Compensation Final Exam

10) Which of the following groups can qualify for the exemptions under the Fair Labor Standards Act of 1938?

A) Computer employees

7) Which of the following statements about ownership and financial markets is true?

A) In the United States, corporate ownership and access to capital is far more concentrated than in most other countries.

23) Which of the following statements about anchoring/framing is true?

A) It states that initial data strongly affect decisions/beliefs.

8) Which of the following is a benefit under Social Security?

A) Lump-sum death payments

9) Which of the following is a test that must be met to qualify for the administrative employee exemption?

A) The employee must be compensated on a salary or fee basis at a rate not less than $455 per week.

23) The base salary plus incentives for expatriates is usually determined by

A) job evaluation.

19) ________ is defined by the Department of Labor as experience, training, education, and ability as measured by the performance requirements of a particular job.

B) Skill

28) With easily sold products,

B) the base compensation tends to be more important.

22) ________ are one-time cash payments to employees that are not added to an employee's base wages.

C) Lump-sum awards

25) Leah, the CEO of SteadyResults Corp., feels that she's underpaid, so she hires a compensation consultant to Survey actual competitors of the company. According to agency theory, if SteadyResults performs poorly, her salary will most likely:

C) be increased in order to retain her.

28) Which of the following is a reason for unions opposing gain-sharing plans?

D) Reduced need for jobs due to increased productivity

4) Advantage of a___ is that it reduces benefits costs, something that the other cost-cutting options don't achieve.

D)reduction in force

13) The ___ is designed to lessen an employer's ability to deny coverage to an employee for a preexisting condition.

Health Insurance Portability and Accountability Act

4) The biggest trend in supervisory pay centers on

A) increased use of variable pay.

7) The rising costs of Social Security have been covered by:

A) increases in the maximum earnings base and the rate at which that base is taxed.

3) Company A and Company B are in the same industry, but Company A is unionized and Company B is not. Therefore,

A) it can be argued with assurance that any wage differences between the two firms are due to the presence of a union in Company A and the absence of a union in Company B.

27) The determination of pay discrimination on jobs of dissimilar content requires a standard that allows jobs of dissimilar content to be declared comparable and that allows pay differences for jobs that are not comparable. This standard is

A) job evaluation.

10) Traditionally, Japan's employment relationships were supported by

A) lifetime security within the company.

2) According to Hofstede's cultural dimensions, in Malaysia and Mexico, where there is high power distance, ________ pay structures are appropriate.

B) hierarchical

10) Basically a phenomenon of the union sector, two-tier wage structures differentiate pay based upon the

B) hiring date.

26) Pay-for-knowledge plans do all of the following EXCEPT

B) increase the probability of work being subcontracted out to nonunion organizations.

28) Which of the following ties salary to a region?

C) The modified balance sheet approach

5) The ________ prohibits use of several compensation programs, including, but not limited to bonuses, retention awards, and incentive pay, except where part of a preexisting employment contract, during the period Troubled Asset Relief Program funds are received.

A) American Recovery and Reinvestment Act

24) Which of the following plans give employees part ownership in a company?

A) Employee stock ownership plans

14) Which of the following is the most popular executive perk offered by most companies?

A) Executive physicals

3) Which of the following often go for extended periods in the field with little supervision?

A) Sales staff

13) Which of the following statements about single rates is true?

A) Single rates are usually specified for workers within a particular job classification.

1) In the context of the Consolidated Omnibus Budget Reconciliation Act, which of the following statements are true?

A) The biggest concern for individuals getting health insurance under the Consolidated Omnibus Budget Reconciliation Act is the relatively brief qualifying period.

22) KYZ, Inc., a U.S. firm, sends its manager, Ryan, to London to manage its operations there. Ryan's salary is still based on the U.S. pay system; however, KYZ offers him a lump-sum payment to offset the additional standards-of-living expense in London. In this case, which of the following approaches to expatriate compensation did KYZ use?

A) The cafeteria approach

27) MayFly, Inc., a firm headquartered in Paris, France, sends one of its employees to Frankfurt, Germany, and Barcelona, Spain, to manage its operations in these cities. The employee would be required to alternate between the two cities every six months. Mayfly offers only a moving expense on top of the base pay as the employee would be moving only within European Union countries. Which of the following approaches to expatriate compensation is exemplified in this situation?

A) The modified balance sheet approach

18) Which of the following is a feature of defined contribution plans?

A) They are faster to vest than defined benefit plans.

26) Hannah is the CEO of JF Corp., a steel manufacturing company. She finds that the market is exhibiting the signs of a maturing market. She wants to revise the compensation package for her sales employees to adapt to the changing market conditions. In this case, Hannah is most likely to:

A) increase base pay.

26) A health maintenance organization pulls together a group of providers willing to provide services at an agreed upon rate in exchange for employers:

A) limiting employees to these providers for health services.

7) Annual bonuses often play a major role in executive compensation and are primarily designed to

A) motivate better short-term performance.

10) A(n) ________ uses cash or stock award that is determined by an increase in stock price at a fixed future date.

A) phantom stock plan

11) Nonqualified stock options require

A) purchase of stock at a stipulated price, not conforming with the Internal Revenue Code.

27) Which of the following is a reason for unions favoring gain-sharing plans?

B) Increased involvement with job activities

26) Which of the following statements is true of the localization approach to expatriate compensation?

B) It ties an expatriate's salary to the host country's salary scales.

21) Which of the following is true of the Age Discrimination in Employment Act?

B) It was amended in 1990 to include the Older Workers Benefit Protection Act.

20) Jacob, an 18-year-old, has been working at HoldVille Corp. for over a year. If HoldVille offers full vesting after one year, which of the following statements is true?

B) Jacob is not eligible for pension as he is not over 21.

13) Which of the following statements is true about the German traditional national system?

B) Labor markets in Germany remain highly regulated, and tariff agreements set pay for union workers

7) Under the ________, employers can be liable for current pay differences that are a result of discrimination that occurred many years earlier.

B) Lilly Ledbetter Fair Pay Act

13) HoldDesk, Inc. has an annual labor cost of $3,000,000. It has a turnover rate of 10 percent and a planned average increase of 5 percent. The turnover effect is

C) $15,000.

29) Almost ___ percent of the companies offering child care assistance to employees also offer elder care assistance.

C) 50

8) In the context of contracts, which of the following is most appropriate when the necessary job skills are within the grasp of most employees?

C) Automatic progression

14) Michael was laid off by his company owing to budget cuts. Before being laid off, he earned $1,000 per week. If he has been receiving unemployment insurance benefits for 26 weeks, which Of the following statements is true?

C) Michael is no longer eligible for unemployment benefits.

29) ________ sets salaries according to the home-country system and simply offers employees lump sums of money to offset differences in standards of living.

C) The cafeteria approach

21) MerTon, Inc. decides to reduce labor costs by using exit incentives to encourage some of its senior, high-earning members to leave the organization. It replaces the employees who quit with new employees and pays them low wages. Which of the following statements is most likely true in this scenario?

C) The salary range midpoint of the company is higher than the actual salary paid.

8) The degree of discretion managers have to make total compensation a strategic tool is referred to as

C) managerial autonomy.

25) The Equal Pay Act is a part of the

C) the Fair Labor Standards Act.

15) Today, ________ percent of workers participate in the pension plan coverage provided by their employers.

D) 53

21) ________ curve expresses the relationship between years since last degree, performance, and salary.

D) A maturity

18) In the negotiation stage of a multiyear wage contract, Mark, the manager of SifCo Corp., specifies that changes will be made to the wage based on the changes in the consumer price index and mentions the effective dates of adjustment. Which of the following types of clauses has Markintroduced in the contract?

D) A reopener clause

13) In the context of child labor, which of the following statements is true?

D) Child labor has decreased in most countries across the world in recent years.

29) ________ has produced more comparable-worth pay increases than any other approach.

D) Collective bargaining

15) Which of the following is a measure of changes in prices of goods and services in the product and service markets over time?

D) Consumer price index

30) According to research, which of the following is true about U.S. expatriates?

D) Only 13 percent of U.S. expatriates are women.

4) Under the ________ Act, executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company.

D) Sarbanes-Oxley

1) _____ is an example of a country with a highly decentralized approach to pay setting with higher wage flexibility.

D) The United States of America

12) MaxTrain Corp. recognizes that its competitor GlasWell Corp., which is unionized, offers higher wages and benefits. To avoid unionization demands from its workers, MaxTrain decides to offer the same wages and benefits to its employees as GlasWell. Which of the following phenomena is exemplified in this case?

D) The spillover effect

2) Which of the following is true of lump-sum awards?

D) They are typically given in lieu of merit increases.

17) In the context of the general compensation strategies, identify a true statement about localizers

D) They operate independently of the corporate headquarters.

6) Which of the following is an objective of the unemployment insurance program?

D) To provide an incentive for employers to stabilize employment

4) Identify Hofstede's national culture dimension that can be described as the extent to which a culture programs its members to feel uncomfortable in unknown and unusual situations and find it difficult to control the uncontrollable.

D) Uncertainty avoidance

24) The Web page for the compensation society is

D) WorldatWork.

30) Replacing merit grids with ________ eliminates the link between the pay increase and the employees' salary position in the range and performance rating.

D) bonuses

26) Regarding pay differences for different jobs,

D) courts continue to uphold the use of market data to justify differences.

20) In recent years, some firms have tried to deal with the plateau effect and also accommodate the different career motivations of mature scientists and engineers through a(n)

D) dual-career ladder.

19) A compa-ratio of less than 1 means that, on average,

D) employees in a range are paid below the midpoint.

5) When compared to the impact of unions during strong economies, the impact of unions during periods of higher unemployment is

D) larger.

19) An Indian citizen working for a Japanese company in India is a

D) local country national.

12) Bonuses paid in Japan are

D) not necessarily related to performance.

23) In recent years, a stable ________ of all major collective bargaining agreements in the private sector have contained a provision for lump-sum payouts.

D) one-third

9) A(n) ________ uses cash or stock award if specific goals are achieved.

D) performance share plan

14) In Japan, internal alignment based on ________ is far more important than other factors.

D) seniority

14) The highest rates of child labor are in

D) sub-Saharan Africa.

17) Prevailing-wage laws

D) were passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression.

18) The denial of jobs, promotions, or training opportunities to qualified women or minorities are examples of

A) access discrimination.

3) KayLeaf, Inc. wants to set up a unit in Hong Kong. To facilitate this, it sends its manager to Hong Kong to gather information about the culture of Hong Kong. Which of the following is most likely to be a suggestion from its manager?

A) To use incentives that are based on an employee's performance

11) The denominator for calculating the current year's pay rise is the

A) average pay at the beginning of the year.

30) With gain-sharing plans, the most common union strategy is to

A) delay taking a stand until real benefits are more apparent.

15) Unlike U.S. companies, Japanese organizations

A) encourage flexible workers.

1) The executive branch of the federal government

A) enforces laws through agencies and its other bodies.

22) Popular stereotypes of salespeople characterize them as being heavily motivated by

A) financial compensation.

18) A recent article analyzing the results from over 100 executive pay studies shows that the best predictor of executive pay is by far

A) firm size.

16) The majority of defined benefit plans calculate average earnings over the last ____ years of service.

B) 3 to 5

5) The differential between supervisors' base pay and their highest paid subordinate is typically ____ percent.

B) 5 to 30

14) ________ is movement through the wage ranges where seniority is specified as the basis of the movement.

B) Automatic progression

11) Which of the following is a factor determining base pay in the Japanese traditional national system?

B) Career category

1) In which of the following situations would engineering jobs is likely treated as a special compensation group?

B) Computer engineers employed at a software firm

24) When taxes are deducted from employees' earnings up to the same amount of taxes they Would pay had they remained in their home country, it is known as

B) tax equalization.

7) If red circle rates become common throughout an organization, then:

B) the design of the ranges and the evaluation of the jobs should be reexamined.

11) The phenomenon where nonunion management continues to enjoy the freedom from union"interference" in decision making and workers receive the rewards already obtained by their unionized counterparts is known as

B) the spillover effect.

20) A Korean citizen working for Toshiba, a Japanese company, in Canada is a

B) third-country national.

12) Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and wants to continue that coverage. According to the Consolidated Omnibus Budget Reconciliation Act, how long can Larry continue his coverage through Steve's company after being laid off?

D) 0 months

7) Union employees in the public sector earn, on average, about ________ more than their nonunion counterparts.

D) 22 percent

21) Which of the following is true of hiring LCNs?

D) Employment of LCNs satisfies nationalistic demands for hiring locals.

28) Which of the following is one of the basic steps in establishing a comparable-worth pay plan?

D) Identifying the percentages of male and female employees in each job group

25) Which of the following actions is most likely to be favored by unions?

D) Introducing lump-sum awards

1) In the context of the impacts of unions on compensation, which of the following statements is true?

D) Management and professional employees do not enjoy union wage advantage.

16) Which of the following statements about evolution and change in the traditional German model is true?

D) Many of the changes in Germany are the result of global competitive pressures and technological changes.

29) Which of the following is true regarding a gain-sharing plan?

D) Not all unions would be in favor of this type of plan.

8) Which of the following includes a provision that requires public companies to set policies to allow executive compensation to be taken back if it was based on inaccurate financial statements that did not comply with accounting standards?

D) The Dodd-Frank Wall Street Reform and Consumer Protection Act

11) In the majority of states, unemployment insurance is financed exclusively by:

D) employers that pay federal and state unemployment insurance.

30) Contingent workers receive ________ benefits than regular workers; contingent workers' benefits cost ________ for employers than it does for regular workers.

D) fewer; less

18) A compa-ratio reflects the

D) relationship of the average actual salary in each range to the midpoint of the range.

9) In a(n) ________ pay plan, a contract is negotiated that specifies that employees hired after a given target date will receive lower wages than their higher-seniority peers working on the same or similar jobs.

D) two-tier

12) At the time they are granted, which of the following have no tax implications for an executive?

B) Incentive stock options

19) Which of the following is the most likely reason for most unions to insist on group-based performance measures with equal payouts to members?

B) It cuts down on strife and internal quarrels.

28) Which of the following is true of the Affordable Care Act?

B) It is aimed at expanding health care coverage through an individual mandate to purchase health insurance and an employer mandate to provide qualifying health insurance coverage.

23) MNTX University requires that all its female professors score higher than the male professors in their appraisal rating to qualify for a pay bonus as there are more female professors than male professors in the university. Which of the following statements is true in this case?

B) MNTX is liable for disparate treatment of women.

21) Maxford Corp. offers full vesting after two years. However, it does not offer portability of pension to its employees. Which of the following statements is true in this scenario?

B) Maxford does not have to provide vested benefits to employees who quit before six months.

27) NaxWell Corp. sells a smart wristband that, apart from monitoring heart rate and blood pressure, also reminds users to stand and walk every half hour. As part of its promotional efforts, a celebrity starts wearing the wristband, thereby increasing its popularity and ease of sale. Which of the following is most likely to happen?

B) NaxWell's likely to increase base salaries and decrease incentives.

11) The ________ specifies the number of breaks that must be provided in an eight-hour workday.

B) Occupational Safety and Health Administration legislation

20) The CEO of BoardCom, Inc., James, negotiates a new union contract with the union leader. IfJames wants to reduce expenses and keep the union happy, which of the following suggestions is most likely to be helpful?

B) Provide lump-sum awards in exchange for merit pay increases.

5) ________ relieve an employer's liability when a pre-employment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone.

B) Second-injury funds

9) Which of the following benefits is a federally administered program?

B) Social Security

6) Which of the following countries has the highest number of people in the workforce belonging to unions?

B) Sweden

20) GronLan, Inc., a company with a majority of workers with high seniority, decides to hire 1,000 college graduates to meet the sudden productivity requirements generated by a growth in the market. Which of the following statements is most likely to be happen in this situation?

B) The average pay actually paid by the company will fall below its range midpoint.

25) Which of the following approaches seeks to ensure that employees on overseas assignments have the same spending power as they would in their home country?

B) The balance sheet approach

6) Which of the following face the possibility that disgruntled stockholders may sue over corporate strategies that do not ''pan out''?

B) The board of directors

9) ________ is the budgetary approach that begins with an estimate from the highest-ranking executives of the pay increase budget for an entire organization.

B) Top-down budgeting

2) The ____ Act extends prevailing-wage concept to manufacturers or suppliers of goods for government contracts.

B) Walsh-Healey Public Contracts

21) Increased global competition has caused unions to:

B) become more receptive to alternate reward systems that link pay to performance.

5) Bottom-up budgeting includes the process of distributing forecasting instructions and worksheets where:

B) firms furnish managers with the forms and instructions necessary to preplan increases.

27) A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is

B) known as a decentralized strategy.

23) If improved account retention became a major focus of attention, the performance measure stressed would be

B) percentage account erosion.

24) When designing a sales compensation plan, it should be kept in mind that:

B) salespeople under an incentive system will view customer service as an imposition.

2) The ________ was enacted by the Congress to provide current and former employees and their Spouses and dependents with a temporary extension of group health insurance when coverage is

C) Consolidated Omnibus Budget Reconciliation Act

22) The European Union has issued the ________, which is significantly stronger than U.S. regulations.

C) Data Privacy Directive

22) In which of the following types of cases is the focus on the discriminatory consequences rather than the intent to discriminate?

C) Disparate impact

28) Which of the following is the basic question to ask to improve quality and ensure that value is added by each technique and at each stage in the compensation system?

C) Does each specific activity directly contribute to our objectives?

1) Which of the following is a factor to control in order to manage labor costs in a simple labor cost model?

C) Employment

24) ________ prohibits discrimination on the basis of race, color, religion, sex, or national origin.

C) Executive Order 112 46

30) Which of the following statements regarding wage differences in industries and firms is NOT true?

C) Female employment is more heavily concentrated in large firms.

15) Who among the following has violated the Fair Labor Standards Act of 1938?

C) Jeremy, who employs his 16-year-old cousin in his meat-packing plant

10) A key provision of the ________ allows employees in publicly traded companies the freedom to sell off any employer stock purchased through deferrals or after-tax contributions.

C) Pension Protection Act

8) ________ use cash or stock award that is determined by increase in stock price during any time chosen (by the executive) in the option period.

C) Stock appreciation rights

12) Susan works in a sterile laboratory that requires her to scrub and put on protective clothing. Which of the following acts determines whether she should be paid for this time?

C) The Portal-to-Portal Act

23) What's the first question that should be asked when determining the amount of retirement income an employer should provide?

C) What level of retirement compensation would the employer like to set as a target relation to pre retirement earnings?

16) An early study of the effects of the living wage law in Los Angeles found all of the following EXCEPT that

C) a higher proportion of new hires were female.

19) Most common approach to motivating executives to make decisions that're in the best interests of stockholders is

C) a long-term incentive plan using stock options.

8) The percentage increase in average pay that is expected for an organizational unit or company is called

C) a planned pay-level rise.

10) Financially healthy employers may wish to maintain their competitive positions in the labor market or share financial success through

C) bonuses and profit sharing.

19) In a(n) ________, employees have a hypothetical account into which is deposited what is typically a percentage of annual compensation.

C) cash balance plan

4) Experts attribute the stabilization in the dollar cost of workers' compensation since 2010 to:

C) employer safety programs.

30) A compensation consultant is hired to survey actual competitors of the company:

C) if the CEO is truly underpaid.

16) A deferred wage increase

C) is negotiated at the time of initial contract negotiations with the timing and amount specified in the contract.

4) A study of unions in 114 companies concluded that

C)unions make a difference in wages across all studies & time periods

3) The average company match for 401(k) retirement plans is ________ on the dollar up to 6 percent of pay.

A) 50 cents

2) Executives, supervisors, and sales staff often receive special compensation treatment because

A) these jobs face conflicting demands.

25) Roughly ________ of all employees have access to paid life insurance.

A) three-fourths

6) Which of the following issues most commonly reach arbitration?

B) Discharge and disciplinary issues

26) ________, a software package, allows workers to make health-care choices, allocate savings to 401(k)s or other savings vehicles, and access vacation schedules.

B) Employee self-service

15) Which of the following is the least popular executive perk offered by most companies?

B) Housing allowance

17) ________ are defined benefit plans that look like a defined contribution plan.

) Cash balance plans

24) An employee who changes jobs four or more times during his or her career will likely receive a pension that is approximately ________ as that of an employee whose working career is spent with one employer, assuming that both employees have the same starting salary and receive annual increases equal to inflation rate.

C) one-fourth the size

18) A Japanese citizen working for Toyota in Georgetown, Kentucky, is a

C) parent-country national.

3) The Davis-Bacon Act

C) requires that mechanics and laborers on public construction projects be paid the prevailing wage in an area.

14) Changes in wages in labor markets are measured

C) through pay surveys.

12) The ________ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage.

C) turnover effect

17) Which of the following involves periodic adjustments based typically on changes in the consumer price index?

A) A COLA clause

13) Which is a benefit under the Employee Retirement Income Security Act guidelines for qualified pension plans?

A) Additional life insurance

25) ________, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay.

A) Communication portals

3) Jennifer is hurt at work while driving a forklift. Her employer claims that she was injured as a result of her careless driving and is therefore not eligible for workers' compensation. What will be the outcome of the employer's challenge to her worker's compensation claim?

A) She will likely receive workers' compensation benefits.

22) An employer experiencing high turnover and seeking to reduce pension costs is likely to prefer:

A) full vesting after three years

9) In the comparison of the pay systems of two well-known Japanese companies Toyota and Toshiba, Toyota

A) places greater emphasis on external market rates.

27) A ____ plan is a hybrid health plan combining the benefits of a health maintenance organization and a ____.

A) point-of-service; preferred provider organization

16) If Philadelphia has a CPI of 165 and Houston has a CPI of 145 and if both cities started with bases of 100, it means that

A) prices have risen faster in Philadelphia since the base year than in Houston.

17) When employees are paid more than the maximum of their pay grade, these rates are called

A) red circle rates.

6) The Worker Economic Opportunity Act

A) states that income from most stock plans need not be included in calculating overtime pay.

5) In the context of Hofstede's national culture dimensions, the "individualism-collectivism" dimension refers to:

A) the degree to which people are supposed to look after themselves or remain integrated into groups, usually around the family.

17) Today, top executive pay is more than ________ times the pay of the average worker.

D) 300

2) Total compensation in many organizations makes up at least ________ of operating expenses.

D) 50 percent

6) The ________ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees.

D) ADEA

16)____ argues that executive pay rises to maintain the same relative relationship with the salaries of lower-level employees.

D) Agency theory

20) Meltrop Corp. employs two store clerks, Sam and Stella. Stella sues Meltrop claiming unequal pay as she earns $500 a week less than Sam does despite doing the same work as Sam. Which of the following is most likely to be the result of the litigation?

D) Meltrop will lose the litigation as it has committed valuation discrimination

29) The major potential advantage of outsourcing is

D) increased cost savings.

29) Working through a temporary-help agency usually means:

D) low pay in administrative or day labor positions.

15) In ____, employees who are evaluated more highly receive larger or more rapid increments than average or poor performers.

D) merit progression