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VIII. Discussion Questions and Suggested Answers
2.1. Identify the contextual influence that you believe will pose the greatest challenge to
companies’ competitiveness and identify the contextual influence that will pose the
least challenge to companies’ competitiveness. Explain your answer.
2.2. Should the government raise the minimum wage? Explain your answer.
2.3. Do unions make it difficult for companies to attain competitive advantage? Explain
your answer.
2.4. Explain the pros and cons of adjusting pay based on cost-of-living differences from a
company’s perspective and an employee’s perspective.
2.5. Some people argue that there is too much government intervention, whereas others
say there is not enough. Based on the presentation of laws in this chapter, do you
think there is too little or too much government intervention? Explain your answer.
One could argue that the government doesn’t do enough to intervene based on the fact that
although many laws, acts, and decrees protect employees and employers alike, it is difficult to
VIII. End of Chapter Case; Instructor Notes, and Questions and Suggested Student
Responses
Case Name: Exempt or Nonexempt?
Instructor Notes
The Fair Labor Standards Act (FLSA) addresses the issues of minimum wage, overtime pay and
child labor. The FLSA requires employers to properly classify employees as Non-exempt
(covered by the Act) or Exempt (not covered by the Act). Many companies want to classify
In examining all of these factors, it is clear that Jane Swift and the other Shift Leaders should be
classified as Non-exempt.
Suggested Student Responses:
2.6. Why did Amy classify the Shift Leaders are Exempt? Are there any advantages to
Jones Department Store to having the Shift Leaders classified as Exempt?
Amy most likely assumed that the Shift Leaders met the Executive exemption under the FLSA.
2.7. Do you think that the shift leaders are properly classified as exempt? Why or why
not?
Answer to this question can be found in the MyLab
2.8. What are some factors that Amy should consider when determining if Shift Leaders
are Exempt or Non-exempt?
Amy should consider the fact that the Shift leaders spend a majority of their time working as
IX. Crunch the Numbers! Questions and Suggested Student Responses
Whether to Work Overtime or Hire Additional Employees
Questions:
2.9. Is it more cost effective to have current manufacturing employees work on an
overtime basis during the life of the contract or to hire new employees?
Overtime option:
1000 employees will have to work an extra 4 hours per week, for 4,000 extra hours each week.
There are 52 weeks in a year and the contract spans 5 years, so there are a total of 260 weeks.
Hire additional employees option:
Base pay for the additional workers at $20 hour x 2080 hours a year (52 weeks x 40 hours each
week) = $41,600 x 100 workers =$4,160,000 x 5 years =$20,800,000
Learning Objective: 2-5 Identify and discuss key employment laws pertinent to compensation
practice.
AACSB: Analytical thinking
2.10. Let’s assume that the unemployment rate in the area is low, which is making it
difficult to attract new manufacturing employees. ACME is finding that it is able to
overcome this problem by paying new employees at a higher hourly rate of $25 per
hour. Under this scenario, is it more cost effective to have current manufacturing
employees work on an overtime basis or to hire new employees?
Hiring additional employees at $25 per hour would result in a higher total base pay.
Base pay for the additional workers at $25 hour x 2080 hours a year (52 weeks x 40 hours each
2.11. Would it be more cost effective to hire 50 new employees as well as having half of
current manufacturing employees work overtime?
To find the cost of this scenario, you must total half of the projected overtime cost and half of the
cost to hire 100 employees.
Overtime: half of $31,200,000 = $15,600,000
XI. Assisted-Graded Questions
2.12. How would the compensation system change if the minimum wage provision of the
Fair Labor Standards Act of 1938 were repealed?
Answer to this question can be found in the MyLab
2.13. Suggest ways that companies in low-paying industries can increase their ability to
attract and retain highly qualified individuals.
Answer to this question can be found in the MyLab
MyManagementLab Only – comprehensive writing assignment for this chapter.
XII. Additional Case from the MyManagementLab Website; Instructor Notes, and
Questions and Suggested Student Responses
Case Name: Preparing for Growth at Waxman Candles
Instructor Notes
In determining a company’s compensation strategy, a company must analyze both external and
Suggested Student Responses:
2.14. What are some competitive forces that human resource management consultant will
consider in conducting a strategic analysis to determine compensation practices?
The consultant should examine the external market environment. In searching for some
experienced staff, such as marketing professionals, it is important to understand how to position
the company to compete for talent. The consultant should also make an assessment of the labor
AACSB: Analytical thinking
2.15. How will being in the growth stage impact the company’s compensation practices?
Even though the company appears to be financial stable, as a company in the growth stage they
