Managing Compensation- Chapter 9

LennoCorp has spent a lot of time collecting wage and salary survey data from the relevant job markets for each of its positions. They are most likely trying to maintain __________ equity.

external

Red circle rates above the maximum for the range can result because

employees have high seniority

Instrumentality refers to

rewards that are valued and motivate employees

__________ encompasses employee wages and salaries, incentives, bonuses, and commissions.

Direct compensation

In __________, employees are paid according to the number of units they produce

piecework

The exempt or nonexempt status of employees is determined by

the U.S. Department of Labor

The measure of the average change in prices over time in a fixed "market basket" of goods and services is known as

the consumer price index

The employees at LennoCorp are meeting or exceeding their goals, and consistently get positive reviews. However, competition has forced down prices on the goods LennoCorp produces, thereby reducing the firm's income. In this situation, pay levels may be limited by

the employer's ability to pay.

Pay-for-performance programs

tie rewards to employee effort

The Fair Labor Standards Act permits employers to pay a "training wage" of __________ per hour for employees younger than the age of twenty during their first ninety days of employment, provided their employment does not displace other workers

$4.25

The most common cost-of-living adjustments are __________ percent per hour for each .3-point or .4-point change in the consumer price index (CPI).

1

According to the compensation scorecard, functions with a compa ratio below __________ are considered to be paying their employees below the company norm

100 percent

For real wages to increase, which of the following must be true?

An employee's wage increase must be greater than the increase in the consumer price index (CPI).

A number of employees in the production department at LennoCorp have approached their supervisors to request raises. They have said that colleagues who work in other departments at LennoCorp, but with the similar job titles and job descriptions, receive a higher wage. How can LennoCorp ascertain the truth of this anecdotal evidence?

Perform job evaluations

__________ is a pay system in which employees are paid according to the number of units they produce

Piecework

Which of the following compensation options would not qualify under the term pay-for-performance?

Seniority-based pay

Which of the following is an internal factor that can influence the rates at which employees are paid?

The employer's ability to pay

Which job evaluation system serves to direct compensation dollars to the type of work pivotal to organizational goals?

Work valuation

Using the point method of job evaluation requires that managers

compare the job descriptions against the various factor-degree descriptions

Under the Fair Labor Standards Act, exempt employees

are those employees not covered by the overtime provisions of the Act

Employers wishing to encourage employees to accept a promotion to a job in a higher grade would

increase the size of successive rate ranges

LennoCorp has spent a lot of time collecting wage and salary survey data from the relevant job markets for each of its positions. At the same time, they have completed an extensive job evaluation of all positions. They are most likely trying to maintain __________ equity

internal and external

Escalator clauses in employee contracts may actually reduce motivation for employees to improve performance because

pay is unrelated to individual performance

Jenna and Blake are both line workers at LennoCorp. This week, they each worked 40 hours. Jenna produced 83 units this week, and Blake produced 71 units. Jenna received higher pay for the week than Blake did. Jenna and Blake are compensated based on

piecework

In conducting a wage and salary survey for office personnel, the relevant labor market to be surveyed is most likely

regional

A quantitative job evaluation procedure that determines a job's relative value on the basis of quantitative assessments of specific job elements is known as

the point system

Astrid is a clerk at LennoCorp, an entry level position. She consistently gets positive evaluations for her work. She loves her job, and has no desire to be promoted into another position within the company. In this situation, her pay level may be limited by

the worth of the job

The HR department at LennoCorp has been tasked with completing job evaluations of all positions to ensure that wages are properly aligned. They will be using several different methods to complete this process. For which category of jobs should they use the Hay profile method?

Executive and managerial positions

The description "G2 jobs include those classes of positions for which the duties are to be performed with minimal supervision and little latitude for the exercise of independent judgment" is typical of that found in what type of job evaluation system?

Job classification

Which system of job evaluation is being used when jobs are grouped according to a series of predetermined wage grades?

Job classification system

Which system of job evaluation are raters using when they take cards that list the duties and responsibilities of the job and arrange them in order of the importance of the jobs?

Job ranking

Which is the simplest and oldest method of job evaluation?

Job ranking system

__________ helps eliminate the obsession with grades and, instead, encourages employees to move to jobs they can develop in their careers and add value to the organization

Broadbanding

A number of employees at LennoCorp have approached their supervisors to request raises. They have said that colleagues who work for other companies in similar positions receive a higher wage. How can LennoCorp ascertain the truth of this anecdotal evidence?

Conduct wage and salary surveys

Which of the following is an external factor that can influence the rates at which employees are paid?

Cost of living

The Hay profile method uses which three factors for evaluating jobs?

Knowledge, accountability, and mental ability

Clauses in labor agreements that provide for quarterly cost-of-living adjustments in wages, basing the adjustments on changes in the consumer price index are known as

escalator clauses

The concept that employees should exert greater work effort if they have reason to expect it will result in a valued reward forms the basis of

expectancy theory

A number of employees at LennoCorp have approached their supervisors to request raises. They have said that colleagues who work for other companies in similar positions receive a higher wage. In this situation, the employees are seeking

external equity

When the organization pays wages that are relatively equal to that of other employers for similar work, it is the basis of

external equity

Jenna and Blake are both line workers at LennoCorp. This week, they each worked 40 hours. Jenna produced 76 units this week, and Blake produced 69 units. They received identical wages. Jenna and Blake are compensated based on

hourly work

Job evaluation helps to establish

internal equity

The predominant approach to employee compensation is

job-based pay

Employees covered by the overtime provisions of the Fair Labor Standards Act are labeled

nonexempt employees

__________ includes employee recognition programs, rewarding jobs, organizational support, work environment, and flexible work hours to accommodate personal needs.

nonfinancial compensation

Employees whose compensation is calculated on the basis of weekly, biweekly, or monthly periods are classified as

salaried employees

Most pay increases may lack motivational value to employees when

salary budgets are low

Which of the following is an example of a nonfinancial compensation?

Employee Recognition Programs

In order for a wage increase to actually improve the recipient's purchasing power and standard of living, it must

be larger than the increase in the CPI

The elements of a job such as fiscal accountability, leadership, and product accountability are referred to as

compensable factors

The relationship between the relative worth of jobs and their wage rates can be represented by means of a

wage curve

The job evaluation system that seeks to measure a job's worth through its value to the organization is known as the

work valuation system

The Fair Labor Standards Act prohibits the employment of those between the ages of __________ in hazardous occupations such as mining, logging, and meatpacking.

16 and 18

Steve has to submit a timecard every week and his compensation is based upon the amount of time he works, rather than what he accomplishes. Steve is compensated based on

Hourly work

__________ may create problems for managers who wish to maintain pay secrecy among employees

Internet salary survey data

LennoCorp is using a job evaluation system in which they evaluate jobs by comparing their descriptions with predetermined wage grades. While they appreciate the simplicity of this system, they want to switch to a system that is more precise. LennoCorp should consider moving to what type of job evaluation system?

Point system

An employee's relative worth can be determined by

an effective performance appraisal system

Jobs that are grouped into the same pay grade should

be paid within a range that may overlap with adjoining grades, so that an employee with experience can be paid as much as or more than a newer employee in a higher grade

The new management at LennoCorp felt that the company had too many salary grades, making the compensation system overly complex and encouraging an obsession with pay grade rather than skill development. They are collapsing the salary grades into a few wide salary bands in a process known as

broadbanding

The __________ collects and displays the results for all the measures that a company uses to monitor and compare compensation among internal departments or units.

compensation scorecard

Employees at LennoCorp often sign up for classes or additional training because such activities can lead to pay raises, even when their actual job titles or positions do not change. This is an application of a

competence-based pay plan

LennoCorp has identified leadership skills, responsibility, and communication as three key traits line managers must possess. Each of those traits is divided into levels of difficulty. Those levels of difficulty are

degrees

Equity theory is also known as

distributive fairness

One potential disadvantage to the cost of living increases often negotiated by unions is that

employees are not motivated to increase performance

The biggest challenge with competence-based pay is

encouraging employees to take advantage of it

When cost-of-living pay increases are given routinely, employees may view them as

entitlements

The fact that people make comparisons to others is central to

equity theory

The relative worth of a job evaluated using the point manual is determined b

the total points that have been assigned to that job

LennoCorp captured information regarding the current rates paid for jobs in the firm and new rates based on a recent job evaluation. This information was graphically represented in a scattergram known as a

wage curve

Senior management at LennoCorp wants a better understanding of the relationship between the values of the jobs at the firm, as determined by their job evaluations, and the actual pay rate for each of those positions. The HR team can provide this information graphically by using a

wage curve

LennoCorp has identified leadership skills, responsibility, and communication as three key traits line managers must possess. Leadership and communication each make up 35 percent, while responsibility makes up 30 percent of the position. Those percents are

weights