SHRM-CP - COMPENSATION & BENEFITS EXAM
44) The major federal law that regulates compensation in the U.S. is the A. Fair Labor Standards Act B. Workers' Compensation Act C. National Labor Relations Act D. Pay Equity Act
A. Fair Labor Standards Act
100) Gain sharing plans consist of all except which of the following elements? A. Internal equity. B. A philosophy of cooperation. C. A financial bonus. D. An involvement system
A. Internal equity.
91) Which of the following statements is FALSE? A. Research has not shown a strong relationship between CEO stock options and firm performance. B. The Sarbanes-Oxley Act was motivated by abuse of stock options by top executives. C. Even at the level of CEO, it is necessary to have formal, measurable performance targets in order for a discretionary bonus system to be effective. D. Perquisites are becoming less-widely used because most of them are now taxed as income to the executive.
A. Research has not shown a strong relationship between CEO stock options and firm performance.
79) Angela, one of the company's best administrative employees, has made an appointment with you, the vice president of HR. Angela is extremely upset because she has done an Internet search on compensation levels for her particular job. She has found that her salary falls below both the industry median and industry average, even though she has been with the company for four years and has had outstanding performance reviews. Angela is a valuable employee and she would be difficult to replace. In addition, if Angela's morale declines, her attitude will strongly affect her co-workers. The compensation system at your company has a strong emphasis on internal equity, and it is a solid and legal system. Which of the following arguments would be LEAST effective for retaining Angela and maintaining her morale? A. Tell Angela that the company has done extensive job evaluation studies, and although she is a highly- 126 valued employee, you can't justify paying her any more. B. Demonstrate that your company offers higher benefits than does the average company listed in the surveys she has found. C. Point out to Angela that your company is located in a small, rural town and that the data she has gathered from the Internet is based on companies that operate in all geographic locations. D. Explain that Angela's job does not include responsibility for budgeting that the benchmark job in the Internet survey includes.
A. Tell Angela that the company has done extensive job evaluation studies, and although she is a highly- 126 valued employee, you can't justify paying her any more.
57) Bruce, the director of compensation for a regional medical center, wishes to examine pay survey data for the various classifications of nurses in the organization. Bruce is aware of some concerns over "price fixing" of wages. He decides that he will use all of the following sources of information on nursing pay EXCEPT A. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives. B. nurses' pay data from the National Bureau of Labor Statistics. C. a management consulting firm that specializes in pay surveys of healthcare workers. D. a pay survey conducted by the local HR association.
A. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives.
22) The _______ type of pay-for-performance system is most likely to induce employees to behave unethically. A. commission B. ESOP C. performance awards D. gainsharing
A. commission
92) When using the point method of job evaluation, a ______ factor is used to identify a job value that is commonly present throughout a group of jobs. A. compensable B. Hays C. value D. KSA
A. compensable
70) A person's _________ is that employee's current pay level divided by the midpoint of the pay range. A. compra-ratio B. market ratio C. target ratio D. matrix ratio
A. compra-ratio
60) Operating managers typically A. evaluate employee performance for compensation purposes. B. develop and administer the compensation system. C. conduct wage surveys. D. develop wage and salary structures and policies.
A. evaluate employee performance for compensation purposes.
23) In terms of procedural justice, the process of determining base pay, allocating pay increases, and measuring performance all must be seen by employees as A. fair. B. equal. C. logical. D. open.
A. fair.
56) Abundance Nurseries needs large numbers of unskilled employees every spring and summer to plant, maintain, and harvest the flower fields. Abundance is located in an area where there is a large supply of unskilled workers, and it has few problems recruiting workers as needed. It would be reasonable for Abundance Nurseries to position its pay for these workers in the-quartile of the labor market. A. first B. second C. third D. fourth
A. first
36) Medical insurance, paid by the employer, is classified as _________ compensation. A. indirect B. direct C. intangible D. intrinsic
A. indirect
16) In designing the company's new team incentive plan, the vice president of HR wishes to strongly link the team's efforts with its effective performance. The timing of incentive payouts should be A. monthly. B. quarterly. C. semiannually. 119 D. annually.
A. monthly.
2) In a competency-based pay system employees are paid A. on the skills and knowledge they have, whether they use these or not. B. according to their job performance, measured either by quality or quantity. C. on the basis of their scores on annual competency tests. D. on whether they have added value to the organization in the last year
A. on the skills and knowledge they have, whether they use these or not.
34) In an equity calculation, an employee's base pay, variable pay, and benefits are the _________ he/she receives from a job. A. outcomes B. outputs 121 C. inputs D. motivators
A. outcomes
55) The purpose of organizational-level incentives is to A. reward each employee for the performance of the entire company. B. aid in recruiting individualistic and entrepreneurial employees. C. motivate functional competition among employees to increase total performance. D. create an organizational culture of ethical behavior.
A. reward each employee for the performance of the entire company.
52) In an organization with a performance-oriented philosophy, A. seniority plays little role in whether an employee receives a raise. B. all employees can at least count on an annual cost-of-living adjustment to their salaries. C. bonuses are based on what other companies in the industries are paying. D. marginal performers tend to be satisfied with their compensation.
A. seniority plays little role in whether an employee receives a raise.
76) Intertwined effects of pay and process refers to the idea that A. the way workers are treated is just as important as the way they are paid B. changing the way workers are paid is more important than the way that they are treated C. productivity can only be boosted if employees in the same jobs are paid equally D. pay decisions have no effect on productivity
A. the way workers are treated is just as important as the way they are paid
51) The disadvantage of "employee of the month" type awards is that A. they can be seen as favoritism. B. they are typically awarded on the basis of objective criteria. C. it is difficult to link these awards with specific performance criteria. D. eventually all employees will have been employee of the month and the award will have lost its distinctiveness.
A. they can be seen as favoritism.
18) The primary objectives of organizational incentive systems includes all of the following EXCEPT A. to enhance employee innovation. B. to attract and retain employees. C. to increase productivity. D. to improve employee morale.
A. to enhance employee innovation.
17) Brian, the director of compensation, has been asked by the board of directors to present the "employee cost factor" at the next board meeting. Brian needs to do the following calculation: A. total compensation and benefits divided by FTEs B. total pay and benefits expenditures C. revenue minus operating expense minus pay and benefits equal adjusted profits divided by FTEs D. revenue minus operating expense minus pay and benefits equal adjusted profit divided by pay and benefits
A. total compensation and benefits divided by FTEs
84) In expectancy theory terms, the fundamental drawback of profit sharing in encouraging employee effort occurs because of A. weak instrumentality perceptions. B. weak valence perceptions. C. weak expectancy perceptions. D. weak equity perceptions
A. weak instrumentality perceptions.
35) _____ plans do not promise a specific benefit level for employees upon retirement. Rather, an individual account is set up for each employee with a guaranteed size of contribution A. Defined benefit B. Defined contribution C. Term benefit D. Unspecified contribution
B. Defined contribution
61) ________ is an example of a group or team variable pay system. A. Sales compensation B. Gainsharing C. Employee stock options. D. Deferred compensation
B. Gainsharing
64) As director of compensation and benefits, you are deciding whether you should purchase a new pay survey. You consider all the of following characteristics of pay surveys in your decision EXCEPT A. On what dates were the survey data gathered? B. Is the survey focused exclusively on companies of your size, the city in which you operate, and your industry? C. Are you familiar with the reputation of the company or organization that produced the survey? D. Does the survey include data from companies with which you compete for employees?
B. Is the survey focused exclusively on companies of your size, the city in which you operate, and your industry?
81) Which of the following is a benefit of reducing the number of pay grades and broadening pay ranges? A. It reduces the organization's overall compensation expense. B. It encourages employees to take horizontal job moves. C. It enhances the distinctions between various jobs. D. It increases employee opportunities for upward mobility.
B. It encourages employees to take horizontal job moves.
9) Susan, the president of the school board for a rural school district, is interested in implementing a pay-for-performance compensation system in the school. The school board has called you in as an expert in incentive compensation to explore this option. You tell Susan that A. pay-for-performance is not appropriate for public sector employees. B. a teacher pay-for-performance system rarely works unless the teachers are involved in the design of the system. C. teachers' unions usually support the idea of payfor-performance because it increases teacher pay which is usually low. D. improvements in student test scores are a noncontroversial measure of teacher performance.
B. a teacher pay-for-performance system rarely works unless the teachers are involved in the design of the system.
10) At Artistic Floral Creations, the non-managerial employees all receive the same pay increase every year. Usually this increase is about 5%, but some years it has been as high as 10% depending on changes in the cost-of-living. Artistic Floral Creations has a/an ____ philosophy of compensation. A. performance B. entitlement C. quartile-based D. total rewards
B. entitlement
37) At the heart of most executive compensation plans is the idea that A. at the executive level, status and image are as important as actual compensation. B. executives should be rewarded if the organization grows in profitability and value over a period of years. C. executive compensation should be based on the organization's current performance in the stock market. D. executives are more focused on their base compensation than they are on the variable pay
B. executives should be rewarded if the organization grows in profitability and value over a period of years.
62) Compensation plans for internationally-assigned employees that attempt to be comprehensive in providing base pay, incentives, benefits and relocation expenses regardless of the country to 124 which the employee is assigned are called compensation plans. A. balance-sheet B. global market C. tax equalization D. supply and demand
B. global market
87) A company that structures its compensation system so that half of its competitors pay their employees more than it does and half of its competitors pay less than it does is using the _______ market strategy. A. lag B. meet C. lead D. follow
B. meet
41) A true cost-of-living raise A. must be implemented both in times of inflation and deflation. B. must be tied to economic indicators. C. is the same thing as an automatic increase. D. is the same thing as a merit raise.
B. must be tied to economic indicators.
66) A differential piece-rate system pays employees A. one piece-rate wage for standard production, but less if producing below quota. B. one piece-rate wage for units produced up to a standard output, and a higher piece-rate wage for units produced over the standard. C. a higher rate per piece for employees with more experience and seniority. D. differential wages depending on the differing responsibilities in the production of each unit.
B. one piece-rate wage for units produced up to a standard output, and a higher piece-rate wage for units produced over the standard.
94) Simon is a compensation specialist for Coreopsis, Inc. He is collecting data on compensation rates for workers performing similar jobs at other organizations, Simon is conducting a A. external equity study. B. pay survey. C. market review. D. competitive evaluation
B. pay survey.
40) Organizations that have specific policies about where they wish to position themselves in the labor market use a/an _______ strategy. A. industry B. quartile C. benchmarking D. labor market
B. quartile
82) Potential metrics for variable pay plans include all of the following EXCEPT A. increase in market share. B. reduction of total compensation expense. C. increase in customer satisfaction levels. D. return on investment.
B. reduction of total compensation expense.
53) Distributing team incentives equitably means that 123 A. each team member gets the same amount of bonus. B. team members are paid incentives that vary according to individual performance. C. teams that are in competition with one another are paid incentives based on their relative performance. D. each team in the company receives the same amount of discretionary incentive dollars to distribute
B. team members are paid incentives that vary according to individual performance.
39) In a division of compensation responsibilities, _________ typically ensure job evaluations and wage surveys are done. A. operating managers B. HR specialists C. Department of Labor analysts D. outside consultants
C. Department of Labor analysts
8) The CEO of MasterFiber Textiles attended a conference where he spoke with the CEO of Golden Fleece Manufacturing. Golden Fleece has had great success in implementing an individual pay-forperformance system. The CEO of MasterFiber has directed the vice president of HR to implement the Golden Fleece method at MasterFiber. The FIRST concern of the VP of HR should be A. Does the plan reward the appropriate employee actions? B. Can the plan be administered properly? C. Does the plan fit with the business strategies and culture at MasterFiber? D. Can MasterFiber afford the plan?
C. Does the plan fit with the business strategies and culture at MasterFiber?
38) The Board of Directors of Clementine Minerals and Mining has been challenged by shareholders about the total compensation of the CEO. In order to examine whether the CEO's pay is reasonable, the Board of Directors is addressing all of the following questions EXCEPT A. Would another company hire this CEO? B. How does the CEO's compensation compare with that of CEOs in other companies in the mining industry? C. Has the CEO's pay decreased in years when CMM lost money? D. What would an investor pay for the CEO's level of performance?
C. Has the CEO's pay decreased in years when CMM lost money?
48) Which of the following is an advantage of a lump-sum increase (LSI) plan compared with traditional raises? A. LSI plans involve less administrative work for HR managers. B. Employees are more satisfied with LSIs. C. It heightens employees' awareness of what reward their performance merited D. It increases the compounding effect of succeeding raises on the employee's base pay
C. It heightens employees' awareness of what reward their performance merited
45) Which of the following statements is TRUE about sales incentive plans? A. Most companies are satisfied with their sales incentive plans. B. Sales incentives are effective in generating sales productivity over targets in most cases. C. Most firms frequently change sales incentive plans. 122 D. Sales staff are most satisfied when they are paid on straight commission plans because they are simple to calculate and result in high payouts.
C. Most firms frequently change sales incentive plans. 122
95) Which of the following is not considered a permanent cutback? A. Reducing the coverage of medical plans. B. Asking employees to shorten their vacations. C. Pay freezes. D. Offering executives early retirement
C. Pay freezes.
78) Organizations that link pay to individual performance are more likely to A. attract team-oriented employees B. attract older workers. C. attract individualistic employees D. attract union workers
C. attract individualistic employees
25) Tom has just taken his first full time job with a salary of $38,000) He knows that he should plan his 120 personal recurring expenses, such as rent and car payments, around this amount because it is his A. total compensation. B. total reward package. C. base pay. D. living wage.
C. base pay.
68) For a profit-sharing plan to be effective, management must A. increase innovative solutions to technical problems. B. not have high expectations of performance impact in the first year of the program. C. be willing to disclose financial and profit information to employees. D. stabilize profits so that the annual payoff is consistent
C. be willing to disclose financial and profit information to employees.
31) HR-related performance measures for a variable pay plan include all the following EXCEPT A. absenteeism costs. B. turnover costs. C. customer satisfaction. D. accident rates
C. customer satisfaction.
30) Which of the following are NOT paid overtime under the Fair Labor Standards Act? A. salaried employees B. nurses C. exempt employees D. public sector employees
C. exempt employees
77) Larry has decided to go back to his hometown of Mellonburg and set up an architectural design business. Mellonburg is a depressed farming community of 351 residents. It is 20 miles from the nearest restaurant, 70 miles from the nearest Starbucks coffee shop, and the local schools are the worst in the state. The winters are severe, the summers are oppressive. Few single people live there, and the social and cultural life is negligible. In order to attract good quality architects, Larry will probably A. need to ignore the market compensation for architects and pay employees on an entitlement basis. B. be able to lag the market significantly in pay because of the low cost of living. C. have pay somewhat more than the market because of the unappealing location. D. have to pay as much as if he were hiring top quality architects in the most expensive cost-ofliving area, such as New York City.
C. have pay somewhat more than the market because of the unappealing location.
15) Of the following, which type of pay adjustment has the most ability to reward employee performance? A. cost-of-living adjustments. B. seniority increases C. lump-sum increases D. across-the-board increases
C. lump-sum increases
80) Which of the following is classified as an individual variable pay plan? A. Scanlon plan B. profit-sharing C. piece-rate D. employee stock options
C. piece-rate
3) All of the following are compensation objectives of the organization EXCEPT A. legal compliance with relevant laws and regulations. B. internal, external and individual equity for employees. C. the lowest total cost of compensation in the industry. D. performance enhancement for the organization.
C. the lowest total cost of compensation in the industry.
24) Aesthetic Decor, Inc. has made the philosophical decision to have absolute internal equity in its pay structure. To that end, every job in the organization has been rigorously evaluated and assigned points according to the worth of the job to the organization. The result is that many traditionally femaledominated jobs are paid more than what they are typically paid, and some traditionally maledominated jobs are paid less than what they are typically paid. Which of the statements below is most likely to be TRUE? A. This system is based on the concept of pay equality. B. Although this system looks ethical on its face, it actually violates the Equal Pay Act because it will discriminate against male employees. C. Aesthetic Decor will have a hard time staffing any of the gender-stereotyped jobs in its organization. D. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive.
D. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive.
99) The fact that past merit payments are incorporated into an individual's base salary allowing formerly productive employees to slack off is known as the: A. merit allowance B. disincentive C. union contract D. annuity
D. annuity
21) George, a compensation specialist for a large frozen foods company, has been asked to identify compensable factors specific to the job of forklift operator in the company's extensive warehouse. This warehouse is one of the largest refrigerated warehouses in the country. George would probably include all the following in his list EXCEPT A. working environment. B. safety hazards. C. use of specialized equipment. D. consequences of errors.
D. consequences of errors.
13) The unemployment insurance program is financed largely through federal and state taxes on A. employees and employers B. employees only C. all taxpayers D. employers only
D. employers only
26) Typical compensation appeals procedures require the employee to discuss the problem first with A. the organizational ombuds. B. the EEOC. C. the HR department. D. his/her supervisor.
D. his/her supervisor.
97) The broad objective in developing pay systems is to assign a monetary value to each job in the organization and an orderly procedure for _______________ the base rate. A. evaluating B. maintaining C. minimizing D. increasing
D. increasing
43) A____ is a group of jobs having common organizational characteristics. A. market band B. occupational category C. benchmark group D. job family
D. job family
86) The _______ shows the relationship between job value, as determined by job evaluation points, and pay survey rates. A. compra-ratio B. isobar C. quartile D. market line
D. market line
47) Regarding benefits, executives A. typically have the same health benefits plans that other employees have. B. typically pay higher deductibles on their health care plans than do other employees. C. usually "self-insure" for their health care. D. often have health plans with no co-payments and no limitations on physician choice.
D. often have health plans with no co-payments and no limitations on physician choice.
98) The final step in attaching dollar values to jobs using the point method is to establish: A. the relationship of points to a salary survey B. job descriptions C. the relative worth of jobs D. pay grades or ranges
D. pay grades or ranges
59) Orville Brothers Construction, Inc. is making a bid for a federal government contract to build a bridge. In that bid, the construction company must allow for ________ wages for the employees. A. median national industry B. minimum C. living D. prevailing
D. prevailing
73) Simon is outraged that Missy was given a raise because she is related to the chairman of the board. Simon's sense of _______ has been violated A. compensatory equity B. distributive justice C. external equity D. procedural justice
D. procedural justice
85) Which of the following is the typical structure of team-based compensation? A. individual pay-for-performance based on team member input B. skill-based pay plus a percentage of base pay C. equal pay for each team member based on team performance D. team-based variable pay on top of individual base pay
D. team-based variable pay on top of individual base pay
29) The aggregate employer costs for the typical expatriate employee, including all allowances, is about _______ the expatriate's salary. A. 10% of B. half C. double D. three or four times
D. three or four times
32) What is a "draw?" A. an amount advanced to a sales employee and repaid from future commissions B. a system by which sales employees "draw down" their sales quotas C. a type of income equalization for tax purposes in which sales representatives can draw down their earnings from a high-income year and transfer them to a low-income year D. a lump-sum payment or bonus at the end of the month
A. an amount advanced to a sales employee and repaid from future commissions
69) Compensatory time-off can be given to nonexempt employees in the private sector A. if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week. B. if the comp time can be carried over for 60 days. C. if the employee's hourly wage is at least one and one-half times the minimum wage. D. only if the employer is a federal government contractor with contracts over $50,000.
A. if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week.
4) A third-quartile approach is a compensation strategy A. in which the company pays higher wages than its competitors do. B. to pay below the average in the labor market. C. where one-third of the competitors in the labor market pay higher wages than what the company does. D. in which the company pays the median of what its competitors pay
A. in which the company pays higher wages than its competitors do.
83) Marie has been offered work as an employee trainer for AgriEnterprise. In this job, Marie will use the employer's training materials, and she will train employees at AgriEnterprise's three locations at the times that the company determines. Marie has been promised that the company will continue to use her services as long as her performance is satisfactory. Marie has agreed not to work as a trainer for any other company while she is working for AgriEnterprise. The company is paying Marie as an independent contractor. Which of the following statements is correct? A. Marie is a contractor. B. Marie is an employee. C. Marie is an independent contractor with only one client. D. Marie would properly be classified as a creative professional employee.
B. Marie is an employee.
12) Which of the following is a TRUE statement about the overtime provisions for non-exempt employees of the Fair Labor Standards Act? A. A manufacturing firm with a 4-day/10-hour schedule must pay overtime for the two hours above 8 each day. B. Overtime pay is set at one and one-half times the regular pay rate for all hours in excess of 40 per week. C. Compensatory time off must be paid at straight time for all hours over 40 in a week or 8 in a day. D. The work week is defined as beginning at 12:01 a.m. Monday and running until midnight Sunday.
B. Overtime pay is set at one and one-half times the regular pay rate for all hours in excess of 40 per week.
5) George is a long-term exceptional performer. He has a compra-ratio of 120 and once again his performance has exceeded expectations. But, George only gets a raise of 3%, which is less than some of his co-workers who have less seniority and whose performance only meets expectations. George is incensed and waiting in your office. As director of HR, how will you explain this situation to George? A. You should discipline George because employees should not discuss their pay. B. You explain that George's compra-ratio shows that he is at the top of his pay range and that he is already earning above the market midpoint set in his pay grade. C. That the pay adjustment matrix is out of date, and that you will classify him as a green-circled employee who should receive accelerated raises. D. You decide to give George a lump-sum increase equivalent to a 10% raise. This will recognize George's exceptional performance without affecting his base pay.
B. You explain that George's compra-ratio shows that he is at the top of his pay range and that he is already earning above the market midpoint set in his pay grade.
19) Steven, the vice president of manufacturing for a U.S. textile firm that is opening up a plant in India, must decide how to pay the hourly workers in the Indian plant. After much consultation with his peers at other companies he decides to follow the common practice of A. paying wages negotiated with the local community leaders in Indis. B. paying local Indian wages. C. paying the U.S. wage in Indian rupees. D. paying higher than the local Indian wages, but lower than the equivalent U.S. wage.
B. paying local Indian wages.
93) Gainsharing can motivate employees as much as individual plans do because of A. the level of employee involvement and management cooperation B. the controllable nature of the performance measure and the frequency of payouts C. the relatively simplistic performance targets and large payouts. D. the high levels of employee ownership and teambased compensation.
B. the controllable nature of the performance measure and the frequency of payouts
42) In a job evaluation, every job in an organization is examined and wages are set according to A. the educational qualifications needed for employment. B. the relative worth of the job to the organization. C. the value of employees holding the job. D. the job's level in the organizational hierarchy.
B. the relative worth of the job to the organization.
74) In the 1978 Manhart ruling, the Supreme Court declared it illegal for employers to require A. physical examinations as a precondition for employment offers. B. women to contribute more than men to a defined benefit plan. C. employees to accept health insurance coverage D. employees to retire at age 65)
B. women to contribute more than men to a defined benefit plan.
88) Chuck has applied to a residential roofing firm for a job as a roofer during school vacation because the pay is very good. Roofing is considered hazardous work. Under the FLSA Chuck cannot be hired unless he is at least _______ years old. A. 14 B. 16 C. 18 127 D. 21
C. 18 127
72) Which of the following is an important phenomenon encountered in cost control efforts? A. A large percentage of employees are responsible for generating the majority of health care costs. B. Employees usually stick on to specific programs in spite of cost control efforts on account of the administrative issues. C. Piecemeal programs may not work well. D. Employees are willing to aid in cost cutting efforts by not making unnecessary claims.
C. Piecemeal programs may not work well.
50) Justin is an hourly employee of Furnace Brick, a company that manufactures a special high-heatresistant brick for industrial kilns. Justin is unhappy with the new compensation system introduced by the company's new plant manager and HR director. This system has eliminated the practice of annual raises, the Christmas bonus, and raises based on seniority for a new system that ties every employee's raise to how well Furnace Brick is performing in the market. Moreover, the plant manager has announced that twenty percent of the employees in the plant will receive no raise at all this year, regardless of the company's performance. Furnace Brick has moved from a/an _______ compensation philosophy, to a/an ____ compensation philosophy. A. budget-based, pay-as-you-go B. paternalistic, competitive C. entitlement, performance D. meet-the-market, lag-the-market
C. entitlement, performance
89) Amanda is upset because she makes the same amount of money Carl does, although Amanda has 18 clients and Carl has only 11 clients. Amanda is making a judgment about A. extrinsic justice. B. intrinsic justice. C. internal equity. D. external equity
C. internal equity.
7) Caroline works on a design team that develops costumes for historically-based and fantasy movies. The team's designs are executed by professional seamstresses and tailors. Caroline's A. job would be suited for individual pay for performance because one can objectively judge the artistic merits of the costumes. B. individual performance can be isolated and measured separately from her team members' contributions. C. job would not be suited for pay for performance because the quality of the work product of the team is mostly based on subjective judgment. 118 D. individual performance can be measured by the number of design drawings she produces, and her pay could effectively be tied to this number.
C. job would not be suited for pay for performance because the quality of the work product of the team is mostly based on subjective judgment. 118
90) Financial measures that can be used to judge executive performance include all of the following EXCEPT A. earnings per share. B. net income before taxes. C. market share. D. return on equity
C. market share.
96) At a broad level, a(n) _______________ includes anything an employee values and desires that an employer is able and willing to offer in exchange for employee contributions. A. competency-based pay system B. employee stock ownership plan C. organizational reward system D. merit-pay method
C. organizational reward system
75) As director of HR for Megatherium Products, you are looking for ways to make the compensation function more efficient. You are considering outsourcing some of the compensation functions to an outside vendor. The function you are most likely to outsource will be A. employee performance appraisal. B. development of wage and salary structures. C. payroll processing. D. job evaluation.
C. payroll processing.
1) The most frequently used form of sales compensation is the A. draw. B. straight commission. C. salary plus commission. D. differential commission.
C. salary plus commission.
54) Andrew is excited about the new program at work. He will be allowed to purchase 20 shares of stock at $45 per share for a limited period of time. Andrew is planning to take advantage of this _______ plan because he expects that the market price of the stock will far exceed $45 in a couple years. A. windfall incentive B. gainsharing C. stock option D. employee stock ownership (ESOP)
C. stock option
11) The most widely used long-term incentives for executives is/are A. generous perquisites. B. ESOPs. C. stock options. D. annual cash incentives
C. stock options.
33) As HR director, you are discussing the implementation of a competency-based compensation system with the company's CEO. You point out that in order for the competency system to be effective A. the company must place its base pay in the third quartile. B. the company's pay structure must be broadbanded. C. the company must invest heavily in employee training programs. D. the company must employ a pay-for-performance system.
C. the company must invest heavily in employee training programs.
46) For an employer, the primary advantage of classifying a worker as an independent contractor is that A. independent contractors are typically more productive than regular employees. B. independent contractors can be fired at any time, unlike regular employees. C. the employer does not have to pay Social Security, workers' compensation, or unemployment costs. D. employers do not have to verify that contractors have valid work permits.
C. the employer does not have to pay Social Security, workers' compensation, or unemployment costs.
27) McDonald's global rewards program has resulted in lower managerial and employee turnover. In this type of total rewards system why would turnover decline? A. All employees benefit from higher pay, and are less likely to quit. B. Employees receive equal bonuses based on growth in McDonald's profits, and this fair treatment makes employees less likely to quit. C. The increased in employee competition from varying reward levels based on performance encourages high performers to stay. D. Higher performers receive higher incentives than lower performers, so high performers would be less likely to quit.
D. Higher performers receive higher incentives than lower performers, so high performers would be less likely to quit.
49) The director of HR at Megatherium Industries knows that there are serious flaws in the company's compensation system. If employees freely discuss their salary levels, raises and bonuses, the director is concerned that there will be widespread dissatisfaction and employee questions that will place the HR department and top management in a bad light. Consequently, Megatherium has a strict pay secrecy policy, and employees who discuss their pay are disciplined. Which of the following statements is TRUE? A. Pay secrecy policies are very rare in the U.S. B. If Megatherium opens its pay policies, employee retention will improve. C. Closed pay systems, such as Megatherium's, are illegal unless they meet certain IRS requirements. D. It is possible that Megatherium's policy violates the National Labor Relations Act.
D. It is possible that Megatherium's policy violates the National Labor Relations Act.
28) James is a sales representative for a large international import/export firm. For the past three years James has received an annual bonus, the maximum possible, between $37,000 and $42,000 because he met his sales targets. This year, James is planning on using his bonus to buy a new car, so he and his wife have been test driving cars. Which of the following statements is most likely to be TRUE? A. We can be fairly certain that James has exerted intense discretionary effort in the last four years. B. The actual dollar amount of the bonus is less important to James than its "prestige" effect. C. The bonus system in this company does not pay out a sufficiently large bonus to motivate maximum effort. D. James probably feels entitled to his anticipated bonus.
D. James probably feels entitled to his anticipated bonus.
71) Employer use of increased deductibles, coinsurance payments, policy exclusions and limitations, and establishment of maximum benefits 125 are examples of which of the following types of managed-care efforts? A. Alternative funding methods B. Claims review C. External cost-control systems D. Plan design
D. Plan design
20) Terri is a salaried line worker at Chicken Delight Poultry Processors. Terri joking refers to herself as a "chicken dis-assembler." She often works more than 40 hours a week, and is not paid overtime. A. Terri's pay is consistent with the FLSA because she is a salaried worker. B. Terri should be paid overtime according to the FLSA because she is an exempt employee. C. Terri's pay is not consistent with the FLSA because she is a non-exempt employee. D. Terri should be given compensatory time off but not overtime because she is a salaried worker.
D. Terri should be given compensatory time off but not overtime because she is a salaried worker.
6) OnionDome Manufacturing has suffered major losses in the last few years. Last year the board of directors fired the CEO and hired Simon Simple from one of its major competitors. Simple has laid off 20 percent of the hourly employees and 15 percent of the managers and professional staff in the company. He has sold off two unprofitable subsidiaries, and for the first time in five years the company has posted a small profit. This year the board of directors has given Simple a multi-million dollar bonus. Which of the following statements is TRUE? A. It is unusual for a company that has experienced mass layoffs to give executives large bonuses. B. Simple should not receive a performance bonus this year because the profits are due to manipulation. C. The Sarbanes-Oxley Act prohibits this type of bonus. D. The employees at OnionDome may feel that it is unethical for Simple to have received this bonus.
D. The employees at OnionDome may feel that it is unethical for Simple to have received this bonus.
58) A compensation plan for expatriates that equalizes the cost differences between the international assignment and the same assignment in the home country of the individual or the corporation is the __________ approach. A. global market B. cost equalization C. total rewards D. balance sheet
D. balance sheet
67) Bonuses are less costly to the organization than general wage increases, because A. bonuses receive preferential tax treatment. B. the annual amount given as a bonus tends to be smaller than the annual amount given as a raise. C. bonuses are frequently given in the form of noncash items. D. bonuses do not become part of employees' base wages.
D. bonuses do not become part of employees' base wages.
14) A consultant presenting a plan for a group/team incentive plan stresses that the money to be used as incentive rewards will be generated by improved organizational performance. This aspect of the plan is called the __________ principle A. liquidating B. zero-sum-game C. pay-as-you-go D. self-funding
D. self-funding
65) The Pregnancy Discrimination Act of 1978 requires employers A. to offer disability plans with pregnancy-related coverage B. to provide up to six weeks of paid leave to either parent upon the birth of a child C. to provide up to six weeks of unpaid leave to either parent upon the birth of a child D. that offer disability plans to treat pregnancy as they would any other disability
D. that offer disability plans to treat pregnancy as they would any other disability
63) As director of HR you need to calculate the return on investment of a new differential piece-rate system. To do this you need to calculate A. the ratio of the cost of the old incentive system to the cost of the new incentive system multiplied by the dollar value of the increase in production. B. the dollar value of the increase in production divided by the cost of the new incentive system. C. the ratio of the cost savings of the new incentive system compared with the return on investment which the shareholders expect. D. the dollar value of the additional production minus the cost of the new incentive system divided by the cost of the new incentive system
D. the dollar value of the additional production minus the cost of the new incentive system divided by the cost of the new incentive system
