HRM Chapter 9 /Test 2

Which of the following is a disadvantage of using an above-market compensation strategy?

A firm using this strategy incurs high labor costs.

What is A maturity curve?

A maturity curve is a schedule specifying the amount of annual increase a person will receive. This curve is used when the annual increase varies based on the actual number of years of service the person has accumulated.

Perquisite

A perquisite, or perk, as it is more informally known, is an extra benefit that may or may not have any direct financial value but is considered an important reward by employees. A perk might include a bigger office, a company car

A laborer who is paid in terms of the hours worked per week is most likely to receive a _____.

A wage

Briefly explain pay secrecy, pay compression, and pay inversion in the context of wage and salary administration.

After wages and salaries have been determined, the resulting compensation system must be administered on an ongoing basis. Most organizations call this process wage and salary administration or compensation administration.

Briefly explain the steps involved in the classification system for job evaluation.

An organization that uses a classification system attempts to group sets of jobs together into classifications, often called grades.

The point manual

Because the point system is used to evaluate jobs, most organizations also develop a point manual. The point manual, used to implement the point system of job evaluation, carefully and specifically defines the degrees of points from first to fifth

what are Benefits

Benefits generally refer to various rewards, incentives, and other things of value that an organization provides to its employees beyond their wages, salaries, and other forms of direct financial compensation.

Cafeteria-style benefits

Cafeteria-style benefits plans allow employees to choose those benefits they really want. can lead to increased satisfaction and reduced turnover.

What is Compensation

Compensation is the set of rewards that organizations provide to individuals in return for their willingness to perform various jobs and tasks within the organization.

_____ are private pension plans in which the size of the benefit is precisely known and is usually based on a simple formula using input such as years of service and salary.

Defined benefit plans

Defined benefit plans

Defined benefit plans are private pension plans in which the size of the benefit is precisely known and is usually based on a simple formula using input such as years of service.

_____ are private pension plans in which the size of the benefit depends on how much money is put into the plan.

Defined contribution plans

Defined contribution plans

Defined contribution plans are private pension plans in which the size of the benefit depends on how much money is contributed to the plan

Defined contribution plans

Defined contribution plans are private pension plans in which the size of the benefit depends on how much money is contributed to the plan.

_____ are designed to assist employees who have chronic problems with alcohol or drugs or who have serious domestic problems.

Employee assistance plans

Which of the following is true of workers' compensation?

Employers pay the cost of workers' compensation insurance.

What is External equity?

External equity in compensation refers to comparisons made by employees to others employed by different organizations performing similar jobs.

Employee assistance plans are designed to help employees who require urgent medical support for family members in case of accidents.

False

External equity in compensation refers to comparisons made by employees to other employees performing similar jobs within the same organization.

False

External equity in compensation refers to comparisons made by employees to other employees performing similar jobs within the same organization.

False

In the context of nonmandated employee benefits, contributions to private pension plans come solely from the employer.

False

Pay compression is least likely to develop when the market rate for starting salaries increases at a rate faster than an organization can raise pay for individuals who are already on the payroll.

False

The Social Security system is aimed at providing a minimum sustenance amount to individuals who are between jobs.

False

Workers' compensation is a nonmandated employee benefit.

False

What is pay inversion?

In pay inversion, the external market changes so rapidly that new employees are actually paid more than experienced employees.

What is Internal equity?

Internal equity in compensation refers to comparisons made by employees to other employees within the same organization.

Which of the following statements is true of the Employee Retirement Income Security Act (ERISA)?

It allows an employee to carry a portion of his or her benefits to another job.

Which of the following is a disadvantage of the classification system for job evaluation?

It assumes that a constant and inflexible relationship exists between job factors and their value to an organization.

Which of the following statements is true of the classification system as a job evaluation method?

It can easily accommodate changes in the value of various individual jobs in an organization.

Which of the following statements is true of the Fair Labor Standards Act?

It includes provisions for the minimum wage and overtime.

Which of the following statements is true of a maturity curve?

It is used when the annual increase in pay varies based on the actual number of years of service a person has accumulated.

What is Job evaluation?

Job evaluation is a method for determining the relative value or worth of a job to the organization so that individuals who perform that job can be compensated adequately and appropriately.

Which of the following statements is true of pay surveys?

Large firms design their own pay surveys to get the exact data they need.

Which of the following is a problem surrounding executive compensation?

Little or no relationship seems to exist between the performance of an organization and the compensation paid to its senior executives.

What are private pension plans? Briefly explain the two types of private pension plans.

Many companies elect to establish private pension plans for their employees. These prearranged plans are administered by the organization that provides income to the employee at her or his retirement.

Nonmandated Benefits

Most organizations today provide other benefits in addition to those mandated by law. Businesses may elect to provide these benefits in order to attract more qualified workers.

Executive Compensation

Most senior executives receive their compensation in two forms: base salary and some form of incentive pay. The traditional method of incentive pay for executives is in the form of bonuses, which can exceed their base pay by some multiple.

_____ occurs when individuals with substantially different levels of experience, or performance abilities, or both in an organization are paid wages or salaries that are relatively equal.

Pay compression

When does Pay compression develop?

Pay compression is most likely to develop when the market rate for starting salaries increases at a rate faster than an organization can raise pay for individuals who are already on the payroll.

Pay compression

Pay compression occurs when individuals with substantially different levels of experience, performance abilities, or both are paid wages or salaries that are relatively equal.

What is Pay compression?

Pay compression occurs when individuals with substantially different levels of experience, performance abilities, or both are paid wages or salaries that are relatively equal.

Pay for knowledge

Pay for knowledge involves compensating employees for learning specific information. might include paying programmers for learning a new programming language or rewarding managers who master a new manufacturing system.

Pay inversion

Pay inversion is the external market changes so rapidly that new employees are actually paid more than experienced employees.

Briefly explain pay secrecy, pay compression, and pay inversion in the context of wage and salary administration.

Pay secrecy is when employee salaries are preferred or mandated to be kept secret by the employee and organization. Pay compression is when the starting rate for new hires is closely approaching the pay that is being received by established employees. Occasionally, a company might experience pay inversion, and that is when the starting salary exceeds the salaries of employees that are already working for the company.

What is Pay secrecy?

Pay secrecy refers to the extent to which the compensation of any individual in an organization is secret or the extent to which information on compensation is formally made available to other individuals.

What are Pay Surveys?

Pay surveys are surveys of compensation paid to employees by other employers in a particular geographic area, industry, or occupational group.

Private pension plans

Private pension plans are prearranged plans administered by the organization that provides income to employees at their retirement

Which of the following statements is true of external inequity?

Problems with external equity may result in dissatisfied and unhappy workers.

Which of the following is a life-cycle benefit offered by employers?

Providing company-paid day care facilities to employees

Pay secrecy

Refers to the extent to which the compensation of any individual in an organization is secret or the extent to which information on compensation is formally made available to other individuals. if pay levels are made known to everybody else, then jealousy or resentment may result.

What is Salary?

Salary is income paid to an individual on the basis of performance, not on the basis of time.

Which of the following is a nonmandated benefit?

Sick leave

Skill-based pay

Skill-based pay rewards employees for acquiring new skills. these plans are more likely to be associated with hourly workers. Instead of rewarding employees who master new material, employees are rewarded for acquiring new skills.

What is Social Security (officially the Old Age Survivors and Disability Insurance Program)

Social Security (officially the Old Age Survivors and Disability Insurance Program), another mandated program, was originally designed to provide limited income to retired individuals to supplement their personal savings, private pensions, part-time work, and so forth.

Which of the following is a problem of the Social Security system?

Social Security benefits do not directly depend on the withholdings assessed against the employee who is retiring.

Mandated Benefits

Some common benefits are mandated by law. Some are known as the Unemployment insurance, Social Security, and Workers' compensation.

Mandated Health Care

The Patient Protection and Affordable care Act or the Affordable Care Act (commonly referred to as "Obamacare") was signed into law in 2010. Although some saw this law as the solution to the large numbers of Americans who were uninsured, others saw it as unnecessary interference by the government.

Barry & Finch, a law firm in Connecticut, performs job evaluation by organizing different sets of jobs in the firm into clusters called grades. The job evaluator then writes definitions and descriptions of each grade, which serves as a tool for deciding the compensation for each job. Which of the following job evaluation methods is Barry & Finch using in the given scenario?

The classification system

The classification system

The classification system for job evaluation attempts to group sets of jobs together into clusters, which are often called grades.

The factor-comparison method part two

The factor-comparison method allows the job evaluator to assess jobs on a factor-by-factor basis. At the same time, it differs from the point system because jobs are evaluated or compared against a standard of key points; instead of using points, a factor-comparison scale is used as a benchmark.

The factor-comparison method

The factor-comparison method for job evaluation assesses jobs, on a factor-by-factor basis, using a factor-comparison scale as a benchmark.

Which of the following is the first step in the factor-comparison method for job evaluation in an organization?

The job factors to be used are selected and defined.

The point system

The point system for job evaluation requires managers to quantify, in objective terms, the value of the various elements of specific jobs. The point system is more sophisticated than the classification system and is also relatively easy to use.

The third step in the factor-comparison method for job evaluation is:

The third step in the factor-comparison method for job evaluation involves ranking the benchmark jobs in an organization on each compensation factor. The ranking itself is usually based on job descriptions and job specifications determined by a job analysis.

Nonmandated Benefits Part two

These consist of the following: private pension plan, Defined benefit plans, Defined contribution plans, paid Time Off, Sick leave, wellness program, and cafeteria-style benefits plans

Bonuses are typically a function of the performance of the organization and are less dependent on the perceived performance of the executive.

True

From 2027, individuals will not be able to retire with full benefits of the Social Security program until they reach age 67.

True

The basic aim of the Affordable Care Act is to lower the number of uninsured employees.

True

The most commonly used method of job evaluation is the point system.

True

What is unemployment insurance?

Unemployment insurance, a mandated protection plan, is intended to provide a basic subsistence payment to employees who are between jobs.

Vesting rights

Vesting rights are guaranteed rights to receive pension benefits. . Under ERISA, however, vesting rights become operational after 6 years at the most, and employees with less service are still usually eligible to receive some portion of their retirement benefits.

Wage and salary administration

Wage and salary administration is the ongoing process of managing a wage and salary structure

Which of the following is a difference between salaries and wages?

Waged employees are eligible for the overtime provisions of the Fair Labor Standards Act, whereas salaried employees are exempt from them.

What are Wages?

Wages generally refer to hourly compensation paid to operating employees; the basis for wages is time.

Wellness programs

Wellness programs are special benefits programs that concentrate on keeping employees from becoming sick rather than simply paying expenses when they do become sick. may be simple and involve little more than organized jogging or walking during lunch breaks.

_____ is a form of mandated benefit.

Workers' compensation

What is Workers' compensation?

Workers' compensation, another mandated protection program, is insurance that covers individuals who suffer a job-related illness or accident.

A leading placement consultancy firm gathers and presents information about the average compensation for attorneys to its clients. This information includes data on the compensation paid by other law firms in a specific geographic region. The firm uses this information to inform its clients about the companies that have the most external equity. In the given scenario, the placement consultancy firm has most likely used _____ to gather information about compensation rates at different firms.

a pay survey

Tessy, a senior accountant at a private bank in Massachusetts, retired at the age of 62. Upon retirement, she received a benefit amount from the bank. This benefit amount equaled the total sum of money she had added to her pension plan each year plus the amount that the bank added to it every year. In this scenario, the sum of money that Tessy received post retirement comes from the _____.

defined contribution plan In the given scenario, the sum of money that Tessy received comes from the defined contribution plan. Defined contribution plans are private pension plans in which the size of the benefit depends on how much money is contributed to the plan.

Brad, a manager at a new investment firm, is performing job evaluation. He selects twelve benchmark jobs in the firm and then ranks each of these jobs against compensate job factors such as physical effort, responsibility, skill, and so forth. This ranking is based on job descriptions created during job analysis. Later, the management meets as a group and develops a consensus on the assigned values for each job. In the given scenario, Brad is most likely using the _____ for job evaluation.

factor-comparison method

In the context of nonmandated benefits, _____ are targeted at different stages of an employee's existence.

life-cycle benefits

Jennifer, an account manager in an automobile company, has a previous work experience of six years and has become one of the best employees of the company in the two years since joining. However, she resigns her job when she finds out that most of the new employees of the company, who have only two or three years of experience, get the same salary as her. In the given scenario, Jennifer most likely resigned due to _____.

pay compression

In the context of nonmandated benefits, a _____ is an extra benefit that may or may not have any direct financial value but is considered an important reward by employees.

perquisite

In the context of nonmandated benefits, a _____ is an extra benefit that may or may not have any direct financial value but is considered an important reward by employees.

perquisite

The _____ is a job evaluation technique that requires managers to quantify, in objective terms, the value of the various elements of specific jobs.

point system

A(n) _____ is established to give senior managers of a company the option to buy the company shares in the future at a predetermined, fixed price.

stock-option plan

Donald, the CEO of a multinational organization, is given a reward by the organization in the form of a contract that allows him to purchase 5 percent shares of the company anytime in the future at a predetermined price. Three years later, Donald purchases those shares at half their market price. Additionally, he gets more motivated to work toward increasing the performance of the organization. In this scenario, Donald was given a _____.

stock-option plan

Donald, the CEO of a multinational organization, is given a reward by the organization in the form of a contract that allows him to purchase 5 percent shares of the company anytime in the future at a predetermined price. Three years later, Donald purchases those shares at half their market price. Additionally, he gets more motivated to work toward increasing the performance of the organization. In this scenario, Donald was given a _____.

stock-option plan

Which of the following statements defines total compensation?

total compensation. It refers to the overall value of financial compensation plus the value of additional benefits that an organization provides to its employees.

The point system part two

typically evaluate 8 to 10 compensate factors for each job. The factors chosen must not overlap one another, and they must immediately distinguish between substantive characteristics of the jobs, be objective and verifiable in nature, and be well understood by managers and employees.

In the context of compensations, perquisites are:

usually made available only to members of top management.

In the context of employment legislation, _____ are guaranteed rights to receive pension benefits.

vesting rights

The actual funding for Social Security benefits comes from the _____.

withholding's of current employees