Deck 11: Pay Structure Decisions

Question 1

The compa-ratio directly assesses the degree to which actual pay is consistent with the pay policy.

Answer 1

True

Question 2

When you move an employee higher in the pay structure to compensate for higher living costs,it becomes easier to adjust the salary downward when the employee moves to a low-cost area.

Answer 2

False

Question 3

Broad bands with their greater spread between pay minimums and maximums can lead to rising labor costs.

Answer 3

True

Question 4

Product market comparisons that focus on labor costs deserve greater weight when the product demand is inelastic.

Question 5

Travis likes that his company places emphasis on job-based pay structures.He is hoping that he will get the next promotion.

Question 6

The upper bound placed by product market competition is more constrictive when labor costs are a larger share of total costs.

Question 7

Job evaluation is a more appropriate tool for internal equity pay comparisons than market pay surveys.

Question 8

Organizations usually develop a market pay policy line based on the key jobs for which there are both job evaluation and market pay survey data available.

Question 9

The equity theory suggests that people evaluate the fairness of their situations by comparing them with how they were treated in their previous organization.

Question 10

Anne and Matthias are both electricians and active members in their union.Without asking each other,they can assume they make the same amount of money.

Question 11

Ciara is doing a comparison of available workers to the number of available jobs for the unemployment commission,otherwise called a labor market competition.

Question 12

The disadvantage of using the pay grade approach is that it increases the administrative burden of setting separate rates of pay for hundreds of different jobs.

Question 13

Jocelyn and Zhane were hired 2 years apart but do the same job.Zhane will make less than Jocelyn because he is a new employee.

Question 14

In setting pay rates for key jobs using the pay policy line approach,actual market rates will give the most accurate information instead of market survey data.

Question 15

Nonkey jobs are those that are common to many organizations.

Question 16

Pay level refers to the relative pay of jobs in an organization.

Question 17

Skill-based pay systems are not suitable for increasing demands that changing technology continues to bring.

Question 18

The number of organizations that are focusing on nonlabor forces while deciding production location is decreasing.

Question 19

Alpha Omega compares its practices set by management with the standard set in each unit as a benchmark.

Question 20

Internal job worth can be measured using the administrative tool of job evaluation.

Question 21

According to the ________,a person (p)compares her own ratio of perceived outcomes to perceived inputs to the ratio of a comparison other (o).

A)reinforcement theory
B)predicted outcome value theory
C)social exchange theory
D)equity theory
E)expectancy theory

Question 22

Which of the following is a likely consequence of external equity perception?

A)Job rotation
B)Transfer
C)Retention
D)Promotion
E)Cooperation among employees

Question 23

Which of the following is true of external equity pay comparison?

A)It involves comparisons with employees with lower-level jobs in the organization.
B)It involves comparisons with employees with higher-level jobs in the organization.
C)It influences whether employees accept transfers.
D)It influences employees' willingness to accept promotions.
E)It influences employees' decisions regarding whether to stay or move to another organization.

Question 24

________ is the relative pay of jobs in an organization.

A)Pay level
B)Pay grade
C)Compa-ratio
D)Range spread
E)Job structure

Question 25

Title VII of the Civil Rights Act focuses on equal pay for jobs of equal content,while the Equal Pay Act of 1963 focuses on equal pay for jobs of equal value or worth.

Question 26

Which of the following is part of the cash compensation offered to employees?

A)Paid vacation
B)Unemployment compensation
C)Health insurance
D)Stock options
E)Retirement plans

Question 27

At Tyrone's interview,he asked about the ________ so that he could make an informed decision regarding the job and the pay offered.

A)pay grade
B)pay structure
C)efficiency wage
D)benchmark
E)job evaluation

Question 28

John is a CEO of his company.On paper,it looks like his salary is commensurate with other managers,but he also has stock options that may increase or decrease his compensation based on the performance of the stock market.

Question 29

Which of the following is a focus of external equity pay?

A)other employees in the same organization in the same job are paid.
B)other employees in the same organization but in a different job are paid.
C)employees in other organizations are paid for doing the same general job.
D)employees in other organizations are paid for doing other jobs with higher responsibility.
E)employees in other organizations are paid for doing other jobs with lower responsibility.

Question 30

Which of the following administrative tools is used by organizations to design job structures?

A)Job rotation
B)Job evaluation
C)Market pay survey
D)Job description
E)Job specification

Question 31

Which of the following is true of labor market competition?

A)The labor market focuses primarily on competing through providing a quality product or service at a competitive price in the market.
B)The labor market places an upper bound on labor costs and compensation.
C)The upper bound placed by the labor market is more constrictive when labor costs are a very small share of the total costs.
D)An indirect payment such as Social Security,a major component of labor costs,is not included in calculating the average cost of an employee.
E)Labor market competition places a lower bound on pay levels.

Question 32

Under the Fair Labor Standards Act,nonexempt employees are eligible for overtime pay.

Question 33

The average compensation-including wages,salaries,and bonuses-of jobs in an organization is called the

A)range spread.
B)compa-ratio.
C)pay level.
D)job structure.
E)pay grade.

Question 34

Inventory levels can be dramatically reduced through just-in-time production,but suppliers need to be in close physical proximity for this to work.

Question 35

One limitation of the comparable worth policy is that it targets single employers,ignoring that men and women tend to work for different employers.

Question 36

Internal equity pay comparison is

A)influenced primarily by an organization's choice of pay level.
B)the primary administrative tool organizations use in choosing a pay level.
C)focused on what employees within the same organization but in different jobs are paid.
D)determined using market pay surveys.
E)more likely to influence the decisions of applicants to accept job offers than external equity pay comparison.

Question 37

Which of the following is part of the benefits offered to employees?

A)Stock options
B)Unemployment compensation
C)Salary
D)Merit increases
E)Bonuses

Question 38

Which of the following observations is true about the equity theory?

A)It suggests that managers compare the performance of employees with their potential to improve.
B)It suggests that employees' performance should be evaluated based on their developmental needs.
C)It suggests that internal equity pay comparisons focus on what employees in other organizations are paid for doing the same general job.
D)It suggests that when a person's outcome-input ratio is greater than the comparison other's ratio,underreward inequity is perceived.
E)It suggests that people evaluate the fairness of their situations by comparing them with those of other people.

Question 39

Which of the following is a likely consequence of an internal equity perception?

A)Attraction of efficient employees
B)Retention of quality employees
C)Labor costs
D)Job rotation
E)Pay scales of competitors

Question 40

Which of the following is true about pay?

A)Pay is not helpful when it comes to aligning employees' interests with those of the broader organization.
B)Pay has a small impact on employee attitudes and behavior.
C)From the employees' view,pay policies do not affect their standard of living.
D)Companies often look for ways to reduce pay by jeopardizing their relationship with the workforce.
E)Employees attach great importance to pay decisions when they evaluate their relationship with the organization.

Question 41

Lamar used a weighting scheme to measure internal job worth.In other words,he completed a

A)job enlargement.
B)job description.
C)job design.
D)job specification.
E)job evaluation.

Question 42

Which of the following is true of key jobs?

A)They are unique to organizations.
B)They can be used in pay surveys.
C)They have unstable content.
D)They cannot be compared through market surveys.
E)They are not benchmark jobs.

Question 43

Why would an organization use benchmarking?

A)To compete for talent
B)To compete for market share
C)To compete on costs
D)To compete on product differentiation
E)To compete for consumer loyalty

Question 44

Product market comparisons that focus on labor costs are likely to deserve greater weight when

A)product demand is inelastic.
B)the supply of labor is elastic.
C)attracting and retaining qualified employees is difficult.
D)the costs of recruiting replacements are high.
E)labor costs represent a large share of total costs.

Question 45

A ________ system is composed of compensable factors and a weighting scheme based on the importance of each compensable factor to the organization.

A)job analysis
B)job description
C)job design
D)job specification
E)job evaluation

Question 46

Which of the following is a procedure in which an organization compares its own practices against those of the competition?

A)Delayering
B)Forecasting
C)Offshoring
D)Benchmarking
E)Job evaluation

Question 47

Which of the following is true of the pay grade approach to developing a pay structure?

A)It permits greater flexibility in moving employees from job to job.
B)It increases the administrative burden of setting up rates of pay.
C)It has a range spread that is smaller at higher levels.
D)It ensures that all of the jobs have fair rates of pay.
E)It tends to contribute to reduced labor costs.

Question 48

Which of the following is the definition of compensable factors?

A)They are jobs that are unique to organizations and that cannot be directly valued or compared through the use of market surveys.
B)They are the characteristics of jobs that an organization values and chooses to pay for.
C)They are the jobs that have relatively stable content and are common to many organizations.
D)They are the factors that describe the relationship between a job's pay and its job evaluation points.
E)They are the jobs that are of similar worth or content grouped together for pay administration purposes.

Question 49

Which of the following is the most widely used method in job evaluation that yields scores for each compensable factor?

A)Range spread approach
B)Point-factor system
C)Market survey system
D)Pay policy line
E)Pay grade approach

Question 50

Which of the following is true of the point-factor system?

A)In this system,job evaluators apply a weighting method before generating scores for the compensable factors.
B)When a priori weights method is used,factors are weighted using expert judgments.
C)In a priori weights method,weights are assigned to noncompensable factors.
D)Multiple regression is an example of a priori weights method.
E)When the weights are derived empirically,factors determining pay in the labor market are excluded.

Question 51

Coach and Cab Company used the ________ to justify higher pay to attract highly skilled employees.

A)structuration theory
B)social exchange theory
C)efficiency wage theory
D)perceptual-motor theory
E)expectancy theory

Question 52

Gamma Ray Inc.wants to use a regression analysis to determine its

A)range spread.
B)compa-ratio.
C)rate range.
D)pay policy line.
E)pay grades.

Question 53

Which of the following is true of nonkey jobs?

A)They have stable content.
B)They can be used in pay surveys.
C)They can be valued directly.
D)They can be compared through market surveys.
E)They are unique to organizations.

Question 54

Which of the following concepts addresses the fact that different employees in the same job may have different pay rates?

A)Range spread
B)Rate ranges
C)Key jobs
D)Compensable factors
E)Pay grades

Question 55

When posting a job vacancy,it is important to post the minimum,midpoint,and maximum pay range so candidates know the

A)market survey rates.
B)pay policy line.
C)compa-ratio.
D)skill-based needed.
E)pay grade.

Question 56

A firm that has a manufacturing unit in China considers shifting production to Cambodia.Which of the following would be a possible reason for it to not shift the production base?

A)Lower wages for labor in Cambodia
B)Less skilled labor in Cambodia
C)Higher productivity in Cambodia
D)Rising labor costs in China
E)Higher transportation costs in China

Question 57

Which of the following theories describes the conditions when the benefits of higher pay outweigh higher costs?

A)Equity theory
B)Expectancy theory
C)Reinforcement theory
D)Efficiency wage theory
E)Social exchange theory

Question 58

Labor market comparisons are more important than product market comparisons when

A)product demand is elastic.
B)the costs of recruiting replacements are low.
C)attracting and retaining qualified employees is difficult.
D)the supply of labor is inelastic.
E)employee skills are specific to the product market.

Question 59

Which of the following is a disadvantage of the pay grade approach?

A)The administrative burden of setting separate rates of pay for numerous employees is increased.
B)It is inflexible when it comes to moving employees from job to job.
C)Demotions are not well received in a pay grade system when compared to a job-based system.
D)It might give rise to some jobs being underpaid and some being overpaid.
E)It does not recognize that performance difference in the higher levels has much impact on the organization.

Question 60

Compensable factors are employees' job characteristics that

A)are immeasurable.
B)go unrecognized by the company.
C)do not motivate employees to work better.
D)primarily lead to intrinsic motivation.
E)the company is willing to pay for.

Question 61

Noreen,Revathy,and Rosa are going to visit their manager and advocate for ________,eliminating undervaluation of women's jobs.

A)equal opportunity
B)the glass ceiling
C)efficiency wages
D)comparable worth
E)minimum wage

Question 62

Which of the following is typically used to measure pay equity?

A)Job evaluation
B)Job analysis
C)Job description
D)Job design
E)Job enlargement

Question 63

Which of the following pay structures would a company adopt if it wanted a pay structure that rewards employees based on their knowledge and competency?

A)Delayering approach
B)Skill-based pay approach
C)Pay grade approach
D)Market survey data approach
E)Pay policy line approach

Question 64

During the recent financial crisis,the U.S.government,as part of the ________,decided it was appropriate to further regulate executive pay in firms receiving government "bailout" money.

A)NCUA Corporate Stabilization Program
B)Troubled Asset Relief Program (TARP)
C)Public-Private Investment Program
D)Lilly Ledbetter Fair Pay Act
E)Emergency Economic Stabilization Act

Question 65

Which of the following is true of a job-based pay structure?

A)It encourages employee initiatives.
B)It allows the organization to take advantage of the skills of those closest to production.
C)It encourages lateral movement of employees.
D)It reinforces a top-down decision-making process.
E)It discourages promotion-seeking behavior.

Question 66

Which of the following best describes gross domestic product?

A)It is a measure of personal income.
B)It is the cost of producing a certain number of outputs produced in an economy.
C)It is the output produced by an employee in contrast to the input used by the employee.
D)It is the total output of an economy.
E)It is the total input used by an economy to produce a definite output.

Question 67

Which of the following best describes a broad band in job-based pay structures?

A)The distance between the minimum and maximum pay in a grade
B)The wider grouping of jobs accomplished through delayering
C)An index of the correspondence between actual and intended pay
D)A mathematical expression that describes the relationship between a job's pay and its job evaluation points
E)The characteristics of jobs that an organization values and chooses to pay for

Question 68

Which of the following is an example of an equal employment opportunity regulation that prohibits sex- and race-based differences in employment outcomes such as pay,unless justified by business necessity?

A)2009 Lilly Ledbetter Fair Pay Act
B)Title VII of the Civil Rights Act
C)Equal Pay Act of 1963
D)Taft-Hartley Act
E)Mann Act

Question 69

Which of the following is a disadvantage of skill-based pay?

A)It is not suited for jobs that require skills to adapt to change in technology.
B)It decreases worker flexibility.
C)It does not give knowledgeable people opportunities to make decisions.
D)It does not help deal with absenteeism or turnover.
E)It may give rise to large new labor costs,but with little payoff.

Question 70

Which type of pay is similar to pay structures based on individual characteristics such as skill or knowledge but usually refers to a plan that covers exempt employees?

A)Internal equity pay
B)Market survey pay
C)Competency-based pay
D)Job-based pay
E)External equity pay

Question 71

The ________ is an index of the correspondence between actual and intended pay.

A)pay grade
B)pay midpoint
C)compa-ratio
D)range spread
E)pay range

Question 72

Which of the following is true of broad bands?

A)More use of broad brands,the less use of delayering in a firm.
B)More use of broad brands,the less opportunity for promotions.
C)Broad bands with greater range spread lead to weaker budgetary control.
D)Broad bands with greater range spread give rise to lower labor costs.
E)Broad bands with smaller range spread permit managers to recognize high performance with high pay.

Question 73

Which of the following hypotheses argues that women were historically restricted to entering a small number of occupations and,as a result,the supply of workers far exceeded demand,resulting in lower pay for such occupations?

A)Macho hypothesis
B)Strain hypothesis
C)Crowding hypothesis
D)Contact hypothesis
E)Calibration hypothesis

Question 74

Which of the following is the primary focus of Title VII of the Civil Rights Act?

A)It makes it mandatory for firms to give women maternity leave.
B)It restricts the setting up of labor unions.
C)It promotes the setting up of labor unions.
D)It supports equal pay for jobs of equal content.
E)It supports equal pay for jobs of equal value.

Question 75

Athen Tech.,a software company,changed its pay structure from 3,000 job titles and 12 pay grades to a simpler structure with 1,000 jobs and 5 pay grades.The managers were then asked to choose pay levels that were based on the market.This is an example of

A)decentralizing.
B)departmentalizing.
C)forecasting.
D)delayering.
E)benchmarking.

Question 76

Architects R Us has begun the process of ________ to increase flexibility in job and merit assignment.

A)decentralizing
B)departmentalizing
C)forecasting
D)delayering
E)benchmarking

Question 77

Job-based pay structure

A)discourages topdown decision-making.
B)encourages lateral employee movement.
C)discourages promotion-seeking behavior.
D)encourages a lack of initiative on the part of employees.
E)discourages performance evaluation by the manager.

Question 78

Lakeisha is in the final stage of the interview process.She has researched what others in the industry make for a similar job and presents the information to the hiring manager.The manager takes this information under consideration when offering the proposed salary.The manager is using the

A)reinforcement theory.
B)social exchange theory.
C)equity theory.
D)expectancy theory.
E)efficiency wage theory.

Question 79

Which of the following is true of skill-based pay?

A)It rarely provides the opportunity for leaner staffing levels.
B)It helps in making alternative arrangements for employee turnover.
C)It reduces worker flexibility.
D)It leads to a shortage of multiskilled employees.
E)It gives rise to centralization of decision-making.

Question 80

According to the study by Peter Cappelli and Peter Sherer,which of the following is true of two-tier wage plans?

A)The plans are characterized by instances in which two employees doing different levels of jobs get the same pay.
B)Lower-paid employees always move to the higher-paying tier.
C)Lower-tier employees are more satisfied despite being paid less money for the same work.
D)The employees in the lower tier have lower comparison standards than those in the higher tier.
E)The lower-tier employees remain dissatisfied until they move into the higher-paying tier.