Compensation Managment
MGT-438

Name: ______Date: ______

1. / Social and political context factors include all of the following except:
A. / legal and regulatory requirements.
B. / influence of other HR activities.
C. / cultural differences.
D. / workforce demographics.
E. / all of the above.
2. / The premise associated with adopting best pay practices is it will allow an employer to gain preferential access to superior human resource:
A. / talent and competencies.
B. / policies and procedures.
C. / labor unions and management relationships.
D. / self-managing teams.
E. / affirmative action and non-discriminatory practices.
3. / In most European countries:
A. / pay systems communicate a need for change in the organization.
B. / unions play a lesser role in pay determination than in the U.S.
C. / pay systems tend to be based more on markets and performance than in the U.S.
D. / pay plays a supporting role in the overall HR strategy.
E. / none of the above.
4. / An incentive payment:
A. / will increase base wages in future years.
B. / is nontaxable and therefore highly preferred by employees.
C. / may be made at the beginning of a quarter for expected performance during that quarter.
D. / can be based on individual or group performance.
E. / all of the above.
5. / The two main categories of pay are:
A. / direct and indirect compensation.
B. / total compensation and relational returns.
C. / cash compensation and benefits.
D. / cash compensation and allowances.
E. / None of the above.
6. / The characteristics of a cult-like organization are:
A. / high pay – low commitment.
B. / low pay – low commitment.
C. / high pay – high commitment.
D. / low pay – high commitment.
E. / none of the above.
7. / According to the concept of internal labor markets, pay for non-entry jobs is heavily influenced by:
A. / availability of skills in the external market.
B. / the wage paid at entry level.
C. / internal factors, such as the organization's strategy, technology, human capital required and other HR systems.
D. / tenure with the organization.
E. / wages paid by other organizations for similar jobs.
8. / Which of the following is not a dimension used to describe pay structures?
A. / The number of levels
B. / Validity of the structure
C. / Criteria used to support the structure
D. / Pay differentials among levels
E. / None of the above
9. / The major factors that shape internal structures are:
A. / boundary-spanning roles of management.
B. / labor unions.
C. / job enrichment programs.
D. / external and organization factors.
E. / re-engineering and human resource planning tools.
10. / Data that involves the elemental tasks or units of work and emphasizes the purpose of each task is referred to as:
A. / human resource planning.
B. / job content.
C. / internal relationships.
D. / affirmative action.
E. / job identification.
11. / When job analysis is done for compensation purposes, data collected must focus on:
A. / the type of training needed to perform the job effectively.
B. / establishing similarities and differences among jobs.
C. / the typical career path for a family of jobs.
D. / the performance levels of job incumbents.
E. / task inventories.
12. / The knowledge, skills, and abilities required to adequately perform the tasks are the:
A. / job analyses.
B. / job evaluations.
C. / performance appraisals.
D. / position analyses.
E. / job specifications.
13. / Which is not a component of the point plan method?
A. / Job analysis
B. / Compensable factors
C. / Benchmark jobs
D. / Weighting of factors
E. / Whole job comparisons
14. / A systematic process designed to aid in determining the relative worth of jobs and establishing pay differentials among jobs within an organization is:
A. / the point method.
B. / job evaluation.
C. / market pricing.
D. / performance appraisal.
E. / broad banding.
15. / The final result of the job analysis-job description-job evaluation process is:
A. / an array of pay rates for all the jobs in an organization.
B. / a compensation strategy.
C. / a structure, a hierarchy of work.
D. / external alignment.
E. / all of the above.
16. / Lack of consistency, i.e. reliability, among evaluators:
A. / is common when evaluators work in jobs different from those being evaluated.
B. / can be improved by using evaluators who are familiar with the work and trained.
C. / primarily affects the “hit-rates” for benchmark jobs.
D. / decreases when the predetermined ranking is for benchmark jobs.
E. / is a greater problem in quantitative than conventional job evaluation.
17. / All of the following outcomes are supported by the research on skill-based plans except:
A. / they are well accepted by employees because they see the connection between the plan, the work, and the amount of the paycheck.
B. / the design of the certification process is crucial in the perception of fairness by employees.
C. / they provide strong motivation for employees to increase their skills.
D. / they have consistently resulted in increases in productivity.
E. / younger, more educated employees with strong growth needs, organizational commitment, and a positive attitude toward workplace innovations were more successful in acquiring new skills.
18. / Studies of experienced compensation administrators find the following in setting pay:
A. / job evaluation data have a larger effect than did market data.
B. / current pay data have a larger effect than did market data.
C. / job titles have a larger effect than did job evaluation data.
D. / job titles have a larger effect than did market data.
E. / market data have a larger effect than did job evaluation data.
19. / Human capital theory assumes that people are paid at the value of their:
A. / marginal revenue.
B. / marginal product.
C. / reservation wage.
D. / competitors pay level.
E. / none of the above.
20. / If employees do not feel they are being fairly paid compared to employees in similar jobs outside the organization, this is a problem of:
A. / employee contributions.
B. / the relative importance of jobs.
C. / external competitiveness.
D. / internal alignment.
E. / inflationary pressure.
21. / The maximum pay level that an employer can set, although labor market conditions and legal requirements put a floor on the pay level required to attract sufficient employees, is determined by the:
A. / labor markets.
B. / product market.
C. / human resource allocation.
D. / job market.
E. / employee turnover.
22. / A market pay line:
A. / reflects an organization's internal alignment policy.
B. / links a company's benchmark jobs with market rates paid by competitors.
C. / provides an accurate prediction of an organization's entry level pay rates.
D. / compares an organization's minimum and maximum pay rates for each skill level.
E. / reflects the ratio between an organization's total compensation and base wage rates.
23. / Broadbanding:
A. / is a means of dealing with cost of living variations among geographic areas.
B. / bases pay on going rates in the local labor market.
C. / is more common for professional jobs than for office/clerical jobs.
D. / encourages cross-functional growth and development in an organization.
E. / provides more guidance for managers in setting individual pay than do grades.
24. / Measures of central tendency include:
A. / dispersion.
B. / percentiles and quartiles.
C. / means, medians, and modes.
D. / standard deviation.
E. / pay ranges.
25. / Which of the following wage components is least risky to the employee?
A. / Lump-sum bonus.
B. / Profit sharing.
C. / Success-sharing plans.
D. / Individual incentives.
E. / Gain sharing.
26. / When an organization wants to encourage employees to work together cooperatively, it may consider using:
A. / individual incentives.
B. / higher base pay.
C. / riskier pay.
D. / group incentives.
E. / higher benefits.
27. / If an individual perceives disequilibrium in the input/output ratio when comparing the ratio to others, he/she is likely to:
A. / feel under-rewarded.
B. / feel inequity exists.
C. / decrease inputs.
D. / feel equity exists.
E. / increase inputs.
28. / Which of the following is an advantage of using group incentive plans?
A. / Easier to develop performance measures than for individual plans
B. / Reduces turnover among all employees
C. / Increases participation of employees in decision making process
D. / Line of sight is enhanced
E. / A & C
29. / All of the following are advantages of stock option plans except:
A. / clear performance-reward links.
B. / option awards have minimal impact on the financial statements of a company at the time they are granted.
C. / if properly communicated, can have powerful impact on employee behavior.
D. / tax deferral to employee.
E. / all of the above.
30. / Individual incentive systems are most appropriate when:
A. / individual contributions are easily measured.
B. / work stoppages are regular and uncontrollable.
C. / management information and cost accounting systems are relatively primitive.
D. / firms are losing market share.
E. / all of the above.
31. / All of the following are reasons employee benefits are cost effective except:
A. / most employee benefits are not taxable.
B. / many group-based benefits can be obtained at a lower rate than by individual employees.
C. / recurrent tax reform proposals continue to increase the favorable tax status granted to many benefits.
D. / a well-designed benefits plan that meets employee needs may yield advantages far beyond the dollar cost.
E. / all of the above are valid reasons.
32. / When asked to comment on the relative importance attached to different types of benefits employees ranked medical coverage:
A. / as the most important benefit they receive .
B. / as more important for an aging workforce.
C. / as being second to profit sharing and disability plans.
D. / behind paid vacation and holidays.
E. / none of the above.
33. / Which of the following has not contributed to the growth in employee benefits?
A. / World War II price controls, which limited wage increases but gave new benefits greater opportunity for introduction
B. / Employer pragmatism, e.g., the expectation that benefits would increase job satisfaction of employees
C. / Legal requirements for equitable treatment imposed by the EEOC
D. / Cost effectiveness of benefits
E. / All of the above contributed to the growth in employee benefits
34. / The Pension Benefit Guaranty Corporation:
A. / guarantees that organizations will provide pension benefits to employees.
B. / guarantees the right of women to receive actuarially equivalent benefits to those of men.
C. / guarantees payment of vested benefits to employees formerly covered by terminated pension plans.
D. / guarantees the level of benefits will be sufficient for survival at or above the poverty threshold upon retirement.
E. / all of the above are guaranteed by different sections of the charter for the Pension Benefit Guaranty Corporation.
35. / 401k plans are:
A. / a type of savings plan.
B. / dental packages permissible under section 401 of the Internal Revenue Code.
C. / any form of flexible benefits package which costs less than $400,000.
D. / the name for tax reform which eliminates most forms of benefits as legitimate business expenses.
E. / none of the above.
36. / Unemployed workers who meet eligibility requirements are entitled to weekly benefits:
A. / based on a percentage of an individual's earnings over a recent 52-week period.
B. / based on an individual's length of service with the employer.
C. / equal to 60% of their weekly earnings.
D. / that are coordinated with a 401(k) plan.
E. / none of the above.
37. / Which of the following is not a factor in the definition of equal work under the Equal Pay Act?
A. / Working conditions
B. / Value of the product produced
C. / Responsibility
D. / Effort
E. / Skill
38. / The use of market data to justify pay differences for different jobs:
A. / can be used as a defense to justify pay differentials among jobs in the public sector.
B. / is viewed as an appropriate defense in reverse discrimination cases.
C. / can be used to justify a claim of comparable worth.
D. / has been supported by court decisions.
E. / encourages the use of job evaluation to support claims of pay discrimination.
39. / Which of the following is not an interest of government related to compensation decisions?
A. / Determining if procedures for deciding pay are fair
B. / Determining if safety nets for the unemployed and disadvantaged are sufficient
C. / Protecting employees from exploitation
D. / Determining if increasing the demand for labor results in increased wages
E. / None of the above
40. / ______discrimination denies minorities workplace opportunities, while ______discrimination addresses pay minorities receive for their jobs.
A. / disparate impact, disparate treatment
B. / valuation, access
C. / disparate treatment, disparate impact
D. / access, valuation
E. / job, wage
41. / According to the Department of Labor, what factors should be looked at when assessing whether jobs are substantially equal?
A. / Skill
B. / Effort
C. / Responsibility
D. / Working conditions
E. / All of the above
42. / Which budgeting method places most responsibility on individual managers?
A. / Bottom-up
B. / Control to compa-ratio
C. / Control to planned level rise
D. / Top-down
E. / Unit level budgeting
43. / Which of the following is not one of the key factors that influences a decision on how much to increase the average pay level for a budget period?
A. / Ability to pay
B. / Turnover effects
C. / Cost of living
D. / Ratio of contingent employees to full-time employees
E. / Competitive market forces
44. / All of the following are recommended steps in the compensation communication cycle by WorldatWork except:
A. / defining the objectives of the communication program.
B. / operate an informal communication network.
C. / collecting information from executives, managers, and employees.
D. / developing a communication strategy that will accomplish the original objectives.
E. / determining the most effective media and conduct the campaign.
45. / The base wage is one of the relational forms of total compensation returns.
46. / In Japan, the traditional view of compensation is something given by one's superior.
47. / Large conglomerates typically use the same business strategies; this implies the same compensation strategy is used in each of the company's different business units.
48. / Microsoft and Bristol-Myers Squibb approach the five dimensions of compensation strategy in very similar ways.
49. / All internal pay structures need to comply with government laws and regulations of the countries in which the organization operates.
50. / Internal alignment refers to pay relationships among different jobs/skills/competencies among different organizations within a single industry.
51. / Reducing the number of levels in a structure may reduce opportunities for recognition and advancement of employees.
52. / The job specifications portion of a job description specifies the most important responsibilities of a job.
53. / Job evaluation supports work flow by integrating each job's pay with its relative contributions to the organization.
54. / In the point method, each job's relative value, and hence its location in the pay structure, is determined by the weighting scheme assigned to it.
55. / The pay structures form many elementary or high school teachers are usually based on their knowledge as measured by education level.
56. / Employee acceptance of the process is crucial if the organization is to have any hope that employees will accept the pay as fair.
57. / External competitiveness implies a pay level greater than that paid by competitors.
58. / Based on the research, it is likely an employer's pay level will not gain a competitive advantage; however, the wrong pay level may place an organization at a competitive disadvantage.
59. / Broad banding, which involves collapsing salary grades into a few broad bands, supports redesigned, downsized, or boundaryless organizations that have eliminated layers of managerial jobs.
60. / Adjustments to an employee's pay are based on the overall upward movement of pay rates caused by the supply of labor in the market.
61. / Data indicate the presence of incentive systems positively affects both the recruitment of job candidates and the willingness of employees to stay with an organization.
62. / Employee performance depends on three general factors: (1) skill and ability to perform task; (2) level of education; and (3) motivation to perform.
63. / Over the long run for employers, merit pay is an inexpensive and efficient method of compensation.
64. / Group pay-for-performance plans are becoming more popular because they focus an organization on evolving into a learning organization.
65. / The benefits planning process must address the vital question of the relative role of benefits in a total compensation package.
66. / A cafeteria-style or flexible benefit program is designed to provide employees with minimal choices in choosing benefit options of greatest value to them.
67. / Living wage laws cover only base wages.
68. / The FLSA's most current application surrounds the use of “on-call” employees who must make themselves available to respond outside the usual workday.
69. / What are the three major provisions of the Fair Labor Standards Act (FLSA)?
70. / According to the Equal Pay Act, what are the four factors to define equal work?
71. / What does the Americans with Disabilities Act require of job descriptions?