MGT 461 Chapter 1 & 2

Recent surveys show that, on average, an outstanding performer receives a _____ merit increase, an average performer a _____ merit increase, and a poor performer a 0.4% merit increase.

4.4%; 2.8%

Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select _____.

A more flexible work schedule

Which of the following statements regarding allowing employees a choice in their pay mix is NOT true?

Allowing employees their choice is easy for competitor companies to imitate

Which of the following is a policy, and NOT an objective, in the pay model?

Competitiveness

A measure of how changes in one variable are related to changes in another variable is the:

Correlation coefficient

A compensation system focusing on system control and work specifications is most closely associated with a(n) _____ strategy.

Cost-cutter

Which of the following is NOT a test of whether a pay strategy is a source of competitive advantage?

Cost-effectiveness test

All of the following EXCEPT _____ are compensation systems associated with a cost-cutter strategy.

Customer satisfaction incentives

A difference between incentives and merit increases is that incentives:

Do not increase the base wage, whereas merit increases the base wage

Incentives and merit guidelines are techniques of the _____ policy of the pay model.

Employee contributions

The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of _____ policy decisions.

Employee contributions

Which of the following is an example of a relational return?

Employment security

T/F A study of IBM showed that its long-standing policy of no layoffs was the major cause of its strong profits.

False

T/F At the corporate level, the fundamental strategic decision involves defining the role of the HR in compensation strategies.

False

T/F Base wage is the overtime pay given to employees who are exempt from regulations of the Fair Labor Standards Act.

False

T/F Base wage reflects both the value of the work and individual employee skills and experience.

False

T/F Customer-focused pay strategies are most likely to use market-based pay.

False

T/F Even if the federal compensation laws change, it is unnecessary to change pay systems to ensure continued compliance.

False

T/F Management and HR research has conclusively shown that goal setting and job enrichment produce the largest and most reliable increases in job performance.

False

T/F Procedural fairness suggests that the way a pay decision is made is of less importance to employees than the results of the decision.

False

T/F The R2, which is an output from a regression analysis, is different from correlation in that it tells us what percentage of the variation is accounted for by the variables we are using to predict or explain

False

T/F The degree to which pay influences individual and aggregate motivation among employees is called the sorting effect.

False

T/F Whole Foods' shared-fate philosophy means that executive salaries are at least 19 times the average pay of full-time employees.

False

Hourly compensation costs for production workers in manufacturing are higher in _____ than in the United States.

Germany

Which of the following is NOT included in a strategy map?

HR alignment

The alignment test

Helps ensure passing the differentiation test.

Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices.

Improves attitudes and behaviors

Variable pay may also be called _____.

Incentives

Career growth, hierarchy, and flexible design are most closely associated with the _____ aspect of mapping a total compensation strategy.

Internal alignment

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?

Internal alignment

_____ refers to comparisons among jobs or skills inside a single organization.

Internal alignment

Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one.

It is unclear what compensation practices

In the formula predicting performance, the component most closely related to compensation is _____.

M

Which of the following companies is taking efforts to improve the work/life balance of its employees?

MH Corp. increases the number of paid holidays given to its senior employees.

Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping a total compensation strategy.

Management

The second step of developing a total compensation strategy is to:

Map the strategy

Which of the following is given as an increment to the base pay in recognition of past work behavior?

Merit pay

According to the Hudson survey, _____ is the single thing that would make 41 percent of the U.S. workers happier

More money

In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of _____.

Objectives

The role non-HR managers play in making pay decisions is called _____.

Ownership

Trying to measure an ROI for any compensation strategy implies that

People are "human capital," similar to other factors of production.

When organization performance declines

Performance-based pay plans do not pay off.

_____ is the measure of how important total compensation is in the overall HR strategy.

Prominence

Which of the following is often the largest component in an executive pay package?

Stock options

Incentives do not permanently increase labor costs because:

They are one-time payments.

Which of the following programs introduced by Congress includes restrictions on executive pay that are designed to discourage executives from taking "unnecessary and excessive risks"?

Troubled Asset Relief Program

T/F A major challenge facing most employers is the rising cost of health care benefits.

True

T/F A major challenge in the design of future pay systems is how to better satisfy individual needs and preferences.

True

T/F A study found that only a very small amount of change in CEO pay is related to changes in company performance.

True

T/F All organizations that pay their employees have a compensation strategy even though it may not be stated or written.

True

T/F Although three separate compensation strategies may be identified, many companies use a combination of all three.

True

One of the reasons why 8 in 10 of the uninsured in the United States are from working families is that _____.

many small employers are much less likely than larger employers to offer health insurance to their employees

T/F Most U.S. firms use merit pay increases.

True

T/F Objectives guide the design of pay systems and provide the standards for evaluating their effectiveness.

True

T/F Pay systems should fit well with other HR systems.

True

T/F When unemployment increases, the proportion of the population covered by health insurance decreases.

True

Managers seek internal alignment within their organization by:

Paying on the basis of similarities among jobs.

T/F An organization defines its strategy through the tradeoffs it makes in choosing what to do and what not to do.

True

T/F Causality is one of the most difficult questions to answer and continues to be an important and sometimes perplexing problem for researchers.

True

T/F Commissions are an example of incentives.

True

T/F Compensation systems focusing on competitors' labor costs typically follow a cost-cutter strategy.

True

T/F How an organization positions its total compensation against its competitors is part of external competitiveness strategic choices.

True

T/F If the objective is to increase customer satisfaction, then incentive programs and merit pay might be used to pay for performance.

True

T/F Internal alignment refers to comparisons among jobs or skill levels inside a single organization.

True

T/F Pension and health benefits are a very large component of total compensation for many large companies such as American Airlines and GM.

True

Compensation policy choices that affect the pay level relative to other companies are most closely associated with the _____ aspect of the pay model.

External competitiveness

According to the text, which of the following decisions should be made jointly?

External competitiveness and employee contribution decisions

In the context of pay relationships, which of the following is illegal in the United States?

Paying on the basis of one's age