Comp Exam #3

The corporate performance of Yellow Corp. is fairly stable. However, it is difficult to measure individual performance. In this case, the most effective compensation mix is to offer?

wide range of awards beyond just money

Low-high approach

•Convert market data to fit the skill - or competency-based structure. •Use the lowest- and highest-paid benchmark jobs as anchors.

One common feature of all types of incentive plans is?

an established standard of performance that is used to determine the magnitude of the incentive pay.

The amount of fairness given to employees refers to

distributive justice

the best approach for pricing jobs using a skill-competency-based pay system.

low-high approach

Expectancy theory

people choose the behavior that leads to the greatest reward

Company X pays for performance. Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards. This is an example of the:

sorting effect.

A team leader with a free-rider problem in his team can most likely maximize the performance of his team by?

specifying performance levels and due dates

Gain Sharing

A team-based compensation structure that rewards teams based on the achievement of certain metrics associated with productivity, efficiency, or quality.

Advantage of gain-sharing plans?

They are administratively easy to implement.

Which of the following statements is true regarding broad bands?

They foster cross-functional growth

Disadvantage of team incentives?

They maximize distinctions between team members.

Success sharing

employee pay is constant, variable pay adds on during successful years

The trend in recent variable-pay design is to combine the best of?

gain-sharing and profit-sharing plans.

When a company moves from an individual incentive plan to a group incentive plan, the company is most likely to experience?

higher turnover among high performers.

When employee performance is easily measured and the organization's performance is fairly stable over time, the most effective type of compensation is to offer?

monetary rewards with large incentives

When employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time, the most effective type of compensation is to offer?

monetary rewards with large incentives

Available evidence indicates that managers believe the most important factor for pay increases is?

performance

Agency theory

performance-based pay is the optimal compensation choice for complex jobs, where monitoring employee performance is difficult.

Equity theory

relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.

The first major decision in setting externally competitive pay and designing the corresponding pay structures

specifying the employer's competitive pay policy

Which of the following statistical measures shows how similar or dissimilar the market rates are from each other?

standard deviation

The size of pay differentials between grades should?

support career movement through the pay structure.

Fuzzy market

Organizations with unique jobs and structures face the double bind of finding it hard to get comparable market at the same time they are placing more emphasis on external market data

Disadvantage of gain-sharing plans?

Pay-performance links are indirect.

The ability triangle includes?

Selection, Recruitment, Training

Pay ranges for office and production work commonly range between?

5% - 15%

________ requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action.

A Bedeaux plan

Which of the following is an individual incentive plan?

A straight piecework system

Gramhold, Inc., a pharmaceutical company, reduces its ten salary grades to just three broad bands. Which of the following statements is most likely to be true in this case?

C) Gramhold will experience more career moves within bands than career moves between bands.

Which of the following statements is true of the Halsey 50-50 method?

It derives its name from the shared split between worker and employer of any savings in direct cost.

Which of the following statements is true of merit pay?

Merit programs are commonly designed to pay different amounts depending on the level of performance.

An incentive system with three piecework rates is the

Merrick plan

Which of the following are an example of a long-term incentive plan?

Performance plans

________ have indirect pay-performance links and require employees to put up money to exercise grants.

Stock options plans

Who usually has responsibility for managing a pay survey?

The compensation manager

Advantages of team incentives?

They are effective in stimulating ideas and problem solving.

Which of the following statements is true of individual spot awards?

They are given to employees for exceptional performance as an add-on bonus.

Which of the following is true of merit bonuses?

They are viewed as less of an entitlement than merit pay.

Which of the following statements is true of market pricers?

They assume that little value is added through internal alignment.

The process of matching survey jobs by applying an employer's plan to the external jobs and then comparing the worth of the external job with its internal "match" is called?

benchmark conversion

The final major decision in setting externally competitive pay and designing the corresponding pay structures is to?

construct a pay policy line that reflects external pay policy

Valence

is the value employees attach to the organization rewards offered for satisfactory job performance.

In gain-sharing plan formulas,

labor inputs are in the numerator and productivity outcomes are in the denominator.

A market pay line does what according to the text?

links a company's benchmark jobs with market rates paid by competitors.

Which of the following is a reward that recognizes outstanding past performance?

merit pay

When pay is based on individual performance, turnover tends to be highest among?

poor performers.

What does aging the data mean?

the process of taking different survey data, which can be accurate at different points in time, and adjusting the data to some common point in time

Reinforcement theory

theory that positive and negative reinforcers motivate a person to behave in certain ways

________ measures reveal competitors' use of performance-based cash payments.

total cash

In the United States, the ________ is a major source of publicly available pay data, and it also calculates the consumer price index.

Bureau of Labor Statistics

Asai uses a skill-based plan that establishes single flat rates for each skill level. Mark performs better than Steve, even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario?

Both Mark and Steve will be paid the same amount.

Which of the following jobs would most likely fall into a fuzzy market? A) The position of English professor that was filled by a Ph.D. holder in English language and literature with five years of teaching experience B) The position of sound engineer that was filled by a graduate with a degree in audio engineering C) The position of senior director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience D) The position of vice president of a marketing firm that was filled by a marketing manager with 15 years of experience in the marketing field

C

The ________ pay strategy emphasizes external competitiveness and deemphasizes internal alignment.

market pricing

Which measure of central tendency minimizes distortion caused by outliers?

median

Most experts agree that employees do not begin to consider changing their behavior unless payouts are at least ________ percent higher.

20

Lead/lag

Aging market data to a point halfway through a plan year is called

Risk sharing

An incentive plan in which employees' base wages are set below a specified level and incentive earnings are used to raise wages above the base. In good years an employee's incentive pay will more than make up for the 20 percent shortfall, giving the employee a pay premium. Because employees assume some of the risk, risk-sharing plans pay more generously than success-sharing plans in good years.

Which of the following is often used to set pay ranges? A) Median B) Weighted mean C) Quartiles and percentiles D) Standard deviation

C) Quartiles and percentiles

The motivation triangle includes?

Culture, Compensation, Performance Management

The second major decision in setting externally competitive pay and designing the corresponding pay structures is to?

define the purpose of the survey

Which of the following is true regarding the Employment Cost Index (ECI)? A. it is published by the department of commerce B. it is an excellent source of competitor labor costs C. it measures annual changes in employer compensation costs D. it allows comparison of labor costs to all-industry averages

D. it allows comparison of labor costs to all-industry averages

In the context of a pay-for-performance plan, which of the following questions is related to equity?

Do employees view the amount of compensation received as fair?

Which of the following motivational theories states that performance-based payments work best when they closely follow performance?

Expectancy theory

In the regression equation y = a + bx, job evaluation points are denoted by?

X

Merit bonus

_____ is an individual level form of performance pay

Instrumentality

_____ is employees' beliefs that requisite job performance will be rewarded by the organization.

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer?

a high base pay with low incentives and a variety of rewards

When an organization's performance has frequent highs and lows, but individual performance is fairly stable and performance measures are clear, the most effective compensation mix is to offer?

a large base pay and low incentive pay

A person with low self-esteem is likely to seek?

a large, decentralized organization with little pay for performance.

Employment Cost Index

a measure of inflation based on wages paid in the labor market

Components identified as vital to the success of both Scanlon and Rucker plans are?

a productivity norm and effective worker committees.

If you had repair work done on your car, the shop most likely used ________ to pay the mechanic.

a standard hour plan

In the context of pay influencing turnovers, which of the following is a result of too little pay?

Feelings of unfair treatment among employees

Which of the following is the most commonly used team incentive performance standard?

Financial performance

The most frequently implemented incentive system is:

a straight piecework system

Paying a dime for every bottle collected and turned to a collection center is an example of:

a straight piecework system.

The most obvious sorting factor is?

ability

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the?

Gantt plan

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the

Gantt plan.

An advantage of providing stock ownership as variable pay to employees?

It defers a portion of taxes to employees.

Which of the following statements is true of the Rowan plan?

It is an individual incentive plan that provides for variable incentives as a function of a standard expressed as time period per unit of production.

Which of the following statements is true of pay ranges?

They reflect the differences in performance or experience that an employer wishes to recognize with pay.

A common first step in interpreting compensation survey data is to?

check for the accuracy of job matches