Compensation Exam 1
The roots of job-based pay structures is traced to _____.
Frederick Taylor
Hourly compensation costs for production workers in manufacturing are higher in _____ than in the United States.
Germany
Egalitarian pay structures have all BUT which of the following characteristics?
Have: few levels, small differentials, support equal treatment Not Have: Prefer individual performance over team performance.
Which of the following is given as an increment to the base pay in recognition of past work behavior?
Merit Pay
Which of the following is an advantage of skill-based pay plans?
They aid in deploying workers in a way that better matches the work flow.
In the formula predicting performance, the component most closely related to compensation is _____.
"M"
Most factor scales have _____ degrees.
4-8
When cooperation is important for successful organization performance, which of the following pay structures is most suitable?
An egalitarian pay structure
A job description is compared to class descriptions in the _____ of job evaluation.
Classification
Which form of pay does not permanently increase labor costs?
Incentive
Which of the following is a disadvantage of the point method?
It can become bureaucratic and rule-based
When a statistical process is used to duplicate an existing pay structure, it is called:
Policy Capturing
The scheme used in the text for classifying competencies consists of three groups. Which of the following is NOT one of them?
Team dynamics
Marginal productivity theory argues that employers pay _____.
Use Value
Managers whose employers use _____ plans focus on placing the right people in the right job.
job-based
Among employers that provide health insurance, the cost to provide family coverage per year per employee is approximately _____.
$16,000
Research shows that skills, one of the compensable factors, accounts for _____ percent or more of the variance in job evaluation results.
90
Who among the following is examining the validity of a job evaluation?
A person who is measuring the degree to which the job evaluation plan matches an agreed-upon pay structure for benchmark jobs.
All of the following are advantages of the ranking method of job evaluation EXCEPT that:
Advantages: the evaluation process is fast, the evaluation process is inexpensive, the evaluation process is not complex EXCEPT: rankings are easy to defend and justify
Which of the following methods requires evaluators to agree on which jobs are the most and least valuable, then the next most and least valued, and so on until all the jobs have been ordered?
Alternation-ranking method
Union preferences are a major factor in _____ a total compensation strategy.
Assessing
The job evaluation method that most resembles a bookcase with many shelves is:
Classification
A compensation system focusing on system control and work specifications is most closely associated with a(n) _____ strategy.
Cost-cutter
A difference between incentives and merit increases is that incentives:
Do not increase the base wage, whereas merit increases the base wage.
Which of the following policy decisions directly affects employees' attitudes and work behaviors?
Employee
Incentives and merit guidelines are techniques of the _____ policy of the pay model.
Employee Contributions
Which of the following is a major decision in job evaluation?
Establishing the purpose of the plan; Decide on single vs. multiple plans; Choose among alternative methods; Obtain involvement of relevant stakeholders; Evaluate the usefulness of the results
Competencies are derived from the _____ beliefs about the organization and its strategic intent.
Executive leadership
According to the text, which of the following decisions should be made jointly?
External competitiveness and employee contribution decisions
The certification processes in skill-based pay is analogous to the _____ in a job-based analysis.
Factor degrees and weights
Which of the following is NOT one of the factors that define an internal pay structure?
Factors: The pay differentials between the levels; the criteria used to determine pay differentials; the number of levels of work NOT: The number of times the pay structure has been changed.
The degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n):
Incentive Effect
Variable pay may also be called _____.
Incentives
Trying to measure an ROI for any compensation strategy implies that
People are "human capital," similar to other factors of production.
In the strategic approach to pay, internal alignment is the _____ issue to be decided.
Second Note: first issue is setting objectives.
Which of the following is often the largest component in an executive pay package?
Stock Options
In today's organizations, in order to increase competitiveness and success, work is analyzed by separating transactional work from:
Tacit work
_____ refers to openness and communication about pay.
Transparency
Which of the following statements is NOT true?
True: The effect of performance incentives depends on the context; Embedding compensation strategy in HR strategy affects results; The effect of paying more than competitors depends on the context. Not true: Focusing only on one dimension of pay strategy is a best practice.
Which of the following pay structure procedures would NOT increase perceptions of pay fairness?
Would: Consistently applying pay procedures to all employees; using accurate data; including appeals procedures. Not: hiring consultants to develop the pay structure
Employees in a multi-skill system earn pay increases:
by acquiring new knowledge.
The best way to establish _____ is to account for competing explanations, either statistically or through control groups.
causation
The well-defined jobs at McDonald's and their small differences in pay are an example of a(n) _____ internal pay structure.
closely tailored
A measure of how changes in one variable are related to changes in another variable is the:
correlation coefficient
A camper is an employee who _____ in a skill-based pay system.
does not want to rotate jobs
In firefighting and rescue squads and global software design teams, a(n) _____ structure is most closely associated with higher performance.
egalitarian
The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of _____ policy decisions.
employee contributions
Comparisons on the forms of compensation used by other companies are part of _____.
external competitiveness
Compensation policy choices that affect the pay level relative to other companies are most closely associated with the _____ aspect of the pay model.
external competitiveness
The exchange value of a job is its _____.
external market value.
Which of the following tests of competitive advantage is probably the easiest test to pass?
helps ensure passing the differentiation test
A compensation system using market-based pay is most likely to be part of a(n) _____ strategy.
innovator
Flexible-generic job descriptions would most likely be used with a(n) _____ strategy.
innovator
Research shows that _____ will effectively shift an organization in a downward performance spiral to an upward one.
it is unclear what compensation practices
Organizations in a turbulent and unpredictable environment requiring flexibility in jobs and work processes are likely to be more successful with a(n) _____ internal pay structure.
loosely coupled
The majority of applications of skill-based pay have been in:
manufacturing industries
Managers seek internal alignment within their organization by:
paying on the basis of similarities among jobs.
The problem that is most likely to be faced by organizations using an egalitarian pay structure is _____.
the difficulty in external recruitment. Must not have problems in maintaining cooperation among employees, the perception of excessive CEO pay, the difficulty in performing teamwork.
Pay for temporary workers is based upon:
the internal structures of their home employer.
Most studies report that when different people rank-order jobs, the correlations are between:
.85 & .96
Who among the following is most likely to be working for a company that uses a competency-based pay plan?
Carlos, who focuses on obtaining certifications in her field to get a pay increase.
Which of the following is NOT a characteristic of aligned pay structures?
Characteristics: They support the way work gets done; they fit an organization's business strategy; they are fair. Not: They are designed to increase the turnover rate.
Which of the following is least likely to be used in establishing skill-based certification methods?
College Degree
In the context of the point method of job evaluation, _____ are those characteristics in the work that an organization values; that help it pursue its strategy and achieve its objectives.
Compensable factors
The process of identifying competencies in person-based structures resembles identifying _____ as part of job evaluation in job-based structures.
Compensable factors
_____ are more likely to conduct job evaluations of senior management jobs.
Compensation managers
_____ are the observable behaviors that indicate the level of competency.
Competency indicators
_____ translate each core competency into action.
Competency sets
Which of the following is the underlying assumption in the assessment of job content?
Content has intrinsic value outside external market
A compensation system that focuses on competitor's labor costs is most closely associated with a(n) _____ strategy.
Cost-cutter
In the point method, the second step in designing a plan is to:
Determine the compensable factors. Steps in order: 1. Conduct job analysis, 2. Determine compensable factors; 3. Scale the factors; 4. Weight the factors according to importance; 5. Select criterion pay structure; 6. Communicate the plan and train users; 7. Apply to non-benchmark jobs; 8. Develop online software support.
The final step in designing a point plan involves _____.
Develop online software support
The most widely used point method job evaluation is the:
Hay Plan
The alignment test
Helps ensure passing the differentiation test.
External factors are dominant influences on jobs filled via:
Hiring Graduates
Research investigating high-performance workplaces found that performance-based pay _____ when combined with other high-performance practices.
Improves attitudes and behaviors
Common characteristics of the point method include all of the following EXCEPT:
Include e.g.: numerically scaled factor degrees, factor weights, compensable factors. Not include: benchmark factor classes
Common bases for modern pay structures include all BUT which of the following?
Include: The content of the work; the skills and knowledge required to perform the work; the work's relative value for achieving organizational objectives Not Include: The extent of external competitiveness and equity
Organization factors that shape internal pay structures include all BUT which of the following?
Include: strategy, technology, human capital, HR policy, employee acceptance and cost implications. Not: will pick something from external factors or internal structure. See pg. 80 of text.
Career growth, hierarchy, and flexible design are most closely associated with the _____ aspect of mapping a total compensation strategy.
Internal alignment
_____ is the process of systematically determining the relative worth of jobs for the purpose of creating an organization's job structure.
Job evaluation
Which of the following is NOT true?
Large raises with a promotion decreases effort and increases absenteeism.
In the context of pay relationships, which of the following is illegal in the United States?
Legal examples: Paying on the basis of the nature of jobs; paying on the basis of pay comparisons with competitors; and, Paying on the basis of one's skill level. Illegal example: Paying on the basis of one's age, gender, religion, natural origin, and disability
One of the reasons why 8 in 10 of the uninsured in the United States are from working families is that _____.
Many small employers are much less likely than larger employers to offer health insurance to their employees.
According to a World atWork survey, the primary method of job evaluation is _____.
Market Pricing
A study of 400 compensation specialists revealed that:
Market data had a substantially larger effect on pay decisions than job evaluation data
You are an HR manager, and your boss has told you to find the best way to raise job performance. After some research, you find that _____ have the greatest instrumental value.
Monetary incentives
According to the Hudson survey, _____ is the single thing that would make 41 percent of the U.S. workers happier.
More Money
_____ are related to greater performance when the work-flow depends on individual contributors.
More hierarchical structures
In mapping a total compensation strategy, the question of how important compensation is in the overall HR strategy is part of _____.
Objectives
Leadership, customer orientation, and functional expertise are examples of which group of competencies?
Organization specific
When organization performance declines
Performance-based pay plans do not pay off (example of a vicious cycle)
The _____ method of job evaluation is the most commonly used method in the United States and Europe.
Point
The _____ method of job evaluation uses compensable factors.
Point
Which of the following is a fundamental objective, and NOT a policy, in the pay model?
Policies: Internal Alignment, Competitiveness, Contributions, and Management Objectives: Efficiency (Performance, Quality, Customer and Stockholder, Cost), Fairness, Compliance, Ethics
Which of the following is a policy, and NOT an objective, in the pay model?
Policies: Internal Alignment, Competitiveness, Contributions, and Management Objectives: Efficiency (Performance, Quality, Customer and Stockholder, Cost), Fairness, Compliance, Ethics
Which of the following is NOT a question to ask for determining if research has value?
Proper Question: Is the research useful?; Can alternatives explanations be ruled out?; Is correlation separated from causation? Example of an Improper Question: Was the research conducted by Ph.D. researchers
_____ is a crucial factor that affects the perception of fairness of a skill-based plan.
The design of the certification process
Which of the following is most likely to be a disadvantage of skill-based pay plans?
They are expensive in the long run as the majority of employees become certified at the highest pay levels.
Incentives do not permanently increase labor costs because:
They are one time payments
Research shows that _____ factor(s) account(s) for 98 to 99 percent of the variance in job evaluation plans.
Three
Which theory predicts that individual performance will be maximized when the pay differentials between job levels is large?
Tournament theory
Which of the following sentences regarding skill-based structure is FALSE?
Training costs are the lowest in comparison to all other pay plans
Which of the following programs introduced by Congress includes restrictions on executive pay that are designed to discourage executives from taking "unnecessary and excessive risks"?
Troubled Asset Relief Program
Which of the following statements regarding allowing employees a choice in their pay mix is NOT true?
True: Allowing employees their choice is difficult to manage; Providing unlimited choices for employees to choose from is difficult to design; Providing too many choices can confuse people False: Allowing employees their choice is easy for competitor companies to imitate
Which of the following is NOT true of the usage of multiple plans versus single job evaluation plans?
True: Employers rarely evaluate all jobs in the organization at one time; Many employers design different evaluation plans for different types of work; typically, a related group of jobs is used for evaluation. False: A single universal plan is acceptable to employees if the work covered is highly diverse.
Which of the following reasons makes competencies a risky foundation for a pay system?
Vagueness and subjectivity
The most common bases for determining internal structures are:
Work content and its value
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 flexible work schedule.
Most job structures are best described as:
both person- and job-based structures.
Skill-based plans tend to work best in organizations using a(n) _____ strategy.
cost-cutter
Compensable factors, skill blocks, and competency sets are used for:
determining what to value.
A _____ approach controls costs by paying only as much as the work performed is worth, regardless of any greater skills the employee may possess.
job-based
Content refers to the:
work performed in a job and how it gets done.
Recent surveys show that, on average, an outstanding performer receives a _____ merit increase, an average performer a _____ merit increase, and a poor performer a 0.4% merit increase.
4.4%; 2.8%
Which of the following is NOT included in a strategy map?
Are Included: External Competitiveness, management, employee contributions, internal alignment Not Included: HR Alignment
Which of the following is NOT a test of whether a pay strategy is a source of competitive advantage?
Are: Alignment test, differentiation test, value-addition test Not: cost-effectiveness test
Reliability of job evaluation techniques is measured by:
Determining if different evaluators produce the same results.
Which of the following is an example of a relational return?
Examples of relational returns: recognition and status, employment security, challenging work, and learning opportunities.
Which of the following is NOT a factor in defining equal work according to the Equal Pay Act?
Factors: equal skill, equal effort, equal responsibility Not: equal experience
Hierarchical pay structures have all BUT which of the following characteristics?
Have: Support a close fit with the organization; many levels; based upon the job or person; greater differences in pay between levels and top and bottom jobs. Not: Prefer team performance over individual performance.
Whole Foods' shared-fate philosophy of limiting executive salaries to no more than 19 times the average pay of full-time employees is an example of which strategic pay decision?
Internal alignment
____ refers to comparisons among jobs or skills inside a single organization.
Internal alignment
In the context of internal alignment, which of the following is the correct sequence?
Job description >>>> Job evaluation>>>>>>>>Job structure
Issues of transparency, technology, and choice are most closely associated with the _____ aspect of mapping a total compensation strategy.
Management
The role non-HR managers play in making pay decisions is called _____.
Ownership
James says, "I don't trust the way the company determines pay rates in my department." If James feels this way despite being happy with his current salary, he is most likely concerned about _____.
Procedural justice
_____ is the measure of how important total compensation is in the overall HR strategy.
Prominence
Most unions prefer which of the following?
Small pay differences among jobs and seniority-based promotions
Which of the following is the correct order of the steps in formulating a total compensation strategy?
Steps: 1. Assess Total Compensation Implications; 2. Map a Total Compensation Strategy; 3. Implement strategy; 4. Reassess
Which of the following is the reason why skill-based pay plans have maximum flexibility?
The pay employees for the highest level of skill they have achieved regardless of the work they perform
