Chapter 11

Which of the following are advantages of paying employee wages above the market average? (Select all that apply.)

It attracts skilled workers. It helps retain top talent. It generates increased job satisfaction. It encourages increased productivity.

Which of the following statements about labor market competition is true?

Shortages and surpluses influence pay levels

Employees typically view their compensation in terms of which of the following? (Select all that apply.)

as a sign of status and success as a way of evaluating their relationship with the organization as it relates to the pay of their colleagues

In a software company that caters to the federal government it would be most appropriate for which of the following positions to be paid at the highest percentile?

VP of software engineering

An administrative procedure used to measure internal job worth is called _______.

a job evaluation

When deciding on specific pay levels, organizations often consult ______.

a market pay survey

Which factors can influence a company's ability to adhere to Equal Employment Opportunity (EEO) pay regulations? (Select all that apply.)

a shifting labor market inequity in compensation based on gender and race changing demographics of the workforce

Employee compensation requires scrutiny because it is typically ______.

a significant organizational cost

The process by which an organization compares its own practices against those of the competition is called __________.

benchmarking

An organization that effectively competes in the product market is able to sell its goods and services at a quantity price that will ______.

bring a sufficient return on investment

Which of the following are provisions of the Fair Labor Standards Act (FLSA) as they relate to employee pay? (Select all that apply.)

calls for time-and-a-half pay for hours exceeding 40 hours a week sets a minimum wage for jobs provides for a training wage

In addition to salary, what is a major component of a typical CEO compensation package?

a stock plan

Most nonexempt employees are paid ______.

an hourly rate

Unlike key jobs, nonkey jobs ______.

cannot be valued or compared through market surveys

In a skill-based pay structure, __________ tests must be developed to determine whether employees have acquired certain skills.

certification

An index that measures the correspondence between actual pay and a company's intended pay policy is called the _______.

compa-ratio

The undervaluation of women's jobs has been combated through the policy of ______.

comparable worth

The characteristics of jobs that an organization values and chooses to pay are called ______.

compensable factors

In addition to labor costs, the proximity to which of the following can influence where a company locates its production facilities? (Select all that apply.)

customers suppliers design group to manufacturing plant

Equal Employment Opportunity (EEO) compensation issues will likely remain in the spotlight because of the ______.

decrease of white males in the workforce

The concept of reducing the number of job levels within an organization in order to gain flexibility in job assignments is called _______.

delayering

In communicating pay cuts to employees, which of the following strategies are effective? (Select all that apply.)

demonstrating significant remorse for implementing the pay cuts providing detailed reasons why the pay cuts are necessary

The pay-setting approach that uses the pay policy line to derive pay rates for both key and nonkey jobs ______.

does not use actual market rates for key jobs

One important advantage of skill-based pay is the potential for ______.

increased worker flexibility

Which of the following are considered part of an employee's total compensation? (Select all that apply.)

paid vacation stock options salary

Another term for comparable worth is ______.

pay equity

A mathematical expression that describes the relationship between a job's pay and its job evaluation points is called the ______.

pay policy line

Salary level decisions can be broken into which of the following two areas? (Select all that apply.)

pay structure individual pay

Benchmarking against product market and labor market competitors is typically accomplished through the use of ______.

pay surveys

Which of the following aspects of an organization do executives typically influence substantially? (Select all that apply.)

performance culture tone

The job evaluation system that relies on a weighting scheme to account for the relative importance of the different compensable factors that make up a job is called the ______.

point-factor system

One of the most important factors that influences the price of a good or service is the cost of ______, which includes labor costs.

production

The distance between the maximum and minimum pay within a pay grade is known as the __________ spread.

range

What do companies use to recognize differences in employee performance, seniority, and training in setting individual pay?

rate ranges

The most crucial role in communicating pay decisions is played by _______.

managers

Labor market competition reflects how ______.

many workers are available relative to the number of jobs available

According to some critics, when it comes to pay, Equal Employment Opportunity (EEO) regulations obstruct ______.

market forces

The approach that places the greatest emphasis on external comparisons is achieved by basing pay on ______.

market surveys

When any change in existing pay practices is set to take place, the intimate involvement of line managers is ______.

necessary

To reduce labor costs, some companies are sending jobs overseas, a concept called ______.

offshoring

Which of the following kinds of occupations are typically exempt from Fair Labor Standards Act (FLSA) coverage? (Select all that apply)

outside salespeople professional positions executive positions

A company may pay a training wage to an employee under the age of 20 for up to ______ days.

90

Which of the following statements about resolving conflicts between market pay surveys and job evaluation is true?

An organization must weigh its objectives and select the most appropriate strategy.

Which of the following are characteristics of the point-factor system for evaluating jobs? (Select all that apply.)

Each evaluation score is typically weighted to account for its relative importance. The system yields evaluation scores for each compensable factor of a job. The resulting score for a job serves as a guide in determining resulting pay levels.

True or false: Market forces provide the most inefficient means of pricing and allocating people to jobs.

False

True or false: Pay policies are often attached to individual employees rather than to particular jobs.

False

In which of the following ways does pay affect an organization's strategic goals? (Select all that apply.)

It influences the kind of employees attracted to the organization. It can help align employees' interests with those of the organization. It has an impact on employees' attitudes and behaviors.

Which of the following statements describe key jobs? (Select all that apply.)

Key jobs are known as benchmark jobs. Key jobs have relatively stable content. Key jobs are common to many organizations.

Why are European automakers locating production facilities in the United States?

Labor costs are lower in the United States.

Susie is an American manager who works at a company branch in Seoul. Her salary is determined by American standards, which are higher than South Korea's. Which of the following statements is true?

Susie is paid a higher salary due to labor markets in the United States and Europe. Susie's higher salary may create a sense of inequity among her Korean peers.

True or false: Currency exchange rates affect the comparison of labor costs between countries.

True

True or false: Employees in the same job may have different pay rates based on performance, seniority, and training.

True

By paying higher labor costs than its competitors, a company can achieve which of the following? (Select all that apply.)

draw better workers to produce higher-quality products than competitors encourage desired employee behaviors retain valued employees

The concept that wages affect worker productivity is called the ______ theory.

efficiency wage

Skill-based pay structures encourage leaner staff levels because ______.

employee turnover or absenteeism can be covered by current multi-skilled workers

The concept that suggests people evaluate the fairness of their situations by comparing them with others is called ______.

equity theory

When thinking about the consequences of pay decisions, managers should keep in mind that employees often ______.

evaluate their pay relative to other employees

Employees can take part in the compensation decision-making process by doing which of the following? (Select all that apply.)

explaining the company's rationale in implementing a specific pay program serving on a task force that designs a pay program participating in a committee that is charged with recommending a pay program

The type of pay comparison that focuses on what employees in other organizations are paid for similar jobs is called ______ equity.

external

Each employee must be assigned a rate of pay acceptable in terms of which of the following? (Select all that apply.)

external equity internal equity employer's cost

With the pay-setting approach that uses the pay policy line to derive pay rates for both key and nonkey jobs, the pay of all the jobs is linked directly to the number of job evaluation points, which ______.

introduces a greater degree of internal consistency

One indicator of a country's productivity is ______.

its gross domestic product (GDP) per person

The relative pay of jobs in an organization is known as the organization's ______.

job structure

The most widely used metric for defining pay structures is by ______.

jobs and associated responsibilities

In developing a pay structure, pay survey data and job evaluation data are commonly available for ______.

key jobs

Which of the following issues with pay structure must managers be prepared to handle? (Select all that apply.)

knowing when a job needs to be reclassified because of substantial changes to its structure explaining the pay structure's design to employees judging when changes to the pay structure are warranted

A compa-ratio less than 1.00 suggests that actual pay ______.

lags behind company pay policy

If a company needs educated knowledge workers but needs to tightly control costs, the company should look for countries with ______.

low labor costs and skilled workers

In general, which combination would lead to the lowest unit labor costs for one country relative to another?

lower labor costs and higher productivity

One advantage of using a pay grade system in planning employee compensation is that it ______.

reduces the administrative burden of setting separate pay rates for hundreds of jobs

Organizations compete in the labor market, so they should consider their employees not just as a cost but also as a(n) ______.

resource that needs to be minimized

Placing jobs in broader bands of classification gives managers the opportunity to ______.

reward high performers with merit increases

A computer manufacturer wants to open a facility overseas to produce tablets. Most of the jobs would be assembly-line jobs, and training would take place on site. This is an example of the manufacturer paying special attention to ______ when considering where to open the facility.

skill level

Typically, expatriate pay and benefits are linked most closely to ______.

the company's home country

Which of the following problems can result from a job-based pay structure? (Select all that apply.)

top-down decision making is reinforced a growing bureaucracy decreased lateral job movement

Which of the following are considered disadvantages of a skill-based pay system? (Select all that apply.)

training programs need to be developed to help employees acquire new skills skills must be described, measured, and assigned monetary values employees may acquire skills too quickly and top out on the pay scale new skills can be difficult to use effectively, resulting in high labor costs

The ratio of top-executive pay to that of an average worker is often described as creating a(n) ______.

trust gap

A system in which employees doing the same jobs are paid two different rates, depending on their hiring date, is known as a ______.

two-tier wage plan

Which of the following do employees often feel when a trust gap exists? (Select all that apply.)

uncertainty about management's competence doubt about the intentions of senior management resentment of management's pay

Which of the following are pay-setting approaches that vary in the relative importance they give to external and internal comparisons? (Select all that apply.)

using pay grades using market survey data using the pay policy line