Chapter 2
Which of the following tests of competitive advantage is probably the easiest test to pass? Alignment test Differentiation test Integration test Value-addition test
Alignment test
Which of the following statements regarding allowing employees a choice in their pay mix is NOT true? Allowing employees their choice is difficult to manage Allowing employees their choice is easy for competitor companies to imitate Providing unlimited choices for employees to choose from is difficult to design Providing too many choices can confuse people
Allowing employees their choice is easy for competitor companies to imitate
Which of the following is NOT a test of whether a pay strategy is a source of competitive advantage? Alignment test Cost-effectiveness test Differentiation test Value-addition test
Cost-effectiveness test
Whole Foods' shared-fate philosophy means that executive salaries are at least 19 times the average pay of full-time employees.
False
____ is the measure of how important total compensation is in the overall HR strategy. Competitiveness Prominence Centrality Ownership
Prominence
Although three separate compensation strategies may be identified, many companies use a combination of all three.
True
An organization defines its strategy through the tradeoffs it makes in choosing what to do and what not to do.
True
Benchmarking and copying best practices does not lead to competitive advantage.
True
How an organization positions its total compensation against its competitors is part of external competitiveness strategic choices.
True
In a virtuous circle, a pay-for-performance strategy results in the improvement of performance
True
Strategy refers to the fundamental direction that an organization chooses.
True
Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select _____. more supplemental insurance more job training a more flexible work schedule more personal days and family leave
a more flexible work schedule
A compensation system focusing on system control and work specifications is most closely associated with a(n) _____ strategy. innovator customer-focused cost-cutter differentiated
cost-cutter
Mich Inc., a hardware store, has a rating system in place that rates employees on their friendliness, usefulness, and product knowledge. Based on the ratings an employee receives, he or she gets an incentive. The compensation strategy followed by Mich is most closely described as a: customer-focused strategy. cost-cutter strategy. innovator strategy. differentiation strategy.
customer-focused strategy
Comparisons on the forms of compensation used by other companies are part of _____. internal alignment external competitiveness employee contributions corporate responsibility
external competitiveness
The alignment test: is difficult to imitate. is the most difficult test. helps ensure passing the differentiation test. becomes difficult if the differentiation test is not clear.
helps ensure passing the differentiation test
A compensation system using market-based pay is most likely to be part of a(n) _____ strategy. innovator cost-cutter cost leadership customer-focused
innovator
Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one. reinforcing performance-based pay implementing team-based pay improving work-life balance it is unclear what compensation practices
it is unclear what compensation practices
Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping a total compensation strategy. objectives management employee contributions internal alignment
management
According to the Hudson survey, _____ is the single thing that would make 41 percent of the U.S. workers happier. more personal days flexible work schedule more money better health insurance
more money
In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of _____. objectives internal alignment external competitiveness corporate responsibility
objectives
Trying to measure an ROI for any compensation strategy implies that it is possible to align and differentiate and still fail to add value. people are "human capital," similar to other factors of production. adding value is the most difficult test. value created as a result of costs is difficult to specify.
people are "human capital," similar to other factors of production.
Which of the following is the correct order of the steps in formulating a total compensation strategy? Assess the strategy, implement the strategy, map the strategy, and reassess the strategy. Assess the strategy, map the strategy, implement the strategy, and reassess the strategy. Map the strategy, implement the strategy, assess the strategy, and reassess the strategy. Map the strategy, assess the strategy, implement the strategy, and reassess the strategy.
Assess the strategy, map the strategy, implement the strategy, and reassess the strategy.
At the corporate level, the fundamental strategic decision involves defining the role of the HR in compensation strategies.
False
In a high-performance system, pay strategy always plays a lead role.
False
Most organizations rely upon the market to determine how to pay their employees as compensation strategy is uncertain and complex.
False
Since unions represent such a small fraction of the labor force, their influence on pay decisions is insignificant.
False
Which of the following statements is NOT true? The effect of performance incentives depends on the context. Embedding compensation strategy in HR strategy affects results. Focusing only on one dimension of the pay strategy is a best practice. The effect of paying more than competitors depends on the context.
Focusing only on one dimension of the pay strategy is a best practice.
Whole Foods' shared-fate philosophy of limiting executive salaries to no more than 19 times the average pay of full-time employees is an example of which strategic pay decision? External competitiveness Employee contributions Corporate responsibility Internal alignment
Internal alignment
In the formula predicting performance, the component most closely related to compensation is _____. A M O C
M
_____ refers to openness and communication about pay. Transparency Ownership Prominence Centrality
Transparency
A compensation strategy should reflect an organization's values
True
A major challenge in the design of future pay systems is how to better satisfy individual needs and preferences.
True
All organizations that pay their employees have a compensation strategy even though it may not be stated or written.
True
Union preferences are a major factor in _____ a total compensation strategy. implementing reassessing assessing mapping
assessing
A compensation system that focuses on competitor's labor costs is most closely associated with a(n) _____ strategy. innovator customer-focused cost-cutter differentiated
cost-cutter
All of the following EXCEPT _____ are compensation systems associated with a cost-cutter strategy. focus on competitor's labor costs focus on system control and work specifications increase in variable pay customer satisfaction incentives
customer satisfaction incentives
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices. improves attitudes and behaviors increases the number of middle men required reduces labor costs has little effect on quality
improves attitudes and behaviors
Flexible-generic job descriptions would most likely be used with a(n) _____ strategy. innovator customer-focused differentiated cost-cutter
innovator
Career growth, hierarchy, and flexible design are most closely associated with the _____ aspect of mapping a total compensation strategy. objectives internal alignment external competitiveness employee contributions
internal alignment
The role non-HR managers play in making pay decisions is called _____. ownership transparency technology decentralized decision-making
ownership
