HRM Chapter 11—Total Rewards and Compensation
Simon is outraged that his co-worker Missy was given a raise. Simon believes Missy got the raise because she married the chairman of the board's son. Simon's sense of ____ has been violated. a. compensatory equity b. distributive justice c. external equity d. procedural justice
d. procedural justice
In an equity calculation, an employee's base pay, variable pay, and benefits are the ____ he/she receives from a job. a. outcomes b. outputs c. inputs d. motivators
a. outcomes
Which of the following is a benefit of reducing the number of pay grades and broadening pay ranges? a. It reduces the organization's overall compensation expense. b. It encourages employees to take horizontal job moves. c. It allows employees to have higher raises. d. It increases employee opportunities for upward mobility.
b. It encourages employees to take horizontal job moves.
Orville Brothers Construction, Inc., is making a bid for a federal government contract to build a bridge. In that bid, the construction company must allow for ____ wages for the employees. a. median national industry b. minimum c. living d. prevailing
a. median national industry
____ is the concept that the pay for all jobs requiring comparable knowledge, skills, and abilities should be similar even if actual duties and market rates differ significantly. a. Pay equity b. Equal pay for equal work c. Gender-neutral compensation d. Equality in compensation
a. Pay equity
Of the following methods of job evaluation, the ____ method is the most subjective. a. classification b. point c. factor-comparison d. Hay system
a. classification
An individual's ____ is that employee's current pay level divided by the midpoint of the pay range. a. compa-ratio b. market ratio c. target ratio d. matrix ratio
a. compa-ratio
If the Wage and Hour Division of the U.S. Labor Department investigates an employer's files looking for violations of the FLSA, it will focus on a. employee time records. b. pay levels for all protected classes c. tax withholding records. d. calculation of compa-ratios.
a. employee time records.
In an organization with a performance-oriented philosophy, a. employees only get raises if their productivity has been satisfactory or better. b. all employees can at least count on an annual cost-of-living adjustment to their salaries. c. bonuses are based on what other companies in the industries are paying. d. marginal performers tend to be satisfied with their compensation.
a. employees only get raises if their productivity has been satisfactory or better.
In terms of procedural justice, the process of determining base pay, allocating pay increases, and measuring performance all must be seen by employees as a. fair. b. legal. c. performance-based. d. non-discriminatory.
a. fair.
Chuck has applied to a residential roofing firm for a job as a roofer during school vacation because the pay is very good. Roofing is considered hazardous work. Under the FLSA Chuck cannot be hired unless he is at least ____ years old. a. 14 b. 16 c. 18 d. 21
c. 18
A compensation plan for expatriates that equalizes the cost differences between the international assignment and the same assignment in the home country of the individual or the corporation is the ____ approach. a. global market b. cost equalization c. total rewards d. balance sheet
d. balance sheet
A ____ job is one that is found in many organizations and performed by several individuals who have similar duties and require similar KSAs. a. comparable b. red-circled c. generic d. benchmark
d. benchmark
The major federal law that regulates compensation in the U.S. is the a. Fair Labor Standards Act. b. Workers' Compensation Act. c. the Sarbanes-Oxley Act. d. Pay Equity Act.
a. Fair Labor Standards Act.
A compensation philosophy in which each employee who has gained another year of seniority should have an increase in pay is called the ____ philosophy. a. entitlement b. commitment c. paternalistic d. the equity-based
a. entitlement
Employee medical insurance paid for by the employer is classified as ____ compensation. a. indirect b. direct c. intangible d. intrinsic
a. indirect
Pay increases for individual, non-executive, employees in a compensation system based on individual performance are typically decided by a. operating managers. b. the compensation committee. c. a compensation consultant. d. HR compensation specialists.
a. operating managers.
Angela, one of the company's best administrative employees, has made an appointment with you, the vice president of HR. Angela is extremely upset because she has done an Internet search on compensation levels for her particular job. She has found that her salary falls below both the industry median and industry average, even though she has been with the company for four years and has had outstanding performance reviews. Angela is a valuable employee and she would be difficult to replace. In addition, if Angela's morale declines, her attitude will strongly affect her co-workers. The compensation system at your company has a strong emphasis on internal equity, and it is a solid and legal system. Which of the following arguments would be LEAST effective for retaining Angela and maintaining her morale? a. Tell Angela that the company has done extensive job evaluation studies, and although she is a highly-valued employee, you can't justify paying her any more. b. Demonstrate that your company offers higher benefits than does the average company listed in the surveys she has found. c. Point out to Angela that your company is located in a small, rural town with a low cost of living, and that the data she has gathered from the Internet is based on companies that operate in all geographic locations. d. Explain that Angela's job does not include responsibility for budgeting that the benchmark job in the Internet survey includes.
a. Tell Angela that the company has done extensive job evaluation studies, and although she is a highly-valued employee, you can't justify paying her any more.
The CEO of your company wants to move to a pure market pricing approach to compensating all the employees. She argues that it is foolish to pay more for any resource (including human resources) than they are worth on the open market. She argues that a pure market pricing approach would be the most efficient use of organizational funds. It is her idea to review the market price for each job in the company annually, and revise the employees' pay up or down as indicated. She knows this is an unconventional idea, but she is convinced it would work. You make all the following arguments EXCEPT a. a pay structure based entirely on market pricing would be hard to defend in court against charges of discrimination. b. employees' pay may fluctuate wildly from year to year. c. it will not be possible to find pay survey data for jobs that are unique to your company. d. for many jobs there is little pay survey data that is gathered in a methodologically-sound manner.
a. a pay structure based entirely on market pricing would be hard to defend in court against charges of discrimination.
Bruce, the director of compensation for a regional medical center, wishes to examine pay survey data for the various classifications of nurses in the organization. Bruce is aware of some concerns over "price fixing" of wages. He decides that he will use all of the following sources of information on nursing pay EXCEPT a. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives. b. nurses' pay data from the National Bureau of Labor Statistics. c. a management consulting firm that specializes in pay surveys of healthcare workers. d. a pay survey conducted by the local HR association.
a. a pay survey of regional healthcare institutions that he will conduct himself during an upcoming conference of healthcare executives.
The market line is a. a regression line derived from job evaluation points and the results of the pay survey. b. calculated from the median point in each of the organization's pay ranges. c. a line representing the organization's average pay for each job in a job family graphed against the average pay for each job in the pay survey. d. typically so affected by outliers that it must be adjusted according to the expert judgment of compensation specialists.
a. a regression line derived from job evaluation points and the results of the pay survey.
When using the point method of job evaluation, a ____ factor is used to identify a job value that is commonly present throughout a group of jobs. a. compensable b. Hays c. value d. KSA
a. compensable
In order to show how the rate of compensation changes compares with the rate of changes in the organization's revenues overall a. compensation metrics should be calculated each year and compared with previous years' metrics. b. compensation metrics should be calculated for regular employees (excluding compensation for part time employees) and compared with previous years' metrics. c. the board of directors should have compensation metrics calculated on a rotating basis: Human value added one year, return on human capital invested the next year, and so forth. This provides the "big picture" strategically. d. total compensation should be charted against total revenues, and any upward change in total compensation should be analyzed.
a. compensation metrics should be calculated each year and compared with previous years' metrics.
Abundance Nurseries needs large numbers of unskilled employees every spring and summer to plant, maintain, and harvest the flower fields. Abundance is located in an area where there is a large supply of unskilled workers, and it has few problems recruiting workers as needed. It would be reasonable for Abundance Nurseries to position its pay for these workers in the ____ -quartile of the labor market. a. first b. second c. third d. fourth
a. first
Organizations use pay grades to a. group individual jobs having approximately the same job worth. b. guard against pay differentials based on sex or race. c. compare similar jobs across a variety of organizations. d. offset the effects of pay compression by giving managers a range of pay for each specific job and individual.
a. group individual jobs having approximately the same job worth.
Compensatory time-off can be given to non-exempt employees in the public sector a. if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week. b. if the comp time can be carried over for 60 days. c. if the employee is salaried non-exempt. d. only if the employer is a federal government contractor with contracts over $50,000.
a. if it is given to employees at the rate of one and one-half times the hours worked over a 40-hour week.
A third-quartile approach is a compensation strategy a. in which the company pays higher wages than its competitors do. b. to pay below the average in the labor market. c. where one-third of the competitors in the labor market pay higher wages than what the company does. d. in which the company pays the median of what its competitors pay.
a. in which the company pays higher wages than its competitors do.
An indication that the organization's compensation system is ineffective includes all of the following EXCEPT a. lower proportion of job applicants who are made offers by the organization. b. high turnover of valuable employees. c. retention of poor performing employees. d. high performing employees who are dissatisfied with their pay.
a. lower proportion of job applicants who are made offers by the organization.
In a competency-based pay system employees are paid a. on the skills and knowledge they have, whether they use these or not. b. according to their job performance, measured either by quality or quantity. c. on the basis of their scores on annual competency tests. d. on whether they have added value to the organization in the last year.
a. on the skills and knowledge they have, whether they use these or not.
Paul is a single parent. He received consistently high performance appraisals from his employer, until the company went bankrupt. Now, Paul is looking for a new job. As the recruiter at MilqueMaid Chocolate, you are very interested in Paul. But, your firm has a lag-the-market compensation strategy. You know that Paul has had an offer from a firm that has a meet-the-market strategy. You are not authorized to offer Paul a market-level salary. Your best way to lure Paul to MilqueMaid is to a. point out MilqueMaid's broad-based performance incentive programs. b. emphasize MilqueMaid's entitlement compensation philosophy. c. discuss the method that MilqueMaid used to determine its quartile strategy. d. discuss MilqueMaid's broadband pay structure.
a. point out MilqueMaid's broad-based performance incentive programs.
The HR unit is typically responsible for all of the following EXCEPT a. recommending pay increases for employees. b. analyzing pay structures. c. evaluating jobs. d. administering the compensation system.
a. recommending pay increases for employees.
Ernest, a U.S. citizen employee is being assigned to the company's German office in Munich because of his intimate knowledge of the company's main product. Ernest was previously stationed at the company headquarters in Kansas City. Al,l of the following issues should be taken into account when determining Ernest's pay during the years he works in Munich EXCEPT a. the compensation that a German would make in a similar job in Munich. b. German income tax policies. c. cost of living differences between Kansas City and Munich. d. fluctuations between the value of the dollar and the euro.
a. the compensation that a German would make in a similar job in Munich.
According to the overtime provisions of the FLSA all of the following are true regarding non-exempt employees EXCEPT a. they do not receive overtime pay for training that is not directly job related even if the training is outside of regular working hours. b. they must receive overtime pay if they are driving a vehicle to a meeting during regular work hours. c. they do not qualify for overtime pay if they are traveling by bus to another work location during normal work hours. d. they must have their incentive pay added to their base pay used for calculating overtime.
a. they do not receive overtime pay for training that is not directly job related even if the training is outside of regular working hours.
Which of the following is a NOT major objective of the Fair Labor Standards Act? a. to eliminate discrimination in compensation b. to limit the number of hours employees work each week c. to establish a minimum wage d. to discourage oppressive child labor
a. to eliminate discrimination in compensation
The goal in giving pay increases to average performers should be a. to keep their pay competitive with the labor market.. b. on motivating them to perform better. c. on encouraging them to leave the organization. d. on achieving a compa-ratio of 100.
a. to keep their pay competitive with the labor market..
Brian, the director of compensation, has been asked by the board of directors to present the "employee cost factor" for the last 10 years at the next board meeting. Brian needs to do the following calculation for each year: a. total compensation and benefits / FTEs b. revenue - operating expense - pay and benefits = adjusted profit / FTEs c. revenue - operating expense - pay and benefits = adjusted profit / pay and benefits d. total pay and benefits / total operating expenses
a. total compensation and benefits / FTEs
Which type of compensation is linked directly to individual, team, or organizational performance? a. variable pay b. direct pay c. wages d. salary
a. variable pay
A true cost-of-living raise a. must be based on the cost of living in the local area where the organization is based. b. must be tied to economic indicators such as the CPI. c. is the same thing as an automatic increase. d. is the same thing as a merit raise.
b. must be tied to economic indicators such as the CPI.
Compensation is one of the organization's largest expenditures. Compensation philosophies and systems vary from one organization to the next. Why is that? a. There is no "one right way" to compensate employees. Many systems will work equally well in any organization. b. Different organizations have different organizational objectives and strategies. c. Legal requirements mandate different types of compensation systems depending on the organization's industry. d. Organizations depend heavily on consultants to design their compensation systems, and each consulting firm has its own system.
b. Different organizations have different organizational objectives and strategies.
As director of compensation and benefits, you are deciding whether you should purchase a new pay survey. You consider all the of following characteristics of pay surveys in your decision EXCEPT a. On what dates were the survey data gathered? b. Is the survey focused exclusively on companies of your size, the city in which you operate, and your industry? c. Are you familiar with the reputation of the company or organization that produced the survey? d. Does the survey include data from companies with which you compete for employees?
b. Is the survey focused exclusively on companies of your size, the city in which you operate, and your industry?
Jack and Jerry are twins. Both started working at competing firms in the same industry. Jack and Jerry were given exactly the same starting salary. They have been with their companies for ten years, and both have identical positions and identical performance ratings. Both Jack and Jerry are consistently average performers. Jack works at a company with an entitlement compensation philosophy. Jerry works at a company with a pay-for-performance compensation philosophy. The two companies are identical in revenue and profitability. They allocate the same budget amount for employee raises each year. All other factors remaining equal, which of the following statements is most likely to be true? a. Jerry will have a higher salary than Jack. b. Jack will have a higher salary than Jerry. c. Jerry and Jack will have identical salaries. d. Jerry and Jack will have identical levels of pay satisfaction.
b. Jack will have a higher salary than Jerry.
Marie has been offered work as an employee trainer for AgriEnterprise. In this job, Marie will use the employer's training materials, and she will train employees at AgriEnterprise's three locations at the times that the company determines. Marie has been promised that the company will continue to use her services as long as her performance is satisfactory. Marie has agreed not to work as a trainer for any other company while she is working for AgriEnterprise. The company is paying Marie as an independent contractor and not contributing to Social Security or providing benefits. Which of the following statements is correct? a. Marie is an independent contractor. b. Marie is really an employee of AgriEnterprise. c. Marie is an independent contractor with only one client. d. Marie would properly be classified as a learned professional employee and non-exempt.
b. Marie is really an employee of AgriEnterprise.
Behemoth Industries has experienced huge losses for the last three years due to collapsing sales of their outdated product line. Behemoth's stock has plummeted on Wall Street because it has not met projected profits for the 24th straight quarter. Behemoth has moved to a pure pay-for-performance system that is tied to achievement of organizational profit goals. Which of the statements below are most likely to be TRUE? a. Only high performers at Behemoth can be certain that they will receive a pay increase. b. No Behemoth employee can expect he/she will receive a pay increase, regardless of his/her performance. c. All employees except those who are the worst performers can expect that they will receive a pay increase. d. Behemoth will be able to attract high performing employees from its competitors.
b. No Behemoth employee can expect he/she will receive a pay increase, regardless of his/her performance.
MetroUrban Bank has 27 branches, each with a branch manager. These branches range in size from mini-branches in grocery stores, to large branches with many business and investment clients. Mini-branches may have only three or four employees. Large branches may have as many as fifty employees. Of MetroUrban's branch managers, 15 are female and 12 are male. Female branch managers average pay is 75% of the male branch managers pay. Has the bank violated the Equal Pay Act? a. No. Women branch managers are not a protected class in this case because a majority of branch managers are female. b. No. The bank only began hiring women to be branch managers about 10 years ago. Consequently, the female branch managers have been with the bank a fewer number of years than the males. Typically, the branch managers of the larger branches are bank officers who have more years of experience with the bank. c. No. Business clients prefer to do business with male branch managers. Consequently, the larger branches are assigned male managers. Since these branch manager positions are much more challenging jobs, the bank can legally pay managers at these branches more than they pay managers of other branches. d. No. The female branch managers' job title is "community banking representative" and the male branch managers' job title is "branch manager." Traditionally, the bank has paid "community banking representatives" less than "branch managers."
b. No. The bank only began hiring women to be branch managers about 10 years ago. Consequently, the female branch managers have been with the bank a fewer number of years than the males. Typically, the branch managers of the larger branches are bank officers who have more years of experience with the bank.
Which of the following is a TRUE statement about the overtime provisions for non-exempt employees of the Fair Labor Standards Act? a. A manufacturing firm with a 4-day/10-hour schedule must pay overtime for the two hours above 8 each day. b. Overtime pay is set at one and one-half times the regular pay rate for all hours in excess of 40 per week. c. Compensatory time off must be paid at straight time for all hours over 40 in a week or 8 in a day. d. The work week is defined as beginning at 12:01 a.m. Monday and running until midnight Sunday.
b. Overtime pay is set at one and one-half times the regular pay rate for all hours in excess of 40 per week.
The CEO of BizMark Equipment wants to know what return the firm is getting on the money it is spending on its employees. As the director of HR, you know this is considered return on human capital. You will calculate this as a. Total Compensation and Benefits / FTEs b. Revenue - Operating Expense -Pay and Benefits = Adjusted Profit / Pay and Benefits c. Revenue - Operating Expense - Pay and Benefits + Adjusted Profit / FTEs d. Total Pay and Benefits Expenditures / Operating Expense
b. Revenue - Operating Expense -Pay and Benefits = Adjusted Profit / Pay and Benefits
Marcia is very upset. She applied for a waitstaff position at a local restaurant and she was told her base wage would be an amount Marcia knows is lower than the minimum wage. Which of the following statements is TRUE? a. Marcia should report the restaurant to the U.S. Department of Labor for violating the FLSA. b. The wage offered is consistent with the FLSA because Marcia would be in a "tipped" position. c. The wage offered is legal because Marcia's position is "exempt" from coverage by the FLSA since it is part-time. d. Marcia should report the restaurant to the U.S. Department of Labor because this is not a living wage.
b. The wage offered is consistent with the FLSA because Marcia would be in a "tipped" position.
Simon is a compensation specialist for Coreopsis, Inc. He is collecting data on compensation rates for workers performing similar jobs at other organizations,. Simon is conducting a a. internal equity study. b. pay survey. c. market review. d. competitive evaluation.
b. pay survey.
Lucy is a nurse at Mountaineer Assisted Living. She works three 12-hour days in a row and receives 40 hours pay for 36 hours of work. Lucy also receives 12 hours of time and a half overtime pay per week for the four hours over 8 she works on each of her three workdays. Which of the following statements is TRUE? a. Medical workers are not covered by the FLSA. They are covered by a separate law. b. This is an allowable arrangement under the FLSA. c. The FLSA requires hospitals to use a 14-day period for calculating overtime so Lucy is not entitled to overtime pay for the number of hours over 8 she works in a day. d. Lucy could receive 12 hours of compensating time off instead of the overtime pay if she requested it.
b. This is an allowable arrangement under the FLSA.
George is a long-term exceptional performer. He has a compa-ratio of 120 and once again his performance has exceeded expectations. But, George only gets a raise of 3%, which is less than some of his co-workers who have less seniority and whose performance only meets expectations. George is incensed and waiting in your office. As director of HR, how will you explain this situation to George? a. You should discipline George and his co-workers because employees should not discuss their pay. b. You explain that George's compa-ratio shows that he is at the top of his pay range and that he is already earning above the market midpoint set in his pay grade. c. You should describe the reality of pay compression to George and that market rates determine what the organization can pay for a particular job no matter how well carried out. d. You decide to give George a lump-sum increase equivalent to a 10% raise. This will recognize George's exceptional performance without affecting his base pay.
b. You explain that George's compa-ratio shows that he is at the top of his pay range and that he is already earning above the market midpoint set in his pay grade.
Wimsey Enterprises has announced that it will give all employees a 5% merit increase this year. This increase should really be termed a/an a. cost-of-living adjustment. b. across-the-board increase. c. lump-sum increase. d. market rate alignment.
b. across-the-board increase.
In the next five years pay surveys will be a. undergoing a major legal challenge due to widespread accusations of "price-fixing on wages." b. conducted largely electronically, using Web-based technology. c. conducted by linking company payroll databases to the surveying company. d. less widely used because of the way market pricing distorts the internal equity of the compensation system.
b. conducted largely electronically, using Web-based technology.
At Artistic Floral Creations, the non-managerial employees all receive the same pay increase every year. Usually this increase is about 5%, but some years it has been as high as 10% depending on changes in the cost-of-living. Artistic Floral Creations has a/an ____ philosophy of compensation. a. performance b. entitlement c. quartile-based d. total rewards
b. entitlement
Compensation plans for internationally-assigned employees that attempt to be comprehensive in providing base pay, incentives, benefits and relocation expenses regardless of the country to which the employee is assigned are called ____ compensation plans. a. balance-sheet b. global market c. tax equalization d. supply and demand
b. global market
Which of the following is NOT a non-monetary reward? a. training and development programs. b. matching stock purchase plans. c. career management services. d. employee recognition.
b. matching stock purchase plans.
A company that structures its compensation system so that half of its competitors pay their employees more than it does and half of its competitors pay less than it does is using a ____ the market strategy. a. lag b. meet c. lead d. follow
b. meet
You are HR director for a U.S. solar panel company that is outsourcing a fabrication plant to India. As director of HR, you must decide how to pay the hourly workers in the Indian plant. You decide to follow the typical pattern for firms outsourcing to a lower-wage country which is a. paying wages negotiated with the local community leaders in India. b. paying the local market rate for the jobs. c. paying the U.S. wage equivalent in Indian rupees. d. paying lower wages than Indian competitors, but offering more generous benefits.
b. paying the local market rate for the jobs.
Organizations that have specific policies about where they wish to position themselves in the labor market use a/an ____ strategy. a. industry b. quartile c. benchmarking d. labor market
b. quartile
The last step in establishing a pay structure is to a. compute pay ranges. b. set the pay for individual employees. c. compare current pay to pay ranges. d. establish pay grades.
b. set the pay for individual employees.
In a job evaluation, every job in an organization is examined and wages are set according to a. the educational qualifications needed for employment. b. the relative worth of the job to the organization. c. the value of employees holding the job. d. the job's level in the organizational hierarchy.
b. the relative worth of the job to the organization.
____ are payments directly calculated on the amount of time worked. a. Salaries b. Wages c. Stipends d. Bonuses
b. Wages
Performance and talent management fits into the total rewards approach in all of the following ways EXCEPT a. performance reviews for the basis for employee raises and promotions. b. in a total rewards approach, traditional "membership" benefits such as insurance can be tied to performance levels. c. employees with high potential future value to the organization are rewarded with career planning for organizational advancement. d. goal setting to direct the efforts of employees with poor performance is tied to their future rewards.
b. in a total rewards approach, traditional "membership" benefits such as insurance can be tied to performance levels.
____ is the practice of using fewer pay grades with much wider ranges than in traditional compensation systems. a. Pay system compression b. Flexible grades c. Broadbanding d. Grade shrinkage
c. Broadbanding
Clemmie is a non-exempt employee of a large law firm. During a particular trial 15 percent of her employer's staff caught a particularly virulent flu, resulting in everyone else having to do their own work as well as the sick employees' work. One particularly intense week, Clemmie worked 90 hours. Which of the following statements is true? a. Clemmie will be entitled to time and a half overtime for every hour over 8 that she worked each day. b. Clemmie will be entitled to 75 hours of time off which she can take within the calendar year. c. Clemmie will be entitled to time and one half pay for 50 hours. d. Clemmie will have her choice of receiving either 50 hours of overtime pay or 75 hours of compensatory time off.
c. Clemmie will be entitled to time and one half pay for 50 hours.
____ is a court action in which a portion of an employee's wages is set aside to pay a debt the employee owes to someone. a. Alimony b. Creditor lien c. Garnishment d. Debt deduction
c. Garnishment
Which of the following is an advantage of a lump-sum increase (LSI) plan compared with traditional raises? a. LSI plans eliminate the need for annual adjustments of the pay matrix. b. Employees are more satisfied with LSIs. c. It heightens employees' awareness of what reward their performance merited. d. It increases the compounding effect of succeeding raises on the employee's base pay.
c. It heightens employees' awareness of what reward their performance merited.
Which of the following is a major drawback to the point method of job evaluation? a. It is too simplified to apply to complex jobs. b. It is too complex to implement in most organizations. c. It reinforces traditional organizational structures. d. It is available only through consulting firms, consequently this system is too expensive for many small employers.
c. It reinforces traditional organizational structures.
_________________ groups jobs into pay grades based on similar market survey amounts. a. Benchmarking b. A pay matrix c. Market banding d. Broadbanding
c. Market banding
Terri is a salaried line worker at Chicken Delight Poultry Processors. Terri joking refers to herself as a "chicken dis-assembler." She often works more than 40 hours a week, and is not paid overtime. a. Terri's pay is consistent with the FLSA because she is a salaried worker. b. Terri should be paid overtime according to the FLSA because she is an exempt employee. c. Terri's pay is not consistent with the FLSA because she is a non-exempt employee. d. Terri should be given compensatory time off but not overtime because she is a salaried worker.
c. Terri's pay is not consistent with the FLSA because she is a non-exempt employee.
Which of the following statements about the Lily Ledbetter Fair Pay Act is true? a. This law extends the protection against pay discrimination to men as well as to women. b. This law allows women to file pay discrimination complaints with the EEOC on the basis of violation of pay equity as well as on the basis of equal pay for equal work. c. Women who have been paid less than men have for the same job have no time limits on when they can file a complaint with the EEOC. d. Under this act, the EEOC can award damages to successful plaintiffs as well as making them whole.
c. Women who have been paid less than men have for the same job have no time limits on when they can file a complaint with the EEOC.
As a young employee who consistently meets (but does not exceed) performance expectations, which type of pay increase system would most likely be to your personal financial benefit considering that you expect to stay with the company another 10 years? a. broadbanding b. lump sum increases c. across-the-board raises d. second quartile approach
c. across-the-board raises
A/an ____ is an indirect reward given to an employee or group of employees because they are members of the organization. a. incentive b. bonus c. benefit d. motivator
c. benefit
As director of HR for a medium-sized firm, you are implementing your company's first overseas location. You will be transferring ten current employees to the company's foreign location in an underdeveloped country for assignments lasting up to three years. You are considering all of the following factors in these employees' future compensation EXCEPT a. hardship premiums. b. tax equalization. c. cost-of-living adjustments. d. home leave and travel allowances..
c. cost-of-living adjustments.
Justin is an hourly employee of Furnace Brick, a company that manufactures a special high-heat-resistant brick for industrial kilns. Justin is unhappy with the new compensation system introduced by the company's new plant manager and HR director. This system has eliminated the practice of annual raises, the Christmas bonus, and raises based on seniority for a new system that ties every employee's raise to how well Furnace Brick is performing in the market. Moreover, the plant manager has announced that twenty percent of the employees in the plant will receive no raise at all this year, regardless of the company's performance. Furnace Brick has moved from a/an ____ compensation philosophy, to a/an____ compensation philosophy. a. wage-based, salary-based b. paternalistic, competitive c. entitlement, performance d. meet-the-market, lag-the-market
c. entitlement, performance
Which of the following are NOT paid overtime under the Fair Labor Standards Act? a. salaried employees b. nurses c. exempt employees d. public sector employees
c. exempt employees
An organization can benefit from a properly designed and implemented competency-based pay system through a. lower overall labor costs. b. reduction of overtime costs by the move to an all-salaried workforce. c. greater workforce skills and knowledge. d. higher employee satisfaction with pay.
c. greater workforce skills and knowledge.
Larry has decided to go back to his hometown of Mellonburg and set up an architectural design business for "green" homes. Mellonburg is a depressed farming community of 1,351 residents. It is 20 miles from the nearest restaurant, 70 miles from the nearest Starbucks coffee shop, and the local schools are the worst in the state. The winters are severe, the summers are oppressive. Few single people live there, and the social and cultural life is negligible. In order to attract good quality architects, Larry will probably a. need to ignore the market compensation for architects and pay the architects on an entitlement basis. b. be able to lag the market significantly in pay because of the low cost of living. c. have pay more than the market because of the unappealing location. d. make market comparisons irrelevant by hiring the architects as independent contractors.
c. have pay more than the market because of the unappealing location.
All the following are likely outcomes when an organization's compensation is viewed by employees and outsiders as lacking external equity EXCEPT a. increased turnover among high quality employees. b. lower organizational performance. c. increased likelihood of pay discrimination complaints to the EEOC. d. difficulty recruiting qualified and high-demand employees
c. increased likelihood of pay discrimination complaints to the EEOC.
Amanda is upset because she makes the same salary as Carl does, even though Amanda has 18 clients and Carl has only 11 clients. Amanda is making a judgment about a. discriminatory compensation. b. procedural justice. c. internal equity. d. external equity.
c. internal equity.
If employees feel their pay is unfair, they are likely to do or feel all the following EXCEPT a. quit. b. be dissatisfied with their jobs. c. lose self-esteem. d. change their job performance.
c. lose self-esteem.
Of the following, which type of pay adjustment has the most ability to reward employee performance? a. cost-of-living adjustments. b. seniority increases c. lump-sum increases d. across-the-board increases
c. lump-sum increases
As HR director, you are discussing the implementation of a competency-based compensation system with the company's CEO. You point out that in order for the competency system to be effective a. the company must place its base pay in the third quartile. b. the company's pay structure must be broad-banded. c. the company must invest heavily in employee training programs. d. the company must implement work teams.
c. the company must invest heavily in employee training programs.
For an employer, the primary advantage of classifying a worker as an independent contractor is that a. independent contractors are typically more productive than regular employees. b. independent contractors can be fired at any time, unlike regular employees. c. the employer does not have to pay Social Security, workers' compensation, or unemployment costs. d. employers can legally hire individuals they know do not have U.S. work permits.
c. the employer does not have to pay Social Security, workers' compensation, or unemployment costs.
All of the following are compensation objectives of the organization EXCEPT a. legal compliance with relevant laws and regulations. b. internal, external and individual equity for employees. c. the lowest total cost of compensation among direct competitors. d. performance enhancement for the organization.
c. the lowest total cost of compensation among direct competitors.
Much of the accuracy of the market pricing method of job evaluation depends on a. the industry in which the organization operates. b. whether gender bias can be eliminated from the system. c. the quality of the job matches between the survey and the employer's jobs. d. the depth and appropriateness of the compensable factors used.
c. the quality of the job matches between the survey and the employer's jobs.
Under the FLSA, which of the following would be classified as a non-exempt employee? a. an artist creating murals for a high-end restaurant b. a sales representative who travels 3 days a week to meet prospective clients c. the architect overseeing the construction of a new university library d. an electrician on staff at a casino
d. an electrician on staff at a casino
Tom has just taken his first full time job with a salary of $58,000. He knows that he should plan his personal recurring expenses, such as rent and car payments, around this amount because it is his a. total compensation. b. total reward package. c. base pay. d. living wage.
c. base pay.
The two basic compensation philosophies, which should be seen as opposite ends of a continuum, are the ____ and the ____ orientations. a. competency, productivity b. exempt; non-exempt c. entitlement; performance d. market-driven, equity-driven
c. entitlement; performance
Aesthetic Decor, Inc., has made the philosophical decision to have absolute internal equity in its pay structure. To that end, every job in the organization has been rigorously evaluated and assigned points according to the worth of the job to the organization. The result is that many traditionally female-dominated jobs are paid more than what they are typically paid, and some traditionally male-dominated jobs are paid less than what they are typically paid. Which of the statements below is most likely to be TRUE? a. This system is based on the concept of pay equality. b. Although this system looks ethical on its face, it actually violates the Equal Pay Act because it will discriminate against male employees. c. Aesthetic Decor will have a hard time staffing any of the gender-stereotyped jobs in its organization. d. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive.
d. Aesthetic Decor's compensation for traditional male jobs will not be externally competitive.
Milo works for the state department of transportation as an hourly-employee in the maintenance department. He is surprised to learn that his friend, Annabelle, who is a salaried paralegal for a law firm, does not get compensating time off when she works weekends and evenings. Milo always gets compensating time off when he has to work late. Which of the following statements is FALSE? a. Since Annabelle is an exempt employee, she is paid a set salary regardless of the number of hours she works. b. Private sector employees of for-profit organizations cannot legally be given compensatory time off in lieu of overtime pay. c. Milo gets compensatory time off because he is a public-sector employee. d. Annabelle is a non-exempt employee and should have the choice of either overtime pay or compensatory time off.
d. Annabelle is a non-exempt employee and should have the choice of either overtime pay or compensatory time off.
Cost-of-living adjustments are typically tied to changes in the a. consumer interest rate. b. prime interest rate. c. Dow Jones Industrial Average. d. Consumer Price Index.
d. Consumer Price Index.
Which of the following approaches is recommended for bringing a red-circled employee's pay into line? a. Transfer the employee to a lower paying job. b. Promote the employee to a job with the appropriate pay grade. c. Cut the employee's pay so it falls within the range. d. Freeze the employee's pay until the pay range is adjusted upward.
d. Freeze the employee's pay until the pay range is adjusted upward.
Which of the following statements is TRUE? a. The only aspect of a compensation system which can be used to shape employee behavior is the structure of variable incentives. All other rewards only encourage continuing membership in the organization. b. Indirect compensation and non-monetary rewards will not overcome the negatives of below-market direct compensation. c. Since employees' understanding of their indirect rewards is so vague, HR managers should focus on the effects of tangible and direct compensation on employee attraction, retention and motivation. d. In a total rewards system the needs and expectations of employees are balanced with the interests and costs of the employers.
d. In a total rewards system the needs and expectations of employees are balanced with the interests and costs of the employers.
The director of HR at Megatherium Industries knows that there are serious flaws in the company's compensation system. If employees freely discuss their wage or salary levels, raises and bonuses, the director is concerned that there will be widespread dissatisfaction and employee questions that will place the HR department and top management in a bad light. Consequently, Megatherium has a strict pay secrecy policy, and employees who discuss their pay are disciplined. Which of the following statements is TRUE? a. Megatherium's policy of pay secrecy is unusual among U.S. organizations. b. If Megatherium opens its pay policies, employee satisfaction and retention will improve because employees will not have to rely on conjecture and rumor. c. Closed pay systems, such as Megatherium's, are illegal for any company traded on the NY Stock Exchange. d. It is possible that Megatherium's policy violates the National Labor Relations Act.
d. It is possible that Megatherium's policy violates the National Labor Relations Act.
____ is the amount estimated to allow an individual to meet his/her basic needs of food, clothing and shelter. a. An honest wage b. A fair wage c. The minimum wage d. The living wage
d. The living wage
Megatherium Industries organizes its production employees into work teams. Each team member's salary is determined by a combination of his/her seniority in the firm and competencies which he/she has demonstrated. Sissy is angry because she has found out that Max is paid more than she is because he has earned more skill certifications, even though Sissy has consistently worked harder and "gone the extra mile" in completing team projects. Which of the following statements is TRUE? a. Research has shown that where employees work in teams, it is crucial for the pay system to be closed because of these kinds of idiosyncratic equity perceptions. b. Sissy is angry because this situation violates her sense of external equity. c. This is an example of how favoritism can undermine the effectiveness of a compensation system. d. This situation violates Sissy's sense of procedural justice.
d. This situation violates Sissy's sense of procedural justice.
Which of the following employees will be qualified for the LARGEST pay raise according to a typical pay adjustment matrix? An employee with a. a compa-ratio of 85 who meets performance expectations. b. a compa-ratio of 85 who exceeds performance expectations. c. a compa-ratio of 115 who meets performance expectations. d. a compa-ratio of 115who exceeds performance expectations.
d. a compa-ratio of 115who exceeds performance expectations.
If an organization's competitive strategy relies on long-term relationships with the clients who purchase the organization's goods and services, the organization should reward its employees from its executives to its sales staff with incentives based on a. quarterly sales. b. annual profits. c. prices of its stocks in daily trading. d. a rolling five-year measure of financial performance.
d. a rolling five-year measure of financial performance.
George, a compensation specialist for a large frozen foods company, has been asked to identify compensable factors specific to the job of forklift operator in the company's extensive warehouse. This warehouse is one of the largest refrigerated warehouses in the country. George would probably include all the following in his list EXCEPT a. working environment. b. safety hazards. c. use of specialized equipment. d. decision-making responsibility.
d. decision-making responsibility.
The Equal Pay Act prohibits wage differentials based on a. race. b. job classification. c. job title. d. gender.
d. gender.
Typical compensation appeals procedures require the employee to discuss the problem first with a. the organizational ombuds. b. the EEOC. c. the HR department. d. his/her supervisor.
d. his/her supervisor.
Traditional job evaluation programs have been criticized as being gender-biased against women. Employers argue that a. female-dominated jobs are concentrated in lower-paying industries and smaller firms which have lower pay levels. b. job evaluation is based on internal equity, and so the resulting pay levels are by definition non-discriminatory. c. male-dominated jobs require physical strength and endurance of severe working conditions, which makes these jobs objectively more valuable to the organization. d. job evaluations reflect the pay rates the "market economy" sets for jobs, so there is no discrimination by the individual organization.
d. job evaluations reflect the pay rates the "market economy" sets for jobs, so there is no discrimination by the individual organization.
A____ is a group of jobs having common organizational characteristics. a. market band b. occupational category c. benchmark group d. job family
d. job family
The ____ shows the relationship between job value, as determined by job evaluation points, and pay survey rates. a. compa-ratio b. isobar c. quartile d. market line
d. market line
Martha has been a professor at a major state university for 20 years. Martha loves her work and is satisfied with the university. Because of her high level of publications and her high quality of teaching, Martha has received the highest raises possible every year. Since this a public university, Martha has access to all the salary data for all her fellow professors. She has learned that the last three professors hired in her field at her level were paid one-quarter more than she is paid. This amounts to tens of thousands of dollars. Martha is shocked and gathers data on the job market in her field. She finds that her pay is much lower than the market rate. Martha has encountered a. the failure of step progression. b. gender- or race-based pay discrimination. c. the realization that she is a "red-circled" employee. d. pay compression.
d. pay compression.
You are chief operating officer of a small, start-up firm and you must handle HR duties. Right now, the organization has 11 employees, although more employees will be hired about two years from now. In setting up a base pay system you need something simple, quick and inexpensive. It would be most appropriate to use a _______ for evaluating jobs. a. factor-comparison method b. Hay system point method c. classification method adapted from the public sector d. ranking method
d. ranking method
Which of the following is the typical structure of team-based compensation? a. individual pay-for-performance based on team member input b. skill-based pay plus a percentage of base pay c. equal pay for each team member based on team performance d. team-based variable pay on top of individual base pay
d. team-based variable pay on top of individual base pay
As a rule of thumb, the aggregate employer costs for the typical expatriate employee, including all allowances, is about ____ the expatriate's salary. a. 10% of b. half c. double d. three or four times
d. three or four times
Amber is the manager of a popular clothing store. She regularly works over 40 hour a week. But when new styles are coming in requiring new displays, she may put in as many as 60 hours a week. Amber's paycheck is the same regardless of the number of hours she has worked. Amber is paid on a/an a. total compensation arrangement. b. incentive compensation program. c. wage system. d. salary basis.
d. salary basis.
Which of the following would be an example of an intrinsic reward? a. a grant of stock options b. additional medical insurance coverage c. a membership in a country club d. satisfaction with meeting a tight deadline.
d. satisfaction with meeting a tight deadline.
