Employee Comp Auburn Test 2 Chapter 5-8
Studies have shown that the majority of firms that use person-focused pay programs are in the manufacturing industry. Typically, these firms employ between ________.
150 and 2,000 people and have been around for 10 years
Studies report that many of the companies using person-focused pay systems have workforces of about _______ employees.
150-2000
Which statement about the stairstep model is FALSE?
A company can only have one stair-step model.
Which of the following is an example of a nonrecurring merit increase?
A plant manager receives a lump sum bonus because his store maintained a perfect safety record.
In the job-point accrual method, why do companies limit the number of jobs that an employee is allowed to learn?
An employee becomes a "jack of all trades and master of none."
Generally, Western European cultures are considered much better than the American culture in providing the workforce with ________.
Applied vocational education
Which of the following is NOT a step that compensation professionals use to begin plans for setting the merit pay grid?
Asking managers to provide names of all those receiving merit pay increases
Which fixed cost goes up considerably for companies when it comes to employee pay and narrowly defined job descriptions?
Benefits
What is the potential impact of broadbanding on organizational structure?
Broadbanding creates a flatter organization.
How does the job-point accrual method create organizational flexibility and promote company goals?
By assigning more points to those skills that are important to the company
What is critical to developing an effective compensation survey?
Clarifying what companies hope to gain from the survey
What can sometimes happen when companies follow the market lag policy as their choice for compensation policy?
Companies have difficulty attracting quality candidates.
What determines the need to use different job evaluation techniques?
Compensable factors
________ are the salient job characteristics by which companies establish pay rates.
Compensable factors
Which of the following refers to the allocation of monetary resources to fund pay structures?
Compensation budget
________ are blueprints that describe the allocation of monetary resources.
Compensation budgets
A(n) ________ refers to an individual's capability to orchestrate and apply combinations of knowledge and skills consistently over time to perform work successfully in required work situations.
Compentasy
What is the end result of a reliable job analysis method?
Consistent results under similar conditions
Which of the following is NOT a consideration when moving from job-based pay to skill-based pay?
Cost of training
Custom surveys are superior to published surveys when determining competitors' pay mix. What is the reason for this?
Custom surveys can be tailored to the company's needs and selected companies can be studied.
Which is the first step in constructing a pay structure?
Deciding on the number of pay structures
Which of the following is NOT a step in the job analysis process?
Determining a plan for the pay structure
Why do employees who participate in person-focused pay systems exhibit greater productivity?
Employees know entire production processes, which can be valuable.
What implication does person-focused pay have for employees?
Employees should stop considering pay an entitlement.
Why are employers able to have leaner staffing in a person-focused pay system?
Employers using person-focused pay systems develop multiskilled employees.
In a person-focused pay system, which of the following would most likely NOT be rewarded?
Exhibiting successful job performance
Based on what considerations would HR officials and the chief financial officer of a company adjust the wages in the company equal to the market pay rate?
Financial resources and the strategic value of the jobs
According to the U.S. Department of Labor Competency Model, academic competencies are considered ________ competencies.
Foundational
When conducting a strategic analysis for designing a market-competitive pay system, which of the following would be considered an internal factor?
Functional capabilities of the firm
Which of the following is NOT a method for collecting job analysis information?
Gathering customer input
What is a potential disadvantage of broadbanding?
Higher compensation costs
Who leads the job analysis process?
Human resource specialists
________ pay is based on the attainment of goals that have been communicated in advance.
Incentive
Technological innovation has been an important force behind person-focused pay. Employers today, as a result, not only expect technical skills, but also ________ from work teams.
Interpersonal skills
The chief advantage to an employer who uses a job-based pay system is that ________.
It is an easy pay system to administer
Why has the term competency become increasingly important in the world of HR?
It is because of the changing nature of jobs.
What is one of the outcomes of performing a complete job analysis when it comes to establishing an internally consistent pay system?
It reduces the company's ability to be flexible when responding to competitors' pay rates, since there are structured job descriptions and job structures.
What does the R2 statistic tell the compensation professional?
It tells us how well the variation in the company's valuation of jobs based on job evaluation points explains the variation in market pay rates from the compensation survey.
If the slope of the market pay line was $30, what would it mean for a job that has 301 job evaluation points instead of 300 job evaluation points?
It would mean that the job that has 301 evaluation points would be worth $30 more.
The stair-step model is a type of person-focused pay. What do the steps represent in the stair-step model?
Job Levels
Which term refers to the detailed process of gathering, documenting, and analyzing information in order to describe jobs?
Job analysis
Which two processes are used by compensation specialists to create internally consistent job structures?
Job analysis followed by job evaluation
Which of the following refers to the actual activities that an employee must perform on the job?
Job content
What is the fundamental principle on which internally consistent compensation systems are based?
Jobs that require higher qualifications, responsibilities, and complex job duties should pay more than those that do not have the same requirements.
Which of the following refers to a set of skills necessary to perform a specific job?
Knowledge blocks
Which of the following factors is NOT likely to be considered when setting the minimum amount for a merit pay increase?
Legality
What major trend are companies following by using the broadbanding concept to consolidate existing pay grades and ranges into fewer pay grades and wider ranges?
Making the organizations flatter
Many of the firms using person-focused pay systems operate in which type of industry?
Manufacturing
Following which type of pay level policy would enable a company to follow a lowest-cost strategy?
Market lag
When a company pursues a differentiation strategy, it is best to follow a market lead strategy as its choice of compensation policy. Why is that so?
Market lead policy helps companies pursue their competitive strategies.
Which of the following BEST describes worker requirements?
Minimum qualifications and the knowledge, skills, and abilities needed to perform a job
Which of the following tend(s) to create hierarchy and social distance within a company?
Narrow pay grades
Which of the following is an example of pay compression?
New information system employees receive the same salary package as that of existing employees in the same position with 3 years of seniority in the company.
____________ policies refer to the combination of core compensation and employee benefits components that make up an employee's total compensation package.
Pay mix
Which of the following assigns different pay rates for jobs of unequal worth?
Pay structures
The type of pay plan that rewards employees for acquiring job-related competencies, knowledge, or skills rather than demonstrating successful job performance is known as ________.
Person focused pay
Which of the following evaluation methods is most popular because it gives compensation professionals better control over balancing internal and market considerations.?
Point method
Of the following phrases, which would apply best to person-focused pay?
Potential job performance of an employee to make positive job contributions
Which of the following is the correct equation that models the prediction of the market pay line?
Predicted salary equals the Y intercept plus the slope multiplied by job evaluation points.
Many companies use market match or market lead policies for which types of employees?
Professional and managerial employees
Which statement about compensation surveys is FALSE?
Published compensation surveys are mostly inaccurate.
What statistical method makes it possible for compensation specialists to set pay rates for a set of jobs that are consistent with the pay rates in the market?
Regression analysis
Which of the following best helps compensation professionals establish market pay rates?
Regression analysis
Which of the following BEST describes what a well-designed pay structure should promote?
Retaining valued employees
Juan works as a salesperson for a major farming equipment manufacturer. Usually, there is considerable lead time between when he approaches a prospective client and when the sale is finalized. Juan typically generates demand for the product and another member of the sales team closes the sale. What type of commission would be most appropriate for Juan?
Salary only plan
Sheila's employer offers a person-focused pay program. , which has led Sheila to acquire multiple skills and be flexible in the types of jobs she can handle. Presently, Sheila's company is facing slow sales. What can Sheila more than likely expect?
Sheila should expect to keep her job because of her flexibility.
In a skill blocks model of a person-focused pay program, ________.
Skills do not nessassry build on each other
Which type of courses would a company offer in-house as opposed to asking employees to take at an educational institution?
Specialized course
Of the following organizations, which one would be most likely to utilize a person-focused pay program?
TV manufacter
What is the key advantage to an employee who works for an employer that awards job-based pay as opposed to an employer that awards person-focused pay?
The employee is rewarded for job performance.
Which of the following describes midpoint pay value?
The halfway mark on the pay range of minimum and maximum rates
When competition demands it, employees have to engage in duties that are beyond the scope of their jobs. What does that do to their jobs?
Their jobs become more fluid and equity is hard to assess.
As jobs become more automated, what are many employers doing as far as workers are concerned?
They are combining jobs and giving broader responsibilities to workers.
Using the point method, how do compensation professionals determine the overall value of a job?
They assign numerical values to compensable factors and add up the total points.
At a minimum, what do all employees, regardless of their function, have in common when it comes to compensation?
They wish to be compensated and valued for their efforts.
Which of the following statements regarding compensation plans and competitive strategy is TRUE?
The company's choice of strategy should play a role in the choice of compensation plan.
One of the reasons why employees prefer person-focused pay systems is because such systems provide job security. How does this occur?
The person-focused system creates workers who can perform a variety of jobs.
Why do compensation professionals use regression analysis?
To determine pay rates that are comparable to pay rates in the market
What is the primary reason that compensation professionals design compensation policies?
To promote competitive advantage
Skills assessment is a consideration when going from job-based pay to person-focused pay. Which of the following questions is NOT relevant to skills assessment?
What input should customers provide in the skills assessment process?
Narrowly defined jobs lead to ________.
bureaucracies
When compensation professionals systematically study the differences in the relative worth among a set of jobs to establish pay levels, they are ________.
conducting a job evaluation
When a company thoroughly examines its external market context and its internal factors, it is, in essence, ________.
conducting a strategic analysis
One of the limitations of an internally consistent compensation system is that it ________.
creates a bureaucratic job structure
A committee created to design, oversee, and evaluate jobs would include representatives from all of the following groups EXCEPT ________.
customers
Skill blocks are sets of skills (knowledge) necessary to perform a job. Before grouping skills into blocks, a company needs to ________ and ________.
develop job descriptions; organize jobs into job families
In recent years, ________ have become part of compensation surveys because they are key elements of market-competitive pay systems.
employee benefits
Each of the following is a criterion that should be used to determine whether to develop and deliver training in-house or to outsource, EXCEPT ________.
employee preference
Limited case studies on pay systems suggest that ________.
employees and employers enjoy the benefits of person-focused pay systems
Compensation professionals use job evaluation to ________.
establish pay differentials
When companies use a market-based job evaluation technique, they are trying to ________.
establish wages that are neither too high nor too low relative to the market
The first step in conducting a pointmethod valuation is to select benchmark jobs. A benchmark job can be defined as a job ________.
found outside the company that is used as a reference point to judge jobs within the company
Well-designed pay systems generally ________.
help companies pursue competitive strategies
The difference between job analysis and job evaluation is that ________.
job analysis is descriptive, whereas job evaluation reflects management's priorities for different positions
Equity assessments become more difficult when ________.
job definitions become more fluid
When creating knowledge blocks, which of the following should be considered blueprints for the creation of a person-focused system?
job descriptions
When compensation professionals create internally consistent job structures, they should conduct a ________ and then a ________.
job analysis; job evaluation
What is the most likely outcome of firms that increase their use of robotics?
losing some jobs (ones focused on routine tasks)
Greater use of technology means that workers ________.
need to be autonomous and work in a team-based environment
Companies emphasize some elements relative to others such as merit pay and short-term incentives focused on individual performance in formulating ____________.
pay mix
One of the key advantages of person-focused pay for employers is that employers can ________.
rely on leaner staffing
All of the following would be considered part of the physical environment of a job EXCEPT ________.
reporting relationships
All of the following are activities that create market-competitive pay systems EXCEPT ________.
surveying employees and supervisors in the company
Those companies that follow a market match policy when designing compensation policies ________.
take a safe approach
A major limitation of the two-tiered pay system is that ________.
the company has difficulty recruiting and retaining new hires who are brought in at a lower pay scale
When an employer's total compensation is analyzed to determine benefits and core compensation, the result is called ________.
the pay mix
A key piece of information that compensation specialists hope to gain from compensation surveys is about ________.
the pay practices of their competitors and employee preferences for different forms of compensation
When there is a conflict between the market pay rate and what is being paid for jobs within the firm, compensation professionals are most likely to refer to ________.
top executives at the firm
A two-tiered wage system is most likely to exist in a(n) ________.
unionized airline
Person-focused pay systems ________.
use market basis for skill valuation
All of the following contribute to the cost of developing custom surveys EXCEPT ________.
using BLS data to enhance the survey
Compensation surveys generally focus on competitors' ________.
wage and salary practices
Which of the following awards sales professionals with subsistence base pay yet provides them with a strong incentive to excel?
Commission-plus-draw plan
Which form of commission allows the sales professional to earn a higher rate of commission for all sales made in a given period of time if the sales level exceeds a predetermined level?
Multiple-tiered commissions
What is the key advantage associated with nonrecurring merit pay increases?
Non-recurring merit pay increases strengthen the pay-for-performance link and contain costs for the company.
Which is a TRUE statement regarding person-focused pay programs?
Person-focused pay programs apply in a more limited context than do job-focused pay programs.
Which of the following compensation plans has the disadvantage of not linking pay to performance?
Salary-only plan
Which type of plan spreads the risk of selling between the company and its sales professionals?
Salary-plus-commission
Which of the following refers to pay received mostly by those who do physical work?
Skill-based pay
Which pay structure has the disadvantage of hurting a company's ability to recruit and retain highly skilled employees?
Two-tier pay structure
