Deck 8: Building Pay Structures That Recognize Individual Contributions

Question 1

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.

A)pay rate
B)percentage-based job evaluation point
C)pay range
D)absolute job evaluation points

Answer 1

D

Question 2

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

A)comparable ratio theory
B)comparable pay theory
C)equality theory
D)equity theory

Answer 2

D

Question 3

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?

A)market-competitive pay structure
B)pay grade
C)pay range
D)market pay line

Answer 3

D

Question 4

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

A)pay ranges
B)pay grades
C)job evaluation points
D)pay spreads

Question 5

What are the differences between pay grades and pay ranges?

Question 6

________ represent the vertical dimension of pay structures.

Question 7

________ assign different pay rates for jobs of unequal worth and provide the basic framework for recognizing differences in individual contributions.

Question 8

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.

A)Fair Labor Standards Act
B)Davis-Bacon Act
C)Equal Pay Act
D)Civil Rights Act of 1964

Question 9

The ________ pay value is the centrally located mark between the range minimum and maximum rates.

Question 10

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.

A)graduated
B)green circle
C)red circle
D)multi-tier

Question 11

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

A)The midpoint will be the same as the market average.
B)The midpoint will be higher than the market average.
C)The midpoint will be lower than the market average.
D)There is not enough information to make this determination.

Question 12

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

A)market lines
B)market-competitive pay structures
C)pay grades
D)pay ranges

Question 13

________ rates pay wages higher than the maximum listed in order to help retain valued employees fielding big job offers elsewhere.

Question 14

How are compa-ratios calculated?

A)the green circle rates midpoint divided by the normal pay range
B)the pay rate divided by the market line rate
C)the pay rate divided by the pay range midpoint
D)the red circle rates divided by the normal pay range

Question 15

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.Which type of pay rate does John receive?

A)green circle
B)red circle
C)midpoint pay
D)two-tier pay

Question 16

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

A)It is highly competitive with the market.
B)It is not competitive with the market.
C)There is no way to judge its competitiveness.
D)You need more information to judge it.

Question 17

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

A)pay grades
B)pay ranges
C)pay structures
D)pay levels

Question 18

A ________ is the difference between the maximum and minimum pay rates of a given pay grade.

Question 19

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

A)pay structures
B)pay compression
C)red circle pay rates
D)green circle pay rates

Question 20

What is pay compression and how can companies minimize the occurrence of it?

Question 21

What are the three considerations used in determining fixed pay and the compensation mix in sales compensation plans?

Question 22

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

A)determining the number of skill blocks
B)convincing shareholders that this type of pay system can facilitate competitive advantage
C)demonstrating that the benefits of adopting a pay-for-knowledge program outweighs the costs
D)pricing individual skill blocks

Question 23

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?

A)commission-plus-draw
B)straight
C)multiple-tiered
D)graduated

Question 24

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

A)The salesperson is selling high-priced products
B)The salesperson has substantial influence over sales
C)The company wants to save money due to budget constraints
D)The company wants to create competition among its sales staff

Question 25

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?

A)broadbanding
B)two-tier pay system
C)pay compression
D)multiple-tier pay system

Question 26

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

A)The minimum pay increase amounts to 10 percent.
B)The maximum pay increase amounts to 10 percent.
C)The average pay increase amounts to 10 percent.
D)The standard deviation of any pay increase cannot be more than 10 percent below or above the average.

Question 27

________,or lump sum bonuses,lend themselves well to cost containment since these bonuses are not permanent percentage increases.

Question 28

________ describe the allocation of monetary resources to fund pay structures.

Question 29

This type of sales incentive compensation plan offers the sales person a salary and further compensation for achievement of specific,exceptional sales goals

A)salary-plus-bonus
B)salary-plus-commission
C)salary-plus-draw
D)salary-plus-graduated commission

Question 30

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

A)expertise in university professors
B)expertise within the company
C)both expertise within and outside the company to provide training
D)expertise in competitor companies

Question 31

Money that covers the basic living expenses of sales professionals is better known as a ________.

Question 32

________ makes sure that employees have at least a minimally acceptable level of skill proficiency upon completion of a training unit.

Question 33

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

A)salary-plus-bonus
B)salary-plus-commission
C)commission-plus-draw
D)commission-only

Question 34

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

A)commission-only
B)salary-only
C)salary -plus-bonus
D)salary plus-commission

Question 35

________ is a form of compensation based upon a percentage of the selling price of a product or service.

Question 36

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

A)1
B)1 to 2
C)1 to 3
D)2 or more

Question 37

Common review dates provide which of the following advantage?

A)The company can equate all employees' job performance at the same time.
B)The company minimizes the administrative burden of the plan.
C)The company trains supervisors about the most effective way to conduct performance reviews.
D)Common review dates ensure that some employees' reviews will be overlooked.

Question 38

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

A)skill range
B)skill grade
C)skill block
D)skill structure

Question 39

A recently opened car dealership 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 sold.However,the salesperson should repay the subsistence pay component within a year;otherwise he/she cannot continue in the employment of this dealer.Which type of sales compensation plan does this dealer adopt?

A)salary-plus-bonus
B)salary-plus-commission
C)commission-plus-draw
D)commission only

Question 40

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

A)highest quality
B)lowest-cost
C)differentiation
D)fairest-price

Question 41

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

A)unionized firms
B)sales firms
C)public sector companies
D)private sector companies

Question 42

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.Which type of pay structure should Mr.Martinez use?

A)broadbanding
B)sales incentives
C)two-tiered
D)merit pay

Question 43

What is broadbanding? What are its limitations?

Question 44

Which of the following would be considered as an advantage of broadbanding?

A)Creation of broad bands lessens employees' job duties and responsibilities.
B)Reduced organizational hierarchies support flexibility.
C)Creation of management layers promotes quicker decision making.
D)Increased responsibility requires supervisors to more closely administer pay.