HR MGMT CHAPTER 11

pay compression

A narrowing of the ratios of pay between jobs or pay grades in a firm's pay structure is: A. pay secrecy. B. pay compression. C. pay security. D. pay inequality.

organizational reward system

A(n) ____________ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions. A. nonfinancial system B. corporate compensation system C. on the spot award D. organizational reward system

false

Advantages to pay openness policies include that it forces managers to publicly defend their pay decisions.

movement toward "salary entitlement" philosophy.

All of the following are major changes in company philosophies concerning pay EXCEPT: A. movement toward "salary entitlement" philosophy. B. increased willingness to control payroll costs. C. more concern with what the company can afford to pay. D. implementation of "pay-for-performance" systems.

false

All organizations must make some allowance for the trust gap in their salary programs.

education-based pay

Alternatives to pay systems based on job evaluation include all of the following EXCEPT: A. education-based pay. B. skill-based pay. C. market-based pay. D. knowledge-based pay.

spot bonus

An employer awarding an employee's exceptional performance with a small, one-time bonus shortly after the noteworthy actions is a: A. lump-sum bonus. B. spot bonus. C. surprise bonus. D. competency-based bonus.

organizational reward system

At a broad level, a(n) _____ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions. A. competency-based pay system B. employee stock ownership plan C. organizational reward system D. merit-pay method

variable pay

At lower levels, _______ systems almost guarantee cost control. A. contribution-based pay B. competency-based pay C. skill-based pay D. variable pay

true

Because sign-on bonuses do not increase base salaries, the structure of differences in pay between new hires and experienced employees does not change.

true

It is true of all incentive plans that none will work well except in a climate of trustworthy labor-management relations and sound human resource management practices.

true

Premium-price options are stock options granted at a higher-than-market price so that executives will profit only after the stock has risen substantially.

false

Regardless of the exact form of rebalancing, stock options will continue to be the focal point of executive compensation.

true

Rewards bridge the gap between organizational objectives and individual expectations and aspirations.

executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company.

Sarbanes-Oxley requires that A. companies can seek repayment for incentives paid that were later found to be materially inaccurate. B. the Securities and Exchange Commission meet annually to discuss bonuses. C. the minimum wage change each year. D. executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company.

true

Sarbanes-Oxley states that executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial security of the company.

false

Skill-based plans are usually applied to "white-collar" work and competencies to "blue-collar" work.

output of the team as a whole

Team incentives provide an opportunity for each team member to receive a bonus based on the: A. net profit of the corporation. B. discretion of the team supervisor. C. terms of the collective bargaining unit. D. output of the team as a whole.

compensable factors

Common job characteristics that an organization is willing to pay for, such as skill, effort, responsibility, and working conditions are termed: A. workload standards. B. benchmark jobs. C. compensable factors. D. ESOPs.

true

Companies providing variable pay to their best workers are 68 percent more likely than other firms to report outstanding financial performance.

true

Companies view skill-and competency-based pay plans as a way to develop the critical behaviors and abilities employees need to achieve specific business results.

false

Incentives oriented toward individuals are becoming less popular as work increasingly becomes technical in nature.

false

Internal equity is the relative size of pay differentials among different segments of the workforce.

true

Different job evaluation methods yield different rank-orders of jobs, and therefore different pay structures.

true

Disadvantages of teams can include competition between teams, inability for workers to see their individual contributions, and top performers who have to carry those who don't carry their fair share of the load.

the company makes relatively large annual contributions to the plan.

ESOP satisfaction tends to be highest in companies where: A. the company makes employees work harder. B. the company makes relatively large annual contributions to the plan. C. there is an increase in day-to-day work satisfaction. D. management does not share power or decision making.

compression issues

Failure of organizations to address _____ may cause long-serving employees to rethink their commitment to a company they think does not value or reward loyalty. A. dependability issues B. annuity problems C. productivity problems D. compression issues

An internal equity

Gainsharing plans consist of all except which of the following elements? A. An internal equity B. A philosophy of cooperation C. A financial bonus D. An involvement system

false

Good corporate citizen awards include everything in a work environment that enhances a worker's sense of self-respect and esteem by others.

true

If competitors' pay decisions determine a company's pay structure, then the level of pay or the mix of pay forms is no longer a source of potential competitive advantage.

adequate and equitable

If pay systems are to accomplish the objectives set for them, ultimately they must be perceived as: A. adequate and equitable. B. generous and timely. C. immediate and fair. D. relevant and competitive.

When making bonus decisions, Chinese managers tend to place less emphasis on employees' work performance than do American managers.

In comparing the relative emphasis Chinese and American managers place on performance versus relationships, which of the following is true? A. When making bonus decisions, Chinese managers tend to place less emphasis on employees' work performance than do American managers. B. When making decisions about nonmonetary recognition of employees, American managers place more emphasis on employees' relationships with coworkers than do their Chinese counterparts. C. American managers tend to give larger bonuses to employees with greater personal needs. D. Chinese managers tend not to take personal needs into consideration when making bonus decisions.

true

In the 50 years since the inception of gainsharing, it has been abandoned by firms about as often as it has been retained.

variable pay

In the United States, about 90 percent of large and medium-sized companies now offer some kind of _____ such as profit-sharing and bonus awards. A. fluctuating incentives B. variable pay C. corporate inducements D. legal kickbacks

the National Labor Relations Act.

In the United States, salary discussions among employees are protected under: A. the Equal Pay Act. B. the National Labor Relations Act. C. Salary.com. D. the Fair Labor Standards Act.

Link between performance and rewards is too strong.

Merit pay systems often fail for all but which of the following reasons? A. Interference from union contracts. B. The annuity problem. C. Link between performance and rewards is too strong. D. Incentive value of the reward offered is too low.

false

Middle managers may actually benefit from pay inflation among nonmanagement employees since companies generally maintain a differential between the managers' pay and that of their highest paid subordinate.

false

Most commonly, merit systems are applied to exempt employees in the form of temporary adjustments to their base pay.

false

One downside of team incentives is that most employees do not feel that their jobs have a direct impact on profits, or at least they cannot see the link.

false

One purpose of job evaluations is to identify important characteristics of each job so that the relative worth of jobs can be determined

equity adjustments

One solution to the problem of pay compression is to institute: A. equity adjustments. B. merit-pay increases. C. compensation concentration. D. salary caps.

level of performance

One way to classify performance incentives is according to the _____ targeted. A. audience B. level of performance C. budget D. benefit plan

job performance can be measured objectively.

Open pay systems tend to work best when: A. there is a union to negotiate pay increases. B. business strategy matches the organizational development stage. C. job performance can be measured objectively. D. effort and performance are related closely over a long time span.

true

Pay compression is the narrowing of the ratios of pay between jobs or pay grades in a firm's pay structure, and is related to the general problem of inflation

labor costs

Pay practices must be designed not only to attract and retain employees but also to ensure that _____ do not become excessive in relation to those of competing employers. A. employee stock ownership plans B. labor costs C. merit-pay increases D. flexible benefit packages

equal pay for men and women doing substantially similar work.

The Equal Pay Act requires: A. equal pay for men and women. B. pay discrimination cases to be filed within 180 days. C. equal pay for men and women doing substantially similar work. D. employers involved in interstate commerce or in the production of goods for interstate commerce to pay men and women the same.

increasing

The broad objective in developing pay systems is to assign a monetary value to each job in the organization and an orderly procedure for _____ the base rate. A. evaluating B. maintaining C. minimizing D. increasing

there is payment of wage premiums by some employers to attract the best talent available and to enhance productivity in order to offset any increase in labor costs.

The efficiency wage hypothesis holds that: A. there is payment of wage premiums by some employers to attract the best talent available and to enhance productivity in order to offset any increase in labor costs. B. unless an employee can produce a value equal to the value received in wages, it will not be worthwhile to hire that worker. C. there is increased willingness to reduce the size of the workforce, to outsource jobs overseas, and to restrict pay to control the costs of wages, salaries, and benefits. D. there is less concern with pay position relative to that of competitors and more concern with what the company can afford.

the annuity problem

The fact that past merit payments are incorporated into an individual's base salary allowing formerly productive employees to slack off is known as: A. merit allowance. B. a disincentive. C. a union contract. D. the annuity problem.

pay grades

The final step in attaching dollar values to jobs using the point method is to establish: A. the relationship of points to a salary survey. B. job descriptions. C. the relative worth of jobs. D. pay grades.

false

The gap between a CEO's pay and the wages of employees has narrowed in the United States.

true

Whether a labor market is tight or loose has a major impact on wage structures and levels.

false

The market-based pay system uses a premium-price options approach for all of a firm's jobs.

job evaluation

The process of ranking jobs in terms of their relative worth to a firm is called: A. job evaluation. B. job analysis. C. pay structure. D. pay review.

false

There is a current trend away from areas where organized labor is weak and pay rates are low.

5 to 30 percent

There should be a balance in pay relationships between supervisors and the highest paid subordinates reporting to them. This differential typically varies from: A. 1 to 10 percent. B. 5 to 30 percent. C. 8 to 50 percent. D. 10 to 20 percent.

American Recovery and Reinvestment

Title VII of the ____________ Act states that top executives in companies receiving government support can retract bonuses, retention awards, or incentives paid to the top five senior executive officers or the next 20 most highly compensated employees based on corporate information that is later found to be inaccurate. A. Equal Pay B. SOX C. American Recovery and Reinvestment D. Pay for Performance

treatment of members of the organization in terms of organizational needs.

To be effective, organizational reward systems should provide all of the following EXCEPT: A. a sufficient level of rewards to fulfill basic needs. B. equity with the external labor market. C. treatment of members of the organization in terms of organizational needs. D. equity within the organization.

true

Today there is a continuing move away from policies of salary entitlement, in which inflation or seniority are the driving forces behind pay increases.

false

Under the Fair Labor Standards Act, overtime pay is required for exempt as well as nonexempt jobs.

true

Wage structures tend to vary across firms to the extent that managers view any given position as more or less critical in their firms.

Sarbanes-Oxley Act

Which act states executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company? A. Sarbanes-Oxley Act B. Defense Authorization Act C. Administrative Procedure Act D. Contract Work Hours and Safety Standards Act

Control-based compensation

Which of the following is NOT another name for gainsharing? A. The Scanlon plan B. The Rucker plan C. Control-based compensation D. Improshare

Pay freezes

Which of the following is NOT considered a permanent cutback? A. Reducing the coverage of medical plans B. Asking employees to shorten their vacations C. Pay freezes D. Offering executives early retirement

Fair Labor Standards Act

Which of the following laws established the first national minimum wage? A. Davis-Bacon Act B. Fair Labor Standards Act C. Walsh-Healy Act D. McNamara-O'Hara Service Contract Act

Marginal revenue theory

Which theory in labor economics holds that unless an employee can produce a value equal to the value received in wages, it will not be worthwhile to hire that worker? A. Theory of value B. Credibility theory C. Tournament theory D. Marginal revenue theory

Market-based pay system

Which type of pay structure is feasible if all jobs are benchmark jobs and direct matches can be found in the market? A. Skill-based pay system B. Competency-based pay system C. Market-based pay system D. Gainsharing

Pay practices

_______ must be designed not only to attract and retain employees but also to ensure labor costs do not become excessive in relation to those of competing employers. A. Workload standards B. Internal equity C. Pay practices D. Survey data

Marginal

________ revenue theory in labor economics holds that unless an employee can produce a value equal to the value of received wages, it will not be worthwhile to hire that worker. A. Continuous B. Variable C. Marginal D. Integrating

Annual or short term

________________ incentive plans encourage the efficient use of existing assets. A. Annual or short term B. Long term C. Pre-tax dollars D. External equity