Compensation Administration - Chapter 18 Questions

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.

C) $15,000.

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

A) 50 cents

________, 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

A) Communication portals

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.

A) It states that initial data strongly affect decisions/beliefs.

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

A) red circle rates.

________, 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

B) Employee self-service

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 1. 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 less than the compa-ratio. D) The number of employees being paid red circle rates will increase.

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

Total compensation in many organizations makes up at least ________ of operating expenses. A) 80 percent B) 70 percent C) 60 percent D) 50 percent

D) 50 percent

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

D) 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

D) Consumer price index

The denominator for calculating the current year's pay rise is the 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.

A) average pay at the beginning of the year.

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.

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

________ 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

B) Top-down budgeting

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.

B) known as a decentralized strategy.

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?

C) Does each specific activity directly contribute to our objectives?

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 less 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 1.

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

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.

C) a planned pay-level rise.

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.

C) 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

C) turnover effect

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.

D) WorldatWork.

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

D) bonuses

A compa-ratio of 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.

D) employees in a range are paid below the midpoint.

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

D) increased cost savings.

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

D) reduction in force

A 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.

D) relationship of the average actual salary in each range to the midpoint of the range.