Chapter 2 Compensation
Which of the following tests of competitive advantage is the easiest test to pass?
Alignment
Which of the following is the correct order of the steps in formulating a total compensation strategy?
Assess total compensation strategy, map a total compensation strategy, implement strategy, reassess
Which of the following relationships within a pay system is accurate?
Compensation objectives shape pay policies.
Which of the following is not a test of whether a pay strategy is a source of competitive advantage?
Cost effectiveness
_______ is to increasing variable pay as innovator is to market based pay.
Cost-cutter
The issue of how much and what forms of pay are our competitors using is part of which objective of total compensation strategy?
External competitiveness
A compensation strategy map shows which strategy is best for an organization.
FALSE
Customer-focused pay strategies are very likely to use market-based pay.
FALSE
External competitiveness is one test of competitive advantage.
FALSE
In a high-performance system pay strategy plays a lead as opposed to support role.
FALSE
A strategy map contains strategies about all but which of the following?
HR alignment
Whole Foods' policy of holding executive salaries to no more than 14 times average pay of full-time employees is an example of which strategic pay decision?
Internal alignment
Whole Foods' decision to seek and engage employees who are going to help the company make money is an example of which strategic pay decisions?
Objectives
The social competitive and regulatory environment factors are most important for which type of strategy?
Strategic compensation
Labor market-based compensation practices in countries such as China Germany and France are likely to be less effective than in countries such as the U.S. Korea or Singapore because there is less movement from company to company
TRUE
Most firms do not have generic strategies but use a blend of cost and innovation.
TRUE
Pay systems should fit well with other HR systems.
TRUE
Strategy refers to the fundamental direction that an organization chooses.
TRUE
Unlimited compensation choices by employees would meet with disapproval from the U.S. Internal Revenue Service.
TRUE
When an organization uses pay for performance and performance is improving this is a virtuous circle.
TRUE
Work/life balance issues are part of competitiveness decisions in the pay model.
TRUE
Among unconventional benefits
U. S. workers in the Hudson's survey rated _____ as their most preferred, a more flexible work schedule
At the corporate level a strategic compensation perspective addresses the question:
What business should we be in?
According to the Hudson survey
__________ is the single thing that would make them happier., more money
Union preferences is a major factor in _____ of a total compensation strategy.
assessing implications
"Putting some skin in the game" refers to:
below market base pay with stock ownership
A compensation system focusing on system control and work specifications is most closely associated with _____ strategy.
cost-cutter
Decisions regarding what forms compensation should be are part of _____.
external competitiveness
The alignment test
helps ensure passing the differentiation test.
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high performance practices.
improves attitudes and behaviors
A compensation system using market-based pay is most likely to be part of a _____ strategy.
innovator
Issues of transparency technology and choice are examples of choices related to the _____ strategy choice of total compensation.
management
When organization performance declines
performance-based pay plans do not pay off.
In mapping a total compensation strategy
the question of how is compensation in the overall HR strategy is part of _____., objectives
Research shows that ____________can effectively shift an organization in a downward performance spiral to an upward one.
there are no compensation practices that
"To maintain good citizenship as a company" and "To make a fair profit on current operations" are examples of _____.
values
_____ is a "best practice".
Both smaller and larger internal pay differences
What level of strategy is the question "how do we gain competitive advantage"?
Business unit
Which of the following is not one of the tests to determine if a pay strategy is a source of competitive advantage?
External competitiveness of the pay system
In the proper sequence of strategic decisions HR strategies are made before business unit strategies.
FALSE
Internal alignment refers to how differently levels of skills and work are paid across different organizations.
FALSE
Most organizations rely upon the market to determine how to pay their employees since compensation strategy is uncertain and complex.
FALSE
Offering employees choice in their compensation mix provides firms a distinct competitive advantage.
FALSE
One of Whole Foods' employee contributions strategic compensation choices is to seek and engage employees who are going to help the company make money.
FALSE
Research on the effects of pay level showed that pay level affects financial performance while how employees are paid has no effect.
FALSE
Since unions represent such a small fraction of the labor force their influence on pay decisions is relatively minor.
FALSE
The major challenge in the design of future pay systems is reducing the pay gap between top executives and low-level employees.
FALSE
What business should a company be in and how does the company win are questions that are a part of mapping a total compensation strategy.
FALSE
When Microsoft replaced stock options with stock awards they were asking employees to put more "skin in the game".
FALSE
Which of the following statements is not true?
Focusing on employee contributions vs other objectives is a best practice
"Choosing techniques to fit strategy" is a part of which step in developing a total compensation system?
Implement strategy
"Everyone wears several hats" and "succeed by working together" are examples of which of the following?
Internal alignment
Which of the following statements regarding allowing employees choice in their pay mix is not true?
It provides an employer a clear competitive advantage
In the formula predicting performance the component most closely related to compensation is ___________
M
A book listing the previous year's pay of all employees is part of Whole Foods "No-secrets" philosophy. This is an example of which strategic compensation choice?
Management
______________ changed its compensation strategy as the company grew and matured?
Microsoft
_____________ is the measure of how important compensation is in the overall HR strategy.
Prominence
A major challenge in the design of future pay systems is how to better satisfy individual needs and preferences.
TRUE
All organizations that pay their employees have a compensation strategy even though it may not be stated or written.
TRUE
Although three separate compensation strategies may be identified many companies use a combination of all three.
TRUE
An organization's strategy is defined by the tradeoffs in choices of what to do and what not to do.
TRUE
Benchmarking and copying best practices does not lead to competitive advantage.
TRUE
Compensation strategy should reflect the organization's values.
TRUE
Compensation systems focusing on competitor labor costs typically follow a cost-cutter strategy.
TRUE
How an organization positions its total compensation against competitors is part of external competitiveness strategic choices.
TRUE
IBM was discussed as an example of an organization that changed it pay system and strategy to meet a different business strategy.
TRUE
A compensation system that pays employees such that "some skin is in the game" means that
a portion of employee pay is at risk
Examination of employee and union needs and the social and political context is a part of _____ step in formulating a total compensation strategy.
assess total compensation implications
A focus on competitor's costs is most closely associated with a _____ strategy.
cost-cutter
All of the following except __________ are compensation systems associated with an innovator strategy.
customer satisfaction incentives
Flexible-generic job descriptions would most likely be used with a _____ strategy.
innovator
Career growth hierarchy and flexible design are examples of choices related to the _____ strategy choice of total compensation.
internal alignment
The second step of developing a total compensation strategy is to:
map a total compensation strategy.
The role non-HR managers play in making pay decisions is called _____.
ownership
Trying to measure an ROI for any compensation strategy implies that
people are "human capital," similar to other factors of production.