Ch 11 and 12

Which of the following is NOT another name for gain-sharing?

Control-based compensation

Which act covers private-sector employees over age 21 enrolled in noncontributory (100 percent employer-paid) retirement plans who have one year's service?

ERISA

Disability coverage provides a supplemental one-time payment when death is accidental or when employees become disabled.

False

Good corporate citizen awards include everything in a work environment that enhances a worker's sense of self-respect and esteem by others.

False

In determining the competitiveness of benefits, senior management tends to focus mainly on value, while employees are more interested in cost.

False

In the context of organizationwide incentives, gain-sharing plans pay out if a firm meets its profitability target.

False

The market-based pay system uses a premium price options approach for all of a firm's jobs.

False

___ programs typically provide a core of basic life coverage and then permit employees to choose greater coverage as part of their optional package.

Flexible-benefit

___ is one of the leading causes for an increase in the cost of health care.

The increase in drug costs

In the context of pay-system mechanics, which of the following is a disadvantage of competency-based payment plans?

They become increasingly expensive as the majority of employees become certified at the highest pay levels.

A unionized employer may establish an incentive system, but it will be subject to negotiation through collective bargaining.

True

Although disability benefits traditionally were divided into salary continuation, short-term disability, and long-term disability, combined disability management programs now merge all three.

True

An aging population and an increase in obesity are part of the major factors driving increases in the cost of health care.

True

An incentive for employers to begin and maintain pension plans is that the government defers taxes on the pension contributions and their earnings.

True

If competitors' pay decisions determine a company's pay structure, then the level of pay or the mix of pay forms is no longer a source of potential competitive advantage.

True

In the 50 years since the inception of gain-sharing, it has been abandoned by firms about as often as it has been retained.

True

Income-maintenance laws were enacted to provide employees and their families with income security in case of death, disability, unemployment, or retirement.

True

It is true of all incentive plans that none will work well except in a climate of trustworthy labor-management relations and sound human resource management practices.

True

LTD recipients typically receive no more than 60 percent of their base pay, until they begin receiving pension benefits.

True

The Patient Protection and Affordable Care Act of 2010 requires states to create and maintain health-care exchanges in which health insurance providers compete for customers on equal terms.

True

The theory underlying the cafeteria-benefits approach is simple: Instead of all workers at a company getting the same benefits, each worker can pick and choose among alternative options cafeteria-style.

True

In the context of performance incentives, an end-of-year bonus given to employees that does not build into their base pay is known as a(n) _____.

lump-sum bonus

Team incentives provide an opportunity for each team member to receive a bonus based on the:

output of the team as a whole.

In the context of incentives for low-level employees, a _____ is a one-time bonus that an employer may offer an employee as a reward for exceptional performance.

spot bonus

In the context of organizationwide incentives, which of the following is an element of a gain-sharing system?

An organizational climate that is characterized by high levels of trust

____ incentive plans encourage the efficient use of existing assets.

Annual

In 2016, the PBGC paid about _____ in benefits owed to retirees and the surviving beneficiaries because their pension plans could not.

$5.8 billion

A disadvantage to pay openness policies is that they force managers to publicly defend their pay decisions.

False

A growing number of companies are giving employees direct access to information about their direct compensation, but not their indirect compensation.

False

A mature firm with well-established products and substantial market share will probably offer low base pay and benefits but high incentives.

False

Achieving cost competitiveness provides assurance that employees will perceive the benefits program as valuable to them.

False

The issue of salary competitiveness is much more complicated than that of benefits-program competitiveness.

False

To ensure covered workers will receive their accrued benefits even if they get fired, ERISA created the Pension Benefit Guaranty Corporation.

False

Under the Fair Labor Standards Act, overtime pay is required for exempt as well as nonexempt jobs.

False

_____ revenue theory in labor economics holds that unless an employee can produce a value equal to the value of received wages, it will not be worthwhile to hire that worker.

Marginal

When given a choice, employees are moving toward _____, even though they are more expensive

PPOs

The 2010 plan intended to reform the U.S. health-care system is called the:

Patient Protection and Affordable Care Act

In the context of pay-system mechanics, identify a true statement about pay practices.

Pay practices must be attractive to employees without becoming excessive in relation to those of competing employers.

In the context of pay planning and administration, which of the following is a solution to the problem of pay compression?

Setting maximum rates of pay that are close to the maximums paid by other companies for similar jobs

Which of the following acts established the first national minimum wage?

The Fair Labor Standards Act

Which of the following requires that health plans not disclose patient identifiers?

The Health Insurance Portability and Accountability Act

Which agency acts as an insurance company, collecting annual premiums from companies with defined-benefit plans that spell out specific payments upon retirement?

The Pension Benefit Guaranty Corporation

Which act states that executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company?

The Sarbanes-Oxley Act

In the context of effective incentives systems, which of the following is a possible reason for the failure of an organization's merit-pay system?

The link between performance and rewards is weak.

In the context of setting incentives for lower-level employees, identify a true statement about performance standards.

They make it easier for supervisors to assign work to employees equitably.

Because sign-on bonuses do not increase base salaries, the structure of differences in pay between new hires and experienced employees does not change.

True

ERISA does not require employers to offer a pension plan.

True

Employers are not required to pay a penalty for employees during a waiting period that is required before an employee can enroll in an employer-provided health insurance plan.

True

Every unemployed worker's benefits are "charged" against one or more companies; therefore, the more money paid out on behalf of a firm, the higher is the unemployment insurance rate for that firm.

True

In an effort to reform the U.S. health-care system, Congress passed the Patient Protection and Affordable Care Act in March 2010.

True

Pay compression is the narrowing of the ratios of pay between jobs or pay grades in a firm's pay structure and is related to the general problem of inflation.

True

Pay practices and policies are critical because they affect every employee.

True

Regardless of whether a plan is a defined-benefit plan or defined-contribution plan, employees will not know what the purchasing power of their pension checks will be, because the inflation rates are variable.

True

Rewards bridge the gap between organizational objectives and individual expectations and aspirations.

True

Social Security is a pay-as-you-go system. Payroll taxes earned by current workers are distributed to pay benefits for those who are already retired.

True

Whether a labor market is tight or loose has a major impact on wage structures and levels.

True

In the context of establishing incentive systems, identify a true statement about the attitude of unions toward incentives.

Unions tend to support organizationwide systems because they provide extra earnings to their members.

All states' workers' compensation laws share all of the following features EXCEPT:

a worker's loss is usually covered fully by the insurance program.

A(n) _____ is a defined-contribution pension plan in which an employer contributes a set percentage of each vested employee's salary to his or her retirement account; annual investment earnings and losses are added to or subtracted from the account balance.

money-purchase plan

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.

organizational reward system

In the context of pay planning and administration, _____ is the narrowing of ratios of pay between jobs or pay grades in a firm's pay structure.

pay compression

Money set aside by employers to cover _____ has become the nation's largest source of capital.

pension obligations

The "gatekeeper" in a "managed-care" health insurance plan is the:

primary-care physician.

An employee stock-ownership plan (ESOP) is a form of a _____.

profit-sharing plan

In the context of mandated benefits, all existing health insurance plans must:

prohibit annual limits of insurance coverage.

In the context of the mechanics of pay systems, the purpose of job evaluation methods is to:

provide a work-related and business-related rationale to support decisions about pay.

At lower levels, _____ systems almost guarantee cost control.

variable-pay

In regard to pensions, employees who have not worked at a company long enough to be _____ are not entitled to any benefits

vested

The law requiring companies with at least 20 employees to make medical coverage available at group insurance rates for up to 18 months after an employee leaves the job is:

COBRA.

All organizations must make some allowance for the trust gap in their salary programs.

False

Competition between teams is an advantage of team incentives.

False

Defined-contribution plans do not appeal to employers.

False

Demographically, the United States now has a much less diverse workforce than it had in the past.

False

Internal equity is the relative size of pay differentials among different segments of the workforce.

False

Middle managers may actually benefit from pay inflation among non-management employees since companies generally maintain a differential between the managers' pay and that of their highest-paid subordinates.

False

Most commonly, merit systems are applied to exempt employees in the form of temporary adjustments to their base pay.

False

National survey data now indicate that people are more attached and committed to organizations that offer family-friendly policies because they benefit personally from the policies.

False

Regardless of the exact form of rebalancing, stock options will continue to be the focal point of executive compensation.

False

Skill-based plans only focus on the depth of employee skills, such as specialists in corporate law or hydraulic maintenance.

False

Strategies to contain the high costs of health care are largely being ignored.

False

The gap between a CEO's pay and the wages of employees has narrowed in the United States.

False

There is a current trend away from areas where organized labor is weak and pay rates are low.

False

Young employees who are just starting out are likely to be more concerned with a generous pension program than with direct pay.

False

The benefits of the _____ are based on a percentage of average weekly earnings and are available for up to 26 weeks

Federal Unemployment Tax Act

Which of the following is a type of insurance that is usually yearly renewable term insurance whose typical coverage is one to two times the employee's annual salary?

Group life insurance

With respect to health information, the _____ includes strict provisions to safeguard employee privacy.

Health Insurance Portability and Accountability Act (HIPAA)

Which type of pay structure is feasible if all jobs are benchmark jobs and direct matches can be found in the market?

Market-based pay system

In the United States, salary discussions among employees are protected under the:

National Labor Relations Act.

Which of the following is NOT an approach widely used to express the cost of employee benefits and services?

National salary index

Which of the following is NOT an area of payment covered by workers' compensation?

Payments to employers while injured workers are recovering

_____ are criteria that specify how well work is to be done by defining levels of acceptable or unacceptable employee behavior.

Performance standards

Identify the type of managed-care health insurance plan where in-network care comes from a specified group of physicians and hospitals, patients can pay extra to get care from outside the network, and there generally is no gatekeeper.

Preferred provider organization

_____ is not legally required, and, because of unemployment compensation, many firms do not offer it.

Severance pay

Which law offers full coverage for retirees, dependent survivors, and disabled persons insured by 40 quarters of payroll taxes on their past earnings or earnings of heads of households?

Social Security Act

Which of the following laws provides that following a worker's death or divorce, the employee's family has the right to buy group-rate health insurance for as long as three years?

The Consolidated Omnibus Budget Reconciliation Act

Which act was enacted to protect the interests of employee-benefit-plan participants and their beneficiaries by requiring the disclosure to them of financial and other information concerning the plan?

The Employee Retirement Income Security Act

Identify a true statement about point-of-service (POS) plans

They combine the features of health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

Identify a true statement about preferred provider organizations (PPOs).

They pay 80 to 100 percent for what is done within the network but only 50 to 70 percent for services rendered outside it.

A disadvantage of team incentives is that workers may be unable to see how their individual contributions have impacted the overall output of the team, which could lead them to lose motivation.

True

At a broad level, insurance is the basic building block of almost all benefits packages, because it protects employees against income loss caused by death, accident, or ill health.

True

Australia, Britain, Canada, Germany, the Netherlands, and New Zealand (all of which provide universal health-care coverage for their citizens) spend half as much of their gross domestic product on health care as the United States does.

True

Cash-balance plans are portable when an employee leaves, but they do not vest any sooner than traditional pension plans.

True

Companies view skill- and competency-based pay plans as a way to develop the critical behaviors and abilities employees need to achieve specific business results.

True

Different job evaluation methods yield different rank-orders of jobs and, therefore, different pay structures.

True

The Equal Pay Act specifically forbids wage differences between men and women doing largely similar work in terms of skills, efforts, responsibilities, and working conditions.

True

The Sarbanes-Oxley Act states that executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial security of the company.

True

The perceived value of benefits rises when employers introduce choice through a flexible benefits package.

True

To be effective, an organizational reward system should treat each member of the organization in terms of his or her individual needs.

True

Under COBRA, following a worker's death or divorce, the employee's family has the right to buy group-rate health insurance for as long as 3 years

True

Voluntary benefits programs allow smaller companies to offer a wider array of benefits than they otherwise would be able to.

True

Wage structures tend to vary across firms to the extent that managers view any given position as more or less critical in their firms.

True

The U.S. health insurance system is based primarily on group coverage provided by:

employers.

In the context of legislation that determines the internal practices of organizations, the Sarbanes-Oxley Act holds that:

executives cannot retain bonuses or profits from selling company stock if they mislead the public about the financial health of the company.

In the context of organizational reward systems, fairness in the wages paid by an organization, in terms of competitive market rates outside the organization, is known as _____.

external equity

In the context of pay-system mechanics, when jobs are evaluated and rank-ordered from highest point total to lowest point total, a(n) _____ is defined.

hierarchy of job worth

The anti-discrimination rule holds that employers can obtain tax advantages only for those benefits that do not discriminate in favor of:

highly compensated employees.

The process of assessing the relative worth of jobs to a firm is called:

job evaluation.

Open pay systems tend to work best when:

job performance can be measured objectively.

A recent MetLife survey showed that 73 percent of employees who were highly satisfied with their benefits were also satisfied with their _____.

jobs

One way to classify performance incentives is according to the _____ targeted.

level of performance

The _____ is a consequence of variable pay, where people who do not want to have their pay tied to their performance do not accept jobs at companies that offer variable pay.

sorting effect

In the context of the four major income-maintenance laws, _____ covers all employees except some state and local government workers, domestic and farm workers, railroad workers, and some nonprofit employees.

the Federal Unemployment Tax Act

In the context of the four major income-maintenance laws, _____ excludes federal government employees hired prior to January 1, 1984.

the Social Security Act

In the context of the four major income-maintenance laws, _____ provides benefits in the form of full retirement payments after age 67 (for those born in 1960 or later), or at reduced rates after 62, to worker and spouse.

the Social Security Act

Employee stock-ownership plan satisfaction tends to be highest in companies where:

the company makes relatively large annual contributions to the plan.

The efficiency wage hypothesis holds that:

there is payment of wage premiums by some employers to attract the best talent available and to enhance productivity in order to offset any increase in labor costs.

In the United States, 84 percent of large and medium-sized companies now offer some kind of _____, such as profit-sharing and bonus awards.

variable pay

Generally, employees of nonagricultural, private-sector firms are entitled to benefits for work-related accidents and illnesses leading to temporary or permanent disabilities under:

workers' compensation

The benefits of _____ average about two-thirds of an employee's weekly wage and continue for the term of a disability.

workers' compensation

There should be a balance in pay relationships between supervisors and the highest-paid subordinates reporting to them. This differential typically varies from:

5 to 30 percent.

Which of the following should be considered by firms when determining their overall benefit plan?

All of these

In the context of managed-care insurance plans, which of the following statements is true about a health maintenance organization (HMO)?

It provides lower out-of-pocket costs than does a preferred provider organization (PPO).

In which of the following situations is a worker eligible to receive unemployment benefits?

When a worker is able and available to work and is actively seeking work

In comparing the relative emphasis Chinese and American managers place on performance versus relationships, which of the following is true?

When making bonus decisions, Chinese managers tend to place less emphasis on employees' work performance than do American managers.

If pay systems are to accomplish the objectives set for them, ultimately they must be perceived as:

adequate and equitable.

The methods for costing benefits include:

all of these.

In the context of merit-pay systems, the _____ occurs when past merit payments are incorporated into an individual's base salary and the resulting regularly paid sums of money allow formerly productive individuals to slack off and still earn a high pay.

annuity problem

In determining the competitiveness of benefits, senior management tends to focus mainly on:

cost

Currently, _____ percent of states have workers' compensation laws.

100

A(n) _____ is a defined-contribution pension plan in which an employee can deduct a certain amount of his or her income from taxable income and place the money into a personal retirement account

401(k) plan

Title VII of the _____ Act covers top executives in companies receiving government support and states that companies can retract bonuses, retention awards, or incentives paid to the top five senior executive officers or the next 20 most highly compensated employees based on corporate information that is later found to be inaccurate.

American Recovery and Reinvestment

In the context of developing effective pay systems, which of the following is a major change seen today in company philosophies concerning pay and benefits?

An increased willingness to control the costs of wages, salaries, and benefits

The type of pension plan that offers all employees the same, steady annual credit toward an eventual pension is a(n):

cash-balance plan.

Common job characteristics that an organization is willing to pay for, such as skill, effort, responsibility, and working conditions, are called:

compensable factors.

Failure of organizations to address _____ may cause long-serving employees to rethink their commitment to a company they think does not value or reward loyalty.

compression issues

The doctrine of _____ holds that an individual must pay taxes on benefits with monetary value when he or she receives them.

constructive receipt

Limiting Medicare payments to what Medicare would have paid for in the absence of a group health plan and to the actual charge for the services is an example of what is referred to as:

cost shifting.

The type of private pension plan in which an employer promises to pay a retiree a stated pension is a:

defined-benefit plan.

An individual or group health plan that provides or pays the cost of medical care may not:

disclose protected health information.