CM Chapter 18

MerTon Inc. decides to reduce labor costs by using exit incentives to encourage some of its senior, high-earning members to leave the organization. It replaces the employees who quit with new employees and pays them low wages. Which of the following statements is most likely true in this scenario? A. The number of employees being paid red circle rates will increase. B. The salary range midpoint of the company is lesser than the compa-ratio. C. The salary range midpoint of the company is higher than the actual salary paid. D. The compa-ratio of the company is greater than one.

The salary range midpoint of the company is higher than the actual salary paid.

The major potential advantage of outsourcing is _____. A. increased turnover rate B. increased compa-ratio C. increased absenteeism D. increased cost savings

increased cost savings

HoldDesk Inc. has an annual labor cost of $3,000,000. It has a turnover rate of 10 percent and a planned average increase of 5 percent. The turnover effect is _____. A. $10,000 B. $45,000 C. $15,000 D. $30,000

$15,000

The average company match for 401(k) retirement plan is _____ cents on the dollar up to 6 percent of pay. A. 50 B. 40 C. 30 D. 20

50

Total compensation in many organizations makes up at least _____ percent of operating expenses. A. 20 B. 30 C. 40 D. 50

50

_____, designed for employees or managers, explain compensation policies and practices, answer frequently asked questions, and explain how these systems affect their pay. A. Communication portals B. Enterprise resource planning systems C. Cafeteria plans D. Content delivery networks

Communication portals

_____, a software package, allows workers to make health-care choices, allocate savings to 401(k)s or other savings vehicles, and access vacation schedules. A. Manager self-service B. Employee self-service C. A cafeteria plan D. An enterprise resource planning system

Employee self-service

Which of the following is NOT a likely consequence of a highly decentralized pay system? A. Financial malfeasance is completely eliminated. B. Pay rates for the same work could be inconsistent. C. Managers could use pay to motivate their own objectives. D. Employees are likely to be treated unfairly.

Financial malfeasance is completely eliminated.

Which of the following statements about anchoring/framing is true? A. It states that initial data strongly affect decisions/beliefs. B. It is the reluctance to accept evidence that contradicts existing beliefs. C. It refers to the tendency to follow fashions in programs/techniques. D. It states that people discover patterns in random events.

It states that initial data strongly affect decisions/beliefs.

GronLan Inc., a company with a majority of workers with high seniority, decides to hire 1,000 college graduates to meet the sudden productivity requirements generated by a growth in the market. Which of the following statements is most likely to be happen in this situation? A. The compa-ratio of the company will become greater than one. B. The average pay actually paid by the company will fall below its range midpoint. C. The salary range midpoint of the company will become lesser than the compa-ratio. D. The number of employees being paid red circle rates will increase.

The average pay actually paid by the company will fall below its range midpoint.

The Web page for the compensation society is _____. A. Society for Human Resource Management B. American Compensation Association C. International Compensation and Benefits Society D. WorldatWork

WorldatWork

The percentage increase in average pay that is expected for an organizational unit or company is called _____. A. a decentralized budget B. a bottoms-up budget C. a planned pay-level rise D. the current year's rise

a planned pay-level rise

The denominator for calculating the current year's pay rise is _____. A. average pay at the beginning of the year B. average pay at the end of the year C. average number of employees during the year D. average employment level

average pay at the beginning of the year

Replacing merit grids with _____ eliminates the link between the pay increase and the employees' salary position in the range and performance rating. A. bands B. skill- or competency-based plans C. job evaluation plans D. bonuses

bonuses

A management strategy of giving separate organization units the responsibility to design and administer their own compensation systems is _____. A. known as a centralized strategy B. known as a decentralized strategy C. the best approach to design D. rarely done in today's organizations

known as a decentralized strategy

According to one study, only _____ of organizations actually calculate the cost and value added by their pay programs. A. three-fourths B. one-fourth C. one-half D. one-third

one-thrid

If Philadelphia has a CPI of 165 and Houston has a CPI of 145, and if both cities started with bases of 100, it means that _____. A. prices have risen faster in Philadelphia since the base year than in Houston B. it essentially costs more to live in Philadelphia than in Houston C. it costs less to live in Houston than in Philadelphia D. pay in Philadelphia is, on average, 20 percent higher than in Houston

prices have risen faster in Philadelphia since the base year than in Houston

When employees are paid more than the maximum of their pay grade, these rates are called _____ rates. A. red circle B. yellow circle C. blue circle D. green triangle

red circle

If financially troubled employers have NOT been able to maintain competitive market positions, the conventional response has been to _____. A. increase the rate of reduction in average pay by controlling adjustments in base pay B. decrease employees' copays and deductibles for benefits C. increase base wages but not variable pay D. reduce employment

reduce employment

The _____ often comes into play if organizations target reductions among higher paid employees because higher paid employees also tend to be older employees. A. WHO B. FMLA C. OSHA D. ADEA

ADEA

Which of the following is a measure of changes in prices of goods and services in the product and service markets over time? A. Producer price survey B. Product market competitor wage survey C. Labor market competitor wage survey D. Consumer price index

Consumer price index

Which of the following is NOT a potential problem with headcount reductions? A. Regulatory requirements make it difficult to make targeted cuts. B. Workforce reductions, especially if not handled well, can harm employee relations. C. Organizations that make greater involuntary workforce reductions also experience greater voluntary turnover. D. RIFs are very costly in tangible terms in the long run due to decreases in unemployment insurance tax rate.

RIFs are very costly in tangible terms in the long run due to decreases in unemployment insurance tax rate.

_____ is the budgetary approach that begins with an estimate from the highest ranking executives of the pay increase budget for an entire organization. A. Bottom-up budgeting B. Top-down budgeting C. Managerial plan D. Executive estimate budgeting

Top-down budgeting

The compa-ratio reflects the _____. A. rate paid for satisfactory performance B. relationship of actual salaries to the midpoint of the going rates in the market C. maximum value of red circle rates D. relationship of the average actual salary in each range to the midpoint of the range

relationship of the average actual salary in each range to the midpoint of the range

Changes in wages in labor markets are measured _____. A. using the producer price index B. using the modified balance sheet approach C. through pay surveys D. by examining the personal expenditure of each employee

through pay surveys

The _____ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage. A. productivity effect B. conflict effect C. turnover effect D. morale effect

turnover effect

A major advantage of a _____ is that it reduces benefits costs, something that the other cost-cutting options ordinarily do not achieve. A. reduction in work hours B. furlough C. pay cut D. reduction in force

reduction in force

Which of the following is the basic question to ask to improve quality and ensure that value is added by each technique and at each stage in the compensation system? A. Who should do the activity? B. How should the technique be redesigned? C. Does each specific activity directly contribute to our objectives? D. Should the activity be done in-house, or can others do it more effectively?

Does each specific activity directly contribute to our objectives?

All of the following are adverse effects of layoffs EXCEPT _____. A. decreased unemployment insurance tax rates B. unrealized productivity C. lower morale D. lower financial gains than expected

decreased unemployment insurance tax rates

A compa-ratio less than 1 means that, on average, _____. A. employees are senior employees B. the turnover rate of the organization is low C. employees are high performers D. employees in a range are paid below the midpoint

employees in a range are paid below the midpoint