Compensation Administration - Chapter 8

Pay ranges for office and production work commonly range between A) 5 and 15 percent. B) 15 and 30 percent. C) 30 and 40 percent. D) 40 and 60 percent

A) 5 and 15 percent.

Which of the following is often used to set pay ranges? A) Median B) Weighted mean C) Quartiles and percentiles D) Standard deviation

C) Quartiles and percentiles

Which of the following statistical measures shows how similar or dissimilar the market rates are from each other? A) Weighted mean B) Mean C) Standard deviation D) Median

C) Standard deviation

In the regression equation y = a + bx, job evaluation points are denoted by A) a. B) b. C) x. D) y.

C) x.

The first major decision in setting externally competitive pay and designing the corresponding pay structures is to A) specify the employer's competitive pay policy. B) conduct a job evaluation. C) select relevant market competitors. D) construct a pay policy line that reflects external pay policy

A) specify the employer's competitive pay policy.

In the United States, the ________ is a major source of publicly available pay data, and it also calculates the consumer price index. A) Chamber of Commerce B) Bureau of Labor Statistics C) Compensation Association D) Department of Economics

B) Bureau of Labor Statistics

Which of the following statements is true regarding broad bands? A) They remove limits on total salary budgets. B) They support recognition via titles or career progression. C) They foster cross-functional growth. D) They increase the hierarchical nature of organizations

C) They foster cross-functional growth.

Which of the following is an example of a company that uses broad banding? A) A company in which there are more lateral movements with no pay adjustment than promotions B) A company that has pay guidelines and controls designed right into the pay system C) A company that has an unlimited total salary budget D) A company that pays all its employees the same salary

A) A company in which there are more lateral movements with no pay adjustment than promotions

Because employers are raising employee pay at various times during the year, survey data must be updated using a process called A) aging. B) leading. C) matching. D) gaining.

A) aging.

A common first step in interpreting compensation survey data is to A) check for the accuracy of job matches. B) seek out nonresponders. C) check for anomalies. D) remove the top- and bottom-paying companies

A) check for the accuracy of job matches.

The final major decision in setting externally competitive pay and designing the corresponding pay structures is to A) interpret survey results and construct the market line. B) construct a pay policy line that reflects external pay policy. C) design grades and ranges or bands. D) select relevant market competitors.

B) construct a pay policy line that reflects external pay policy.

The second major decision in setting externally competitive pay and designing the corresponding pay structures is to A) specify relevant markets. B) define the purpose of the survey. C) specify the pay-level policy. D) design grades and ranges.

B) define the purpose of the survey.

A market pay line A) reflects an organization's pay scale based on the ratings given by its employees. B) links a company's benchmark jobs with market rates paid by competitors. C) provides an accurate prediction of an organization's entry level pay rates. D) compares an organization's minimum and maximum pay rates for each skill level

B) links a company's benchmark jobs with market rates paid by competitors.

A company using a skill-based pay system prices the job of lead assembler between $10 and $22 per hour. Survey data showed that the job of assembler averaged $10 per hour and the job of assembly supervisor averaged $22 per hour. The company is using the ________ method of job matching. A) benchmark job B) low-high C) survey leveling D) benchmark conversion

B) low-high

For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is A) the benchmark job approach. B) the low-high approach. C) survey leveling. D) benchmark conversion

B) the low-high approach.

Asai uses a skill-based plan that establishes single flat rates for each skill level. Mark performs better than Steve, even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario? A) Mark will be paid more than Steve as his performance is better. B) Steve will be paid more than Mark as he has more seniority. C) Both Mark and Steve will be paid the same amount. D) Steve will be given more incentives than Mark.

C) Both Mark and Steve will be paid the same amount.

Gramhold, Inc., a pharmaceutical company, reduces its ten salary grades to just three broad bands. Which of the following statements is most likely to be true in this case? A) Gramhold will face difficulty in defining job responsibilities broadly with the new structure. B) Gramhold will find that the new structure hinders cross-functional growth. C) Gramhold will experience more career moves within bands than career moves between bands. D) Gramhold will offer recognition via titles rather than through cross-functional experience and lateral progression.

C) Gramhold will experience more career moves within bands than career moves between bands.

Which of the following jobs would most likely fall into a fuzzy market? A) The position of English professor that was filled by a Ph.D. holder in English language and literature with five years of teaching experience B) The position of sound engineer that was filled by a graduate with a degree in audio engineering C) The position of senior director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience D) The position of vice president of a marketing firm that was filled by a marketing manager with 15 years of experience in the marketing field

C) The position of senior director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience

Which of the following statements is true of market pricers? A) They align pay structures with the business strategy. B) Their pay structures are unique and difficult to imitate. C) They assume that little value is added through internal alignment. D) They emphasize pay structures based on unique technology or the way work is organized

C) They assume that little value is added through internal alignment.

Which of the following statements is true of pay ranges? A) They are flexible enough to deal with differences in quality but not with the productivity or value of these quality variations. B) They usually lead to an increase in employee turnover. C) They reflect the differences in performance or experience that an employer wishes to recognize with pay. D) They cause employees to believe that their compensation cannot increase in the same job

C) They reflect the differences in performance or experience that an employer wishes to recognize with pay.

________ measures reveal competitors' use of performance-based cash payments. A) Base pay B) Short-term incentive pay C) Total cash D) Long-term incentive pay

C) Total cash

Aging market data to a point halfway through a plan year is called A) leveling. B) updating. C) lead/lag. D) matching

C) lead/lag.

The size of pay differentials between grades should A) be based upon differentials in market surveys. B) be approximately 20 percent. C) support career movement through the pay structure. D) be between 10 and 25 percent

C) support career movement through the pay structure.

Which of the following is true of the Employment Cost Index? A) It is one of three types of salary surveys published regularly by the Department of Commerce. B) It measures the rate of change in prices for goods and services in the product market, not wage changes in labor markets. C) It measures monthly changes in employer costs for compensation. D) It allows a firm to compare changes in its average costs to an all-industry or specific-industry average.

D) It allows a firm to compare changes in its average costs to an all-industry or specific-industry average.

________ minimizes the distortion of the central tendency caused by outliers. A) Weighted mean B) Mean C) Mode D) Median

D) Median

The process of matching survey jobs by applying an employer's plan to the external jobs and then comparing the worth of the external job with its internal "match" is called A) pay compression. B) collective bargaining. C) due diligence. D) benchmark conversion

D) benchmark conversion

The ________ pay strategy emphasizes external competitiveness and deemphasizes internal alignment. A) job structure B) broad banding C) reference rate D) market pricing

D) market pricing

In most organizations, the responsibility for managing a pay survey lies with A) top management. B) the facility or plant manager. C) outside consultants. D) the compensation manager

D) the compensation manager