Chp8Comp

81. (T/F) Grades and ranges or bands recognizes both external and internal pressures on pay decisions.

TRUE

16. Pay surveys collect total number of employees for the purpose of_______ _____ A. impact on the labor market B. how work is organized C. ability to pay D. recruiting success

A. impact on the labor market

38. Paying jobs of different functions different rates within a pay band is called ____. A. reference rates B. broad banding C. pay leveling D. knowledge-based pay

A. reference rates

65. (T/F) A market pay line is useful for setting pay for benchmark jobs that match competitors, but not for non-benchmark jobs.

FALSE

44. (T/F)Many employers use market surveys to validate their own job evaluation results.

TRUE

45.(T/F)When there is an unusual level of turnover in a job, an employer is likely to conduct a market survey.

TRUE

47. (T/F) A segmented labor supply requires multiple labor market comparisons.

TRUE

50. (T/F)Identifying pay survey participants by company name is considered price fixing under the Sherman Act.

TRUE

53.(T/F) If the purpose of a survey is to price the entire structure, then benchmark jobs can be selected to include the entire job structure.

TRUE

54. (T/F)Pay surveys include information about both all forms of cash compensation and benefits.

TRUE

35.Pay ranges for clerical and production jobs commonly range between _____ and _____. A. 5, 15 B. 15, 30 C. 30, 40 D. 40, 60

A. 5, 15

18. This measure of compensation may overstate competitors' pay. A. Base pay plus benefits B. Total cash compensation C. Base pay D. Total compensation

B. Total cash compensation

19. _____ measures competitors' use of performance-based pay. A. Base pay B. Short-term incentive pay C. Total cash D. Total compensation

C. Total cash

8. The primary responsibility for conducting a pay survey is _____. A. top management B. the facility or plant manager C. outside consultants D. the compensation manager

D. the compensation manager

26. The _____ minimizes distortion of the central tendency caused by outliers. A. weighted mean B. mean C. mode D. median

D. median

43. (T/F)Adjustments to forms of pay occur more often than adjustments to overall pay level.

FALSE

79. (T/F) Market pricers match a small percentage of their jobs with market data.

FALSE

31. (p. 280) In the regression equation, y

a + bx, job evaluation points are _____. A. a B. b C. x D. y=C. x

21. Survey data from one or a few employers that are significantly out of line with other employers _____. A. are deviant data B. are anomalies C. reflect a diverse sample D. are standard deviations

B. are anomalies

7. Which of the following jobs would most likely fall into a fuzzy market? A. Screen writer (MGM) B. Sound engineer (Sony studios) C. Director of future vision services (West Publishing) D. Vice-president of people (Southwest Airlines)

C. Director of future vision services (West Publishing)

25. Which of the following is often used to set pay ranges? A. Median B. Weighted mean C. Quartiles and percentiles D. Standard deviation

C. Quartiles and percentiles

27.Which of the following statistical measures shows how similar or dissimilar the market rates are from each other? A. Weighted mean B. Mean C. Standard deviation D. Median

C. Standard deviation

41. Which of the following statements is true about market pricers? A. They align pay structures with the business strategy. B. Their pay structures are unique and difficult to imitate. C. They assume that little value is added through internal alignment. D. They emphasize pay structures based on unique technology or the way work is organized.

C. They assume that little value is added through internal alignment.

14. Applying the job evaluation process to pay survey jobs to assess the degree of match between survey jobs and benchmark jobs is called the _____ approach. A. low-high B. benchmark job C. benchmark conversion D. point survey conversion

C. benchmark conversion

3. The final major decision in pay-level determination is _____. A. interpret and apply results of survey B. obtain top-management acceptance of final decisions C. design grades and ranges or bands D. draw policy lines

C. design grades and ranges or bands

42. (T/F)The final step in determining externally competitive pay levels and structures is merging internal and external pressure.

FALSE

46. (T/F)The relevant labor market for accounting, sales or clerical skills should be limited to each industry in which these types of work are found.

FALSE

48. (T/F) It is easier for employers to determine the worth of jobs that fall into fuzzy markets than traditional relevant markets.

FALSE

49.(T/F) It is easier for companies using a market pricing approach to price "fuzzy market" jobs than those using a benchmark job approach.

FALSE

51. (T/F) Salary data available to employees via the Internet are as reliable and accurate as other more traditional surveys.

FALSE

52. (T/F) Salary.com provides fewer different job descriptions for a similar job title such as programmer than the BLS survey.

FALSE

57. (T/F) Total cash includes base pay plus stock options and benefits.

FALSE

60. (T/F)The most common measure of variation in pay surveys is the standard deviation.

FALSE

62. (T/F) A common practice is to use the 10th and 90th percentiles from pay survey data to set minimums and maximums of pay grades.

FALSE

72.(T/F) A high degree of overlap between adjacent pay ranges means pay raises can be larger compared to low overlap.

FALSE

76. (T/F)Career moves between bands are more common than within bands.

FALSE

78.(T/F) A job structure is anchored by the organization's external competitive position and reflected in its pay-policy line.

FALSE

55. (T/F) Turnover and organizational revenues are examples of survey data collected to gather competitive intelligence.

TRUE

56. (T/F) Setting your company's base pay to competitors' total compensation risks high fixed costs.

TRUE

58. (T/F) The process of multiplying survey data by a factor reflecting the difference between a survey and a company job is called survey leveling.

TRUE

63. (T/F)Market lines may be constructed by either freehand drawing or linear regression.

TRUE

64. (T/F)Regression smoothes large amounts of data while minimizing variations.

TRUE

66. (T/F) Aging the market data to a point halfway through the plan year is called lead/lag.

TRUE

67. (T/F) A pay range exists when at least two employees in the same job are paid different rates.

TRUE

68.(T/F)Grades group job evaluation data on the horizontal axis.

TRUE

69. (T/F)Pay ranges for top-level management positions are commonly larger than those other professional and midlevel managerial positions.

TRUE

70. (T/F)Pay ranges for managerial jobs are larger than ranges for other jobs because these jobs have greater opportunity for both discretion and performance than lower level jobs.

TRUE

74.(T/F)Flat rates, in which pay is the same regardless of performance or seniority, are often used in skill-based pay systems and in unionized employers.

TRUE

75. (T/F) Use of broad bands has risks of bias and high labor costs.

TRUE

32. An organization that has a match (pay) policy will pay its employees: A. the market rate each month for the duration. B. more than the market rate for some months and less than the market rate for the other months. C. at the 100th percentile of the market rate obtained through the wage/salary survey. D. at the 50th percentile of the market rate obtained through the wage/salary survey.

B. more than the market rate for some months and less than the market rate for the other months.

39. Job structure is to ________ as pay structure is to pay-policy line. A. market line B. pay surveys C. job evaluation D. reference rates

C. job evaluation

33. Aging market data to a point halfway through the plan year is called _____. A. leveling B. updating C. lead/lag D. lag

C. lead/lag

4. Which of the following is true regarding the Employment Cost Index (ECI)? A. It is published by the Department of Commerce. B. It is an excellent source of competitor labor costs. C. It measures annual changes in employer compensation costs. D. It allows comparison of labor costs to all-industry averages.

D. It allows comparison of labor costs to all-industry averages.

23. All of the following are examples of potential anomalies except _____. A. outliers B. a large variation in base pay for a job at one company C. one company dominates the results D. a large variation in average base pay for a job across companies

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

59. (T/F)Research shows that most managers analyze pay surveys in similarly by weighting pay of their major product and labor market competitor more than others.

FALSE

17. _____ shows how competitors value work in similar jobs. A. Base wage B. Total cash C. Total compensation D. Base pay plus benefits

A. Base wage

6. Which of the following types of labor would most likely be recruited only locally? A. Office and clerical workers B. Scientists C. Managers D. Executives

A. Office and clerical workers

28. Because employers are raising employee pay at various times during the year, survey data must be updated using a process called _____ or _____. A. aging, trending B. aging, smoothing C. trending, leveling D. gaining, smoothing

A. aging, trending

20. The first step in interpreting survey data is _____. A. check for the accuracy of job matches B. seek out non-responders C. check for fraudulent data D. remove the top and bottom paying companies

A. check for the accuracy of job matches

15. Financial data in pay surveys are used to _____. A. group firms by size B. analyze competitors' performance C. compare competitors' labor costs D. compare competitors' debt ratios

A. group firms by size

29. A survey conducted in January, 2013 found the median pay effective January 1, 2013, for a clerk was $22,000 and the forecast rate of wage increases in the market for 2013 of was 5% and another 5% for 2014. An employer choosing to follow a lead strategy of 4% above the market for the plan year, will need to _____. A. multiply salary by 105% and then by 109% B. increase the clerk salary by $2,200 C. multiply the salary by 109% D. multiply the salary by 114%

A. multiply salary by 105% and then by 109%

1.The first step in setting competitive pay and designing a pay structure is _____. A. specify pay-level policy B. conduct job evaluation C. draw policy lines D. specify relevant market

A. specify pay-level policy

9. The answer to the question of how many firms to include in a pay survey is _____. A. there are no firm rules B. include at least one-hundred C. focus primarily on labor-market competitors D. the top 50 percentile of similar sized firms

A. there are no firm rules

12. A company using a skill-based pay system prices the job of lead assembler at between $10 and $22 per hour. Survey data showed the job assembler averaged $10 per hour and the job of assembly supervisor at $22 per hour. The company was using the _____ method of job matching. A. benchmark job B. low-high C. pay range D. benchmark conversion

B. low-high

13. For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is _____ A. benchmark job. B. low-high. C. market pricing D. benchmark conversion

B. low-high.

37. Which of the following statements is true regarding broad bands? A. They require a relatively stable organization design. B. They support recognition via titles or career progression. C. They foster cross-functional growth. D. They give managers "freedom with guidelines".

C. They foster cross-functional growth.

34. Pay ranges: A. are flexible enough to deal with differences in quality, but not with the productivity or value of these quality variations. B. usually lead to an increase in employee turnover. C. reflect the differences in performance or experience that an employer wishes to recognize with pay. D. cause employees to believe that their compensation can increase by only a limited amount.

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

36. Size of pay differentials between grades should _____. A. be based upon differentials in market surveys B. be approximately 15 percent C. support career movement through the pay structure D. be between 10 and 25 percent

C. support career movement through the pay structure

11. Companies typically use _______ pay survey(s) when setting pay levels. A. one well-validated B. two C. three or more D. more than five

C. three or more

40.The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. A. job structure B. broad banding C. reference rate D. market pricing

D. market pricing

5. A relevant labor market includes all employers who compete in one or more of the following areas except _____. A. employees in the same geographic area B. the same occupations or skills C. the same products and services D. pay similar wages

D. pay similar wages

22. 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 _____. A. updating B. point factor adjustment C. lead/lag policy adjustment D. survey leveling

D. survey leveling

61. (T/F)The measure of central tendency that minimizes distortion is the mode.

FALSE

73. (T/F)When flat pay rates are used, they are typically the midpoint of a corresponding survey job.

TRUE

77. (T/F) Managers often regard external market data as more objective than internal job evaluation.

TRUE

80. (T/F) A pure market pricing strategy tends to ignore internal alignment.

TRUE

10. The _____ publishes extensive information on various occupations in different geographic areas. It is a major source of publicly available compensation data. A. Chamber of Commerce B. Bureau of Labor Statistics C. compensation association D. Department of Economics

B. Bureau of Labor Statistics

24. You work in a midsize organization and have just conducted a wage survey. Five midsize companies have provided wage data for a particular job. Here are the numbers. Which of the following statistics will be the most accurate reflection of the market rate? A. Mean B. Weighted mean C. Median D. Mode

B. Weighted mean

2. The second major decision in pay-level determination is _____. A. specify relevant market B. define purpose of survey C. design and conduct survey D. select product and labor market competitors

B. define purpose of survey

30. A market pay line _____. A. reflects an organization's internal alignment policy B. links a company's benchmark jobs with market rates paid by competitors C. provides an accurate prediction of an organization's entry level pay rates D. compares an organization's minimum and maximum pay rates for each skill level

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

71.(T/F) Smaller pay ranges may reduce the opportunities for promotion.

TRUE