Compensation Chapter 6-8

Suppose that a compensation prefessional would like to calculate the median salary. He orders four salaries as follows: $20,000, $22,000, $24,000, $26,000. What is the median salary for this data set?

$23,000

Market lag policies are generally set to which quartile in the salary survey?

1st

Typically, What is the number of skills blocks used in skill-based pay programs?

2 or more

Market match policies are generally set to which quartile in the salary survey?

2nd

The Consumer Price Index represents the average price changes for the price of goods and services in how many regions?

4

Compensation professionals in the XYZ Company use regression analysis... Which of the following best describes this amount of variation when the R^2 value turns out to be 0.85?

A large amount of the variation in market pay

What does it mean the distribution of data is skewed to the right?

A lower frequency of larger values and the mean is greater than the median.

When ________ spreads are used to develop pay grade widths, the grades are based on a set number of job evaluation points for each grade that increases as an employee moves up the pay structure.

Absolute job evaluation point

The R^2 statistice tells us how well the variation in the company's valuation of jobs based on job evaluation points explains the variation in market pay rates from the compensation survey. What does it mean when the R^2 = 1?

All of the variation in market pay can be explained by the company's job structure.

Which job evaluation method entails ordering jobs on the basis of extremes?

Alternation Ranking

Which of the following are the two types of central tendency measures that are pertinent to compensation?

Arithmetic mean and median

These are used as reference points for setting pay levels.

Benchmark jobs

Which of the following are reference points against which jobs within the company are judged?

Benchmark jobs

The HR manager of a company thinks that they have too many narrow pay grades within the organization. By getting the support from upper management, the manager decided to consolidate existing pay grades and ranges into fewer pay grades and broader pay ranges in order to create a flatter organization in terms of compensation. This is an example of which pay structure variation?

Broad banding

Narrowly defined jobs can create which type of problems

Bureaucracy

This causes compensation survey data to become obsolete fairly quickly.

Changes in the cost of living

Sarah works at a federal government agency. Her pay rate is determined by her GS level and work seniority. What type of job-content evaluation approach was used to categorize her job?

Classification Plans

A recently opened car dealer uses an incentive compensation plan for its sales people. The dealer provides money to its salespeople to cover basic living expenses and then shares a fixed percentage of the selling price of each car that a salesperson sells. However, the salesperson should repay the subsistence pay component within a year; otherwise he/she cannot continue in the employment of this dealer. What type of sales compensation plan does this dealer adopt?

Commission-plus-draw

Which of the following surveys are tools used by employers to determine the pay levels needed to recruit highly qualified employees?

Compensation

In which type of document do compensation professionals represent the selection and implementation of pay level and pay mix policies over a specified time period, usually one year?

Compensation Plan

Compensation surveys are typically focused on which two factors?

Competitors' wage and salary practices

This federal Act requires contractors with federal contracts worth over $2,000 to pay wages at least equal to those prevailing in the area where the work is being done.

Davis-Bacon Act

Universal compensable factors are derived from which federal Act?

Equal Pay Act

Which of the following theories suggests that an employee must regard his own ratio of merit increase pay to performance as similar to the ration for other comparably performing people in the company?

Equity theory

Wherever proprietary information is the subject of training, a company most often relies on which of the following sources of expertise?

Expertise within the company.

What does Quartile 3 represent?

Figures that fall below 75%

John is just hired by a software company as a programmer. He is also a part-time student at the local college and needs just a few credits to graduate from this college. A college degree is required in order to work as a programmer in this software company. Therefore, John receives below-minimum pay rate until he graduates from college. What type of pay rate does John receive?

Green Circle

Who leads the process of analyzing jobs?

HR specialists

When using compensation survey data, statistical analyses are used to integrate this with the external market, in order to determine pay rates.

Internal job structures

Which of the following is NOT true for internally consistent compensation systems?

Internally consistent compensation compensation systems are created through job analysis and job evaluation.

This clearly defines the relative value of each job among all jobs within a company.

Internally consistent compensation system

Richard's job has a compa-ratio of 0.85. What does this ratio tell about Richard's pay rate?

It is not competitive with the market

What was the main effect created by the revisions to the ADA regulations passed in 2008?

It is now easier for an individual seeking protection under the ADA to establish a disability within the meaning of the ADA.

This is a systematic process for gathering, documenting, and analyzing information in order to describe jobs.

Job analysis

Which of the following describes job duties, tasks, and pertinent factors needed to perform a job adequately?

Job content

This is the systematic process for recognizing differences in the relative worth among a set of jobs and for establishing pay differentials accordingly.

Job evaluation

In the regression analysis formula, what does the X represent?

Job evaluation points

Which process can companies use to make corrections for differences between their jobs and external benchmark jobs

Job leveling

Which is the fundamental principle of internally consistent compensation systems?

Jobs that require higher qualifications should be paid more than jobs that require lower qualifications.

A company adopting a commissions-oriented sales compensation plan would most likely pursue which type of competitive strategy?

Lowest-cost

XYZ Inc. pursues a low-cost strategy in its industry and generally needs lower skilled employees. As a result, their management team decided to establish a compensation policy that pays less than the marketplace. In recent years the company became susceptible to labor shortages and high turnover. What kind of pay level policy does XYZ Inc. follow?

Market Lag

The XYZ Company is a world leader in medical device manufacturing. Aiming to continue its market position in this industry , the XYZ Compant pursues a differentiation strategy. As a result, this company compensates its employees higher than competitors in order to attract and retain the best employees. What kind of pay level policy does the XYZ Company follow?

Market Lead

Which of the following represents the relationship between a company's valuation of jobs based on job evaluation and the valuation of jobs within the external market as assessed by compensation surveys?

Market Pay Rate

Companies pursuing a differentiation strategy are most likely to use which pay level policy?

Market lead

Which of the following type of job evaluation plans is used when the company chooses to assign job pay rates that are neither too low nor too high relative to the market?

Market-based

How often is the Consumer Price Index calculated for the U.S.?

Monthly

With which type of sales commission plan does an employee earn a higher rate for all sales made in a given period if the sales level exceeds a predetermined level?

Multiple - tiered

Generalized work activities, organizational context, and work context are requirements under which O*NET category?

Occupation

If the mean salary for B42DA, Inc., is $30,000 and the median salary is $32,000, What would Yolanda's salary of 165,000 be considered?

Outlier

In statistical analysis, which of the following is used to signify extreme observation

Outliers

Which term is used to describe the situation where the pay spread between newly hired employees and more qualified job incumbents is small?

Pay compression

For the purpose of applying pay policies, this term refers to the groupings of jobs based on compensable factors.

Pay grades

Which of the following represents the horizontal dimension of pay structures?

Pay grades

Midpoint, minimum, and maximum are values used to define which of the following?

Pay ranges

Compensation professionals integrate the internal job structure with the external market pay rates identified through compensation surveys, and tis sintegration reveals which of the following?

Pay rates that reflect both they company's and the external market's valuations of jobs.

An HR manager of a company decides to change the current job-content valuation technique by using a quantitative methodology. He thinks that the old approach falls to balance internal and external considerations while evaluating jobs. Which type of job evaluation technique do you suggest for this HR manager?

Point method

Which of the following is a major challenge in setting up skill-based pay program?

Pricing individual skill blocks

Which type of organizations use classification plans most prevalently?

Public Sector Organizations

This type of pay rate applies to an employee who is demoted but is paid more than the maximum rate for the pay grade he is now in.

Red circle

With which sales compensation plan does the level of pay NOT vary when sales volume does?

Salary-only

This type of sales incentive compensation plan offers the sales person a salary and further compensation if they meet a specific, exceptional sales goal.

Salary-plus-bonus

Jasmine Black believes that the company should share part of the risk for her sales position. Which sales compensation plan should she pursue?

Salary-plus-commission

Jose Escobar conducts a survey of salaries at UB2 Enterprises and finds that 50% of the workers fall below the market pay average of $32,000. In which quartile do the workers at ERL Enterprises fall?

Second

This term describes a set of skills necessary to perform a specific job or a group of similar jobs

Skill block

This term refers to the distance of each salary figure from the mean

Standard deviation

Which of the following are three measures of dispersion?

Standard deviation, quartile, percentile

_____ is defined as an in-depth examination of the external and internal environmental factors that are likely to have the greatest impact on the future of the company

Strategic Analysis

Which of the following entails an examination of a company's external market context and internal factors?

Strategic analysis

A 10 percent merit pay increase budget tells us which of the following?

The average pay increase amounts to 10 Percent

Common review dates provide which of the following advantages?

The company minimizes the administrative burden of the plan.

If the company wants to lead the market, how will that company's pay range midpoint compare to the market average?

The midpoint will be higher than the market average

Which scenario would be appropriate for using a salary-only plan?

The salesperson is selling high-priced products

Alejandro Martinez is responsible for setting up the pay structure for his company. He believes that newly hired employees should not be paid as much as established employees. Accordingly, what type of pay structure should Mr. Martinez use?

Two-tiered

Which types of companies are most likely to utilize two-tier wage systems?

Unionized firms

A job analysis method is ________ if it accurately assesses each job's duties

Valid

Abilities, interests and work styles are elements for which O*NET category?

Worker Characteristics

One of the essential skills that software development engineers must have is the proficiency in at least one of the modern computer programming languages, such as Java or C++. This must be indicated in Which part of the job analysis description?

Worker requirement

Which of the following would be considered as an advantage of broad banding

reduced organizational hierarchies support flexibility

How are compa-ratios calculated?

the pay rate divided by the pay range midpoint