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Q:
When a work force is highly unionized:
A) compensation decisions are based only on performance.
B) managers have more control in compensation decisions.
C) workers are likely to disagree with internal and external equity.
D) pay is typically subject to negotiation and bargaining requirements.
Q:
Which of the following is most likely true regarding compensation systems?
A) Nonmonetary rewards tend to predominate in companies concerned with external equity.
B) External equity is easier to manage in decentralized pay systems.
C) The nine issues discussed in the text regarding compensation are interdependent with minimal influence on one another.
D) Centralized pay systems work best in large, diverse organizations.
Q:
Decentralizing pay decisions most likely enables a company to:
A) more effectively face legal challenges to compensation decisions.
B) better utilize the expertise of their compensation specialist.
C) build a stronger link between pay and performance.
D) better manage fixed pay-based compensation.
Q:
Karen, president of a small restaurant chain, would like to centralize compensation decisions. She asks you about the pitfalls of such a move, and you should most likely respond that:
A) internal equity would not be maintained.
B) it is likely that the company will not be able to defend itself legally.
C) external equity is difficult to maintain.
D) it is only beneficial during great economic prosperity.
Q:
Pay openness would work best in which of the following situations?
A) Company A - high employee involvement and a culture of trust
B) Company B - high degree of competition and employee turnover
C) Company D - significant pay differences between professionals
D) Company E - significant emphasis on nonmonetary rewards
Q:
The practice of secret pay in a compensation system generally leads to:
A) managers being more careful in their compensation decisions because they have to defend them.
B) an increase in the cost of mistakes in the pay-making decisions.
C) greater pay dissatisfaction among employees.
D) an egalitarian pay system.
Q:
You have just been hired at Corpus Entertainment, Inc. (CEI) and as part of your contract, you sign an oath that you will not divulge information about your compensation to your co-workers or any other employee of CEI. You realize that the company has a(n) ________ pay policy.
A) egalitarian
B) centralized
C) open
D) secret
Q:
The practice of openness in a compensation system generally leads to:
A) greater pay dissatisfaction among employees.
B) increased fairness in managerial pay decisions.
C) greater overall compensation costs.
D) increased team building.
Q:
An emphasis on monetary rewards will generally reward a company with:
A) more achievement and responsibility among employees.
B) an internal climate of cooperation among employees.
C) long-term employee commitment.
D) increased employee diversity.
Q:
Companies that emphasize monetary rewards are primarily associated with:
A) volatile markets.
B) high customer service demands.
C) high job security.
D) cross-functional teams.
Q:
Firms that use nonmonetary rewards are most likely trying to:
A) reinforce achievement and sales growth.
B) foster an internally competitive climate.
C) develop responsibility among employees.
D) emphasize customer service and loyalty.
Q:
Companies that pay employees at rates above the market are generally:
A) small start-up companies.
B) involved in global expansion.
C) companies that struggle financially.
D) larger companies in less competitive industries.
Q:
Above-market compensation policies are more likely to:
A) create an impression of innovation and success.
B) improve employee morale and reduce employee turnover.
C) affect employee cooperation more than any other business policy.
D) reduce barriers between people who need to work closely together.
Q:
Elitist compensation systems are most likely:
A) beneficial to firms trying to expand market share.
B) implemented by newer, smaller businesses.
C) established in very competitive environments.
D) used by older firms with mature products.
Q:
Egalitarian compensation systems are:
A) problematic because of increased tensions between co-workers.
B) more common in older businesses with mature products.
C) important to developing a more stable work force.
D) becoming common in competitive environments.
Q:
The stockholders are concerned about the cost of perquisites. Management wants maximum flexibility to move people among jobs without having to adjust their compensation. Management also wants more joint-task accomplishment and better cooperation among employees. A(n) ________ compensation system will reinforce all these goals.
A) elitist
B) variable
C) egalitarian
D) job-centered
Q:
Garden of the Gods' (GOTG) employees are compensated according to their organizational level, with upper-level managers receiving more compensation than lower-level managers. GOTG uses a(n) ________ pay system.
A) elitist
B) egalitarian
C) internally equitable
D) knowledge-based
Q:
If management wants the compensation system to reinforce a traditional organizational structure and stability within the company, a(n) ________ compensation system is the best choice.
A) egalitarian
B) elitist
C) individual-centered
D) labor market-based
Q:
Which of the following is NOT a criticism of skill-based compensation systems?
A) Too much labor specialization
B) Unspecific job qualifications
C) Higher labor costs
D) Workplace chaos
Q:
Advocates of skill-based pay argue that it:
A) diminishes the need for changing technology.
B) improves employee specialization.
C) reduces absenteeism.
D) enhances recruitment.
Q:
An individual-based pay policy works best in which of the following situations?
A) Employees may have many opportunities to learn new skills.
B) Employees are expected to move up "through the ranks."
C) Employee turnover is low and jobs don't change often.
D) Jobs are standardized within the industry.
Q:
Job-based pay policies work best in which of the following situations?
A) Employees require little training for a job.
B) Employees' jobs don't change often.
C) Technology changes rapidly.
D) Turnover is fairly high.
Q:
An individual-centered compensation system:
A) focuses on employees' contribution and increases compensation based on the employee's ability to perform more duties successfully.
B) assumes that the tasks being performed, and the contribution of those tasks to the company, provide the best criteria for setting the wage pay system.
C) pays based on the number of hours during which the employees perform their assigned job.
D) stresses the value and prestige of the job being performed.
Q:
A compensation system that assumes that the tasks being performed and the contribution of those tasks to the company are the best criteria for setting the wage is a(n) ________-centered compensation system.
A) performance
B) individual
C) equity
D) job
Q:
A compensation system that assumes that employees should be compensated based upon their abilities, potential, and flexibility to perform multiple tasks is a(n) ________ compensation system.
A) traditional-oriented
B) knowledge-based
C) equity-based
D) job-centered
Q:
A company designing a compensation plan needs to make several decisions. Explain a company's pay options in terms of: fixed versus variable pay, performance versus membership, and individual versus job-based system.
Q:
Define the concepts of internal and external equity, describing two basic models a company may use, and explain how the objectives of internal and external equity can conflict.
Q:
________ is the perceived fairness of individual pay decisions.
Q:
________ is the perceived fairness of the pay structure within a firm.
Q:
The relative emphasis placed on performance versus membership depends largely on the organization's culture and beliefs of top management.
Q:
Membership-contingent compensation provides a similar wage to every employee in a given group, so long as they perform their job satisfactorily.
Q:
As an employee's base pay increases, it is likely that the percentage of variable pay that he or she receives will decrease.
Q:
The primary reason variable pay is the norm in U.S. industry is because it correlates labor costs with production costs and enhances a company's competitive position.
Q:
Balancing equity ensures that employees with seniority will receive greater compensation than more recent hires.
Q:
The distributive justice model of pay equity holds that the wage rate for a given occupation is set at a point where the labor supply and labor demand are equally distributed.
Q:
The perceived fairness of an employee's pay relative to what other employees are being paid for the same labor describes the concept of internal equity.
Q:
Additional Case 10.1
Brighton Manufacturing is reviewing its compensation system. The CEO wants employees to be paid wages and benefits comparable to Brighton's competitors. He wants a system that allows for maximum flexibility in reassigning workers to different jobs without requiring compensation adjustments each time. The Finance VP suggests that the company link compensation costs more closely to productivity and profit. When profits are down, compensation costs should be reduced as well. The Finance VP also believes that employees should be paid for what they produce, not for their time, and the compensation program should apply to all employees equally. The VP of HR suggests that the key to the company's success is their employees and advocates an individual-based compensation plan. People should be paid for their skills or knowledge, not just because they are fulfilling certain jobs. The VP of HR also feels that it would be simpler to implement a compensation system by level rather than by job.
Refer to Additional Case 10.1. The Finance VP would most likely favor a(n):
A) variable pay system.
B) membership-based system.
C) individual-centered system.
D) egalitarian compensation system.
Q:
Additional Case 10.1
Brighton Manufacturing is reviewing its compensation system. The CEO wants employees to be paid wages and benefits comparable to Brighton's competitors. He wants a system that allows for maximum flexibility in reassigning workers to different jobs without requiring compensation adjustments each time. The Finance VP suggests that the company link compensation costs more closely to productivity and profit. When profits are down, compensation costs should be reduced as well. The Finance VP also believes that employees should be paid for what they produce, not for their time, and the compensation program should apply to all employees equally. The VP of HR suggests that the key to the company's success is their employees and advocates an individual-based compensation plan. People should be paid for their skills or knowledge, not just because they are fulfilling certain jobs. The VP of HR also feels that it would be simpler to implement a compensation system by level rather than by job.
Refer to Additional Case 10.1. The CEO is primarily concerned about:
A) external equity.
B) skill-based pay.
C) distributive justice.
D) internal equity.
Q:
Companies using performance-based compensation systems tend to be:
A) publicly-held corporations in competitive markets.
B) smaller, rapidly growing companies that face strong competitive pressures.
C) larger firms with several layers of management that operate in relatively stable markets.
D) large firms that desire to break out of the "pack" and distinguish themselves from competitors.
Q:
A membership-contingent compensation system pays employees:
A) for the number of hours during which they perform their assigned jobs.
B) on the basis of the value of the job they perform.
C) on the basis of the skills used to perform their jobs.
D) for how well they do their particular job.
Q:
Rose works for a home interiors company. She hostesses several parties a week and sells various kinds of home decorations. She receives a commission on all that she sells. Rose receives:
A) fixed compensation.
B) membership-contingent compensation.
C) performance-contingent compensation.
D) risk sharing rewards.
Q:
A performance-contingent compensation system bases pay upon:
A) employee status.
B) specified hours.
C) required skills.
D) units produced.
Q:
Variable compensation takes a variety of forms, including:
A) base salary.
B) hourly wages.
C) profit sharing.
D) disability insurance.
Q:
According to your text, as employees' base pay increases, their:
A) variable pay decreases.
B) overall compensation stabilizes.
C) nonmonetary compensation decreases.
D) overall compensation is more subject to risk.
Q:
On average, ________ of a U.S. employee's pay is variable.
A) 5%
B) 10%
C) 15%
D) 20%
Q:
Variable compensation systems work best:
A) with smaller, less well-established firms with younger employees.
B) in difficult economies with high rates of inflation.
C) when the job market is flooded with qualified workers.
D) in larger, established companies that need significant productivity improvement.
Q:
An emphasis on external equity is most important for:
A) large, global corporations.
B) established firms in highly stable markets.
C) newer, smaller firms in quickly changing markets.
D) privately owned firms in highly competitive industries.
Q:
Balancing equity is most likely difficult because:
A) EEOC regulations are extensive and complicated.
B) internal and external equity often oppose one another.
C) open pay employers strive primarily for internal equity.
D) managers prefer focusing on establishing external equity.
Q:
A company using a labor market model holds the philosophy that:
A) the wage rate for any given job is set at the point where the supply of labor equals the demand for that labor in the marketplace.
B) internal equity is more important than external equity in a balanced labor market.
C) egalitarian pay policies are more effective than elitist policies when labor demand is high.
D) nonmonetary rewards are more effective motivators than monetary rewards.
Q:
According to your text, which of the following questions is LEAST relevant to developing an effective compensation plan?
A) Will compensation link pay with group performance?
B) Will the compensation plan be developed by HR managers?
C) Will compensation decisions be made by unit managers?
D) Will the compensation plan emphasize nonmonetary rewards?
Q:
You are trying to convince the management of Marcelle, Inc. to pay its employees the "going rate," no more, no less. You are trying to:
A) reach external equity.
B) reach internal equity.
C) reduce Marcelle's work force.
D) increase Marcelle's work force.
Q:
The distributive justice model is based on the idea that:
A) employees prefer keeping salary issues private.
B) employers pay what employees deserve to receive.
C) employees make input/output comparisons to their co-workers.
D) employers will never pay above-market wages unless external equity occurs.
Q:
A company designs its compensation system around the philosophy that employees exchange their skills and contributions for pay. As a consequence, employees feel fairly compensated when the ratio of their inputs and outputs is equivalent to those of other employees whose job demands are similar to their own. This company's compensation system is based on a ________ compensation model.
A) balanced equity
B) labor market
C) free market
D) distributive justice
Q:
The perceived fairness of what an employer pays, relative to what other employers pay for the same type of labor, is known as:
A) distributive justice.
B) egalitarianism.
C) internal equity.
D) external equity.
Q:
Cornilia and Janice have similar jobs at different firms. Janice is compensated with higher pay and better benefits than Cornilia, which bothers Cornilia. Cornilia's concern reflects the compensation issue of:
A) job versus individual pay.
B) external equity.
C) internal equity.
D) fixed versus variable pay.
Q:
In order for a compensation system to work well, it must:
A) enable the firm to achieve its objectives.
B) guarantee low employee turnover.
C) follow an egalitarian strategy.
D) meet federal guidelines.
Q:
Employee earnings:
A) correlate directly with employee job satisfaction.
B) are the most important factor in job acceptance.
C) are relatively easy for organizations to manage.
D) affect employees economically and psychologically.
Q:
________ is a program designed to reward employees for good performance.
Q:
The package of quantifiable rewards an employee receives for his/her labors is called ________.
Q:
Pay incentives make up the greatest percentage of total compensation for employees.
Q:
The benefits portion of an employee's pay averages 42% of the total compensation package.
Q:
Job compensation directly affects how much labor costs detract from or contribute to business profitability.
Q:
Indirect compensation in a pay mix typically includes:
A) hourly wages for overtime.
B) health insurance and vacation time.
C) special perks based on status in the company.
D) incentives and bonuses periodically paid to an employee.
Q:
Perquisites, also called "perks" are best described as:
A) special benefits reserved for upper-level managers.
B) stock options available to long-term employees.
C) indirect compensation, such as vacation.
D) fixed pay rewarded regularly.
Q:
Employees' total compensation consists of which of the following?
A) Base compensation, personnel costs, payroll
B) Benefits, pay incentives, personnel costs
C) Base compensation, pay incentives, indirect compensation
D) Payroll, pay incentives, base compensation
Q:
Base compensation refers to:
A) health insurance and time off.
B) fixed pay received on a regular basis.
C) perks determined by status within the company.
D) bonuses that underpin the employee's total compensation.
Q:
In the opening case in Chapter 10, a secretary complains that janitors make more money than she does. Her complaints and Dr. Smith's response show that Sigma's compensation system:
A) may lack internal equity.
B) is a decentralized pay system.
C) relies on individual-based pay.
D) uses variable pay to induce performance.
Q:
In the opening case in Chapter 10, an experienced computer programmer complains that the starting salary for new hires at Sigma, Inc. is 15% more than his current salary. Dr. Smith's answer reveals that Sigma's compensation system is built on a(n) ________ compensation model.
A) balanced equity
B) labor market
C) free market
D) egalitarian
Q:
What are some steps that employees can take to improve their chances for career advancement? What organizational activities suggest that a firm has a culture that supports career development and advancement?
Q:
What self-development steps are recommended to prepare employees for future workplace challenges? What are the warning signs that an individual's career development activities have become excessive?
Q:
Communication skills and the ability to resolve problems are keys to career advancement.
Q:
When an employer does not routinely offer career development programs, there is very little individual employees can do to take control of their own development.
Q:
Ron is consistently looking for new conferences to present at and seminars to attend. Which of the following best describes how Ron is approaching advancement?
A) Resolve problems
B) Improve communication skills
C) Market yourself
D) Understand business trends
Q:
Elise focuses her time on having hard discussions with people that she often does not see eye-to-eye. Which of the following best describes how Elise is approaching advancement?
A) Understand business trends
B) Resolve problems
C) Improve communication skills
D) Market yourself
Q:
According to the text, which of the following is NOT one of the key domains to consider when defining career success?
A) Life
B) Work
C) Money
D) Environment
Q:
Which of the following would be the best way to market yourself?
A) Attending seminars
B) Studying business issues
C) Facing conflicts at work
D) Requesting an executive mentor
Q:
All of the following are recommended activities for career advancement EXCEPT:
A) understanding business trends.
B) balancing your work and family
C) resolving problems at work.
D) marketing yourself.
Q:
Of the advancement suggestions offered by the authors, one of the most critical is:
A) setting reasonable goals.
B) placing a priority on enhancement.
C) cultivating relationships with superiors.
D) improving your communication skills.
Q:
The most appropriate personal mission statements are:
A) unchanging and highly structured.
B) dependent on a work-life balance.
C) formalized by management.
D) changeable over time.
Q:
Your text suggests that if an organization does not offer career development programs, employees should initiate their own career development by:
A) creating their own personal mission statements.
B) placing a priority on enhancement over advancement.
C) applying for positions with competing firms.
D) finding a subordinate to mentor and coach.