Chapter 10 - PART 1

1.

1 point

26) A compensation system that assumes that employees should be compensated based upon their abilities, potential, and flexibility to perform multiple tasks is a(n) ________ compensation system.

A) traditional-oriented

C) equity-based

B) knowledge-based

D) job-centered

2.

1 point

50) When a work force is highly unionized:

C) workers are likely to disagree with internal and external equity.

A) compensation decisions are based only on performance.

B) managers have more control in compensation decisions.

D) pay is typically subject to negotiation and bargaining requirements.

3.

1 point

28) An individual-centered compensation system:

A) focuses on employees' contribution and increases compensation based on the employee's ability to perform more duties successfully.

D) stresses the value and prestige of the job being performed.

C) pays based on the number of hours during which the employees perform their assigned job.

B) assumes that the tasks being performed, and the contribution of those tasks to the company, provide the best criteria for setting the wage pay system.

4.

1 point

3) Base compensation refers to:

B) fixed pay received on a regular basis.

A) health insurance and time off.

D) bonuses that underpin the employee's total compensation.

C) perks determined by status within the company.

5.

1 point

17) An emphasis on external equity is most important for:

A) large, global corporations.

D) privately owned firms in highly competitive industries.

B) established firms in highly stable markets.

C) newer, smaller firms in quickly changing markets.

6.

1 point

34) Garden of the Gods' (GOTG) employees are compensated according to their organizational level, with upper-level managers receiving more compensation than lower-level managers. GOTG uses a(n) ________ pay system.

D) knowledge-based

A) elitist

B) egalitarian

C) internally equitable

7.

1 point

33) If management wants the compensation system to reinforce a traditional organizational structure and stability within the company, a(n) ________ compensation system is the best choice.

C) individual-centered

D) labor market-based

A) egalitarian

B) elitist

8.

1 point

27) A compensation system that assumes that the tasks being performed and the contribution of those tasks to the company are the best criteria for setting the wage is a(n) ________-centered compensation system.

C) equity

D) job

A) performance

B) individual

9.

1 point

21) Variable compensation takes a variety of forms, including:

C) profit sharing.

B) hourly wages.

A) base salary.

D) disability insurance.

10.

1 point

32) Which of the following is NOT a criticism of skill-based compensation systems?

D) Workplace chaos

B) Unspecific job qualifications

A) Too much labor specialization

C) Higher labor costs

11.

1 point

24) A membership-contingent compensation system pays employees:

C) on the basis of the skills used to perform their jobs.

A) for the number of hours during which they perform their assigned jobs.

D) for how well they do their particular job.

B) on the basis of the value of the job they perform.

12.

1 point

39) Companies that pay employees at rates above the market are generally:

B) involved in global expansion.

A) small start-up companies.

D) larger companies in less competitive industries.

C) companies that struggle financially.

13.

1 point

14) According to your text, which of the following questions is LEAST relevant to developing an effective compensation plan?

D) Will the compensation plan emphasize nonmonetary rewards?

A) Will compensation link pay with group performance?

C) Will compensation decisions be made by unit managers?

B) Will the compensation plan be developed by HR managers?

14.

1 point

46) Pay openness would work best in which of the following situations?

B) Company B - high degree of competition and employee turnover

A) Company A - high employee involvement and a culture of trust

C) Company D - significant pay differences between professionals

D) Company E - significant emphasis on nonmonetary rewards

15.

1 point

9) Cornilia and Janice have similar jobs at different firms. Janice is compensated with higher pay and better benefits than Cornilia, which bothers Cornilia. Cornilia's concern reflects the compensation issue of:

A) job versus individual pay.

C) internal equity.

B) external equity.

D) fixed versus variable pay.

16.

1 point

20) According to your text, as employees' base pay increases, their:

C) nonmonetary compensation decreases.

D) overall compensation is more subject to risk.

A) variable pay decreases.

B) overall compensation stabilizes.

17.

1 point

37) Elitist compensation systems are most likely:

B) implemented by newer, smaller businesses.

C) established in very competitive environments.

D) used by older firms with mature products.

A) beneficial to firms trying to expand market share.

18.

1 point

7) Employee earnings:

C) are relatively easy for organizations to manage.

B) are the most important factor in job acceptance.

D) affect employees economically and psychologically.

A) correlate directly with employee job satisfaction.

19.

1 point

47) Karen, president of a small restaurant chain, would like to centralize compensation decisions. She asks you about the pitfalls of such a move, and you should most likely respond that:

C) external equity is difficult to maintain.

A) internal equity would not be maintained.

B) it is likely that the company will not be able to defend itself legally.

D) it is only beneficial during great economic prosperity.

20.

1 point

31) Advocates of skill-based pay argue that it:

A) diminishes the need for changing technology.

B) improves employee specialization.

C) reduces absenteeism.

D) enhances recruitment.

21.

1 point

18) Variable compensation systems work best:

B) in difficult economies with high rates of inflation.

A) with smaller, less well-established firms with younger employees.

C) when the job market is flooded with qualified workers.

D) in larger, established companies that need significant productivity improvement.

22.

1 point

41) Companies that emphasize monetary rewards are primarily associated with:

C) high job security.

A) volatile markets.

D) cross-functional teams.

B) high customer service demands.

23.

1 point

44) You have just been hired at Corpus Entertainment, Inc. (CEI) and as part of your contract, you sign an oath that you will not divulge information about your compensation to your co-workers or any other employee of CEI. You realize that the company has a(n) ________ pay policy.

C) open

A) egalitarian

B) centralized

D) secret

24.

1 point

43) The practice of openness in a compensation system generally leads to:

D) increased team building.

A) greater pay dissatisfaction among employees.

C) greater overall compensation costs.

B) increased fairness in managerial pay decisions.

25.

1 point

5) Perquisites, also called "perks" are best described as:

B) stock options available to long-term employees.

C) indirect compensation, such as vacation.

A) special benefits reserved for upper-level managers.

D) fixed pay rewarded regularly.

26.

1 point

10) The perceived fairness of what an employer pays, relative to what other employers pay for the same type of labor, is known as:

A) distributive justice.

C) internal equity.

D) external equity.

B) egalitarianism.

27.

1 point

4) Employees' total compensation consists of which of the following?

A) Base compensation, personnel costs, payroll

D) Payroll, pay incentives, base compensation

C) Base compensation, pay incentives, indirect compensation

B) Benefits, pay incentives, personnel costs

28.

1 point

48) Decentralizing pay decisions most likely enables a company to:

A) more effectively face legal challenges to compensation decisions.

B) better utilize the expertise of their compensation specialist.

D) better manage fixed pay-based compensation.

C) build a stronger link between pay and performance.

29.

1 point

23) Rose works for a home interiors company. She hostesses several parties a week and sells various kinds of home decorations. She receives a commission on all that she sells. Rose receives:

C) performance-contingent compensation.

A) fixed compensation.

D) risk sharing rewards.

B) membership-contingent compensation.

30.

1 point

11) A company designs its compensation system around the philosophy that employees exchange their skills and contributions for pay. As a consequence, employees feel fairly compensated when the ratio of their inputs and outputs is equivalent to those of other employees whose job demands are similar to their own. This company's compensation system is based on a ________ compensation model.

A) balanced equity

D) distributive justice

C) free market

B) labor market

31.

1 point

16) Balancing equity is most likely difficult because:

A) EEOC regulations are extensive and complicated.

B) internal and external equity often oppose one another.

D) managers prefer focusing on establishing external equity.

C) open pay employers strive primarily for internal equity.

32.

1 point

42) An emphasis on monetary rewards will generally reward a company with:

A) more achievement and responsibility among employees.

C) long-term employee commitment.

D) increased employee diversity.

B) an internal climate of cooperation among employees.

33.

1 point

25) Companies using performance-based compensation systems tend to be:

D) large firms that desire to break out of the "pack" and distinguish themselves from competitors.

C) larger firms with several layers of management that operate in relatively stable markets.

A) publicly-held corporations in competitive markets.

B) smaller, rapidly growing companies that face strong competitive pressures.

34.

1 point

12) The distributive justice model is based on the idea that:

C) employees make input/output comparisons to their co-workers.

A) employees prefer keeping salary issues private.

D) employers will never pay above-market wages unless external equity occurs.

B) employers pay what employees deserve to receive.

35.

1 point

40) Firms that use nonmonetary rewards are most likely trying to:

A) reinforce achievement and sales growth.

C) develop responsibility among employees.

B) foster an internally competitive climate.

D) emphasize customer service and loyalty.

36.

1 point

6) Indirect compensation in a pay mix typically includes:

C) special perks based on status in the company.

B) health insurance and vacation time.

A) hourly wages for overtime.

D) incentives and bonuses periodically paid to an employee.

37.

1 point

51) Bobcat International pays a range of salaries for retail workers. Employees can be paid anywhere from $5.50/hr to $8.50/hr. This range of pay is called a:

A) pay grade scale.

C) payroll span.

B) pay range.

D) pay area.

38.

1 point

22) A performance-contingent compensation system bases pay upon:

A) employee status.

C) required skills.

D) units produced.

B) specified hours.

39.

1 point

36) Egalitarian compensation systems are:

D) becoming common in competitive environments.

A) problematic because of increased tensions between co-workers.

B) more common in older businesses with mature products.

C) important to developing a more stable work force.

40.

1 point

35) The stockholders are concerned about the cost of perquisites. Management wants maximum flexibility to move people among jobs without having to adjust their compensation. Management also wants more joint-task accomplishment and better cooperation among employees. A(n) ________ compensation system will reinforce all these goals.

C) egalitarian

D) job-centered

B) variable

A) elitist

41.

1 point

8) In order for a compensation system to work well, it must:

B) guarantee low employee turnover.

C) follow an egalitarian strategy.

A) enable the firm to achieve its objectives.

D) meet federal guidelines.

42.

1 point

49) Which of the following is most likely true regarding compensation systems?

A) Nonmonetary rewards tend to predominate in companies concerned with external equity.

C) The nine issues discussed in the text regarding compensation are interdependent with minimal influence on one another.

D) Centralized pay systems work best in large, diverse organizations.

B) External equity is easier to manage in decentralized pay systems.

43.

1 point

29) Job-based pay policies work best in which of the following situations?

B) Employees' jobs don't change often.

D) Turnover is fairly high.

C) Technology changes rapidly.

A) Employees require little training for a job.

44.

1 point

1) In the opening case in chapter 10, an experienced computer programmer complains that the starting salary for new hires at Sigma, Inc. is 15% more than his current salary. Dr. Smith's answer reveals that Sigma's compensation system is built on a(n) ________ compensation model.

A) balanced equity

B) labor market

C) free market

D) egalitarian

45.

1 point

13) You are trying to convince the management of Marcelle, Inc. to pay its employees the "going rate", no more, no less. You are trying to:

A) reach external equity.

C) reduce Marcelle's work force.

B) reach internal equity.

D) increase Marcelle's work force.

46.

1 point

38) Above-market compensation policies are more likely to:

B) improve employee morale and reduce employee turnover.

A) create an impression of innovation and success.

D) reduce barriers between people who need to work closely together.

C) affect employee cooperation more than any other business policy.

47.

1 point

15) A company using a labor market model holds the philosophy that:

D) nonmonetary rewards are more effective motivators than monetary rewards.

C) egalitarian pay policies are more effective than elitist policies when labor demand is high.

B) internal equity is more important than external equity in a balanced labor market.

A) the wage rate for any given job is set at the point where the supply of labor equals the demand for that labor in the marketplace.

48.

1 point

30) An individual-based pay policy works best in which of the following situations?

C) Employee turnover is low and jobs don't change often.

B) Employees are expected to move up "through the ranks."

D) Jobs are standardized within the industry.

A) Employees may have many opportunities to learn new skills.

49.

1 point

2) In the opening case in chapter 10, a secretary complains that janitors make more money than she does. Her complaints and Dr. Smith's response show that Sigma's compensation system:

B) is a decentralized pay system.

C) relies on individual-based pay.

A) may lack internal equity.

D) uses variable pay to induce performance.

50.

1 point

45) The practice of secret pay in a compensation system generally leads to:

D) an egalitarian pay system.

C) greater pay dissatisfaction among employees.

A) managers being more careful in their compensation decisions because they have to defend them.

B) an increase in the cost of mistakes in the pay-making decisions.