Chapter 11: Test your knowledge HR 3240

_____ is an indirect reward given to an employee or group of employees as part of membership in an organization, regardless of performance. Variable pay An intangible reward Garnishment A benefit

A benefit

The _____ prohibits companies from using different wage scales for men and women performing substantially the same jobs. Fair Labor Standards Act Affordable Care Act Equal Pay Act National Labor Relations Act

Equal Pay Act

Which of the following is a factor that leads to success in utilizing bonuses? Enabling every employee to reach the minimum performance level to receive bonus Establishing clear, metric-based employee reviews Paying large amounts as bonuses Distributing bonuses equally to all employees

Establishing clear, metric-based employee reviews

The major federal law that affects compensation is the: Fair Labor Standards Act. Paycheck Fairness Act. Equal Pay Act. Civil Rights Act.

Fair Labor Standards Act.

In hotels, which of the following is often used as the basis for providing recognition awards to front-desk representatives, housekeepers, food and beverage workers, and other hourly employees? Performance appraisals Guest comment cards Inspections by management Ethnocentric attitude

Guest comment cards

In the context of HR metrics for compensation, which of the following is a measure of sales incentives? Increase in market share Revenue growth Return on investment Profit growth

Increase in market share

Which of the following statements is true of variable pay? It shifts some risk to employees. It is preferred by labor unions. It is prevalent in the public sector. It is an expression of the entitlement philosophy.

It shifts some risk to employees.

Which of the following represents an input in the equity theory of motivation? Recognition Praise Pay Knowledge

Knowledge

Which of the following statements regarding minimum wage is NOT accurate? The minimum wage for tipped employees is $2.13, but average tips must put average earnings at or above $7.25 per hour. Many states have a higher minimum wage than the federal standard. The current minimum wage is $7.25 per hour. Minimum wage is automatically adjusted to inflation and the cost-of-living index.

Minimum wage is automatically adjusted to inflation and the cost-of-living index.

Which of the following represents an outcome in the equity theory of motivation? Recognition Commitment Time Enthusiasm

Recognition

In the context of developing a base pay system, which of the following methods of determining the worth of jobs in an organization has an external focus? The point factor method The classification method The ranking method The market pricing method

The market pricing method

Which of the following statements is true of standardized pay adjustments? They reward employees that have earned a pay increase. They are not used to compensate for inflation and rising prices. They are used by companies that have an entitlement philosophy. They reflect an age-based pay increase.

They are used by companies that have an entitlement philosophy.

Which of the following is the primary objective of profit sharing plans? To evaluate performance of all employees To focus individuals on career goals To reduce social loafing To focus employees on organizational goals

To focus employees on organizational goals

Which of the following is the goal of employee stock option plans? To get employees to think like owners To improve cooperation among employees To encourage employees to excel To compensate for inflation and rising prices

To get employees to think like owners

Which of the following is NOT a type of variable pay? Equity awards Bonuses Wages Commissions

Wages

Which of the following is NOT one of the three general types of sales compensation plans? Salary only Wages only Straight commission Salary plus commission

Wages only

An example of an intangible reward is: autonomy. a paid vacation. a cash bonus. life insurance.

autonomy.

A _____ is a percentage of the revenue generated by sales that is given to an agent or salesperson. service award perquisite commission recognition award

commission

To determine each individual employee's standing in relationship to the midpoint of a pay range, many organizations use a value called the: mid-cap index. pay compression. pay gap. compa-ratio.

compa-ratio.

To determine whether a pay survey is relevant and valid, an organization should ascertain that it: is specific and includes data from organizations of the same size and industry. does not report all elements of compensation separately. covers a realistic sample of the employers with whom the organization competes for employees. does not contain job summaries to protect the identities of the participants from their employers.

covers a realistic sample of the employers with whom the organization competes for employees.

An example of a tangible, indirect reward is: a supportive work environment. dental insurance. a cash bonus. salary.

dental insurance.

The _____ states that individuals judge fairness in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others. two-factor theory equity theory of motivation expectancy theory of motivation reinforcement theory

equity theory of motivation

The _____ states that an employee's motivation is based on the probability that his or her efforts will lead to a presumed level of performance that is linked to a valued reward. two-factor theory equity theory of motivation expectancy theory of motivation reinforcement theory

expectancy theory of motivation

The expectancy theory of motivation emphasizes the importance of: finding valued rewards for employees. peer influence. equity compensation. transparency in the rewards system.

finding valued rewards for employees.

An exempt employee is an employee who: is entitled to a salary but not benefits. holds a position for which he or she is not paid overtime. has waived his or her right to the protections under the Fair Labor Standards Act. is not a U.S. citizen.

holds a position for which he or she is not paid overtime.

An organizational incentive system compensates all employees according to: how well the organization performs. the current economy. their performance. the increase in the productivity of the organization.

how well the organization performs.

In the context of employee pay grades, green-circled problems are likely to be the result of: opportunistic hiring. broadbanding. market pricing. the flattening of organizational levels.

opportunistic hiring.

A company that follows a pay-for-performance philosophy is most likely to: offer holiday bonuses to all employees. provide raises for length of service. increase pay scales annually. provide market-adjusted pay scales.

provide market-adjusted pay scales.

_____ rewards individuals for the capabilities they demonstrate and acquire. Competency-based pay Equity-based pay Tenure-based pay Performance-based pay

Competency-based pay

Which of the following is a common work unit/team incentive? Gift cards Gainsharing Sales commissions Profit sharing plans

Gainsharing

Which of the following is the most widely used individual incentive? Spot bonus Stock option plans Gainsharing Sales incentives

Sales incentives

The effectiveness of any variable pay program relies on its consistency with: similar plans at other companies. the organization's culture. the economy. the entitlement philosophy.

the organization's culture.

Richard earns $20 an hour and works a 40-hour week. He receives a 3 percent lump-sum increase (LSI) as his total yearly pay increase. Richard's base pay for the next year will be: $20.60 per hour. $20.06 per hour. $20 per hour. $26 per hour.

$20 per hour.

Andy is an employee in Pay Grade 2. The pay range for Grade 2 is minimum = $8.50, midpoint = $10.00, and maximum = $11.50. Andy earns $9.30 per hour. Andy's compa-ratio is: 1.08. 0.93. 0.81. 1.09.

0.93.

Which of the following is NOT a criterion for exempt status? Pursuit of artistic or creative endeavors Primary duties of managing Payment on a salary basis A minimum pay level of $1,000 per week

A minimum pay level of $1,000 per week

Based on a typical pay adjustment matrix, which of the following employees would receive the largest percentage pay increase? Alex, who is in the second quartile and whose performance exceeds expectations Pablo, who is in the first quartile and whose performance is below expectations Ann, who is in the fourth quartile and whose performance exceeds expectations Jan, who is in the third quartile and whose performance meets expectations

Alex, who is in the second quartile and whose performance exceeds expectations

Which of the following is an intrinsic reward? Base pay Stock options Autonomy Perquisites

Autonomy

In the context of HR metrics for compensation, which of the following is a measure of base pay? Revenue growth Percentage of employees receiving bonus Bonus pay percentage Average hourly rate

Average hourly rate

Which of the following is an example of an extrinsic reward? Bonus Autonomy Professional development Meaningful work

Bonus

Which of the following statements regarding the entitlement philosophy is NOT true? Bonuses are given based on merit. Pay raises are given across the board. Pay and raises are based on length of service. Pay scales are increased annually.

Bonuses are given based on merit.

_____ is the practice of using fewer pay grades with much wider ranges than in a traditional compensation system. Salary inversion Broadbanding Pay compression Market banding

Broadbanding

Which of the following statements regarding broadbanding is NOT accurate? Broadbanding may lead employees to feel that there are more promotional opportunities. Broadbanding is more consistent with the increasing incidence of multidimensional jobs. Broadbanding is designed to encourage horizontal movement. In broadbanding, a promotion is unlikely to result in movement into a new pay grade.

Broadbanding may lead employees to feel that there are more promotional opportunities.

In the context of HR metrics for compensation, which of the following is a measure of variable pay on the organizational level? Customer acquisition rate Increase in market share Return on investment Customer satisfaction

Return on investment

_____ occurs when the pay given to new hires is more than the compensation provided to more senior employees. Salary inversion Broadbanding Pay compression Market banding

Salary inversion

Which of the following statements is true of pay surveys? They cannot be used if market pricing is used for job evaluation. They should not include data from different industries and locales. They are an important element for establishing external pay equity. Management consulting companies are not a reliable source for pay surveys.

They are an important element for establishing external pay equity.

Which of the following statements is true of benchmark jobs? They are performed by a limited number of high-performing employees. They are common across different employers. They are not likely to have stable content. They cannot be used for comparison if market pricing is used for job evaluation.

They are common across different employers.

In the context of legal issues, which of the following statements is true of pay surveys? The survey data must be traceable to individuals so that its accuracy can be verified. Companies participating in pay surveys must safeguard employee privacy. Pay surveys must not be administered by a third party. Employers must conduct pay surveys to avoid a potential violation of antitrust laws.

Companies participating in pay surveys must safeguard employee privacy.

Which of the following statements is true of executive compensation packages? They are frequently determined by the governing board of directors. They typically include short-term incentives. They are not likely to include noncash elements. They are handled the same as employee pay in most public corporations.

They are frequently determined by the governing board of directors.

Which of the following statements is true of salaried workers? Their paycheck fluctuates from one pay period to the next. Their payments are calculated directly on the basis of time worked. They receive the same consistent payments each pay period. Their salary for a pay period depends on the commission they receive in that period.

They receive the same consistent payments each pay period.

Which of the following is NOT a reason for adopting variable pay? To reduce fixed costs To transfer some risk to employees To link strategic business goals and employee performance To reward employees financially for the amount of time that they work

To reward employees financially for the amount of time that they work

Which of the following is one of the primary ways for distributing team incentives? Giving the same size reward to each member of the team Rewarding team leaders but not other team members Giving the entire incentive to the team member who made the maximum contribution Allowing team members to vote on the size of each member's reward

Giving the same size reward to each member of the team

In the context of executive compensation, which of the following is true of a clawback provision? It permits an organization to require an employee to return rewards obtained through unethical or negligent actions. It ensures that an employee does not share any confidential information once he or she leaves a job and joins another company. It helps attract executives from other organizations. It prohibits an employee from joining an organization that is a direct competitor.

It permits an organization to require an employee to return rewards obtained through unethical or negligent actions.

Which of the following statements explains the basic concept behind organizational incentive plans? Every employee's pay must be increased to compensate for inflation. Everyone can excel in some or other field in an organization. Overall results depend on company-wide efforts and cooperation. Pay given to new hires should not exceed the compensation provided to more senior employees.

Overall results depend on company-wide efforts and cooperation.

Which of the following sales compensation plans is useful when an organization emphasizes serving and retaining existing accounts over generating new sales and accounts? Salary only Bonuses Straight commission Salary plus commission

Salary only

Which of the following is an example of a perquisite? Garnishment Health insurance Stress counseling Annual executive bonus

Stress counseling

Which of the following statements is true of the child labor provisions of the Fair Labor Standards Act (FLSA)? The minimum age for employment in hazardous occupations is 21 years. The minimum age for employment with limited hours outside of school hours is 14 years. The minimum age for employment with unlimited hours is 17 years. Employers are not responsible for verifying an individual's age before hiring the individual.

The minimum age for employment with limited hours outside of school hours is 14 years.

Which of the following statements regarding lump-sum increase (LSI) plans is NOT accurate? Workers who receive LSIs may become discouraged because their base pays do not change. LSIs slow down the increase of base pay and thus reduce or avoid the compounding effect on succeeding raises. An LSI plan heightens employees' awareness of what their performance levels merited. Unions generally insist on LSI programs as part of a total rewards package.

Unions generally insist on LSI programs as part of a total rewards package.

An example of a tangible direct reward is: autonomy. a paid vacation. a cash bonus. life insurance.

a cash bonus.

In the context of variable pay, the term _____ refers to the idea that employees can clearly see how their actions and decisions lead to desired outcomes. line of sight field of vision beeline visible horizon

line of sight

Labor unions are likely to oppose variable pay because they: want employee efforts to be closely aligned with organizational objectives. do not believe in the entitlement philosophy. prefer that employees be paid for the amount of time they work. are opposed to using salaries as an incentive for employees.

prefer that employees be paid for the amount of time they work.

Firms that have contracts with the U.S. government must pay their employees: garnishment. the prevailing wage in their geographic area for similar work. the minimum wage set by law. bonuses for finishing projects on schedule.

the prevailing wage in their geographic area for similar work.

_____ are elements of compensation that cannot be easily measured or quantified. Bonuses Intangible rewards Extrinsic rewards Stock option plans

Intangible rewards

Which of the following statements is true of gainsharing? It is a team-level incentive. It is typically used to reward longevity with a company. It is an organizational-level incentive. It is an intrinsic reward.

It is a team-level incentive.

Which of the following is a disadvantage of market pricing? Employees are not likely to view it as an objective method. It is not likely to be perceived as a more credible method than internal job evaluations. It is likely to get distorted because of internal job evaluations. It is likely to lead to wide fluctuations in pay.

It is likely to lead to wide fluctuations in pay.

Which of the following statements regarding a pay adjustment matrix is NOT accurate? It reflects employees' eligibility for pay increase. It is used in a company that has an entitlement philosophy. It considers employees' level of performance and their position in the pay range. It is typically revised based on the budgeted increase level.

It is used in a company that has an entitlement philosophy.

_____ occurs when compensation differences among individuals with different levels of experience and performance become small. Salary inversion Broadbanding Pay compression Market banding

Pay compression

Which of the following is another term for variable pay? Competency-based pay Intangible rewards Garnishment Pay for performance

Pay for performance

The term _____ refers to groupings of individual jobs that have approximately the same value to an organization. job cluster job family pay compression pay grade

pay grade

In the context of work teams, free riders are also called: exempt employees. social loafers. red-circled employees. flexible workers.

social loafers.

In the context of the Fair Labor Standards Act (FLSA), which of the following is an overtime pay requirement for nonexempt employees? One and a half times the regular pay rate for all overtime hours Overtime pay for all hours worked over 35 in a week Two times the regular pay rate for hours worked on weekends and holidays One and a half times the regular pay rate for all hours worked over 10 in a day

One and a half times the regular pay rate for all overtime hours

In the context of administrative responsibilities, which of the following HR functions is likely to be the first to be outsourced? Evaluating employee performance Developing base pay programs Conducting job evaluations Processing payroll

Processing payroll

Which of the following is a basic assumption that underlies the philosophical foundation of variable pay? External equity is more important than internal equity to establish compensation fairness. Some people or groups contribute more to organizational success than do others. Everyone should receive the same rate of compensation. All risk should not be borne by employees.

Some people or groups contribute more to organizational success than do others.

Which of the following job evaluation methods is a simple system that places jobs in order, from highest to lowest? The factor comparison method The classification method The ranking method The point factor method

The ranking method

Which of the following statements regarding cost-of-living adjustments (COLA) raises is true? They are lump-sum increases. They are tied to the pay adjustment matrix. They recognize employees for their relative contributions to the organization. They are given to all employees to compensate for inflation and rising prices.

They are given to all employees to compensate for inflation and rising prices.

In the context of the administrative responsibilities related to compensation, which of the following statements is true of managers? They are not likely to be involved in administering compensation programs. They typically conduct job evaluations and wage surveys. They are not likely to be able to help employees see the connections between their performance and the expected rewards. They are often the first point of contact for employees with questions about pay fairness.

They are often the first point of contact for employees with questions about pay fairness.

Rhonda earns $20 an hour and works a 40-hour week. She receives a 3 percent lump-sum increase (LSI) as her yearly pay increase. Assuming she works for 2,080 hours in the year, Rhonda receives a lump sum of: $1,248. $1,152. $288. $12,480.

$1,248.

Which of the following is NOT a recommended approach to bringing a red-circled employee's pay into line? Giving the employee a small lump-sum payment but not adjusting the pay rate when others are given raises Freezing the employee's pay until the pay range is adjusted upward Cutting the employee's pay Encouraging the employee to take advantage of development opportunities that will lead to a promotion into a higher pay grade

Cutting the employee's pay

In the context of pay, which of the following represents valence in expectancy theory? Employees placing a high value on receiving high commission pay The perceived likelihood that better sales performance will lead to higher commission pay The perceived likelihood that time and effort will lead to better sales performance Employees being satisfied with their base salary

Employees placing a high value on receiving high commission pay

Which of the following statements regarding overtime pay issues is NOT true? Employers in the private sector are allowed to offer compensatory time off to nonexempt employees in lieu of payment for extra time worked. Travel time must be counted as work time if it occurs during normal work hours for the benefit of the employer. Time spent in training related to a job must be counted as time worked by nonexempt employees. Employers must add the amount of direct work-related incentives to a nonexempt employee's base pay and use the adjusted base when calculating overtime pay.

Employers in the private sector are allowed to offer compensatory time off to nonexempt employees in lieu of payment for extra time worked.

A(n) _____ is an incumbent who is paid above the range set for a job. red-circled employee green-circled employee exempt employee nonexempt employee

red-circled employee

To address pay compression, companies can do all of the following EXCEPT: provide equity pay adjustments. hire people who are looking for promotions rather than higher pay. promote from within. reduce salaries of new recruits.

reduce salaries of new recruits.

A company targets pay ranges so that 75 percent of other firms pay above it and 25 percent pay below it. The company is using a _____ strategy. third-quartile second-quartile first-quartile fourth-quartile

first-quartile

In a piece-rate system, people are paid: for the amount of time they work. for the work completed. different rates. on the basis of the capabilities they acquire.

for the work completed.

A(n) _____ is an incumbent who is paid below the range set for a job. red-circled employee green-circled employee exempt employee nonexempt employee

green-circled employee

Communicating an organization's pay philosophy to employees is: likely to affect employees' work attitudes negatively. likely to enhance younger workers' satisfaction and retention. not likely to help them understand the total rewards package provided by the employer. not likely to enable employees to perform in ways that enhance their compensation.

likely to enhance younger workers' satisfaction and retention.

A(n) _____ is a one-time payment of all or part of a yearly pay increase. across-the-board increase lump-sum increase bonus cost-of-living adjustment

lump-sum increase

In _____ of job evaluation, descriptions of job categories are written and then each job is put into the category it best matches. the factor comparison method the classification method the ranking method the point factor method

the classification method