Question 1

Which form of equity refers to the fairness of an individual's pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each individual's performance?

Accepted Answer

C)Individual equity refers to the fairness of an individual's pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each individual's performance. Internal equity refers to how fair the job's pay rate is when compared to other jobs within the same company, such as between managers in different departments.

Question 2

What theory of motivation states that people are strongly motivated to maintain a balance between what they perceive as their contributions and their rewards?

Accepted Answer

B)The equity theory of motivation postulates that people are strongly motivated to maintain a balance between what they perceive as their inputs or contributions, and their rewards. Equity theory states that if a person perceives an inequity, a tension or drive will develop in the person's mind, and the person will be motivated to reduce or eliminate the tension and perceived inequity.

Question 3

Which of the following gives employees the right to organize, bargain collectively, and engage in concerted activities for the purpose of collective bargaining?

Accepted Answer

D)The National Labor Relations Act of 1935 (Wagner Act)and related legislation and court decisions legitimized the labor movement. It gave unions legal protection, and granted employees the right to unionize, to bargain collectively, and to engage in concerted activities for the purpose of collective bargaining or other mutual aid or protection.

Question 4

Which form of equity refers to the fairness of a job's pay rate in comparison to other jobs within the same company?

Accepted Answer

B)Internal equity refers to how fair the job's pay rate is when compared to other jobs within the same company. For instance, is the sales manager's pay fair when compared to what the production manager is earning?

Question 5

Trevor, a sales manager at IBM, recently learned that an IBM human resources manager with comparable responsibilities and spans of control earns a higher salary than Trevor. Which form of equity is of most concern to Trevor?

Accepted Answer

B)Internal equity refers to how fair the job's pay rate is when compared to other jobs within the same company, such as between managers in different departments.

Question 6

Which of the following is used to maintain internal equity?

Accepted Answer

A)Managers use job analysis and job evaluation comparisons of each job to maintain internal equity.

Question 7

Which form of equity refers to the perceived fairness of the processes used to make decisions regarding the allocation of pay?

Accepted Answer

D)Procedural equity refers to the "perceived fairness of the processes and procedures used to make decisions regarding the allocation of pay."

Question 8

Bonnie, a data analyst, needs to take time off from work to care for her elderly mother. According to the Family and Medical Leave Act, what is the maximum number of weeks of unpaid, job-protected leave that Bonnie may take?

Accepted Answer

C)The Family and Medical Leave Act aims to entitle eligible employees, both men and women, to take up to 12 weeks of unpaid, job protected leave for the birth of a child or for the care of a child, spouse, or parent.

Question 9

Which of the following terms refers to a compensation plan that advances a firm's strategic goals?

Accepted Answer

C)The compensation plan should advance the firm's strategic aims, so management should produce an aligned reward strategy. This means creating a bundle of rewards-a total reward package including wages, incentives, and benefits-that aims to produce the employee behaviors the firm needs to support and achieve its competitive strategy.

Question 10

Which form of equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies?

Accepted Answer

C)External equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies.

Question 11

External equity refers to ________.

Accepted Answer

A)External equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies.

Question 12

Audrey is a lawyer in a mid-size firm in Chicago. She recently learned that another lawyer who joined the firm at the same time earns a lower salary than she does. Which form of equity is most relevant to Audrey's situation?

Accepted Answer

C)Individual equity refers to the fairness of an individual's pay as compared with what his or her co-workers are earning for the same or very similar jobs within the company, based on each individual's performance.

Question 13

Which of the following best defines internal equity?

Accepted Answer

B)Internal equity refers to how fair the job's pay rate is when compared to other jobs within the same company.

Question 14

Which of the following issues would LEAST likely be negotiated by unions?

Accepted Answer

D)Historically, the wage rate has been the main issue in collective bargaining. However, unions also negotiate other pay-related issues, including time off with pay, income security, cost-of-living adjustments, and health care benefits. Unpaid medical leave is addressed by the Family and Medical Leave Act.

Question 15

Which of the following is NOT one of the forms of equity related to compensation issues?

Accepted Answer

A)Managers address external, internal, individual, and procedural equity when considering compensation issues.

Question 16

What has historically been the key issue in collective bargaining?

Accepted Answer

A)Historically, the wage rate has been the main issue in collective bargaining. However, unions also negotiate other pay-related issues, including time off with pay, income security, cost-of-living adjustments, and health care benefits.

Question 17

Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the past few years, the company's market share has dropped significantly, and employee turnover has increased. Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around. Historically, the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following questions is LEAST relevant to Homelife's decision to develop an aligned reward strategy?

Accepted Answer

D)An aligned reward strategy links a firm's compensation plan with its strategic aims. Homelife can create a total reward package including wages, incentives, and benefits that will generate the employee behaviors the firm needs to support and achieve its competitive strategy. Questions about employee behaviors and compensation are relevant, but a question about salary surveys is not.

Question 18

Which of the following is the LEAST likely way that an employer would address a cost-of-living differential?

Accepted Answer

D)Employers handle cost-of-living differentials in several ways. One is to give the transferred person a nonrecurring payment, usually in a lump sum or perhaps spread over one to three years. Others pay a differential for ongoing costs in addition to a one-time allocation or simply raise the employee's base salary.

Question 19

Jason is an information systems technician in a town in North Carolina with a population of 100,000. He receives an annual salary of $35,000. He recently found out that a nearby town with a similar population pays people in the same position $40,000 annually. With which form of equity is Jason most concerned?

Accepted Answer

D)External equity refers to how a job's pay rate in one company compares to the job's pay rate in other companies.

Question 20

Which of the following laws has the LEAST amount of influence on compensation decisions?

Accepted Answer

B)The ADA, Family and Medical Leave Act, and the Age Discrimination in Employment Act all impact compensation decisions made by organizations. The Labor Management Relations Act prohibited unfair union labor practices and enumerated the rights of employees as union members and has no impact on compensation issues.

Quiz 11: Establishing Strategic Pay Plans