Compensation Exam 1
Among employers that provide health insurance, the cost to provide family coverage per year per employee is approximately _____.
$16,000
Most studies report that when different people rank-order jobs, the correlations are between
.85 and .96
Which of the following is a major decision in job evaluation?
1. establishing the purpose of the plan 2. decide on single v. multiple plans 3. choose among alternative methods 4. obtain involvement of relevant stakeholders 5. evaluate the usefulness of the results
Most factor scales have ____ degrees
4 to 8
Recent surveys show that, on average, an outstanding performer receives a _____ merit increase, and average performer a _____ merit increase, and a poor performer a 0.4% merit increase.
4.4%: 2.8%
Research shoes that skills, one of the compensable factors, accounts for _____ percent or more of the variance in job evaluation results
90
Which of the following is NOT a test of whether a pay strategy is a source of competitive advantage?
ARE: alignment test, differentiation test, value-addition test NOT: cost-effectiveness test
Who among the following is most likely to be working for company that uses a competency-based pay plan?
Carlos, who focuses on obtaining certifications in her field to get a pay increase
Which of the following is NOT a characteristic of aligned pay structures?
Characteristics: they support the way work gets done; they fit an organization's business strategy; they are fair Not: they are designed to increase the turnover rate
Which of the following is NOT a factor in defining equal work according to the Equal Pay Act?
Factors: equal skill, equal effort, equal responsibility Not: equal experience
Which of the following is NOT one of the factors that define an internal pay structure?
Factors: the pay differentials between the levels; the criteria used to determine pay differentials; the number of levels of work NOT: the number of times the pay structure has been changed
The roots of job-based pay structures is traced to _____.
Frederick Taylor
Hourly compensation costs for production workers in manufacturing are higher in _____ than in the U.S.
Germany
Egalitarian pay structures have all BUT which of the following characteristics?
Have: few levels, small differentials, support equal treatment Not have: prefer individual performance over team performance
Hierarchical pay structures have all BUT which of the following characteristics?
Have: support a close fit with the organization; many levels; based upon the job or person; greater differences in pay between levels and top bottom jobs Not: prefer team performance over individual performance
Which of the following is NOT included in a strategy map?
IS: external competitiveness, management, employee contributions, internal alignment NOT: HR alignment
Common characteristics of the point method include all of the following EXCEPT
Include: numerically scaled factor degrees, factor weights, compensable factors Not include: benchmark factor classes
Organization factors that shape internal pay structures include all BUT which of the following?
Include: strategy, technology, human capital, HR policy, employee acceptance and cost implications Not: will pick something from external factors or internal structure
Common bases for modern pay structures include all BUT which of the following?
Include: the content of the work; the skills and knowledge required to perform the work; the work's relative value for achieving organizational objectives Not include: the extent of external competitiveness and equity
Which of the following is NOT true?
Large raises with a promotion decreases effort and increases absenteeism
In the formula predicting performance, the component most closely related to compensation is _____.
M
One of the reasons why 8 in 10 of the uninsured in the U.S. are from working families is that ________.
Many small employers are much less likely than larger employers to offer health insurance to their employees.
Which of the following statements is NOT true?
TRUE: the effect of performance incentives depends on the context; embedding compensation strategy in HR strategy affects results; the effect of paying more than competitors depends on the context FALSE: focusing only on one dimension of pay strategy is a best practice
The scheme used in the text for classifying competencies consists of three groups. Which of the following is NOT one of them?
Team dynamics
Which of the following is an advantage of skill-based pay plans?
They aid in deploying workers in a way that better matches the work flow.
Which of the following is most likely to be a disadvantage of skill-based pay plans?
They are expensive in the long run as the majority of employers become certified at the highest pay levels.
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
Which of the following pay structure procedures would NOT increase perceptions of pay fairness?
Would: consistently applying pay structures to all employees; using accurate data; including appeals procedures Not: hiring consultants to develop the pay structure
BAsed on the opinions of the 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select _____.
a more flexible work schedule
Who among the following is examining the validity of a job evaluation?
a person who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs
All of the following are advantages of the ranking method of job evaluation EXCEPT that
advantages: the evaluation process is fast, the evaluation process is inexpensive, the evaluation process is not complex except: rankings are easy to defend and justify
Which of the following tests of competitive advantage is probably the easiest test to pass?
alignment is the easiest test to pass and also helps ensure passing the differentiation test
Which of the following methods requires evaluators to agree on which jobs are the most and least valuable, then the next most and least valued, and so on until all the jobs have been ordered?
alternation-ranking method
When cooperation is important for successful organization performance, which of the following pay structures is most suitable?
an egalitarian pay structure
Union preferences are a major factor in _____ a total compensation strategy.
assessing
Most job structures are best described as
both person and job-based structures
Employees in a multi-skill system earn pay increases
by acquiring new knowledge
The best way to establish _____ is to account for competing explanations, either statistically or through control groups.
causation
A major decision in job evaluation is to
choose among alternative approaches
A job description is compared to class descriptions in the _____ of job evaluation.
classfication
The job evaluation method that most resembles a bookcase with many shelves is
classification
The well-defined jobs at McDonald's and their small differences in pay are an example of a(n) ______ internal pay structure
closely tailored
Which of the following is least likely to be used in establishing skill-based certification methods?
college degree
In the context of the point method of job evaluation, ______ are those characteristics in the work that an organization values; that help it pursue its strategy and achieve its objectives
compensable factors
The process of identifying competencies in person-based structures resembles identifying _____ as part of job evaluation in job-based structures.
compensable factors
_____ are more likely to conduct job evaluations of senior management jobs.
compensation managers
_____ are the observable behaviors that indicate the level of competency
competency indicators
______ translate each core competency in action.
competency sets
Which of the following is the underlying assumption in the assessment of job content?
content has intrinsic value outside external market
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
Flexible-generic job descriptions would most likely be used with a(n) _____ strategy.
cost-cutter
Skill-based plans tend to work best in organizations using a(n) _____ strategy.
cost-cutter
In the point method, the second step in designing a plan is to
determine the compensable factors 1. conduct job analysis 2. determine compensable factors 3. scale the factors 4. weight the factors according to importance 5. select criterion pay structure 6. communicate the plan and train users 7. apply to non-benchmarks 8. develop online software support
Reliability of job evaluation techniques is measured by
determining if different evaluators produce the same results
Compensable factors, skill blocks, and competency sets are used for
determining what to value
The final step in designing a point plan involves ______.
develop online software support
A difference between incentives and merit increases is that incentives
do not increase the base wage, whereas merit increases the base wage
A camper is an employee who _____ in a skill-based pay system.
does not want to rotate jobs
In firefighting and rescue squads and global software design teams, a(n) _____ structure is most closely associated with higher performance
egalitarian
Which of the following policy decisions directly affects the employees' attitudes and work behaviors?
employee
Incentives and merit guidelines are techniques of the _____ policy of the pay model.
employee contributions
The decisions to implement pay for performance, flat pay rate, and profit sharing and examples of _____ policy decisions.
employee contributions
All of the following EXCEPT _____ are compensation systems associated with cost-cutter strategy.
example: customer satisfaction incentives
Competencies are derived from the _____ beliefs about the organization and its strategic intent.
executive leadership
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
The exchange value of a job is its _____.
external market value
The certification processes in skill-based pay in analogous to the _____ in a job-based analysis.
factor degrees and weights
The most widely used point method job evaluation is the
hay plan
The Alignment test
helps ensure passing the differentiation test
External factors are dominant influences on jobs filled via
hiring graduates
Which of the following is NOT a question to ask for determining if research has value?
improper: was the research conducted by Ph.D. researchers?
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices
improves attitudes and behaviors
Which form of pay does not permanently increase labor costs?
incentive
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
Variable pat may be also called _____.
incentives
A compensation system using market-based pay is most likely to be part of 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
_____ refers to comparisons among job skills inside a single organization.
internal alignment
Which of the following is a disadvantage of the point method?
it can become bureaucratic and rule-based
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 context of internal alignment, which of the following is the correct sequence?
job description > job evaluation > job structure
_____ is the process of systematically determining the relative worth of jobs for the purpose of creating an organization's job structure
job evaluation
A _____ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess
job-based
Managers whose employers use _____ plans focus placing the right people in the right job.
job-based
In the context of pay relationships, which of the following is illegal in the U.S.?
legal: paying on the nature of jobs, pay comparisons with competitors, pay on skill levels illegal: paying on the basis of one's age, race, gender, religion, natural origin, or disability
Organizations in a turbulent and unpredictable environment requiring flexibility in jobs and work processes are likely to be more successful with a(n) ______ internal pay structure
loosely coupled
Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping the total compensation strategy.
management
The majority of applications of skill-based pay have been in
manufacturing industries
A study of 400 compensation specialists revealed that
market data had a substantially larger effect on pay decisions than job evaluation data
According to a World at Work survey. the primary method of job evaluation is _____
market pricing
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
_____ are related to greater performance when the work-flow depends on individual contributors
more hierarchical structures
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
Leadership, customer orientation, and functional expertise are examples of which group of competencies?
organization specific
The role non-HR managers play in making pay decisions is called ______.
ownership
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 facotrs of production
When organization performance declines
performance-based pay plans do not pay off (example of a vicious cycle)
The _____ method of job evaluation uses compensable factors
point
The _____ method of the job evaluation is the most commonly used method in the U.S. and Europe
point
Which of the following is a fundamental objective, and NOT a policy, in the pay model?
policies: internal alignment, competitiveness, contributions, and management objectives: efficiency, fairness, compliance, ethics
Which of the following is a policy, and NOT an objective, in the pay model?
policies: internal alignment, competitiveness, contributions, and management objectives: efficiency, fairness, compliance, ethics
When a statistical process is used to duplicate an existing pay structure, it is called
policy capturing
James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being happy with his current salary, he is most likely concerned about ______.
procedural justice
_____ is the measure of how important total compensation is in the overall HR strategy.
prominence
Which of the following is an example of a relational return?
recognition and status, employee security, challenging work, learning opportunities
In strategic approach to pay, internal alignment is the _____ issue to be decided.
second *first issue is setting objectives
Most unions prefer which of the following?
small pay differences among jobs and seniority-based promotions
The second step of developing a total compensation strategy is to:
step 1: assess total comp implications step 2: map a total comp strategy step 3: implement strategy step 4: reassess
Which of the following is the correct order in formulating a total compensation strategy?
step 1: assess total comp implications step 2: map a total comp strategy step 3: implement strategy step 4: reassess
Which of the following is often the largest component in executive pay package?
stock options
In today's organizations, in order to increase competitiveness and success, work is analyzed by separating transactional work from
tacit work
_____ is a crucial factor that affects the perception of fairness of a skill-based plan.
the design of the certification process
The problem that is most likely to be faced by organizations using an egalitarian pay structure is ______.
the difficulty in external recruitment *must not have problems in maintaining among employees, the perception of excessive CEO pay, the difficulty in performing teamwork*
Pay for temporary workers is based upon
the internal structures of their home employer
Which of the following is the reason why skill-based pay plans have maximum flexibility?
the pay employees for the highest level of skill they have achieved regardless of the work they perform
Incentives do not permanently increase labor costs because
they are one-time payments
Research shows that _____ factor(s) for 98 to 99 percent of the variance in job evaluation plans.
three
Which job theory predicts that individual performance will be maximized when the pay differentials between job levels is high?
tournament theory
Which of the following sentences regarding skill-based structure is FALSE?
training costs are the lowest in comparison to all other pay plans
_____ refers to openness and communication about pay.
transparency
Which of the following statements regarding allowing employees a choice in their pay mix is NOT true?
true: allowing employees their choice is difficult to manage; providing unlimited choices is difficult to design; providing too many choices is confusing to people false: allowing employees their choice is easy for competitor companies to imitate
Which of the following is NOT true of the usage of multiple plans versus single job evaluation plans?
true: employers rarely evaluate all jobs in the organization at one time; many employers design different evaluation plans for different types of work; typically, a related group of jobs is used for evaluation false: a single universal plan is acceptable to employees if the work covered is highly diverse
Which of the following statements is true of a job evaluation plan?
true: it is developed using benchmark jobs and then applied to non-benchmark jobs
Marginal productivity theory argues that employers pay ______.
use value
Which of the following reasons makes competencies a risky foundation for a pay system?
vagueness and subjectivity
Content refers to the
work performed in a job and how it gets done