Chapter 11

Evaluating jobs based on pre-determined job grades.

Classification method

The process of managing a company's compensation program.

Compensation administration

Wage adjustment linked to cost of living to maintain standards of living for an expatriate employee.

Differential

Passed in 1963, this act mandates that organizations compensate men and women doing the same job in the organization with the same rate of pay.

Equal Pay Act

A professional employee whose job category is not required to meet FLSA standards, especially in the area of overtime pay.

Exempt

Rewards one gets from the employer, usually money, a promotion, or benefits.

Extrinsic rewards

Passed in 1938, this act established laws outlining minimum wage, overtime pay, and maximum hour requirement for most U.S. workers.

Fair Labor Standards Act

Employers must offer higher wages when unemployment rates are high to attract qualified workers. (T/F)

False

In the U.S., the threshold poverty level for an individual is $19,570 per year. (T/F)

False

Intrinsic rewards include money, promotions, and benefits. (T/F)

False

It is well known that executives in the public sector are paid more than those in the private sector. (T/F)

False

Research finds that with the declining economic situation, employees only value financial types of rewards, such as pay, which are designed to assist in maintaining employee commitment. (T/F)

False

The FLSA identifies two primary categories of employees: full-time and part-time. (T/F)

False

The Federal minimum wage is $7.25 per hour. (T/F)

False

A financial protection plan for executives in case they are severed from the organization.

Golden Parachute

An increase in one's pay, based on performance, that is usually given on an annual basis

Merit Pay

Ranking job worth from highest to lowest.

Ordering method

A motivation system that rewards all facility members based on how well the entire group performed.

Organization-wide incentive

Rewards exemplified by the use of commissions, piecework pay plans, incentive systems, group bonuses, or other forms of merit pay.

Performance-based rewards

Pay based on how well the team performed.

Team-based compensation

A commission is considered a performance-based reward. (T/F)

True

A downside to merit pay is that employees expect pay increases regardless of how well the company performs. (T/F)

True

An example of an extrinsic reward is an assigned parking space with an employee's name clearly painted underneath the "Reserved" sign. (T/F)

True

Job evaluation is the process whereby an organization systematically establishes its compensation program. (T/F)

True

Organization-wide incentives aim to direct the efforts of all employees toward achieving overall organizational effectiveness. (T/F)

True

Probably one of the most complex functions of international human resource management is the design and implementation of an equitable compensation program. (T/F)

True

The U.S. Department of Labor estimates that seven in ten U.S. employers are violating wage and hour regulations. (T/F)

True

Three basic methods of job evaluation are currently in use: ordering, classification, and point methods. (T/F)

True

Al's company just instituted a new compensation program for managers. Pay is based on competencies such as leadership, problem solving and strategic planning. Pay levels are preset and reflect the degree of competency. What kind of compensation system was used? a) Broad-banding b) Scanlon Plan c) Piece rate d) Ordering e) IMPROSHARE

a) Broad-banding

What is the incentive plan that uses a mathematical formula to determine employee bonuses? a) IMPROSHARE b) Scanlon Plan c) Broad-banding d) FLSA e) Ordering

a) IMPROSHARE

Chris, a store manager for a sporting goods organization, is on the compensation committee. Today, they are evaluating jobs. Chris and Kenny, one of the owners, are comparing jobs to each other, one at a time. By the end of the day, they will have compared all jobs to every other job and come up with a ranking. What method was used? a) Ordering b) Classification c) Basic factors d) Point method e) Prioritization

a) Ordering

Andres is the general manager of a plant that manufactures tires. He wants to introduce a plant-wide incentive program focusing on cooperation between management and employees through sharing problems, goals, and ideas. What incentive system should Andres use? a) Scanlon plan b) Competency-based plan c) Merit pay d) Stock options e) Piecework plan

a) Scanlon plan

_________ for expatriates may include shipping household goods, legal clearance and shipment for pets, education allowances for children, and bodyguards.

assistance programs

Lisa, a compensation analyst for a large government agency, is completing a job evaluation for her organization. She is reviewing the grades that have been established by skills, knowledge and abilities because several managers have complained that the jobs no longer "fit" into the defined grades. What job evaluation method is Lisa using? a) Ordering b) Classification c) Basic factors d) Point method e) Prioritization

b) Classification

Dana, a compensation specialist for a large hospital in Phoenix is reviewing pay rates for nurses and nursing technicians in other health care organizations in the Phoenix area. She is also making sure her organization is giving as much vacation and shift differentials as her competition. What is she studying? a) Wage structure b) Compensation survey c) Overtime pay review d) Wage and hour law e) Classification

b) Compensation survey

Jon, a U.S. petroleum engineer, moved his family to Saudi Arabia for a two-year assignment. The company provided him a travel allotment of $.10 a mile, a food allowance of $500 a month, and $2000 a month for housing to maintain his standard of living. What kind of pay factor was used? a) Base pay b) Differentials c) Bonuses d) Incentives e) Assistance programs

b) Differentials

Which of the following has the greatest effect on initial salaries, but little effect on promotion and salary increases? a) Walsh-Healy Act b) Equal Pay Act of 1963 c) The Civil Rights Act d) Fair Labor Standards Act e) The Federal Minimum Wage Act

b) Equal Pay Act of 1963

Which act was passed in 1938 to establish laws outlining wage, overtime pay, and maximum hour requirement for most U.S. workers? a) Equal Pay Act b) Fair Labor Standards Act c) Walsh-Healy Act d) Civil Rights Act e) Living Wage Act

b) Fair Labor Standards Act

Which of the following is an extrinsic source of employee motivation? a) Increased responsibility b) Impressive job title c) Participation in decision-making d) Opportunities for job growth e) More interesting work

b) Impressive job title

Which of the following is NOT a performance-based financial reward? a) Piecework b) Labor market adjustment c) Commission d) Performance bonuses e) Merit pay plans

b) Labor market adjustment

Which of the following is NOT an intrinsic source of employee motivation? a) Increased responsibility b) Pay raise c) Increased employee autonomy d) Tasks organized to allow individuals to complete activities e) Performance feedback

b) Pay raise

Shameka is the new compensation manager of a large manufacturing company. She is currently redesigning the pay structure. She wants to be able to break down jobs based on identifiable factors and the degree to which these criteria exist on the different jobs in her company. What job evaluation method should Shameka use? a) Classification method b) Point method c) Ordering method d) Ranking method e) Broad-banding method

b) Point method

Which type of long-term incentive makes up the largest portion of an executive's pay? a) Base salary b) Stock options c) Bonuses based on sales d) Benefits e) Golden parachutes

b) Stock options

What is the federal minimum wage under the Fair Labor Standard Act that began in July 2009? a) $5.85 b) $6.55 c) $7.25 d) $8.15 e) $9.10

c) $7.25

Which of the following is a nonexempt employee under the FLSA? a) A lawyer in a large corporation b) A general manager in a manufacturing company c) A health aide in a hospital d) A middle level executive in a bank e) An accountant in a pharmaceutical company

c) A health aide in a hospital

Which method evaluates jobs based on predetermined job grades? a) Ordering method b) Broad-banding method c) Classification method d) Point method e) Group incentive method

c) Classification method

Which of the following is NOT a factor that is taken into account in the balance sheet approach to international compensation? a) Base pay b) Differentials c) Golden parachute d) Incentives e) Assistance programs

c) Golden parachute

Which of the following is the most widely used individual incentive plan? a) Piecework plan b) Scanlon plan c) Merit pay d) Competency-based plan e) Bonus plan

c) Merit pay

Moshe, a 10th grade dropout, has held the job of janitor for an inner city grade school for 17 years. Each year, he is only eligible to receive the cost of living allowance raise because of his educational level. Will his raise criteria change after he has worked there for 20 years and received a long time service medal? a) No. Cost of living and service medals are both intrinsic. b) Yes. The service medal award is extrinsic. Cost of living is intrinsic. c) No. Cost of living is membership based. Education level is performance-based. d) Yes. Cost of living is membership based. Educational level is performance-based. e) No. Cost of living and educational level are both performance-based.

c) No. Cost of living is membership based. Education level is performance-based.

Keon, vice-president of human resources for a large manufacturing firm, wants to keep the reward system membership-based instead of moving to performance-based pay. Traditionally, most increases have been based on seniority. Why does he want to keep the membership-based system? a) Membership-based pay increases commitment and loyalty. b) All pay increases are membership-based due to work process reengineering. c) The criteria area easier to measure with the membership-based system. d) Performance based pay does not increase status awareness. e) Under the ADA, all seniority raises are membership-based.

c) The criteria area easier to measure with the membership-based system.

International compensation packages typically include four factors, base bay, differentials, incentives and assistance programs. This approach is referred to as a) broadband. b) golden parachute. c) balance sheet. d) expatriate. e) classification.

c) balance sheet.

Mignon is worrying about the request to institute an incentive pay plan in her organization. All of these concerns are well-founded EXCEPT a) individual incentives may encourage workers to sacrifice quality for quantity. b) individual incentives may make coworkers enemies. c) group incentives may reduce cooperation on shared tasks. d) it's often hard for individuals to see their contribution to an organization-wide incentive, the dilution effect. e) individual incentives may reduce workplace communication and interaction.

c) group incentives may reduce cooperation on shared tasks.

Team-based compensation plans are effective in all of these situations EXCEPT a) teams share a clear purpose and goals. b) team members communicate effectively with each other. c) team members compete with each other. d) resources are plentiful. e) rewards must be significant and worthwhile.

c) team members compete with each other.

Edrian works for a bank that recently acquired his consulting shop. He has a "green-circled" job for the wage curve. His manager is likely to tell him: a) you won't get a raise until you get a promotion. b) you won't get a promotion for at least 3 years. c) you will get a salary adjustment increase in your next paycheck. d) you need to assess your skills and interests and find another job. e) you are targeted for a 10% pay decrease.

c) you will get a salary adjustment increase in your next paycheck.

Used to gather factual data on pay practices among firms and companies within specific communities.

compensation surveys

_________ are used to gather factual data on pay practices among firms within specific communities.

compensation surveys

Which of the following is the most likely to be an exempt employee under the FLSA? a) A clerk in a large retail store b) A typist c) A factory worker d) A middle manager in a large company e) A bank teller

d) A middle manager in a large company

According to the Fair Labor Standards Act, which of the following would be considered exempt from receiving overtime? a) Anyone who has the job title of supervisor or manager b) Independent contractors c) Restaurant employees d) A professional making more than $455 per week e) Unionized employees

d) A professional making more than $455 per week

Which of the following is NOT an implied membership-based financial reward? a) Cost-of-living increases b) Labor market adjustment c) Time-in-rank increases d) Business cards e) Profit sharing

d) Business cards

As the HR manager of Company XYZ., Victoria is currently working on the reward system. She wants to be able to pay and reward employees based on their skills, knowledge, and behaviors. What pay system should Victoria use? a) Scanlon plan b) IMPROSHARE c) Profit sharing d) Competency-based plan e) Point method

d) Competency-based plan

Which of these pieces of legislation requires that initial job offers for jobs with the same attributes be equal, regardless of gender? a) Comparable Action and Worth Standard b) Americans with Disabilities Act c) Fair Labor Standards Act d) Equal Pay Act of 1963 e) Civil Rights Act

d) Equal Pay Act of 1963

Which of the following reward systems is based on clear performance standards and objective measurements of performance? a) Cost-of-living increases b) Salary increases c) Benefits d) Group bonuses e) Seniority based increases

d) Group bonuses

Cesar, a satellite architect, accepted an overseas assignment for his company when the company agreed to provide a car and chauffeur, a beach villa, a sailboat, and a lump sum payment of $600,000. What kind of pay factor was used? a) Base pay b) Differentials c) Bonuses d) Incentives e) Assistance programs

d) Incentives

Which of the following is an explicit membership-based financial reward? a) Commission b) Performance bonuses c) Incentive plans d) Pay for time not worked e) Profit sharing

d) Pay for time not worked

Hassan, a compensation analyst for a large firm, is completing a job evaluation for "Administrative Assistant." He reads a chart that identifies "high school diploma" as the 2nd degree in the "Education" skill factor, and adds 44 into his calculation. He identifies "Making sure that work area does not present a hazard to others" as the 1st degree in the "Safety of others" responsibility factor, and adds 5 into his calculator. What job evaluation method was used? a) Ordering b) Classification c) Basic factors d) Point method e) Core specification

d) Point method

Which method breaks down jobs based on identifiable criteria and the degree to which these criteria exist on the job? a) Ordering method b) Broad-banding method c) Classification method d) Point method e) Group incentive method

d) Point method

Which of the following is NOT covered by the provisions of the FLSA? a) Minimum wage b) Overtime pay c) Child labor d) Retirement plans e) Record keeping

d) Retirement plans

Rayshard works for an automobile salvage firm. Last year he started going to monthly meetings with managers and coworkers to evaluate labor-saving ideas. One idea, raising the crane level by 8 feet to clear the building, saved them $2 million. Each of the employees received a $200 bonus for the implementation of that idea. What kind of compensation system is used? a) Piecework b) Time-saving bonus c) Merit pay d) Scanlon Plan e) Group incentive

d) Scanlon Plan

Organizational reward systems are typically dichotomized as a) financial versus extrinsic. b) performance-driven versus performance-based. c) hourly versus salaried. d) intrinsic versus extrinsic. e) membership-based versus extrinsic.

d) intrinsic versus extrinsic.

Heather is the human resources administrator for a small electronics firm that currently has 27 employees. Until now, workers were paid whatever the CEO felt they were worth. Heather wants to start a job evaluation process. She wants to use the point method for all of these reasons except a) it offers the greatest stability over time. b) it can effectively address the comparable worth issue. c) the methodology contributes to a minimum of rating error. d) it is quick and inexpensive to develop. e) it is the most widely used method.

d) it is quick and inexpensive to develop.

Jean, a geologic specialist, agreed to accept an overseas assignment for her company after the company agreed to store her yacht, provide security service 24X7, and arrange for Mimi, her cat, to go with her. What kind of pay factor was used? a) Base pay b) Differentials c) Bonuses d) Incentives e) Assistance programs

e) Assistance programs

What type of compensation plan would be appropriate for employees who have tasks that are interdependent and require cooperation by all team members? a) Merit pay b) Bonuses c) Competency-based plans d) Organization-wide incentives e) Group incentive plans

e) Group incentive plans

When a non-unionized employee works in an organization that includes unionized workers, what type of advantage will the non-unionized employee gain? a) Cost of living adjustments larger than those by the Department of Labor b) Less competition for jobs and promotion c) Increases that are less dependent on job evaluations d) Larger than normal wage curves e) Increased wages and benefits based on the "spillover" effect

e) Increased wages and benefits based on the "spillover" effect

Which of the following would be considered an intrinsic reward? a) Recognition b) Preferred work assignments c) Volunteer opportunities d) Casual dress e) Meaningful work

e) Meaningful work

Zahur, a compensation analyst, is explaining the new wage structure to a group of managers. Grade 3 ranges from 201 to 300 points and $6.25 to $7.00. Grade 5 ranges from 401 to 500 points and $7.50 to $8.75. Which of the following statements would be true of Grade 4? a) 350 points is outside the range of Grade 4. b) The dollar spread for Grade 4 is less than $.75. c) The dollar spread for Grade 4 is greater than $1.25. d) The bottom of Grade 4 is lower than $6.50. e) The top of Grade 4 is greater than $7.50.

e) The top of Grade 4 is greater than $7.50.

Membership-based rewards include all of the following EXCEPT a) cost-of-living increases. b) pay for time not worked. c) seniority benefits. d) labor market adjustments. e) piecework.

e) piecework.

__________ would likely include employees in professional and managerial jobs.

exempt employees

________ are motivation systems based on individual work performance.

individual incentive plans

Pride in one's work and a sense of accomplishment are examples of ________ rewards

intrinsic

_________ consists of enhancing jobs by giving employees more opportunity to plan and control their work.

job enrichment

________ receive(s) certain protections under the FLSA.

nonexempt employees

The three basic methods of job evaluation currently in use are order, classification, and _________ methods.

point

The __________ consists of breaking down jobs based on identifiable criteria and the degree to which these criteria exist on the job.

point method

In the United States, the threshold _________ for a family of two is $15,000 per year.

poverty level

A pay scale showing ranges of pay within each grade.

wage structure