MGT 461 Exam 1 ch 1-4
Among employers that provide health insurance, the cost to provide family coverage per year per employee is approximately _____.
$16,000
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%
Which of the following is the correct order of the steps in formulating a total compensation strategy?
Assess the strategy, map the strategy, implement the strategy, and reassess the strategy.
List the basic elements of the pay model
Compensation objectives policies that form the foundation of the compensation system techniques that make up the compensation system
A study of IBM showed that its long-standing policy of no layoffs was the major cause of its strong profits.
False
Base wage reflects both the value of the work and individual employee skills and experience.
False
Even if the federal compensation laws change, it is unnecessary to change pay systems to ensure continued compliance.
False
In a high-performance system, pay strategy always plays a lead role.
False
Management and HR research has conclusively shown that goal setting and job enrichment produce the largest and most reliable increases in job performance
False
Most organizations rely upon the market to determine how to pay their employees as compensation strategy is uncertain and complex.
False
Procedural fairness suggests that the way a pay decision is made is of less importance to employees than the results of the decision.
False
Since HR research contains information useful to managers, most managers read research in HR management, and compensation journals
False
Since unions represent such a small fraction of the labor force, their influence on pay decisions is insignificant.
False
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
Whole Foods' shared-fate philosophy means that executive salaries are at least 19 times the average pay of full-time employees
False
Which of the following statements is NOT true?
Focusing only on one dimension of the pay strategy is a best practice.
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 degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n):
Incentive effect
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
Which or the following is often the largest component in an executive pay package?
Stock options
GreenRain Corp. faces an increase in employee turnover rate. The CEO calls for a board meeting with the senior executives to discuss the issue. Who among the following suggests increasing the relational returns that employees receive to reduce the turnover rate at GreenRain?
Tom suggests increasing the decision-making authorities given to the employees to make work more challenging
_____ refers to openness and communication about pay.
Transparency
A compensation strategy should reflect an organization's values.
True
A study found that only a very small amount of change in CEO pay is related to changes in company performance.
True
An organization defines its strategy through the tradeoffs it makes in choosing what to do and what not to do.
True
Causality is one of the most difficult questions to answer and continues to be an important and sometimes perplexing problem for researchers.
True
Commissions are an example of incentives.
True
If the objective is to increase customer satisfaction, then incentive programs and merit pay might be used to pay for performance.
True
In a virtuous circle, a pay-for-performance strategy results in the improvement of performance.
True
Monetary incentives produce the biggest increases in job performance
True
Most U.S. firms use merit pay increases
True
Most firms do not have generic strategies but use a blend of cost and innovation.
True
Objectives guide the design of pay systems and provide the standards for evaluating their effectiveness.
True
Pension and health benefits are a very large component of total compensation for many large companies such as American Airlines and GM.
True
When unemployment increases, the proportion of the population covered by health insurance decreases
True
a major challenge facing most employers is the rising cost of health care benefits
True
Which of the following is NOT a question to ask for determining if research has value?
Was the research conducted by PhD researchers?
Which of the following tests of competitive advantage is probably the easiest test to pass?
alignment test
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
Union preferences are a major factor in _____ a total compensation strategy.
assessing
Describe the various returns received from work
cash compensation-base, merit/cost of living, short-term incentives, long-term incentives Benefits-income protection, work/life balance, allowances Relational returns-recognition and status, employment security, challenging work, learning opportunities
The best way to establish _____ is to account for competing explanations, either statistically or through control groups.
causation
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 that focuses on competitor's labor costs 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
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 policy decisions directly affects employees' attitudes and work behaviors?
employee contributions
Which of the following is an example of a relational return?
employment security
Comparisons on the forms of compensation used by other companies are part of _____.
external competitiveness
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
Which of the following is a fundamental objective, and NOT a policy, in the pay model?
fairness
At the corporate level, the fundamental strategic decision involves defining the role of the HR in compensation strategies.
false
Base wage is the overtime pay given to employees who are exempt from regulations of the Fair Labor Standards Act.
false
Customer-focused pay strategies are most likely to use market-based pay.
false
Research on the effects of pay level shows that how employees are paid has no effect on the performance of the employees.
false
The degree to which pay influences individual and aggregate motivation among employees is called the sorting effect.
false
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 attitude and behaviors
Which form of pay does not permanently increase labor costs?
incentive
Variable pay may also be called _________.
incentives
Robert, the CEO of GameTrack Corp., wants to restructure the pay plan without increasing the labor costs in the long run. He is most likely to achieve this, while retaining his top employees, by:
increasing incentive pay and decreasing base pay
A compensation system using market-based pay is most likely to be part of a(n) _____ strategy.
innovator
Flexible-generic job descriptions would most likely be used with a(n) _____ strategy.
innovator
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
Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one.
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.
management
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
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
You are an HR manager, and your boss has told you to find the best way to raise job performance. After some research, you find that _____ have the greatest instrumental value.
monetary incentives
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
In the context of pay relationships, which of the following is illegal in the United States?
paying on the basis of one's age
Managers seek internal alignment within their organization by:
paying on the basis of similarities among jobs
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
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"?
trouble asset relief program
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
Although three separate compensation strategies may be identified, many companies use a combination of all three.
true
Benchmarking and copying best practices does not lead to competitive advantage
true
Compensation systems focusing on competitors' labor costs typically follow a cost-cutter strategy.
true
How an organization positions its total compensation against its competitors is part of external competitiveness strategic choices.
true
Pay systems should fit well with other HR systems
true
Providing unlimited compensation choices to employees would meet with disapproval from the U.S. Internal Revenue Service.
true
Strategy refers to the fundamental direction that an organization chooses.
true
internal alignment refers to comparisons among jobs or skill levels inside a single organization.
true
