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
31. Jacob’s manager asks him to organize a blood drive for the organization. The
manager tells Jacob that if he accepts the assignment, he will be awarded Employee of
the Month. Jacob has organized blood drives in the past and knows how much work is
involved. He does not doubt that his manager can deliver on the promise of the award.
However, Jacob has always thought that the award was silly. According to expectancy
theory, Jacob is unmotivated to accept the assignment because ______ is lacking.
A. valence
B. instrumentality
C. expectancy
D. significance
32. Aryn and Mary started at the organization on the same day. Both are hard workers
and perceive that they are equitably rewarded for their efforts. According to equity
theory, it is likely that both will ______.
A. request a raise
B. worker harder or longer
C. do less work
D. continue to put forth effort
33. An organization must complete an assessment of estimated ______ from business
operations and determine what percentage of revenues can or should realistically go
toward compensation costs.
A. equity
B. costs
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
C. revenues
D. growth
34. In setting the base pay rate for new jobs at her organization, Alexis is doing an
assessment of how much she can afford to pay. She is considering ______.
A. ability to pay
B. types of compensation
C. performance- or longevity-based pay
D. skill- or competency-based pay
35. Mimi is redesigning the compensation mix at her organization to include more
family-friendly benefits such as child and elder care. Mimi is considering ______.
A. ability to pay
B. types of compensation
C. wage compression
D. skill- or competency-based pay
36. Megha is revising her organization’s policy around annual raises and wondering
whether to reward employees who have been with the company the longest or those
who have closed the most sales. She is considering ______.
A. ability to pay
B. types of compensation
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
C. performance- or longevity-based pay
D. skill- or competency-based pay
37. Organizations must decide if they are going to have a ______ philosophy or a
longevity philosophy.
A. evaluation
B. assessment
C. performance
D. seniority
38. Morgan is working on the compensation package for bank tellers. Bank customers
like to see the same faces in the bank when they come in to talk about their money.
Therefore, Morgan needs to find a way to reduce turnover among the tellers. Adopting
a(n) ______ organizational philosophy on compensation might be a good idea.
A. below-the-market
B. at-the-market
C. pay-for-longevity
D. pay-for-performance
39. Ling’s organization is in a very competitive industry and getting goods to market
quickly is vital to the organization’s survival. For Ling, adopting a(n) ______
organizational philosophy on compensation might be a good idea.
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
A. at-the-market
B. below-the-market
C. pay-for-longevity
D. pay-for-performance
40. Vladimir’s organization gives raises for completing certain tasks, not just showing up
and being loyal to the firm. Vladimir’s organization pays more for ______.
A. performance
B. competence
C. compression
D. structure
41. Aasia’s organization uses a differentiation strategy. To encourage worker to bring
knowledge, skills, and abilities to the job that can allow them to analyze problems and
come up with creative solutions, the organization might adopt a(n) ______ philosophy
on compensation.
A. skill-based pay
B. above-market
C. at-market
D. competency-based pay
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
42. ______ wage theory says that if a company pays higher wages, it can generally hire
better people who will in turn be more productive.
A. Competency
B. Compression
C. Efficiency
D. Rate
43. Mallory would like to attract better workers and enhance her organization’s
employment brand. Adopting a(n) ______ organizational philosophy on compensation
could help her achieve her goals.
A. at-market
B. above-market
C. pay for longevity
D. pay secrecy
44. Katrina’s organization is hiring for low-skilled jobs in an industry where
unemployment is high and it is easy to find replacement workers. Adopting a(n) ______
organizational philosophy on compensation could allow her to hire plenty of workers.
A. wage compression
B. below-market
C. pay for longevity
D. skill-based pay
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
45. ______ occurs when new employees require higher starting pay than the historical
norm, causing narrowing of the pay gap between experienced and new employees.
A. Wage compression
B. Rate range
C. Competency-based pay
D. Pay secrecy
46. Wage compression can weaken the desired link between pay and performance,
creating significant ______ on the part of long-term employees.
A. equity
B. satisfaction
C. dissatisfaction
D. compression
47. Employers are usually unaware that ______ exists until problems surface.
A. pay compression
B. dissatisfaction
C. satisfaction
D. equity
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
48. The major provisions of the ______ cover minimum wage, overtime issues, and
child labor rules.
A. Fair Pay Act
B. Wage and Rule Act
C. Equal Pay Act
D. Fair Labor Standards Act
49. Halle plans to pay her workers the lowest hourly rate of pay generally allowed under
the Fair Labor Standards Act. In other words, Halle will pay her workers ______.
A. skill-based pay
B. overtime wages
C. at-market wages
D. minimum wage
50. The ______ is the lowest hourly rate of pay generally permissible by federal law.
A. pay rate
B. minimum wage
C. wage compression
D. overtime
51. ______ is higher than minimum, federally mandated wage, required for nonexempt
employees if they work more than a certain number of hours in a week.
Lussier, Human Resources Management 3e
SAGE Publishing, 2019
A. Wage compression
B. Pay rate
C. Overtime
D. Minimum wage
52. Teens aged 14 or 15 may work ______ school hours for no more than 3 hours on a
school day, 18 hours in a school week, 8 hours on a nonschool day, and 40 hours in a
nonschool week.
A. outside
B. inside
C. during
D. any
53. ______ is the principle that when jobs are distinctly different but entail similar levels
of ability, responsibility, skills, and working conditions, they are of equal value and
should have the same pay scale.
A. Equity theory
B. Comparable worth
C. Expectancy theory
D. Pay structure