MGT 461 Chapter 7&8 TEST 2

Mark and Steve work as crane operators in a construction company called Asai Corp. Asai uses a skill- based plan that establishes single flat rates for each skill level. Mark performs better than Steve even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario?

Both Mark and Steve will be paid the same amount.

The _____ publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data.

Bureau of Labor Statistics

In the regression equation, y = a + bx, job evaluation points are denoted by _____.

X

All of the following are examples of potential anomalies EXCEPT _____.

a large variation in average base pay for a job across companies

Because employers are raising employee pay at various times during the year, survey data must be updated using a process called _____ or _____.

aging; trending

A common first step in interpreting survey data is to _____.

check for the accuracy of job matches

The second major decision in pay-level determination is to _____

define the purpose of a survey

The final major decision in pay-level determination is to _____.

design grades and ranges or bands

All of the following are advantages of a lead pay-level policy EXCEPT _____.

higher turnover rates

The pay-level policy that is most likely to reduce pay dissatisfaction is a(n) _____.

lead policy

For organizations using a skill-competency- based pay system or generic job descriptions, the best approach for pricing jobs is _____.

low-high approach

The first step in setting competitive pay and designing a pay structure is to _____.

specify a pay-level policy

The process of multiplying survey data by some factor judged to reflect the difference between a survey benchmark job and a company job is called _____.

survey leveling

In most organizations, the responsibility for managing a pay survey lies with _____.

the compensation manager

The assumption of the upward sloping supply curve that offers of higher pay will increase supply will most likely NOT hold when _____.

unemployment is low

A study of graduating college students found they sought jobs with all of the following pay characteristics EXCEPT _____.

variable pay

The pay-mix policy alternative in which the percentage of benefits is likely to be the highest is known as _____.

work/life balance policy

Which of the following statements is true regarding broad bands?

They foster cross-functional growth.

Which of the following is NOT a reason a company might pay base wages above market?

To increase turnover rates

Employers continue to hire until the marginal revenue of the last hire equals his or her wage rate. This is based on the first labor market theory assumption that:

employers seek to maximize profits.

Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the:

labor costs

Aging the market data to a point halfway through a plan year is called _____.

lead/lag

A market pay line _____.

links a company's benchmark jobs with market rates paid by competitors

A company using a skill-based pay system prices the job of lead assembler between $10 and $22 per hour. Survey data showed that the job of assembler averaged $10 per hour and the job of assembly supervisor averaged $22 per hour. The company is using the _____ method of job matching.

low-high

In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire.

marginal revenue; wage rate

Pay ranges:

reflect the differences in performance or experience that an employer wishes to recognize with pay.

Among pay-mix alternatives, the percentage of base pay is highest in _____.

security or commitment policy

Size of pay differentials between grades should _____.

support career movement through the pay structure

All of the following are important factors in defining a market for compensation purposes EXCEPT:

the ability to pay

_____ measures reveal competitors'; use of performance-based cash payments.

Total Cash

Pay ranges for office and production work commonly range between _____ and _____ percent.

5; 15

Which of the following is an example of a company that uses broad banding?

A company in which there is more lateral movement with no pay adjustment than promotions

Which of the following is NOT true of the relationship between employer size and its ability to pay?

Talented individuals have a lower marginal value in a larger organization.

Wages tend to be the lowest in which of the following industries?

Education and health care

Which of the following is an example of a bourse market?

Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods

Gramhold Inc., a pharmaceutical company, reduces its 10 salary grades to just three broad bands. Which of the following statements is most likely to be true in this case?

Gramhold will experience career moves within bands more than career moves between bands.

The _____ theory is the most influential in explaining pay-level differences.

Human capital

Which of the following is true regarding the Employment Cost Index (ECI)?

It allows comparison of changes in its average costs to an all-industry average.

_____ refers to the average of the array of rates inside an organization.

Pay level

Which of the following statements is true of pay level?

Pay level is directly proportional to labor costs.

Which of the following is an example of the demand side of labor?

Pay level offered by an employer

In which of the following conditions would product market competitors' data be given more weight than data from labor market competitors?

Product demand is responsive to price changes.

Evidence shows that in manufacturing, _____ is positively correlated with hourly wage level.

Productivity

Which of the following is often used to set pay ranges?

Quartiles and percentiles

Which of the following statistical measures shows how similar or dissimilar the market rates are from each other?

Standard deviation

_____ is the additional output associated with the employment of one additional person, with other production factors held constant.

The marginal product of labor

Which of the following jobs would most likely fall into a fuzzy market?

The position of Senior Director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience

_____ puts a lid on the maximum pay level an employer can set.

The product market

A small lawn care company has two mowers and four employees. If it hires another employee and the factors of production remain the same, how will the productivity of the fifth employee compare to that of the current four employees?

The productivity will reduce

_____ is an example of a bourse.

The total compensation for a top athlete

Which of the following statements is true about market pricers?

They assume that little value is added through internal alignment.

The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment.

market pricing

The most common pay policy is a(n) _____.

match policy

A survey conducted in January 2013 found that the median pay effective January 1, 2013, for a clerk was $22,000 and that the forecast rate of wage increases in the market for 2013 was 5 percent and another 5 percent for 2014. An employer choosing to follow a lead strategy of 4 percent above the market for the plan year will need to _____.

multiply the salary by 105 percent and then by 109 percent

The market pay rate is the:

point at which supply and demand lines cross

Druk Inc. is a consulting firm with 10 employees. Each new client generates $10,000 in revenue. If the company hires another employee who brings in five new clients and all other factors of production are constant, which of the following statements is true?

Druk needs to pay $50,000 as wage to the eleventh employee to break even.

The pay policy that is most closely associated with the decreased ability to attract employees is a(n) _____ policy.

Lag

The _____ minimizes the distortion of the central tendency caused by outliers.

Median

Which of the following is an example of a quoted-price market?

Nile, a website that allows sellers to sell their products for a fixed price