Question 1

What is an advantage of a two-tier wage system?
A) It helps move jobs out of the country.
B) It helps eliminate jobs without any legal hassles.
C) It helps reduce labor costs without cutting employees' existing salaries.
D) It helps provide more pay to new employees.
E) It provides better standards for benchmarking.

Accepted Answer

A two-tier wage system helps reduce labor costs without cutting existing salaries, by offering new employees lower wages and benefits. This can be beneficial for the company as it allows them to stay competitive while still retaining experienced employees with higher salaries. However, it is important to note that this can also lead to conflicts and morale issues between different tiers of employees.

Question 2

Research on the effects of two-tier wage plans found that
A) lower-paid employees were less satisfied on average than higher-paid employees.
B) lower-paid employees were more satisfied on average than higher-paid employees because they made comparisons with lower-paying alternatives for themselves.
C) lower-paid employees expected to be promoted into the second tier in a short time span.
D) equity theory did not come into play for either group and neither group experienced more or less job satisfaction than the other.
E) both existing employees and new employees have a similar pay rate.

Accepted Answer

The answer of Research on the effects of two-tier wage...

Question 3

Some employees at Opal Coin, a clothing manufacturer, investigate pay rates on Salary.com and learn that Opal Coin has been paying them significantly more than the national average for their jobs. In this case, what is the most likely reaction of the employees at Opal Coin?
A) The employees will conclude that there must be regional differences in pay.
B) The employees will be motivated to work much harder.
C) The employees will find their jobs less challenging.
D) The employees will find a way to increase their outcomes by stealing.
E) The employees' attitudes and behaviors will continue unchanged.

Accepted Answer

When employees discover they are being paid more than the national average for their job, they are less likely to be motivated to work harder or steal. Instead, they are likely to assume there are regional differences in pay and feel reassured that they are being fairly compensated. The discovery is unlikely to change their attitudes or behaviors at work.

Question 4

Employees' conclusions about equity depend on
A) what they choose as a standard of comparison.
B) how much money they think the company CEO makes.
C) what level of income they believe they should be at by this point in their lives.
D) what benefits they receive.
E) if they think they can bargain for a higher rate of pay.

Accepted Answer

Employees' conclusions about equity are subjective and depend on what they choose as a standard of comparison. They may compare their pay to that of colleagues in similar positions, or to industry or regional averages, and their perception of equity will differ in each case. The other options listed may also play a role but are less critical than the standard of comparison.

Question 5

Which statement is true about pay ranges?
A) Pay ranges are most common for blue-collar jobs and those covered by union contracts.
B) Pay ranges are widest for employees who are at lower levels in terms of their job evaluation points.
C) Pay ranges generally are designed so they do not overlap.
D) The market rate or the pay policy line generally serves as the midpoint of a range for the job.
E) The less overlap, the more flexibility in transferring employees among jobs.

Accepted Answer

Pay ranges are typically designed with a midpoint that is based on the market rate or the organization's pay policy. This midpoint serves as the anchor around which the range is built, with a minimum and maximum range that allows for flexibility in pay based on performance, experience, and other factors.

Question 6

A pay policy line
A) shows the mathematical relationship between the minimum pay and the maximum pay in an organization.
B) can be generated using a statistical method called regression analysis.
C) requires market-pay-rate data on all jobs in the organization.
D) can seldom provide information on the market pay level for a given job evaluation.
E) reflects the pay structure in the market, which always matches rates in the organization.

Accepted Answer

A pay policy line can indeed be generated using regression analysis, which is a statistical method used to determine the relationship between variables. In this context, it helps establish the relationship between job evaluation points and market pay rates, thereby guiding the organization in setting its pay structure.

Question 7

Assuming an organization wants to motivate employees through promotions, and assuming enough opportunities for promotions are available, the organization would want to
A) increase the overlap from one level to the next.
B) reduce its compa-ratio to less than 1.
C) implement a broadband pay structure.
D) limit the overlap from one pay range to the next.
E) use a fixed interval promotion policy.

Accepted Answer

Limiting the overlap from one pay range to the next can create clearer distinctions between different levels of responsibility and performance, making promotions more meaningful and motivating for employees.

Question 8

What is a drawback of setting pay rates based strictly on a pay policy line?
A) It increases the administrative burden of managing the compensation system.
B) Employees have difficulty interpreting regression analysis.
C) The estimated pay for a job may not reflect conditions in the labor market.
D) It increases the costs of surveying the market.
E) It groups jobs, which will result in rates of pay for individual jobs that precisely match the levels specified by the market.

Accepted Answer

Pay policy lines may not accurately reflect the external labor market as they are based on internal factors such as the organization's structure and its desired pay structure. As a result, the estimated pay for a job may not reflect conditions in the labor market, leading to difficulties in attracting and retaining skilled employees.

Question 9

Overlapping ________ give the organization more flexibility in transferring employees among jobs, because transfers need not always involve a change in pay.
A) pay rates
B) pay ranges
C) pay policies
D) pay differentials
E) pay ranks

Accepted Answer

Pay ranges allow for flexibility in transferring employees among jobs because they provide a range of pay rather than a specific pay rate. This means that a transfer may not always result in a change in pay, as the employee may fall within the pay range for their new position.

Question 10

Malto Inc., a manufacturing company, bases employees' pay entirely on market forces. In this case, what is a practical drawback faced by the company?
A) Employees might conclude that the pay rates are unfair.
B) Supervisors of the company will expect to receive lower pay because of less responsibility.
C) The highly paid employees will likely be dissatisfied because of more work.
D) The managers will participate in rotation of responsibilities because they receive lower pay.
E) All employees will be categorized as exempt employees.

Accepted Answer

The practical drawback faced by Malto Inc. in basing employees' pay entirely on market forces is that employees might conclude that the pay rates are unfair. If employees perceive that they are being paid unfairly relative to their peers in the industry, they may become dissatisfied and seek employment elsewhere, leading to high turnover rates and difficulty in attracting new talent.

Question 11

Keegan, the human resource manager at R&S Inc., is advising the company's business executives that paying more for labor than competitors can support the company's strategy. Under what conditions might Keegan's idea be most valid?
A) R&S pays more to attract top talent, applying employees' knowledge to be more innovative than competitors.
B) R&S intends to charge more than competitors for the same kinds of products.
C) R&S hopes other companies will eventually match R&S's pay scale.
D) Labor costs are a large part of R&S's total costs.
E) R&S is developing a low-price strategy that will generate more sales.

Accepted Answer

Paying more to attract top talent can lead to a more innovative workforce, which can give R&S an advantage over competitors. This aligns with the company's strategy of differentiation and can justify paying more for labor than competitors. The other options do not necessarily support paying more for labor than competitors.

Question 12

Pay ranges are most common for
A) white-collar jobs.
B) piece-rate jobs.
C) jobs that are covered by union contracts.
D) automotive workers.
E) construction workers.

Accepted Answer

Pay ranges are most common for white-collar jobs as they tend to have more standardized job descriptions and pay structures. Piece-rate jobs, union contract jobs, automotive and construction workers may have more variable pay structures.

Question 13

Pay policies are one of the most important human resource tools for
A) reducing competition in the product market.
B) automating routine activities.
C) persuading customers that high quality is worth a premium price.
D) making decisions about product pricing.
E) encouraging desired employee behaviors.

Accepted Answer

Pay policies directly influence the behavior of employees by incentivizing certain actions or outcomes. For example, implementing a pay for performance system encourages employees to increase productivity and achieve goals that are aligned with the company's objectives. In addition, pay policies can also influence employee retention and engagement, as fair and competitive compensation is a key factor in job satisfaction.

Question 14

Gilly Brothers, an insurance company, incurred losses of about $100 million. To analyze its losses and to overcome them, the company began comparing its own practices against those of its successful competitors. In this scenario, which procedure is adopted by Gilly Brothers?
A) benchmarking
B) job evaluation
C) regression analysis
D) delayering
E) pay structuring

Accepted Answer

Gilly Brothers is adopting benchmarking, which involves comparing its practices and performance against those of its successful competitors, to analyze and overcome its losses.

Question 15

Which statement is true of compensable factors?
A) They are generally statistically derived.
B) They are the characteristics of a job that a firm values and chooses to pay for.
C) They refer to the factors that are important for setting the two-tier wage system.
D) They describe all aspects of the jobs being evaluated.
E) They are used to ensure equity among employees.

Accepted Answer

Compensable factors are those characteristics of a job that a firm considers important and chooses to pay for. They are not necessarily statistically derived and do not refer specifically to the factors for setting a two-tier wage system or describing all aspects of a job. However, they are commonly used to ensure equity among employees by providing a basis for determining fair and competitive compensation for different jobs within an organization.

Question 16

According to ________, people measure outcomes such as pay in terms of their inputs.
A) expectancy theory
B) equity theory
C) retributive justice theory
D) progressive justice theory
E) economic theory

Accepted Answer

Equity theory states that people measure outcomes such as pay in terms of their inputs or contributions to the organization, compared to the inputs and outcomes of others. This theory suggests that individuals strive for fairness and equality in their work relationships and will feel distressed if they perceive inequity.

Question 17

Which U.S. organization conducts an ongoing National Compensation Survey measuring wages, salaries, and benefits paid to the nation's employees?
A) Bureau of Labor Statistics
B) Society for Human Resource Management
C) American Management Association
D) AFL-CIO
E) Bureau of Economic Analysis

Accepted Answer

The Bureau of Labor Statistics conducts the National Compensation Survey to measure wages, salaries, and benefits paid to employees across the United States.

Question 18

Economic theory holds that the most profitable pay level, all things being equal, would be at the
A) lowest possible level.
B) market rate.
C) highest possible level.
D) mid-range level.
E) CPI rate.

Accepted Answer

The market rate is the point at which the supply of labor matches the demand for labor, resulting in an efficient allocation of resources. This rate ensures that a business is able to attract and retain workers without overpaying for their services, maximizing profits while maintaining a competitive edge in the market.

Question 19

Abbel Inc., a manufacturing company, believes that pay is an investment that can generate returns in attracting, retaining, and motivating a high-quality workforce. In this case, which statement is true about Abbel Inc.?
A) It considers its employees as resources.
B) It gives the least importance to profits.
C) It is a customer-friendly firm.
D) It tries to keep its labor costs minimal.
E) It helps employees find higher-paying jobs.

Accepted Answer

Abbel Inc. believes that pay is an investment in its employees, which implies that it recognizes its employees as resources.

Question 20

What is a set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job?
A) pay grade
B) pay range
C) pay differential
D) compa-ratio
E) compensation differential

Accepted Answer

A set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job is called a pay range. A pay grade is a grouping of jobs that are considered equivalent in terms of skill or difficulty, and is often associated with a salary range. A pay differential refers to the difference in pay between two employees or groups of employees. A compa-ratio is the comparison of an employee's actual pay rate to the midpoint of the pay range for their position. Compensation differential refers to the differences in pay between employees who hold different positions within the same organization.

Quiz 12: Establishing a Pay Structure

What is an advantage of a two-tier wage system?

Research on the effects of two-tier wage plans found that

Some employees at Opal Coin, a clothing manufacturer, investigate pay rates on Salary.com and learn that Opal Coin has been paying them significantly more than the national average for their jobs. In this case, what is the most likely reaction of the employees at Opal Coin?

Employees' conclusions about equity depend on

Which statement is true about pay ranges?

A pay policy line

Assuming an organization wants to motivate employees through promotions, and assuming enough opportunities for promotions are available, the organization would want to

What is a drawback of setting pay rates based strictly on a pay policy line?

Overlapping ________ give the organization more flexibility in transferring employees among jobs, because transfers need not always involve a change in pay.

Malto Inc., a manufacturing company, bases employees' pay entirely on market forces. In this case, what is a practical drawback faced by the company?

Keegan, the human resource manager at R&S Inc., is advising the company's business executives that paying more for labor than competitors can support the company's strategy. Under what conditions might Keegan's idea be most valid?

Pay ranges are most common for

Pay policies are one of the most important human resource tools for

Gilly Brothers, an insurance company, incurred losses of about $100 million. To analyze its losses and to overcome them, the company began comparing its own practices against those of its successful competitors. In this scenario, which procedure is adopted by Gilly Brothers?

Which statement is true of compensable factors?

According to ________, people measure outcomes such as pay in terms of their inputs.

Which U.S. organization conducts an ongoing National Compensation Survey measuring wages, salaries, and benefits paid to the nation's employees?

Economic theory holds that the most profitable pay level, all things being equal, would be at the

Abbel Inc., a manufacturing company, believes that pay is an investment that can generate returns in attracting, retaining, and motivating a high-quality workforce. In this case, which statement is true about Abbel Inc.?

What is a set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job?