Chapter 12—Providing Benefits and Services
MULTIPLE CHOICE
1. Employee benefits and services are generally defined as _____ to employees for their membership or
participation in an organization.
a.
in-kind payments
b.
employer contributions
c.
special compensation
d.
employee entitlements
e.
due compensation
2. A employee discount on its own products provided by a firm to its employees is an example of
________________.
a.
in-situ co-payments
b.
employer contributions
c.
exempt compensation
d.
employee entitlements
e.
employee services
3. ___________ is the most frequently reported objective that organizations hope to achieve by offering
appropriate benefits and services.
a.
Control of benefits costs
b.
Retention of employees
c.
Increased productivity of employees
d.
Maintenance of work-life balance
e.
none of the above
4. Why do both marginally-performing employees and high-performing employees receive the same
health insurance, vacation days, sick days, and such?
a.
Research has shown that paying differential benefits for differential performance has no
impact on employee motivation.
b.
It is required by law that employee performance not determine receipt of benefits.
c.
It violates E.E.O. to give high performers greater benefits than marginal performers.
d.
Benefits and services are available on a noncontingent basis, employees receive the same
benefits and services regardless of job performance.
e.
None of the above is true.
5. Unfortunately, the money employers spend on benefits and services does not always produce
employee motivation and productivity due to:
a.
too many hierarchical levels
b.
benefits and services generally are not tied to employee performance
c.
interpersonal conflict
d.
interdepartmental conflict
e.
an indeterminate time horizon
6. Employee benefits are implemented in response to all but one of the following:
a.
employee needs
b.
employer need to improve worker productivity
c.
employer need to reduce total labor costs
d.
employer desire to be socially responsible
e.
employer need to recruit talented employees
7. If the business objective is to “establish the division as a recognized leader in support of its
community,” the most appropriate benefit response is to:
a.
develop an employee career counseling system to enhance employee competencies
b.
establish a corporate giving matching fund
c.
establish an employee assistance program
d.
develop various termination subsidies
e.
gradually transfer subsidiary employees into benefits culture
8. Which of the following is an example of a mandatory benefit provided by a legally required public
protection program?
a.
wellness programs
b.
paid vacation time
c.
unemployment compensation
d.
life insurance
e.
paid sick days
9. Which of the following is an example of a voluntary benefit provided by a private protection program?
a.
child care allowance
b.
paid sick days
c.
pensions and savings plans
d.
health insurance
e.
all of the above
10. Public protection programs are a response to
a.
unionization
b.
lobbying efforts by health care providers
c.
numerous lawsuits
d.
the hardships of the Great Depression
e.
paternalistic feelings held by a number of large employers
11. Which of the following benefits is the most costly to employers?
a.
retirement savings plans
b.
health insurance
c.
pension plans
d.
life insurance
e.
stock options
12. Most recently, _____ has been the most important economic condition in the management of employee
benefits
a.
inflation
b.
increasing laws and regulations
c.
fall of the stock market
d.
health care costs
e.
union contracts’ impact on non-union employers
13. Clarissa is comparing job offers from several firms in different industries. The salary the firms are
offering her are very similar, and she has decided to use the generosity of the benefits as the deciding
factor. Which of the following firms is likely to have the most generous benefits package?
a.
a textile manufacturing firm in South Carolina that has intense competition with low-cost
Asian manufacturers
b.
a small toy manufacturer with 18 employees
c.
a newly-formed, rapidly-growing service firm that has tripled in size in the last two years
d.
a large manufacturing company which makes top-selling luxury women’s cosmetics
e.
the information in the options above is insufficient to answer this question.
14. The total costs for benefits and services are ________for larger firms in service-providing industries as
for smaller firms in the same industry.
a.
about the same
b.
more than ten times as much
c.
more twice as much
d.
about one-half as much
e.
none of the above
15. ________ ensure that all policies and practices are consistent with legal requirements.
a.
Line managers
b.
HR professionals
c.
Employees
d.
all of the above
e.
none of the above
16. The growing approach to managing employee benefits is the
a.
contractor-defined approach
b.
employee involvement approach
c.
laissez faire approach
d.
autocratic approach
e.
legislated approach
17. Which of the following is NOT a legally required employee benefit?
a.
Workers compensation
b.
Unemployment compensation
c.
Social Security
d.
Family medical leave
e.
All of the above are legally required
18. Which of the following statements about unemployment compensation benefits is true?
a.
These benefits are administered solely through state governments.
b.
Unemployment compensation varies by state
c.
These benefits are administered solely through the federal government.
d.
Unemployment compensation replaces about 90% of the employee’s before-tax income
e.
All employers pay the same tax rate to support employment compensation.
19. Which of the following is an example of a public protection program?
a.
workers’ compensation
b.
group term life insurance
c.
payouts from profit-sharing
d.
dental insurance
e.
ESOPs
20. Under The Family and Medical Leave Act of 1993, employers with _____ or more employees are
required to comply.
a.
15
b.
25
c.
50
d.
100
e.
There is no specified number of employees
21. Amelia is delighted to learn that her and her husband’s adoption of a 7-year-old Ukrainian orphan will
soon be finalized. When she consults her HR director about FMLA leave, he accurately tells her
_____.
a.
FMLA gives 12 weeks of leave for natural birth, but only 6 weeks for adoption.
b.
FMLA gives 12 weeks of leave for natural birth, but no leave for adoption.
c.
FMLA gives 12 weeks of leave for natural birth and adoption of infants under 12 months
old, but none for the adoption of older children.
d.
FMLA gives 12 weeks of leave for natural birth and adoption, but only for children who
are residents of the U.S.
e.
FMLA gives 12 weeks of leave for natural birth and adoption.
22. Which of the following statements about voluntary protection programs is true?
a.
The largest category of voluntary protection plans is medical insurance.
b.
They are required by law.
c.
Stock options are not a part of private protection plans.
d.
They do not include any type of unemployment benefits.
e.
They include retirement income plans and capital accumulation plans.
23. A qualified retirement income plan:
a.
is only available to top management
b.
does not have to adhere to any strict tax regulations
c.
is regulated by the Department of Justice
d.
replaces Social Security in participating organizations
e.
receives favorable tax treatment
24. _____ do not adhere to strict tax regulations, cover only select groups of employees, and do not
receive favorable tax treatment.
a.
Qualified retirement income plans
b.
Administered benefit packages
c.
Cafeteria incentive plans
d.
Nonqualified retirement income plans
e.
Nonparticipative retirement income plans
25. With a defined benefit plan:
a.
an employee can receive a lump sum amount on retirement
b.
the benefits received on retirement vary by the employee’s age and length of service
c.
employees can move to another job and carry their retirement accounts with them
d.
the benefits begin the day the employee turns 60
e.
the survivors will receive the benefits in the event the employee dies before the retirement
funds are paid out
26. A plan is referred to as noncontributory when:
a.
it is tax deductible
b.
only the employee contributes to it
c.
only the employer contributes to it
d.
only the federal government contributes to it
e.
the employer matches any finds the employee chooses to contribute
27. Alfrie’s employer contributes an amount equivalent to 8 percent of her salary each month to a(n)
_____. Alfrie personally contributes $100 monthly. When she retires, these accumulated funds will be
used to provide her with an annuity.
a.
individual retirement account
b.
profit-sharing plan
c.
nonqualified income retirement plan
d.
contributory plan
e.
thrift plan
28. Which of the following is a concern created by shifting the risk of poor investment decisions from the
employer to the employee?
a.
How can employees weather big downswings in the market, especially when a downsizing
occurs near the age of retirement?
b.
What will many employees who were eligible for 401(k)s and chose not to participate do
when they discover that they have too little money when they retire?
c.
What about the many employees who may not have the financial knowledge needed to
invest wisely?
d.
How will society treat future retirees who do not have the money they need during
retirement?
e.
all of the above are concerns
29. Clarissa and Alan, a married couple, recently graduated from a Midwestern university. They plan to
work in the Midwest for five years while saving money to move to Denver. In their present job search
in the Midwest, Clarissa and Alan would be most attracted to a company that offered _____.
a.
portable benefits
b.
excellent health benefits
c.
advanced training and tuition reimbursement
d.
401(k) plan
e.
long-term care insurance
30. Richard is trying to decide between a defined benefit plan for retirement and a cash balance plan.
Richard is 27 years old, unmarried, and is in an occupation (computer software design) that causes him
to move from employer to employer. He has already worked for three companies since he received his
bachelor’s degree. As his advisor, which plan would you recommend to Richard?
a.
Defined benefit plans are covered by ERISA and guaranteed by the PBGC. This is
definitely Richard’s best choice.
b.
Defined benefit plans will increase with Richard’s tenure in the organization. When he
retires, he will have accumulated high benefits.
c.
Cash balance plans pay out lump sums when Richard leaves the company. This will be
advantageous to Richard if he continues to change employers frequently throughout his
career.
d.
Cash balance plans pay out lump sums for employees who have been with the company a
minimum of 20 years. If Richard does not plan to stay with an employer that long, he
should go with a defined benefit plan.
e.
The only differences in the two kinds of plans involve the employer’s accounting and tax
management. It makes no difference to the employee, although it is of great importance
for HR benefits managers.
31. Charles is one year from retirement when he reads in the newspaper that his employer has been
accused of taking the money from the employees’ defined benefit retirement plan to finance the
reconfiguration of the Houston manufacturing plant. Under which law will his employer be
prosecuted?
a.
Social Security Act
b.
Economic Recovery and Tax Act
c.
Federal racketeering law
d.
Employee Retirement Income Security Act
e.
Economic Growth and Tax Reconciliation Act
32. Which of the following statements about laws requiring employers to provide services and benefits to
their employers is true?
a.
The first law that actually dealt with employee benefits was passed in 1972.
b.
The Pregnancy Discrimination Act requires employers to grant equal benefits for
pregnancy as for other disabilities
c.
The Family and Medical Leave Act requires all employers to grant an employee up to
twelve weeks unpaid leave annually.
d.
The Employee Retirement Income Security Act was designed to protect the interests of
workers covered by private retirement plans.
e.
The Economic Recovery Tax Act gave employers tax credit for providing health benefits
for their employees.
33. The Employee Retirement Income Security Act:
a.
established provisions regarding vesting
b.
was designed to protect the interests of workers covered by private retirement plans
c.
does not require an employer to offer its employees a pension fund
d.
states that employees are eligible to participant in an employer’s petition fund after one
year of service or at age twenty-five
e.
is accurately described by all of the above
34. Although healthcare benefits and services are very expensive for employers, most employees view
coverage as an _____.
a.
incentive
b.
perk
c.
entitlement
d.
legal duty
e.
gift
35. In a health maintenance organization (HMO), _____.
a.
the employee gets to choose his/her own doctor from a list of health care providers who
offer discounted services to members of the HRO
b.
are a high cost / high quality option for employers seeking to offer excellent medical care
to their employees
c.
the medical services are offered by Blue Cross / Blue Shield
d.
the medical services are usually offered by the employer organization in-house
e.
none of the above are true
36. Which of the following statements about preferred provider organizations (PPOs) is true?
a.
Employers like PPOs because they are highly regulated.
b.
Companies with at least 25 employees who live in a PPO service area are legally required
to offer membership in the PPO as an alternative to regular group health coverage.
c.
Employees who participate in a PPO are required to use the plan’s providers exclusively.
d.
Employers contract with health care providers to deliver discounted services to
participants.
e.
All of the above statements about PPOs are true.
37. Yvette is a legal secretary for one of the largest law firms in the state. Each day, there is a Weight
Watchers’ brown-bag lunch program for anyone who wishes to attend. Yvette has attended three times
a week in the last year and has lost 20 pounds. This is best categorized as _____.
a.
an employee assistance program
b.
an HMO program
c.
a perk
d.
a wellness program
e.
an incentive plan
38. Employee assistance programs (EAPs):
a.
are specifically designed to meet the needs of employees with chronic personal problems
that hinder their job performance
b.
serve as a form of indirect compensation that benefits the individual and the firm
c.
often serve employees with drug or alcohol additions
d.
can help employees cope with eating disorders, financial problems, smoking cessation,
and AIDS
e.
are accurately described by all of the above
39. Which of the following statements is true?
a.
In the U.S., most employees get paid leave for some holidays.
b.
In the U.S., employees always take whatever vacation days they have earned.
c.
Vacation days are usually tied to job performance
d.
Vacation days do not vary by rank in the organizational hierarchy.
e.
Sabbaticals are given in situations where the employee has serious health problems.
40. In setting up vacation programs, employers need to determine all of the following EXCEPT:
a.
whether to allow employees to defer vacations
b.
what pay rate applies to employees on vacation
c.
whether to base vacations on employee productivity or employee tenure
d.
whether to allow employees to be paid in lieu of a vacation
e.
whether to base vacation on scheduled hours or hours actually worked
41. Jean-Claude is an international financial specialist who is considering job offers from several different
organizations. He is an avid outdoorsman, keenly interested in wildlife photography in all climates. He
prefers to have as much personal time as possible to pursue his hobby. He has been offered positions
with companies in each of the following countries. Which should Jean-Claude select?
a.
U.S.
b.
Japan
c.
United Kingdom
d.
Finland
e.
Mexico
42. Which of the following is NOT a benefit of paid-time-off plans (PTOs):
a.
PTOs combine vacation, sick, and personal days (and sometimes holidays) into one bank.
b.
PTOs ease leave administration
c.
PTOs help firms stay competitive with other companies
d.
PTOs foster work-life balance
e.
All of these are benefits of PTOs
43. Which of the following is an on-the-job paid leave benefit that an employer might want to consider
because of its on-the-job benefit?
a.
clothes-changing time
b.
getting-ready time
c.
lunch periods
d.
use of onsite physical facilities
e.
wash-up time
44. Which of the following is NOT an example of child care services an employer might want to consider
in order to remain competitive in the job market?
a.
scholarship for dependents
b.
flexible scheduling
c.
profit-sharing accounts for dependents
d.
adoption benefits
e.
sick-child care
45. Clarence’s father and mother are in their eighties and are beginning to show their age. In fact, Clarence
is concerned that his mother may be showing signs of Alzheimer’s. His father has macular
degeneration and is going blind. His parents are living on their Social Security payments because all of
their savings were invested in Enron. Clarence is a bachelor and an only child, and has a job requiring
15 days of travel per month. What kind of employee benefit would Clarence most be interested in?
a.
family leave
b.
disability insurance
c.
life insurance
d.
flexible scheduling
e.
long-term care insurance
46. Reasons for employers to provide domestic partner benefits include all of following EXCEPT:
a.
to attract and retain talented employees
b.
to comply with the firm’s nondiscrimination policy
c.
to comply with federal EEO guidelines
d.
to comply with state laws and local ordinances
e.
all of the above are reasons to provide domestic partner benefits
47. Jack and Mark have been living together in a romantic relationship for over two years. They own a
home together and pool their income into joint bank accounts. Which of the following statements is
true?
a.
Jack may be able to put Mark on his health benefits because they have a common law
marriage.
b.
Jack may be able to put Mark on his health benefits because they are spousal equivalents.
c.
Same-sex partners can only be covered on their partner’s health insurance in certain
geographical areas.
d.
Spousal equivalent policies only refer to gay and lesbian relationships.
e.
Depending on where they live, their company may be required to provide domestic partner
benefits.
48. Why are employers willing to invest money in an educational expense assistance for their employees?
a.
to minimize employee skill obsolescence
b.
to help train employees for new, unfamiliar jobs that come as a result of downsizing
c.
to help employees deal with jobs that have been modified as a result new technology
d.
to upgrade employee skills for higher positions
e.
to do all of the above
49. In order to get the most employee satisfaction from benefits, HR professionals should:
a.
communicate qualities of existing benefits to employees
b.
conduct employee surveys
c.
allow the employees to select their own benefits
d.
allow employees input into benefit design
e.
all of the above
50. Employers use have sought to reduce their costs by shifting some health care costs to employees.
Which of the following represent increase costs now paid by employees?
a.
Increased copays for drugs
b.
Increased deductibles
c.
Increased premium contribution
d.
Increased out-of pocket expenses
e.
all of the above
51. Charlotte has been suffering from severe migraine headaches that are causing her to visit her HMO
almost weekly. This has been going on for two months, and Charlotte is still losing many workdays
due to illness. The HMO has given Charlotte’s medical file to a reviewer to examine her symptoms,
treatment plan, medication, medical history, etc. This is called _____.
a.
cost containment action
b.
standard practice
c.
case management
d.
price control
e.
medical malpractice review
52. To further control the cost of providing health care for their employees, a company might employ the
strategy of:
a.
a hospital utilization program
b.
case management
c.
cost sharing with employees
d.
health promotion initiatives
e.
any of the above
TRUE/FALSE
1. Driving the desire to offer fewer employee benefits and services are the pressures to attract and retain
valued employees and thereby to compete effectively against other employers in the labor market.
2. During the economic boom of the 1990s, employers were relatively generous in offering benefits—a
growing economy meant that simply finding enough people to staff organizations required less focus
on controlling costs.
3. To attract and retain talent that is in short supply, a few employers compete successfully by providing
new and innovative benefits and services.
4. To capitalize on the money spent on employee benefits and services, employers must consider their
business strategies.
5. Legally required private protection programs include Social Security, unemployment compensation,
life insurance, and disability insurance.
6. Voluntary protection programs, such as health insurance, are legally required.
7. Tax regulations for benefits and services can substantially influence both their real cost to employers
and their real value to employees.
8. An organization’s fundamental values determine how it manages employee benefits and services.
9. Injury or illness that occurs as the result of an on-the-job event usually entitles workers to workers’
compensation benefits.
10. Under The Family and Medical Leave Act of 1993, employers covered under the act do not have to
maintain preexisting employee health insurance during the leave period.
SHORT ANSWER
1. Why do employers provide benefits and services to their employees?
2. What is the primary reason why benefits and services often do not help an organization motivate its
employees?
3. When were the first federal mandatory public protection program enacted?
4. During what historical period did benefits and services to employees become more widespread, and
why?
5. Why are portable benefits more important these days than previously?
6. List four of the most common types of off-the-job paid leaves for the typical employee?
ESSAY
1. In the chapter opening vignette “Managing Human Resources at Ultimate Software,” how does the
company view its employees? What were the benefits to the company from its decision to stand by its
employees during the recession?
2. Imagine you are talking to a manufacturer of leather handbags that has nine employees. How would
you respond to the question, “Do you believe benefit packages should be selected on the basis of what
is good for the employee as well as what is good for the employer?”
3. What are the similarities and differences between Social Security retirement and pensions?
4. In the feature Managing Ethics: Ethical Implications of Defined Contribution Plans, what ethical
concerns were raised when IBM froze its defined benefit plan and began automatically enrolling
employees in a 401(k) plan?
5. In the feature Managing Ethics: Ethical Implications of Defined Contribution Plans, IBM froze its
defined benefit plan and began automatically enrolling employees in a 401(k) plan. What steps did
IBM take to help protect its employees against the downside risks of 401(k)s?
6. What are the risks associated with profit-sharing programs for employees and firms?
7. Alhambra Manufacturing is a medium-sized company that makes baggage conveyors. Its CEO is
thinking of setting up an on-site daycare/eldercare center, but he is concerned about potential negative
response from his childless/parentless employees to this indirect compensation that will not benefit
those without either children or elderly parents. What is your opinion?