Chapter 2: MNGT 463
How does Whole Foods make its compensation strategies competitive in the external market?
It provides health insurance for all full-time employees.
Nucor
It provides several opportunities but no defined career paths
Merrill Lynch
It sizes jobs based on knowledge/skill, complexity, business impact, and strategic value
Identify the disadvantages of offering employees unlimited choice in terms of compensation. (Check all that apply.)
It would be difficult to design and manage. It would not be approved by the US IRS It may confuse employees
Which of the following makes a company's compensation strategy difficult to imitate?
Its alignment with the overall HR strategy
Identify the factors in the social and political context that influence compensation strategies. (Check all that apply.)
Legal requirements Demographical changes in the workforce
Competitiveness, individual accomplishments, and performance-based returns are emphasized.
Microsoft
Minimizes hierarchy and stresses collaboration
In the context of compensation, which of the following is a way to better satisfy employees' individual needs and preferences?
Offering more choice
A(n) ________ _______ focuses on those compensation choices that help the organization gain and sustain competitive advantage.
strategic perspective
_____ refers to the fundamental directions that an organization chooses.
strategy
The reassessment step in formulating a total compensation strategy recognizes that _____.
the compensation strategy must undergo modifications in response to changing conditions
To deal effectively with turbulent competitive dynamics, an organization should first focus on _____.
the factors that are of importance to the business environment in the present and in the future
the management wants the employees to know that it loves them
Performance-based pay is most effective when _____.
there is success to share
The business units at United Technologies follow different compensation strategies because _____.
they face varied competitive conditions
What are the pay objectives followed at Merrill Lynch?
to hire, motivate, and retain the best talent
Unlike Microsoft's compensation strategy, SAS Institute's approach to compensation emphasizes _____.
work/life programs
Identify a true statement about the compensation strategy at Google.
It offers its employees significant stock programs.
Arrange the steps involved in developing a total compensation strategy in the order in which they are conducted.
1. Assessing the implications of total compensation 2. Mapping a strategy for total compensation 3. Implementing the total compensation strategy 4. Reassessing the total compensation strategy
Identify a similarity in the compensation strategies adopted by Google and Microsoft.
A strong emphasis on stock-related compensation
According to Boxall and Purcell, the ___ ___ is an increasingly common "very basic theory of performance" that bases performance on ability, motivation, and opportunity.
AMO Theory
Which of the following are involved in the alignment of pay strategy? (Check all that apply.)
Alignment with the business strategy External alignment with the economic and socio-political conditions Internal alignment within the overall HR system
Identify the similarities between Google, Nucor, and Merrill Lynch in terms of compensation strategies. (Check all that apply.)
All three give importance to outstanding employee performance and commitment. All three formulate their pay strategy in a way that supports their business strategy.
Which test of compensation strategy is the most difficult?
Determining whether it adds value
The cost cutter
It places emphasis on efficiency and operational excellence
What are the objectives of the compensation strategy followed at Google? (Check all that apply.)
Emphasis on innovation Commitment to cost containment Recognition of contributions
General Mills
Employees are allowed to exchange several weeks' salary for stock awards.
Netflix
Employees can select the mix of stock options and salary.
whole foods
Employees vote on the benefits of their choice.
True or false: Alignment is probably the most difficult test that a pay strategy has to pass.
False
True or false: Not all organizations that pay people have a compensation strategy.
False
True or false: The development of a total compensation strategy should not involve trial and error.
False
According to the advocates of the strategic approach, what makes a pay strategy competitive?
How it is managed
Which of the following is true of Nucor Steel's corporate mission?
It believes in achieving success by working together.
Identify the true statements about a company's strategic compensation map. (Check all that apply.)
It can elucidate the message that the company is trying to deliver with its compensation system. It provides a visual reference of the company's compensation system.
Identify the true statements about organizations' business and pay strategies. (Check all that apply.)
Pay systems should change according to changes in business strategies. A company's pay systems should align with its business strategy.
Competitive market position, companywide success sharing, and egalitarianism are the distinctive features.
SAS
Which of the following is currently believed to be responsible for too much risk-taking at Merrill Lynch and the eventual downfall of the company?
The aggressive pay-for-performance approach
Nucor
The management follows a no-layoff practice, but the income varies
Merrill Lynch
The management sends out an understandable and consistent message
People who support the idea of adopting best practices in developing a pay strategy feel that this _____.
provides the employer with preferential access to superior employees
Identify the union preferences that influence compensation strategies. (Check all that apply.)
The worry about job security The desire for different forms of pay
Merrill Lynch
They are market competitive in base, benefits, incentive/bonus, and stock
Nucor
They are market leaders for total cash compensation
They are market leaders in pay and benefits and provide unique benefits
Why are some people against the idea of viewing pay as an investment with measurable returns?
They feel that this view reduces the importance of treating employees equitably.
Which of the following are true of the employees of companies that are engaged in virtuous circles? (Check all that apply.)
They receive large bonuses and stock awards. They share in the company's success.
What are the pay objectives followed at Merrill Lynch?
To hire, motivate, and retain the best talent
Identify the true statements about Whole Foods's business objectives. (Check all that apply.)
To take extraordinary measures to satisfy and delight customers To hire and try to retain employees who are going to help the company make money
Microsoft
Total compensation is given prominence
SAS
Total compensation supports work/life balance
True or false: Different business units within the same company can have different compensation strategies.
True
True or false: Pay strategies need to take into account the nature of the union-management relationship.
True
True or false: The results from using a compensation system need to be assessed against the objectives the company is trying to achieve.
True
What is the first step in formulating a total compensation strategy?
Understanding business strategy and competitive dynamics
According to the AMO theory, when will HR systems be most effective? (Check all that apply.)
When employee ability is enhanced through selective hiring and training and development When roles are designed to allow employees to participate in decision-making and have an opportunity to make an impact When the compensation system encourages employees to act on their abilities and utilize the opportunity to make a difference
In which of the following situations can performance-based pay be a "worst practice"? (Check all that apply.)
When it prompts government investigation When it alienates employees
According to the AMO theory, when will HR systems be most effective? (Check all that apply.)
When the compensation system encourages employees to act on their abilities and utilize the opportunity to make a difference When roles are designed to allow employees to participate in decision-making and have an opportunity to make an impact When employee ability is enhanced through selective hiring and training and development
People who disagree with the idea of strategic fit in terms of compensation believe that _____.
a set of best practices that have universal applicability exist
The _____ - ______ business strategy places emphasis on pleasing customers and bases employee pay on how well they do this.
customer focused
Compensation strategy, HR strategy, and business strategy ultimately seek to _____, relative to competitors.
decrease costs or increase revenues
True or false: Not all organizations that pay people have a compensation strategy.
false
At Nucor Steel, the focus is on _____.
high productivity and quality
A crucial challenge in the design of next-generation pay systems is _____.
how to better satisfy individual needs and preferences
The innovator
it places emphasis on new products and quick response to market trends
Since governments are major stakeholders in determining compensation, _____ can be included in a compensation strategy.
lobbying to influence laws and regulations
In the context of the elements in the pay model, _____ refers to the role played by non-HR managers in making compensation decisions.
ownership
In the context of the elements in the pay model, _____ is the measure of the significance of total compensation in the overall HR strategy.
prominence