Managing Pay Systems

Changes in wages in labor markets are measured _____.

Through pay surveys

The denominator for calculating the current year's pay rise is _____.

Average pay at the beginning of the year

What are the problems associated with headcount reduction in cutting labor costs?

Workforce reductions are costly in tangible terms up front due to increases in unemployment insurances tax rates Organizations will not be able to generate revenue if business picks up again Regulatory demands make it difficult to make targeted cuts Organizations with more number of workforce reductions experience greater voluntary turnover Workforce reductions can ham employee relations

True or false: In the past, financial planning associated with managing compensation was solely about costs.

True: financial planning requires understanding the revenues(returns) gained from certain compensation decisions.

Pay policies are more open in the public sector than in the private sector.

True

All of the following are adverse effects of layoffs EXCEPT _____.

Decreased unemployment insurance tax rates

Most employers explain the rationale for individual pay increases.

False

Decisions to raise the average pay level of employees is in part a function of an organization's

Financial circumstance

Which of the following is a feature of broad bands?

They are accompanied by external market "reference rates"

Rack the steps involved in WORLDATWORK'S SIX-STAGE PROCESS of communication in the correct order

1. Define the objectives of an employee communication programs 2. Obtain information and identify the facts 3. Select communication tools and media 4. Conduct communication sessions with employees 5. Evaluate the success of an employee communication program.

Ranked in top-down budgeting in an organization in the correct order

1. Pay increase budget for the entire organization is estimated by top management 2. A total budget is allocated to each manager 3. Managers distribute a total budget among subordinates

In the context of embedded controls, which of the following is meant to offer managers greater flexibility compared to a grade-range design?

Broad bands

Which of the following is an index that is used to evaluate how managers actually pay employees in relation to range midpoint?

Compa-ratios

The CPI accurately reflects an individual employee's cost of living.

False

True or False: An understanding of which compensation information, analyses, and reports are useful can be easily achieved through the use of compensation enterprise systems.

False

True or False: Shifts in pay mix do no reflect changes in business strategy and reconstructing.

False

True or false: in the context of allocating a salary budget to subordinates, some companies used forced distribution approaches to minimize the number of employees placed in low performance

False- once salary budgets are allocated to each subunit manager, they become a constraint: a limited fund of money that each manager has to allocate to subordinate

In order to reduce benefits costs, most companies have recently resorted to_______.

Suspending their matching contributions to employee 401(k) plans

Which of the following is true of the consumer price index (CPI)?

The CPI is referred to as a "cost-of-living" index by many people

A major advantage of a reduction in force is that it reduces benefits costs

True

According to reward leaders, promises of work-life balance is more talk than action.

True

Exit incentives is likely to result in the loss of high-performing employees.

True

In a totally decentralized pay system, employees are likely to be treated unequally and unfairly.

True

Reward programs are typically NOT evaluate in terms of their impact on social responsibility and sustainability policies.

True

In the Context of managing labor costs, it is a viable option to ____________when the costs of fixed benefits are high.

add overtime

The turnover effect is also referred to as

churn (slippage)

Instances where employees are paid below the minimum ranges are referred to as

green circle rates

A major advantage of a _____ is that it reduces benefits costs, something that the other cost-cutting options ordinarily do not achieve.

reduction in force

Merit increase guidelines guarantee

that different managers grants consistent raises to employees with similar performance ratings and in the same position in their ranges.

Activities that are not unique to an organization and those that can be done cheaper (and perhaps also better) by an outside provider are called

transactional activities

Average salary (fixed payments) level plus variable compensation payments such as bonuses, gain sharing, stock plans, and/or profit sharing comprise...

Average cash compensation

What are the factors included in the labor cost model?

Cash compensation Hours worked Number of employees

Group of workers with the nature of their relationships with their employer

Core employees- Organizations desire a long-time relationship with these employees Contingent workers- Employment agreements of these employees may cover only short, specific time periods

Which of the following is NOT a a evaluation perspective category?

Job evaluation, specifically the point factor method

What are the reasons for managers paying employees at rates that are less than the intended policy?

Promotions may be occurring rapidly The majority of employees may be new Employees may be poor performers

Which of the following is a feature of the bottom-up salary budgeting approach?

The budget depicts a plan and deviations due to unforeseen changes

Associating budgets or payments to the consumer price index (CPI) is called

indexing

Evaluating reward strategies and programs is important for which of the following reasons?

Labor costs represent largest single cost of doing business for most employers Companies should monitor alignment of reward programs with business strategy Because internal & external conditions can change compromising the value of a reward program Reward strategies & Programs can have unintended consequences

Which of the following are examples of the strategy of reducing headcount to cut labor costs?

Layoffs Exit incentives

Which of the following statement is NOT supported by research?

Most companies communicate salary ranges to employees

Match the concepts with methods in which they are measured: Changes in wages in labor markets Changes in prices in the product and service markets The cost of living

Changes in wages in labor markets- This concept is measured through pay surveys Changes in prices in the product and service markets- This concept is measured by certain government indexes such as the consumer price index (CPI) The cost of living-This concept is measured by examining the personal expenditures of each employees