Compensation Mgmt Ch 2
TRUE
A compensation strategy should reflect an organization's values. T/F
C
A compensation system focusing on system control and work specifications is most closely associated with a(n) _____ strategy. A. innovator B. customer-focused C. cost-cutter D. differentiated
C
A compensation system that focuses on competitor's labor costs is most closely associated with a(n) ____ strategy. A. innovator B. customer-focused C. cost-cutter D. differentiated
A
A compensation system using market-based pay is most likely to be part of a(n) _____ strategy. A. innovator B. cost-cutter C. cost leadership D. customer-focused
TRUE
A major challenge in the design of future pay systems is how to better satisfy individual needs and preferences. T/F
C
According to the Hudson survey, _____ is the single thing that would make 41 percent of the U.S. workers happier. A. more personal days B. flexible work schedule C. more money D. better health insurance
D
All of the following EXCEPT _____ are compensation systems associated with a cost-cutter strategy. A. focus on competitor's labor costs B. focus on system control and work specifications C. increase in variable pay D. customer satisfaction incentives
TRUE
All organizations that pay their employees have a compensation strategy even though it may not be stated or written. T/F
TRUE
Although three separate compensation strategies may be identified, many companies use a combination of all three. T/F
TRUE
An organization defines its strategy through the tradeoffs it makes in choosing what to do and what not to do. T/F
FALSE
At the corporate level, the fundamental strategic decision involves defining the role of the HR in compensation strategies. T/F
C
Based on the opinions of 10,000 U.S. workers, Hudson found that when given their choice of unconventional benefits, most employees would select _____. A. more supplemental insurance B. more job training C. a more flexible work schedule D. more personal days and family leave
TRUE
Benchmarking and copying best practices does not lead to competitive advantage. T/F
B
Career growth, hierarchy, and flexible design are most closely associated with the _____ aspect of mapping a total compensation strategy. A. objectives B. internal alignment C. external competitiveness D. employee contributions
B
Comparisons on the forms of compensation used by other companies are part of _____. A. internal alignment B. external competitiveness C. employee contributions D. corporate responsibility
TRUE
Compensation systems focusing on competitors' labor costs typically follow a cost-cutter strategy. T/F
FALSE
Customer-focused pay strategies are most likely to use market-based pay. T/F
A
Flexible-generic job descriptions would most likely be used with a(n) _____ strategy. A. innovator B. customer-focused C. differentiated D. cost-cutter
TRUE
How an organization positions its total compensation against its competitors is part of external competitiveness strategic choices. T/F
FALSE
In a high-performance system, pay strategy always plays a lead role. T/F
TRUE
In a virtuous circle, a pay-for-performance strategy results in the improvement of performance. T/F
A
In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of _____. A. objectives B. internal alignment C. external competitiveness D. corporate responsibility
B
In the formula predicting performance, the component most closely related to compensation is _____. A. A B. M C. O D. C
B
Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping a total compensation strategy. A. objectives B. management C. employee contributions D. internal alignment
A
Mich Inc., a hardware store, has a rating system in place that rates employees on their friendliness, usefulness, and product knowledge. Based on the ratings an employee receives, he or she gets an incentive. The compensation strategy followed by Mich is most closely described as a: A. customer-focused strategy. B. cost-cutter strategy. C. innovator strategy. D. differentiation strategy.
TRUE
Most firms do not have generic strategies but use a blend of cost and innovation. T/F
FALSE
Most organizations rely upon the market to determine how to pay their employees as compensation strategy is uncertain and complex. T/F
TRUE
Pay systems should fit well with other HR systems. T/F
TRUE
Providing unlimited compensation choices to employees would meet with disapproval from the U.S. Internal Revenue Service. T/F
A
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices. A. improves attitudes and behaviors B. increases the number of middle men required C. reduces labor costs D. has little effect on quality
FALSE
Research on the effects of pay level shows that how employees are paid has no effect on the performance of the employees. T/F
D
Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one. A. reinforcing performance-based pay B. implementing team-based pay C. improving work-life balance D. it is unclear what compensation practices
FALSE
Since unions represent such a small fraction of the labor force, their influence on pay decisions is insignificant. T/F
TRUE
Strategy refers to the fundamental direction that an organization chooses. T/F
C
The alignment test A. is difficult to imitate. B. is the most difficult test. C. helps ensure passing the differentiation test. D. becomes difficult if the differentiation test is not clear.
A
The role non-HR managers play in making pay decisions is called _____. A. ownership B. transparency C. technology D. decentralized decision-making
D
The second step of developing a total compensation strategy is to: A. implement the strategy. B. assess total compensation implications. C. estimate the cost of the strategy. D. map the strategy.
B
Trying to measure an ROI for any compensation strategy implies that A. it is possible to align and differentiate and still fail to add value. B. people are "human capital," similar to other factors of production. C. adding value is the most difficult test. D. value created as a result of costs is difficult to specify.
C
Union preferences are a major factor in _____ a total compensation strategy. A. implementing B. reassessing C. assessing D. mapping
B
When organization performance declines A. a virtuous circle may be created. B. performance-based pay plans do not pay off. C. managers must avoid changing the pay practices. D. employee attrition rate declines considerably.
B
Which of the following is NOT a test of whether a pay strategy is a source of competitive advantage? A. Alignment test B. Cost-effectiveness test C. Differentiation test D. Value-addition test
C
Which of the following is NOT included in a strategy map? A. External competitiveness B. Management C. HR alignment D. Employee contributions
B
Which of the following is the correct order of the steps in formulating a total compensation strategy? A. Assess the strategy, implement the strategy, map the strategy, and reassess the strategy. B. Assess the strategy, map the strategy, implement the strategy, and reassess the strategy. C. Map the strategy, implement the strategy, assess the strategy, and reassess the strategy. D. Map the strategy, assess the strategy, implement the strategy, and reassess the strategy.
C
Which of the following statements is NOT true? A. The effect of performance incentives depends on the context. B. Embedding compensation strategy in HR strategy affects results. C. Focusing only on one dimension of the pay strategy is a best practice. D. The effect of paying more than competitors depends on the context.
B
Which of the following statements regarding allowing employees a choice in their pay mix is NOT true? A. Allowing employees their choice is difficult to manage B. Allowing employees their choice is easy for competitor companies to imitate C. Providing unlimited choices for employees to choose from is difficult to design D. Providing too many choices can confuse people
A
Which of the following tests of competitive advantage is probably the easiest test to pass? A. Alignment test B. Differentiation test C. Integration test D. Value-addition test
FALSE
Whole Foods' shared-fate philosophy means that executive salaries are at least 19 times the average pay of full-time employees. T/F
D
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? A. External competitiveness B. Employee contributions C. Corporate responsibility D. Internal alignment
B
_____ is the measure of how important total compensation is in the overall HR strategy. A. Competitiveness B. Prominence C. Centrality D. Ownership
A
_____ refers to openness and communication about pay. A. Transparency B. Ownership C. Prominence D. Centrality
