Question 1

What is the key purpose of pay equity legislation?
A) to achieve equal pay for work of comparable value
B) to achieve equal pay for equal work
C) to eliminate the gender pay gap
D) to ensure more women in top management

Accepted Answer

Pay equity legislation aims to ensure that jobs of comparable value receive equal pay, addressing systemic wage disparities often based on gender.

Question 2

Scenario 9.2
Calendars "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendars "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Which of the following is a useful and cost-effective way for Calendars 'R" Us to find information on wage and salary trends in similar industries?
A) develop in-house surveys
B) use surveys done by provincial governments and boards of trade
C) purchase surveys done with global organizations
D) set wages based on ability to pay only

Accepted Answer

Using surveys done by provincial governments and boards of trade is a cost-effective way to find information on wage and salary trends in similar industries, as these surveys are often comprehensive and readily available at little or no cost.

Question 3

What do we call payment rates above the maximum of a pay range?
A) red circle rates
B) unfair pay rates
C) pay for talent
D) broadband rates

Accepted Answer

Red circle rates refer to payment rates that are above the maximum of a pay range, typically used to retain employees whose pay exceeds the range due to various reasons such as changes in job structure or pay scale adjustments.

Question 4

Scenario 9.2
Calendars "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendars "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Setting pay levels at Calendars "R" Us can be limited by all of the following factors EXCEPT which one?
A) employee expectations and motivation
B) profitability of the firm
C) productivity of employees
D) economic condition and competition

Accepted Answer

Employee expectations and motivation are not a factor that can limit setting pay levels.

Question 5

Scenario 9.2
Calendars "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendars "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Calendars "R" Us jobs range from management to administrative, to clerical to production to packing to delivering. Which of the following would be key to evaluating the worth of each job category?
A) avoiding the use of job evaluation to establish wage structure
B) evaluating the job based on market price
C) evaluating the job based on total value delivered to the organization
D) comparing each job with a competitor in the market

Accepted Answer

Evaluating the job based on total value delivered to the organization is key to evaluating the worth of each job category. This is because it takes into account the importance of the job to the organization, as well as the skills and experience required to perform the job.

Question 6

Scenario 9.2
Calendars "R" Us Ltd. is a small firm that manufactures yearly calendars with a specific focus on middle and high schools in Alberta. They started operations back in 2006 with just 12 employees, two machines, and a small warehouse that served as an office and production and storage facilities. Today, Calendars "R" Us has roughly 60 employees and supplies its calendars to most middle and high schools in Alberta. When employees join they are paid based on their relationship with the owners. Given the rapid growth in its staff complement, and the arbitrary way in which it normally compensates employees, payroll has proven to be quite a challenge for the company as management looks to expand into other provinces.
-Refer to Scenario 9.2. Calendars "R" Us wants to develop a set of compensation policies that are internally fair. Which of the following is helpful in making this decision?
A) job evaluation
B) external competition
C) global comparisons of pay
D) market surveys

Accepted Answer

Job evaluation helps in assessing the relative worth of jobs within an organization, ensuring that compensation policies are internally fair by aligning pay with the job's requirements and responsibilities.

Question 7

ABC Corporation is a furniture firm based in Ontario that supplies its products to the federal government. What laws would apply to ABC Corporation?
A) federal and provincial laws
B) federal laws only
C) provincial laws only
D) international laws only

Accepted Answer

ABC Corporation, being based in Ontario and supplying products to the federal government, would be subject to both federal and provincial laws. Federal laws apply due to its dealings with the federal government, and provincial laws apply because it operates within Ontario.

Question 8

Jambrone Foods and CUPE Local 5000 have a collective agreement in place that allows for wages to be paid at more than the minimum wage set by the Employment Standards Act. Which of the following best describes this agreement?
A) It is illegal.
B) It is legal.
C) It is legal but ill-advised.
D) It is acceptable under the Employment Standards Act but illegal under the Canada Labour Code.

Accepted Answer

Collective agreements that stipulate wages above the minimum wage set by the Employment Standards Act are legal and common practice. The Employment Standards Act sets the minimum standards, including the lowest legal wage that can be paid to workers. Agreements that offer more favorable conditions than the minimum standards are not only legal but also encouraged as they contribute to better working conditions.

Question 9

Scenario 9.1
Denton and Denton Inc. (D&D Inc.) is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the United States. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. Which of the following is NOT a benefit of competency-based pay system?
A) greater productivity
B) decreased compensation costs
C) improved staffing flexibility to meet production or service demands
D) reduced effects of absenteeism and turnover

Accepted Answer

Competency-based pay systems focus on rewarding the skills, knowledge, and performance of employees rather than the specific job they perform. While they can lead to greater productivity, improved staffing flexibility, and reduced effects of absenteeism and turnover by motivating employees and aligning their skills more closely with the company's needs, they do not inherently decrease compensation costs. In fact, these systems can sometimes increase costs because they require ongoing assessment of competencies and may lead to higher pay for employees who gain new skills or competencies.

Question 10

Strategic compensation may involve market pricing.

Accepted Answer

Strategic compensation often involves market pricing to ensure that pay levels are competitive with the external labor market, helping to attract and retain employees.

Question 11

Which of the following is a potential outcome of wage-rate compression?
A) increased motivation
B) low employee morale
C) decreased employee theft
D) lower absenteeism

Accepted Answer

Wage-rate compression can lead to low employee morale because it reduces the pay differences between employees regardless of their experience, skills, or job performance. This can demotivate employees who feel their efforts and contributions are not adequately rewarded compared to those of less experienced or lower-performing colleagues.

Question 12

Indirect compensation includes bonuses and commissions.

Accepted Answer

Indirect compensation refers to non-monetary benefits such as health insurance, retirement plans, and paid time off, rather than direct cash payments like bonuses and commissions.

Question 13

Scenario 9.1
Denton and Denton Inc. (D&D Inc.) is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the United States. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. Given that these employees are skilled-based/knowledge workers, which of the following is a more effective way to compensate them?
A) piece rate pay system
B) hourly rate based on task completed
C) salaried employee system
D) competency-based pay system

Accepted Answer

Competency-based pay systems are more effective for knowledge-based workers because they reward employees for their skills, knowledge, and contributions to the company, rather than just the hours worked or tasks completed. This aligns better with the nature of their work and their perception of their value to the company.

Question 14

Desirée is a female receptionist employed by Trent University in Ontario. John is a male janitor with the same employer. Both jobs are evaluated as having 500 points, yet Desiree is paid less than John. She has decided to legally challenge the employer. Which of the following is relevant in this case?
A) the Peter principle
B) market matching
C) equal pay for work of equal value
D) equal pay for equal work

Accepted Answer

Equal pay for work of equal value is relevant in this case because it addresses the issue of ensuring that employees in different jobs that are evaluated to be of equal value are paid equally, regardless of gender or job title.

Question 15

Strategic compensation links an organization's compensation systems to its mission and business objectives.

Accepted Answer

Strategic compensation is designed to align an organization's compensation systems with its overall mission, goals, and business objectives, ensuring that pay structures support the company's strategic direction and encourage desired employee behaviors.

Question 16

Scenario 9.1
Denton and Denton Inc. (D&D Inc.) is a small graphic design firm that designs tray liners for various small food chains across Canada and a major chain in the United States. D&D currently has 20 employees who are paid hourly rates for time worked, not projects completed. These workers consider themselves valuable, knowledge-based workers, and now that the company is expanding its client base they are not happy with the current pay structure. Management claims that this pay structure, ranging from $20 to $65 per hour, is based on collapsing the pay ranges for four job bands.
-Refer to Scenario 9.1. What type of pay system is D&D Inc. currently using to compensate its employees?
A) broadbanding
B) competency-based
C) red circle rates
D) piece rate

Accepted Answer

D&D Inc. is using a broadbanding pay system, as indicated by the collapsing of pay ranges for four job bands into a wider range. This approach reduces the number of pay levels, allowing for more flexibility in pay within broader bands.

Question 17

Wage compression may create problems related to which of the following?
A) external equity
B) internal equity
C) gender discrimination
D) racial discrimination

Accepted Answer

Wage compression occurs when the pay gap between different levels of employees narrows. This can create problems related to internal equity, as employees at lower levels may feel that they are not being fairly compensated in relation to their colleagues at higher levels.

Question 18

Which of the following terms is also used to describe competency-based pay?
A) incentive pay
B) commission pay
C) skilled-based pay
D) broadband pay

Accepted Answer

Skill-based pay, also known as competency-based pay, rewards employees for the range, depth, and types of skills and knowledge they are capable of applying to their work.

Question 19

As the year 2000 approached, many organizations hired "young" and "inexperienced" information technology (IT) specialists to help address the Y2K problem. Many of these new hires were paid high compensation that brought them very close to the compensation earned by experienced IT specialists working with these companies. Which of the following can such a practice lead to?
A) wage inversion
B) pay equity
C) wage-rate compression
D) high turnover across the board

Accepted Answer

Wage-rate compression occurs when there's a narrowing of the differences in pay between employees regardless of their skills, experience, or seniority. Hiring inexperienced IT specialists at high compensation rates close to those of experienced specialists can lead to this situation, as the pay scale becomes compressed between new and veteran employees.

Question 20

Which type of legislation is concerned with minimum wage rates and overtime payments?
A) employment standards
B) employment equity
C) equal pay
D) pay equity

Accepted Answer

Employment standards legislation is designed to ensure fair treatment of employees, including setting minimum wage rates and regulating overtime payments.

Quiz 9: Managing Compensation

What is the key purpose of pay equity legislation?

What do we call payment rates above the maximum of a pay range?

ABC Corporation is a furniture firm based in Ontario that supplies its products to the federal government. What laws would apply to ABC Corporation?

Jambrone Foods and CUPE Local 5000 have a collective agreement in place that allows for wages to be paid at more than the minimum wage set by the Employment Standards Act. Which of the following best describes this agreement?

Strategic compensation may involve market pricing.

Which of the following is a potential outcome of wage-rate compression?

Indirect compensation includes bonuses and commissions.

Strategic compensation links an organization's compensation systems to its mission and business objectives.

Wage compression may create problems related to which of the following?

Which of the following terms is also used to describe competency-based pay?

Which type of legislation is concerned with minimum wage rates and overtime payments?