Question_CHAP12_10Dec_4th

| August 14, 2017

91.
Which
of the following is a benefit of reducing the number of pay grades and
broadening pay ranges?

a. It reduces the organization’s overall
compensation expense.

b. It encourages employees to take
horizontal job moves.

c. It enhances the distinctions between
various jobs.

d. It increases employee opportunities
for upward mobility.

92. Which of the following employees will
be qualified for the LARGEST pay raise according to a typical pay adjustment
matrix? An employee with
a. a compra-ratio of 85 who does not meet
performance expectations.

b. a compra-ratio of 115 who exceeds
performance expectations.

c. a compra-ratio of 115 who meets
performance expectations.

d. a compra-ratio of 85 who exceeds
performance expectations.

93.
Which
of the following approaches is recommended for bringing a red-circled
employee’s pay into line?
a. Transfer the employee to a lower
paying job.

b. Keep pay levels and ranges
confidential.

c. Cut the employee’s pay so it falls
within the range.

d.
Freeze the employee’s pay until the pay range is adjusted upward.

94. Martha
has been a professor at a major state university for 20 years. Martha loves her
work and is satisfied with the university. Because of her high level of
publications and her high quality of teaching, Martha has received the highest
raises possible every year. Since this a public university, Martha has access
to all the salary data for all her fellow professors. She has learned that the
last three professors hired in her field at her level were paid one-quarter
more than she is paid. This amounts to tens of thousands of dollars. Martha is
shocked and gathers data on the job market in her field. She finds that her pay
is much lower than the market rate. Martha has encountered

a. the failure of step progression.

b. gender-based pay inequity.

c. compensation stagnation.

d. pay compression.

95. George
is a long-term exceptional performer. He has a compra-ratio of 120 and once
again his performance has exceeded expectations. But, George only gets a raise
of 3%, which is less than some of his co-workers who have less seniority and
whose performance only meets expectations. George is incensed and waiting in your
office. As director of HR, how will you explain this situation to George?

a. You should discipline George because
employees should not discuss their pay.

b. You
explain that George’s compra-ratio shows that he is at the top of his pay range
and that he is already earning above the market midpoint set in his pay grade.

c.
That
the pay adjustment matrix is out of date, and that you will classify him as a
green-circled employee who should receive accelerated raises.

d. You
decide to give George a lump-sum increase equivalent to a 10% raise. This will
recognize George’s exceptional performance without affecting his base pay.

96.
A
person’s ____ is that employee’s current pay level divided by the midpoint of
the pay range.

a. compra-ratio

b. market ratio

c. target ratio

d. matrix ratio

97. Which of the following is an advantage
of a lump-sum increase (LSI) plan compared with traditional raises?
a. LSI plans involve less administrative
work for HR managers.

b. Employees are more satisfied with
LSIs.

c. It heightens employees’ awareness of
what reward their performance merited.

d. It increases the compounding effect of
succeeding raises on the employee’s base pay.

98. The goal in giving pay increases to
average performers should be

a. to align their pay with the labor
market.

b. on retaining and rewarding them.

c. on encouraging them to leave the
organization.

d. on achieving a compra-ratio of 100.

99. A true cost-of-living raise
a. must be implemented both in times of
inflation and deflation.

b. must be tied to economic indicators.

c. is the same thing as an automatic
increase.

d. is the same thing as a merit raise.

100.
As
a young employee who consistently meets (but does not exceed) performance
expectations, which type of pay increase system would most likely be to your personal
financial benefit considering that you expect to stay with the company another
10 years?

a. broadbanding

b. lump sum increases

c. across-the-board raises

d. second quartile approach

101. Cost-of-living adjustments are
typically tied to changes in the

a. consumer interest rate.

b. prime interest rate.

c. Dow Jones Industrial Average.

d. Consumer Price Index.

102. Wimsey Enterprises has announced that
it will give all employees a 5% merit increase this year. This increase should
really be termed a/an
a. cost-of-living adjustment.

b. across-the-board increase.

c. lump-sum increase.

d. seniority increase.

103.
Of
the following, which type of pay adjustment has the most ability to reward
employee performance?

a. cost-of-living adjustments.

b. seniority increases

c. lump-sum increases

d. across-the-board increases

TRUE/FALSE

1. Although
non-monetary rewards are valued by employees, they are not included in the
concept of organizational compensation, which is limited to direct and indirect
extrinsic rewards.

2.
Some
rewards, such as benefits, are given to employees just for being members of the
organization, regardless of their level of performance on the job.

3. In
the last decade the pressures of the U.S. economy have compelled most
private-sector, for-profit organizations to change to a pay-for-performance
compensation philosophy.

4.
In
a typical division of compensation responsibilities, the HR unit is responsible
for evaluating employee performance for compensation purposes.

5.
Gillian,
a meteorologist at a regional TV station, is angry that she received a large
raise from her boss because she is “cute as a button.” Although her income has
gone up considerably, Gillian is upset because of a failure of procedural
justice.

6. An increasing number of organizations
are keeping pay information secret, thus avoiding disputes and lawsuits about
pay fairness.

7.
Research
of compensation databases shows that about one-third of the people who think
they are underpaid are actually underpaid.

8.
Junior Birdman Children’s Clothing and Toy
Company must attract and retain the most creative and talented children’s
designers in the industry. It probably uses a third-quartile compensation
strategy.

9. A competency-based pay system rewards
employees who are versatile and have continued to develop their skills.

10. Compensation practices are simplified
as organizations shift to using work teams, because everyone on a team is paid
the same amount.

11.
Tax
equalization plans require an expatriate employee to pay only the U.S. taxes on
his/her income, not the taxes of the foreign country in which he/she is
stationed.

12.
The
Fair Labor Standards Act sets minimum wage standards and hours of work for all
employees in the private sector.

13.
Managers
and professionals are protected from working more than 60 hours a week by the
FLSA, although they are not paid overtime.

14. A non-exempt employee must receive overtime
pay under the FLSA.

15.
Lucy
is a nurse at Mountaineer Assisted Living. She works three 12-hour days in a
row and receives 40 hours pay for 36 hours of work. Lucy also receives 12 hours
of time and a half overtime pay per week for the four hours over 8 she works on
each of her three workdays. This pay is mandated by the special healthcare
occupation rules of the FLSA.

16.
The work week, as defined by the FLSA for overtime purposes, does not
have to be a calendar week.

17. The Equal Pay Act of 1963 was passed to
achieve pay equity between men and women.

18. The city in which YellowCraft Boat is
located has passed a “super-minimum” wage that is fifty cents higher per hour
than the federal minimum wage. YellowCraft Boat must pay its workers at least
this super-minimum wage.

19. Job evaluation provides a formal,
systematic basis for determining the relative worth of jobs within an
organization.

20.
The
ranking method typically ranks jobs in value to the organization based on three
or four compensable factors.

21.
Those
interested in women’s rights tend to be strong promoters of traditional job
evaluation methods because these methods reflect rates of pay in the “market
economy,” thus ensuring pay equity for women.

22. An advantage of market pricing is that
employees view it as having high face validity.

23.
External
benchmarking is a job evaluation method that uses market pay data to identify
the value of jobs based on what other employers pay for similar jobs.

24. Employers often use outside
consultants to conduct pay surveys to avoid charges that the employers are
attempting “price fixing” on wages.

25.
Typically,
clerical and professional jobs are classified in the same job family because
they are both white collar occupations.

26. Broadbanding is most appropriate in a
traditional, hierarchical organization where the managers have careers based on
steady advancement and promotions.

27. A green-circled employee is an incumbent who
is paid above the range set for the job.

28. Pay compression occurs when the range
of pay differences among individuals with different levels of experience and
performance in the organization becomes small.

29.
Josephine
has been a high performing employee for Clockman Publications for many years.
She is at the top of her pay grade and has a high compra-ratio. Clockman
Publications uses the pay adjustment matrix method for calculating raises.
Josephine should expect a very small pay increase, if any this year.

30. Collette received a $2,500 lump-sum
increase for her performance last year. This increased her base pay by $2,500.

ESSAY

1.
What
are the two major compensation philosophies and how to they affect employee
attitudes and behavior?

.

2. What is meant by equity? Is equity an
important consideration in compensation?

3. Would you recommend that an employer
require that all salary information be kept confidential? Why or why not?

.

4.
What
are exempt and non-exempt jobs? How are exempt and non-exempt jobs identified
in the organization? What are independent contractors and why is it important
for the organization to identify who is a contractor and who is an employee?

5.
What
are the advantages and disadvantages of using market pricing to set
compensation in organizations?

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