MGT 461 Exam 2 - Ch. 5-8
Which of the following is the underlying assumption in the assessment of job content? Content has intrinsic value outside external market. Content has no artistic value. Stakeholders are the best judge for assessing the quality of content. Content can be determined with or without external market.
Content has intrinsic value outside external market
In the point method, the second step in designing a plan is to: conduct job analysis. scale the factors. determine the compensable factors. prepare a job evaluation manual.
Determine the compensable factors
Reliability of job evaluation techniques is measured by: determining if different evaluators produce the same results. asking the question "What does the evaluation measure?" determining hit rates. surveying employee attitudes about the evaluation.
Determining if different evaluators produce the same results
T/F: Focusing on the end product of the internal alignment process, the pay structure, is more important for acceptance of the results than focusing on the approach chosen.
False
T/F: Market pricers emphasize any unique or difficult-to-imitate aspects of an organization's pay structure.
False
T/F: Pay ranges for top-level management positions are smaller than the pay ranges for entry-level managerial positions.
False
T/F: Recent research shows that the use of online job evaluation by independent managers is more reliable than traditional job evaluation committees.
False
T/F: Since business strategies may change often, compensable factors should rarely be added or deleted.
False
T/F: The final step in determining externally competitive pay levels and structures is the merging of internal and external pressure.
False
_____ measures reveal competitors' use of performance-based cash payments. Base cash pay Short-term incentive pay Total cash Long-term incentive pay
Total Cash
Skill-based plans establish single flat rates for each skill level regardless of performance or seniority.
True
T/F: A pay range exists when at least two employees in the same job are paid different rates.
True
T/F: Advocates of competencies say that by focusing on optimum performance, rather than average performance, competencies can help employees maintain their marketability.
True
T/F: Aging the market data to a point halfway through the plan year is called lead/lag.
True
T/F: Skill-based plans establish single flat rates for each skill level regardless of performance or seniority.
True
T/F: The main appeal of competencies is the direct link to the organization's strategy.
True
T/F: When there is an unusual level of turnover in a job, an employer is likely to conduct a market survey.
True
Which of the following is NOT a reason a company might pay base wages above market? To increase employee productivity To increase turnover rates To increase wage satisfaction To attract more job applicants
To increase turnover rates
T/F: Defining the compensable factors and scales to include the content of jobs held predominantly by women is one of the methods to ensure that job evaluation plans are bias-free.
True
T/F: Graduating students usually find themselves in a quoted-labor market.
True
T/F: In cases where the content of an organization's jobs does not sufficiently match that of the jobs in the salary survey, an effort can be made to quantify the difference via benchmark conversion.
True
T/F: In determining the compensation strategy, a major strategic decision is whether to mirror what competitors are paying.
True
T/F: Managers often regard external market data as more objective than internal job evaluation.
True
T/F: Many employers use market surveys to validate their own job evaluation results.
True
T/F: One approach to both improving and measuring the level of acceptance of job evaluation is to establish a formal appeals process.
True
T/F: Paired-comparison and alternate-ranking methods may be more reliable than simple ranking.
True
T/F: Point plans represent a significant change from ranking and classification methods in that they make explicit the criteria for evaluating jobs: compensable factors.
True
T/F: Regression smoothes large amounts of data while minimizing variations.
True
T/F: Research shows that a lead pay strategy reduces turnover.
True
T/F: Segmenting sources of labor is a means of reducing labor costs.
True
T/F: Skill-based pay plans can focus on both the depth and breadth of work.
True
T/F: Skill-based plans are generally well accepted by employees because it is easy to see the connection between the plan, the work, and the size of the paycheck.
True
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 face difficulty in defining job responsibilities broadly with the new structure. Gramhold will find that the new structure hinders cross-functional growth. Gramhold will experience career moves within bands more than career moves between bands. Gramhold will offer recognition via titles rather than through cross-functional experience and lateral progression.
Gramhold will experience career moves within bands more than career moves between bands.
T/F: The number of job evaluation plans required depends only upon the number of employees in the organization.
False
T/F: The policy capturing approach and the committee a priori approach for developing pay structures yield the same pay structure.
False
The roots of job-based pay structures is traced to _____. Frederick Taylor Karl Marx Adam Smith Ronald McFreyer
Frederick Taylor
T/F: A pure market pricing strategy carried to its extreme tends to ignore internal alignment completely.
True
T/F: According to efficiency-wage theory, paying higher wages than competitors can lower labor costs due to more efficient workers.
True
T/F: An employer offering lower base pay with high bonuses is a likely signal that it is seeking risk-taking employees.
True
Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the: profit margins. labor costs. return on investments. revenues.
labor costs
For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is _____. benchmark-job approach low-high approach survey leveling benchmark conversion
low-high approach
The majority of applications of skill-based pay have been in: education industries. manufacturing industries. health-care industries. service industries.
manufacturing Industries
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. demand factor; supply factor marginal output; market price incremental output; marginal output marginal revenue; wage rate
marginal revenue; wage rate
A study of graduating college students found they sought jobs with all of the following pay characteristics EXCEPT _____. individual-based pay variable pay flexible benefits job-based pay
variable pay
Skill-based plans tend to work best in organizations using a(n) _____ strategy. innovator defender laissez-faire cost-cutter
Cost-cutter
Which of the following is an example of a bourse market? Neurofort, a website that sells surgical equipment in bulk at fixed prices Hardknox, a hardware store that sells all its products at 10 percent above the maximum retail price Needlefarm, a store that sells premium furniture at discounted rates Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods
Flatcake, a website that allows buyers to negotiate the prices with the sellers of handmade goods
T/F: As experience with competencies has grown, organizations are placing greater emphasis on business-related descriptions of behaviors.
True
T/F: By encouraging employees to take charge of their own development, skill-based plans may give them more control over their work lives.
True
T/F: Combat pay premiums paid to military personnel to offset some of the risk of being fired upon is an example of a lead pay-level policy.
True
T/F: Compensable factors are aspects of work that add value to the organization.
True
Lisa is a manager at Trell Inc. When she hires her employees, she focuses on finding the right job for the right person. Which of the following pay plans is her employer most likely using? Skill-based pay plan Competency-based pay plan Aptitude-based pay plan Job-based pay plan
job-based pay plan
Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the: profit margins. labor costs. return on investments. revenues.
labor costs.
The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. job structure broad banding reference rate market pricing
market pricing
_____ is a crucial factor that affects the perception of fairness of a skill-based plan. The design of the certification process The number of compensable factors The extent of alignment with an organization's strategy The number of weights and factor degrees
the design of the certification process
Which of the following is NOT a reason a company might pay base wages above market? To increase employee productivity To increase turnover rates To increase wage satisfaction To attract more job applicants
to increase turnover rates
T/F: The primary reason for documenting the views of employees and supervisors on compensable factors is to meet requirements of the Equal Pay Act.
False
T/F: The product market sets the floor on the minimum wage required to attract sufficient numbers of employees.
False
Most factor scales have _____ degrees. 6-9 4-8 3-7 2-4
4-8
TreeWind Inc. is a bookstore that uses skill and responsibility as its compensable factors. It assigns 20 percent weight to responsibility and 80 percent weight to skill. If the responsibility factor scores a 60 after multiplying the subfactors with their corresponding weights, and if the skill factor has two subfactors that are rated as 4 and 5, what is the total weightage given to the job? 40 120 420 990
420
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 A company that has pay guidelines and controls designed right into the pay system A company that has unlimited total salary budget A company that pays all its employees the same salary
A company in which there is more lateral movement with no pay adjustment than promotions
Which of the following methods requires evaluators to agree on which jobs are the most and least valuable, then the next most and least valued, and so on until all the jobs have been ordered? Alternation-ranking method Classification method Point method Paired-comparison method
Alternation-ranking method
The _____ publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data. Chamber of Commerce Bureau of Labor Statistics Compensation Association Department of Economics
Bureau of Labor Statistics
Which of the following is least likely to be used in establishing skill-based certification methods? Tests College degree Peer review On-the-job demonstration
College Degree
Compensable factors, skill blocks, and competency sets are used for: assessing relative value. collecting work content information. determining what to value. completely different purposes.
Determining what to value
Wages tend to be the lowest in which of the following industries? Education and health care Technology-intensive industries Professional services Pharmaceuticals
Education and health care
Which of the following is a major decision in job evaluation? Choosing the stakeholders to eliminate in the process Choosing the method of eliminating multiple plans Establishing standards that solely use a single plan Establishing the purpose of evaluation
Establishing the purpose of evaluation
The exchange value of a job is its _____. content value performance value internal market value external market value
External Market Value
The certification processes in skill-based pay is analogous to the _____ in a job-based analysis. classes compensable factors regression analysis factor degrees and weights
Factor degrees and weights
T/F: Career moves between bands are more common than within bands.
False
T/F: Employers in highly competitive markets are more able to raise prices without loss of revenues.
False
T/F: Employers tend to overestimate the importance of pay to employees and underestimate the role of relationships with the supervisor.
False
T/F: Factors are scaled after factor weights have been assigned.
False
Which of the following is a disadvantage of the point method? It can leave too much room for manipulation. It can become bureaucratic and rule-bound. It does not allow for comparisons. It does not communicate what is valued.
It can become bureaucratic and rule-bound.
In the context of internal alignment, which of the following is the correct sequence? Job description > Pay structure > Job evaluation Job evaluation > Job description > Job structure Pay structure > Job description > Job evaluation > Job analysis Job description > Job evaluation > Job structure
Job description > Job evaluation > Job structure
_____ is the process of systematically determining the relative worth of jobs for the purpose of creating an organization's job structure. Performance evaluation Job restructuring Job evaluation Point factor evaluation
Job evaluation
Who among the following is examining the validity of a job evaluation? Keira, who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs Laila, who is measuring the effectiveness of a formal appeals process Keith, who is surveying employee attitudes about the job evaluation plan Rita, who is requesting the management for a reanalysis and a reevaluation of the required skills as she feels her job is evaluated incorrectly
Keira, who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs
The pay policy that is most closely associated with the decreased ability to attract employees is a(n) _____ policy. lead match lag employer of choice
Lag
The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. job structure broad banding reference rate market pricing
Market Pricing
The most common pay policy is a(n) _____. lead policy lag policy hybrid policy match policy
Match policy
The _____ method of job evaluation uses compensable factors. classification Position Analysis Questionnaire point ranking
Point
T/F: A potential disadvantage of skill-based pay is that labor costs can be a source of competitive disadvantage.
True
When a statistical process is used to duplicate an existing pay structure, it is called: policy capturing. committee a priori judgment approach. factor analysis. regression analysis.
Policy Capturing
Among pay-mix alternatives, the percentage of base pay is highest in _____. work-life balance policy security or commitment policy performance-driven policy market match policy
Security or commitment policy
Size of pay differentials between grades should _____. be based upon differentials in market surveys be approximately 15 percent support career movement through the pay structure be between 10 and 25 percent
Support career movement through the pay structure
In today's organizations, in order to increase competitiveness and success, work is analyzed by separating transactional work from: core work. hygiene work. tacit work. system work.
Tacit work
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. Talented people can influence more people and decisions. Influence of talented people leads to more profits. Talented people prefer to work in larger organizations.
Talented individuals have a lower marginal value in a larger organization.
_____ is the additional output associated with the employment of one additional person, with other production factors held constant. Productivity The marginal product of labor Incremental productivity The marginal revenue of labor
The marginal product of labor
_____ is an example of a bourse. The stated starting wage of a job in an ad The total compensation for a top athlete The price of a product on Amazon The price of a box of cereal at a grocery store
The total compensation for a top athlete
Common characteristics of the point method include all of the following EXCEPT: benchmark factor classes. numerically scaled factor degrees. factor weights. compensable factors.
benchmark factor classes.
Employees in a multiskill system earn pay increases: by increasing their productivity. based on job content. based on job assignments. by acquiring new knowledge.
by acquiring new knowledge
A major decision in job evaluation is to: choose which stakeholders to eliminate in the process figure out how to eliminate the use of multiple plans choose among alternative approaches figure out how to eliminate the use of single plans
choose among alternative approaches
A major decision in job evaluation is to: choose which stakeholders to eliminate in the process. figure out how to eliminate the use of multiple plans. choose among alternative approaches. figure out how to eliminate the use single plans.
choose among alternative approaches.
A job description is compared to class descriptions in the _____ of job evaluation. Position Analysis Questionnaire method point method Hay Group Guide Chart—Profile MethodSM classification method
classification method
In the context of the point method of job evaluation, _____ are those characteristics in the work that an organization values; that help it pursue its strategy and achieve its objectives. competitive skills compensable factors core competencies benchmark factors
compensable factors
The final major decision in pay-level determination is to _____. interpret and apply the results of the survey obtain top-management acceptance of the final decisions design grades and ranges or bands draw policy lines
design grades and ranges or bands
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. The productivity will increase. The productivity will remain the same. There is not enough information to determine productivity.
The productivity will reduce
Which of the following statements is true regarding broad bands? They remove limits on total salary budgets. They support recognition via titles or career progression. They foster cross-functional growth. They increase the hierarchical nature of organizations.
They foster cross-functional growth.
Reliability of job evaluation techniques is measured by: determining if different evaluators produce the same results. asking the question "What does the evaluation measure?" determining hit rates. surveying employee attitudes about the evaluation.
determining if different evaluators produce the same results.
The final step in designing a point plan involves _____. developing online software support selecting compensable factors communicating the plan and training users scaling the factors
developing online software support
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: markets are competitive. pay rates reflect all costs of employment. employers seek to maximize profits. workers are homogeneous and interchangeable.
employers seek to maximize profits.
The certification processes in skill-based pay is analogous to the _____ in a job-based analysis. classes compensable factors regression analysis factor degrees and weights
factor degrees and weights
All of the following are advantages of a lead pay-level policy EXCEPT _____. reduced vacancy rates higher turnover rates reduced absenteeism better-quality employees
higher turnover rates
A _____ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess. performance-based competency-based job-based skill-based
job-based
Managers whose employers use _____ plans focus on placing the right people in the right job. person-based skill-based competency-based job-based
job-based
The market pay rate is the: minimum wage rate set by the Department of Labor. pay rate at which applicants will deny a job offer. difference between use value and surplus value. point at which supply and demand lines cross.
point at which supply and demand lines cross.
When a statistical process is used to duplicate an existing pay structure, it is called: committee a prior judgement approach policy capturing factor analysis regression analysis
policy capturing
When a statistical process is used to duplicate an existing pay structure, it is called: policy capturing. committee a priori judgment approach. factor analysis. regression analysis.
policy capturing.
Pay ranges: are flexible enough to deal with differences in quality but not with the productivity or value of these quality variations. usually lead to an increase in employee turnover. reflect the differences in performance or experience that an employer wishes to recognize with pay. cause employees to believe that their compensation cannot increase in the same job.
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 _____. work-life balance policy security or commitment policy performance-driven policy market match policy
security or commitment policy
The first step in setting competitive pay and designing a pay structure is to _____. specify a pay-level policy conduct a job evaluation draw policy lines specify the relevant market
specify a pay-level policy
Routine work is also termed _____. transactional work hygiene work tacit work system work
transactional work
A job description is compared to class descriptions in the _____ of job evaluation. Position Analysis Questionnaire method point method Hay Group Guide Chart—Profile MethodSM classification method
Classification Method
The process of identifying competencies in person-based structures resembles identifying _____ as part of job evaluation in job-based structures. compensable factors job description employee requirement work flow outlay
Compensable factors
_____ translate each core competency into action. Competency indicators Multifunctional skills Skill-based structures Competency sets
Competency sets
Which of the following statements is true about market pricers? They align pay structures with the business strategy. Their pay structures are unique and difficult to imitate. They assume that little value is added through internal alignment. They emphasize pay structures based on unique technology or the way work is organized.
They assume that little value is added through internal alignment.
In the regression equation, y = a + bx, job evaluation points are denoted by _____. a b x y
X
All of the following are examples of potential anomalies EXCEPT _____. outliers a large variation in base pay for a job at one company one company dominating the results a large variation in average base pay for a job across companies
a large variation in average base pay for a job across companies
