Comp: Ch 7-13
A company decides to include "customer contact" as a compensable factor in their job evaluation system. What conclusion can you draw from this?
"Customer contact" is central to the execution of the company's strategy.
You have been provided with the following information about a certain pay range: minimum $50,000; mid-point $55,000; and maximum $60,000—in Canadian dollars. What is the range spread and the range spread percentage?
$10,000 and 20%
What would happen if an organization used the job-to-job method to establish a pay equity plan and a male comparator job is eliminated?
. A new male comparator must be found.
What is the main advantage of conducting a formal in-house survey?
. Data quality and appropriateness are ensured.
According to Statistics Canada data, what percentage of employers offers a formal pension plan?
25
In a U.S. study conducted on performance appraisals, what percentage of organizations rate their systems as very effective?
3
You have determined that the lowest-paying employer pays its accounting clerk a mean total compensation of $32,000 and that the highest-paying employer pays its accounting clerk a mean total compensation of $41,600. What is the dispersion in accounting clerks' compensation across firms?
30 percent
What percentage of medium-to-large employers in Canada use nonmonetary rewards programs?
50
Which of the following best explains a compa-ratio above 1?
A compa-ratio of greater than 1 means that, on average, employees are being paid above the midpoint at that firm.
What is a major advantage of using a field review performance management system?
A small number of specially trained raters can rate many employees, thus increasing consistency and reliability.
What should a compensation specialist do when the evaluation of the compensation system determines that the expected results are not taking place?
Attempt to evaluate why the desired results are not occurring
Which appraisal method provides specific descriptors for each point on the rating scale?
BARS
Which statement best describes performance appraisal systems?
Both managers and employees have expressed a high level of dissatisfaction with them
Which of the following is a change in internal circumstances that can trigger the need to change the compensation system?
Changes in financial circumstances
Which managerial strategy will likely look at flexible benefit plans as a cost savings exercise?
Classical
The textbook identifies five major methods for evaluating jobs. Which method is classified as "whole job"?
Classification/Grading
Which statement does NOT accurately describe conducting a compensation survey?
Collecting information about wage and salary levels provides an adequate basis for comparison.
Which of the following is NOT associated with goal-sharing plans?
Cost savings need to be quantified.
Your company has decided to use third-party surveys to help you determine labour market base wages. What is one advantage associated with third-party surveys?
Data collection is easy and they cost little
Considering the factor of "supervisory responsibility," which degree statement is an example of inconsistent construct formation?
Degree 4: responsible for development of annual operating budget
Which Canadian company has had one of the longest running profit sharing plans?
Dofasco (or Arcelor/Mittal Dofasco)
According to your textbook, which statement best reflects the current use of employee stock ownership plans?
Employee stock ownership bonus plans are on the decline
Which statement best describes an employee stock option plan?
Employees receive options to purchase company stock at a future time at a fixed price.
After reviewing your company's pay data, you determine the compa-ratio to be equal to one. What can you conclude from this?
Employees, on average, are being paid at the midpoint.
Organizations often establish job evaluation committees to support and lead the job evaluation process. As a human resource specialist, which recommendation would you NOT support in helping a committee be successful?
Ensure membership in the committee is limited to three years.
A particular manufacturer wants to reward employees based on the company's ability to reduce the number of direct and indirect labour hours associated with one unit of output. What kind of gain-sharing plan is this organization contemplating?
Improshare
Which statement does NOT accurately describe labour market considerations?
In the public sector, employees' ability to generate revenue dictates pay levels
What was a result of passing Bill 88, the Electronic Commerce Act, in Ontario?
It allowed digital paystubs.
Which variable may be considered an advantage associated with the "a priori" method in determining factor weights?
It forces committee members to work together.
In Canada, what is happening to the wage gap between union and non-union employees?
It has declined
Which statement best describes the notion of "share appreciation rights" provided to a manager in a publicly traded company?
It is a "marriage" of two concepts: stock options and stock bonus plan
What is one problem with using the ranking/paired job evaluation method?
It is not acceptable to pay equity commissions.
What is the major benefit for the ranking method of job analysis?
It is one of the least complicated systems.
Which statement best defines range spread?
It is the difference between the maximum and the minimum pay level, in dollars, for a given pay range.
Which condition must an organization meet in order to have a supplemental unemployment benefit plan (SUP)?
It must be registered with the Employment Insurance Commission
What occurs to the female job class if the percentage of secretaries in that job class changes from 95 percent to 30 percent?
It remains a female job class
Excessive stock options have been cited as a factor in the collapse of some major U.S. corporations. Which statement best reflects this concept?
It was a quirk in financial reporting systems which made stock options appear costless.
Johnny has reached the highest pay level within the base pay range associated with his job as a top service technician for a local appliance company. Given that he does not qualify for any further merit increases, what approach would you take to keep Johnny engaged?
Make bonuses available to Johnny.
ABC Ltd. uses a series of independent measures in its gain-sharing formula, including labour/material usage, quality metrics, customer satisfaction, and number of accidents. Which component will be included in a gain-sharing plan if it is stipulated that no bonus will be paid for periods in which work-related accidents occurred?
Modifier
Which method of job analysis focuses on the behaviours that make up a job and uses job elements to describe work activities?
PAQ
What is NOT a main method used to compare male and female job classifications?
PAQ method
Which statement best describes planning for information technology?
PIPEDA requires Web-based benefits systems administrators to limit access to employee records to only a few authorized persons.
Why use pay grades in a job evaluation system?
Pay grades acknowledge that job evaluation is essentially a subjective process.
Which statement is an example of public sector wage compression?
Public sector employees at the lower end of the job hierarchy usually earn more than comparable employees in the private sector, while public sector employees at the top of the job hierarchy usually earn less than they would in the private sector.
Which of the following would be categorized as a goal-sharing plan?
Rucker plan
Which statement best describes the concept of factor overlap?
Some factors are counted twice and become too heavily weighted.
Which of the following is NOT considered a key aspect of membership behaviour?
Task
A smaller private-sector non-union employer in Ontario concludes that male employees are compensated at a higher level than women employees within the company. Under Ontario's pay equity legislation, which action is this company NOT allowed to undertake to correct this inequity?
The company lowers pay levels for males to create a level playing field.
According to the textbook, why might using job descriptions for job evaluation purposes prove problematic?
The dynamic nature of the general environment creates a situation whereby job duties change without human resources departments noticing it.
Understanding the tax implication of benefits is important. If an employer pays the full amount of the Long Term Disability (LTD) premium, what is the tax implication?
The employee must pay tax when the benefit is taken.
What is one concern of outsourcing benefits administration?
The employer may lose touch with emerging problems
Matthew, a human resource compensation specialist, determines that the correlation coefficient is nearly -1 (negative one) after calculating a straight regression line. What conclusion can Matthew make based on this nearly perfect correlation coefficient?
The higher the job evaluation points, the lower the pay.
A manager with 250 direct reports provides high ratings to all employees in her division because she feels she is a great manager. Which statement provides a likely explanation for her behaviour?
The manager wants to capture a fair share of available merit pay for her division and herself.
What is a disadvantage of having very narrow pay grades?
The only way for an employee to significantly increase their wages is through a promotion.
What is a major problem with using the "bottom-up" approach to calculate merit increases?
The organization has no control over the labour costs
What is a valid reason to re-evaluate jobs?
There is a high level of appeals
Which statement best describes a benefit of a defined contribution pension plan from an employee's perspective?
They are more portable than defined benefit plans
Why are "top hat" profit-sharing plans NOT eligible for registration as a deferred profit-sharing plan?
They are not widely available to all employees.
What is a disadvantage of 360-degree feedback systems?
They can be complicated to set up.
Why are health care spending accounts becoming more popular with employers?
They have a tax-favoured status.
Which statement would NOT be an acceptable explanation for the existence of pay range overlaps?
They make pay equal for all employees in the lower pay grade.
There are six "major categories" of benefits that may be included in the indirect pay component of a compensation system. Which of the following would NOT be classified as a "major category"?
Unemployment Insurance
What is the key to ensuring the viability of the gain-sharing plan?
Valid historical baseline
What can you conclude from determining that your company has a very large interquartile range quotient?
You may have a job matching issue
What is a necessary component of goal-sharing plans?
achievement levels
What final step must be completed before applying survey data?
aging the data
What is a pitfall of job analysis?
analyzing the jobholder not the job
In an organization where profits fluctuate by season, what should the pay frequency of profits sharing be?
annually
The point method of job evaluation has many benefits, but it does have some drawbacks. From the list below, what would be considered a drawback of the point method?
appears scientifically objective but in reality it is very subjective
ABC Ltd. is contemplating outsourcing some of their payroll and benefits administration. What would be the least critical consideration?
approach taken by competitors
When deciding to provide benefits to employees, what needs to be addressed first?
asking if the benefits plan helps achieve compensation objectives
What is the first step in analyzing compensation survey data?
assessing central tendency
Which term refers to the total compensation divided by the number of full-time equivalent employees?
average employee earnings
Why did the "Phoenix"—the new federal government payroll system—fail so badly?
because the scope of the implementation task was underestimated
The compensation rates for the coming year are applied to employees, factoring in probable merit and seniority increases as well as expected turnover and the compensation budget for the coming year is based on the total dollar amount derived from this process. What is this budgeting system is known as?
bottom-up approach
Which of the following is NOT used to evaluate a benefit system?
break-even analysis
What term best describes the process of reducing the number of pay grades within a compensation system?
broadbanding
How does the company PayScale test its compensation information for accuracy?
by using algorithms
What is the third stage of the compensation implementation plan?
communicating the compensation plan
Which term refers to the process through which employee earnings are calculated and the appropriate remittances are paid to employees, governments, and other agencies?
compensation administration
Once the compensation infrastructure is put into place and debugged, what is the next step in the implementation process?
conducting the training
Which effect best explains why an average job candidate, interviewed after an extremely weak applicant, can receive a better evaluation than deserved?
contrast
What is step two of implementing the compensation system?
creating the infrastructure
What is one of the biggest negatives with ranked based appraisal methods?
cross department comparison
Which of the following is a profit-sharing plan?
current distribution plan
Which of the following would NOT be considered an administrative task associated with the process of administering a benefits program?
deciding the mix of benefits for employees
Which variable is linked to flexible benefit plans?
decreased benefits costs due to better coordination between spousal plans
What is the first step in designing a goal-sharing plan?
define the group
What type of company pension plan has no guarantee as to what amount your annual retirement pension will actually be?
defined contribution
Which type of company pension plan shifts investment risk associated with pension income from the employer to the employee?
defined contribution
Which of the following is NOT an element of base pay structure?
degrees
Which task should be included in the planning process to deal with administration of the compensation system?
developing the process for ongoing communication
Which base for allocating the profit-sharing bonus is least used by Canadian firms?
equal distribution
What is the method to establish pay grade widths in which the point spreads are equal for all pay grades?
equal interval approach
Which term describes a benefit plan that provides a standard set of benefits?
fixed benefits plan
For motivational reasons, what type of profit-sharing plan is recommended?
fixed formula
ABC Inc. is a new organization planning to launch a call centre in the next six months. You have been tasked with creating detailed job descriptions for several operational roles in the call centre. Which information collection method would you likely rely on to gather job information?
functional
With which method do appraisers use a numerical scale to rate employees on a series of characteristics?
graphic rating scale
Marie, a manager at a local pharmacy, has very strong interpersonal skills which tend to outshine other areas of her performance that require improvement. As a result, her manager tends to give Marie "exceptional ratings." What perceptual error is likely impacting her performance result?
halo error
Which term refers to the inclination of many appraisers to provide unduly low performance appraisals?
harness effect
Your task is to convince an executive to use the point method to design a job evaluation system. What would be central to your discussion?
high degree of precision in measuring jobs
Which managerial strategy is likely to use a broad base of employees in staffing its compensation task force?
high-involvement managemen
In which type of organization do nonmonetary reward programs seem to be most effective?
high-involvement organizations
What is a source of significant costs to defined benefit pension plans?
increase in life expectancy
Which tool would be the most appropriate for a manager to use if an organization wanted to recognize individuals' contributions within teams?
individual- or team-based merit grid
Which source of compensation data tends to suffer from poor reliability?
informal surveys
Which term refers to the differences between the range midpoints of adjacent pay grades in a pay structure expressed by dollars?
intergrade differentials
According to your textbook, which data collection method seems to have very few negative attributes?
internet survey
Similar to comparing apples and oranges, which process is used to determine the relative value of different jobs to the organization?
job evaluation
What is the definition of a benchmark job?
job in the firm's job evaluation system for which there is a good match in the labour market data
What is the observation method of job analysis well-suited for?
jobs that have a short work cycle
Which term refers to the inclination of many appraisers to provide unduly high performance appraisals?
leniency effect
Which of the following is NOT likely to be included as a basic element of a job description?
level of compensation
What have researchers identified as a benefit to organizations who have pension plans?
lower turnover
What type of benefit is the Canadian/ Quebec pension plan (CPP/QPP)?
mandatory
What analytical approach mitigates the impact of having a data set that has a few very high or/and very low points?
median
Which plan helps retain key employees by providing rewards based on the stock performance of a portfolio of promising new high-tech firms?
phantom equity plans
What is a key aspect of developing the implementation plan?
planning for communicating the new system
Which method of job evaluation is useful for firms with large numbers of jobs and is most commonly used for pay equity?
point-factor
Which term refers to an organization that gives an employee the ability to appeal a decision of the job evaluation committee?
procedural justice
Which term refers to the division of an ordered list of values into either four groups or ten groups?
quartiles or deciles
What is the cheapest method of compensation data collection?
questionnaires
Which term refers to the percentage calculated by dividing the range spread for a given pay range by the minimum for that pay range?
range spread percentage
What is the simplest method of performance appraisals?
ranking
Some workers are being paid above their pay range and then they get their wage rate frozen at their current rate of pay until salary scales catch up. What is this practice is called?
red-circling
What kind of program allows an employee to "smooth out income" over a number of years, providing an employee with the opportunity to defer income taxes?
registered sabbatical leave plan
Which step in developing a job evaluation system using the point method allows you to quantify the extent to which each factor is present in a job?
scaling the factors
Which variable would NOT be included under the term "compensation differential"?
scarcity of labour
Which of the following is NOT an example of a job specification?
supervising clerical staff
What type of nonmonetary award is a "Golden Banana" an example of?
symbolic
Which type of behaviour does quality and quantity of work falls under?
task
What did Canada Post avoid with its new integrated HRIS and payroll system?
the customization trap
Which term refers to the relative value of different jobs as determined by knowledgeable individuals?
the ranking method
What was the name of Jack Welch's performance management system, where the bottom 10% was terminated?
the vitality curve
What are the three main reasons for conducting job evaluations?
to control wage costs, to create equitable pay structures, and to create the perception of an equitable pay system among participants
As an owner of a large business, what budget approach are you using by setting a limit on the total amount of compensation available for the coming year and then dividing the available funds among your department managers to distribute to their employees?
top-down
Which component forms the basis for a ranked list of all jobs included in the job evaluation system?
total points
What would be considered a big draw for American companies to set up operations in Canada?
universal health care
At a basic level, what do employers need to know when attempting to gather information about a relevant labour market?
what competitors are paying for labour
In what specific circumstances are field reviews an appropriate performance management tool?
when the behaviour being observed can be measured in a short time frame
Under which circumstance is a team-based reward system the best means of rewarding performance in teams?
when there is no evidence of free-riders