Strategic Compensation, 7e (Martocchio)

Chapter 1 Strategic Compensation: A Component of Human Resource Systems

1) What is the primary factor that will prevent companies from growing in the next decade?
A) increased government regulations
B) the inability to attract and retain employees
C) caps on executive pay in some organizations
) increased global competition
Answer! B
ifficulty! ifficult
"ype! Critical "hin#ing
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') (rotection programs are what type of compensation benefits?
A) external
B) non)monetary
C) internal
) monetary
Answer! B
ifficulty! *oderate
"ype! Concept
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+) Which of the following would be an example of a non)monetary reward?
A) medical insurance
B) vacations
C) day care assistance
) all of the above
Answer!
ifficulty! ,asy
"ype! Concept
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-) "his law made it illegal to pay women less for performing e.ual wor# as men/
A) ,.ual (ay Act of 101+
B) Civil 2ights Act of 101-
C) avis 3 Bacon Act of 10+1
) 4air $abor 5tandards Act of 10+6
Answer! A
ifficulty! *oderate
"ype! Concept
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<) What is the typical annual Cost)of)living ad&ustments =C%$As) in recent years?
A) 8 to 1 percent
B) ' to + percent
C) + to < percent
) 6 to 18 percent
Answer! B
ifficulty! ifficult
"ype! Concept
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1) What type of pay system rewards employees for partially or completely attaining a
predetermined wor# ob&ective?
A) seniority pay
B) merit pay
C) incentive pay
) s#ill)based pay
Answer! C
ifficulty! *oderate
"ype! Concept
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>) ?ason wor#s at a call center for an insurance company and he has been answering calls
regarding auto insurance/ 2ecently9 he started to attend a training program about home insurance/
@pon successful completion of this training program9 ?ason will be able to handle home
insurance .uestions and .ueries as well/ :f this insurance company has a compensation policy
that rewards ?asonAs completion of this training9 then what type of pay system does it employ?
A) incentive pay
B) merit pay
C) seniority pay
) pay)for)#nowledge
Answer!
ifficulty! *oderate
"ype! Application
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6) Which of the following is B%" one of the three broad categories that discretionary benefits
fall into?
A) wor#erAs compensation laws
B) paid time off
C) protection programs
) services
Answer! A
ifficulty! ifficult
"ype! Concept
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0) 5amuel is a recently hired ;2 professional wor#ing at CDE *otor Co/ ;is current pro&ect
involves recording the time it ta#es assembly wor#ers to complete their tas#s/ With the help of
industrial engineers in the manufacturing plant9 the aim of this pro&ect is to identify the most
effective ways of assembly operations/ Which of the following is B%" related to 5amuelAs
pro&ect?
A) scientific management practices
B) time)and)motion studies
C) &ob analysis
) welfare practices
Answer!
ifficulty! *oderate
"ype! Application
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18) "hese are positive employer gestures that beyond what was re.uired by law9 created in part
to thwart potential union activity/
A) employee benefit plans
B) welfare practices
C) scientific management practices
) compensable factors
Answer! B
ifficulty! *oderate
"ype! Concept
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11) A companyAs ability to sustain mar#et share and profitability for several years running is
referred to by what term?
A) differentiation
B) personnel administration
C) compensation practices
) competitive advantage
Answer!
ifficulty! ,asy
"ype! Concept
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1') "his term suggests that a loss is li#ely for the firm9 and that the individual will be left with
little control/
A) reverse opportunity
B) negative e.uity
C) threat
) foreclosure
Answer! C
ifficulty! ,asy
"ype! Concept
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1+) What strategy describes the use of benefit and compensation pac#ages in order to support
both ;2 and competitive strategies?
A) wor#er welfare strategies
B) total compensation strategies
C) total .uality management strategies
) wor#er satisfaction strategies
Answer! B
ifficulty! *oderate
"ype! Concept
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1-) 2yanair uses one type of aircraft in its fleet and re.uires their passengers to carry their
luggage to the plane/ 2yanairAs decisions exemplify which of the following competitive
strategies?
A) differentiation strategy
B) high .uality strategy
C) brand notoriety
) lowest)cost strategy
Answer!
ifficulty! *oderate
"ype! Application
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1<) A company using this competitive strategy see#s to offer a product or service that is
completely uni.ue from other competitors in their mar#et segment/
A) differentiation strategy
B) defender strategy
C) prospector strategy
) lowest)cost strategy
Answer! A
ifficulty! *oderate
"ype! Concept
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11) Which of these actions would ;2 see# to encourage in attempting to create a lowest)cost
competitive strategy?
A) an employee long)term focus
B) unpredictable employee behavior
C) high concern for the .uantity of output
) high concern for the .uality of output
Answer! C
ifficulty! ifficult
"ype! Critical "hin#ing
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1>) "his group is directly involved in producing goods and delivering services for a company/
A) staff employees
B) line employees
C) managers
) executives
Answer! B
ifficulty! *oderate
"ype! Concept
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16) "hese describe the terms of employment that are set between management and union
bargaining representatives/
A) employee relationship agreements
B) collective bargaining agreements
C) &oint employment agreements
) wor#place re.uisite agreements
Answer! B
ifficulty! ,asy
"ype! Concept
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10) 5andraAs position changed from supervisor at the planning department to supervisor at the
new pro&ects department/ :n terms of career development9 which of the following is more
applicable to 5andraAs situation?
A) maintaining focus with less responsibilities
B) a lateral move across the companyAs hierarchy
C) moving upward through a companyAs hierarchy
) maintaining the focus and assume greater responsibilities
Answer! B
ifficulty! *oderate
"ype! Application
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'8) Which of these is a company sponsored program that provides income to wor#ers throughout
their retirement?
A) pension plans
B) severance plans
C) loyalty plans
) longevity plans
Answer! A
ifficulty! ,asy
"ype! Concept
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'1) "his is a way in which companies often trim their payroll responsibilities by encouraging
higher paid wor#ers with more seniority to voluntarily leave the company earlier than previously
planned/
A) resignation plans
B) severance plans
C) early retirement programs
) employee expenditure plans
Answer! C
ifficulty! *oderate
"ype! Concept
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'') What @/5/ federal law established a national minimum wage for employees involved in
commerce =rather than &ust those employed by companies wor#ing for the @/5/ government)9 as
well as prohibit most employment of minors in oppressive child labor?
A) "he ,.ual (ay Act of 101+
B) "he Civil 2ights Act of 101-
C) "he 4air $abor 5tandards Act of 10+6
) "he 4amily and *edical $eave Act of 100+
Answer! C
ifficulty! *oderate
"ype! Concept
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'+) "hese ordered sets of &obs ma#e it easy for compensation managers to give a clear relative
value for all &obs within a company/
A) externally consistent compensation systems
B) internally consistent compensation systems
C) mar#et)wide consistent compensation systems
) comparably consistent compensation systems
Answer! B
ifficulty! ,asy
"ype! Concept
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'-) What is a systematic process for gathering9 documenting9 and analyzing information in order
to describe &obs?
A) &ob evaluation
B) internal consistency
C) &ob analysis
) strategic analysis
Answer! C
ifficulty! *oderate
"ype! Concept
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'<) What do compensation managers use to recognize differences in the relative net worth of
&obs and to establish pay differentials based upon management priorities?
A) &ob evaluation
B) internal consistency
C) &ob analysis
) strategic analysis
Answer! A
ifficulty! *oderate
"ype! Concept
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'1) "hese compensation systems go a long way in attracting and retaining the most .ualified
employees9 and are based upon mar#et surveys and compensation surveys/
A) internally consistent compensation systems
B) mar#et)competitive pay systems
C) &ob evaluation compensation systems
) externally consistent compensation systems
Answer! B
ifficulty! *oderate
"ype! Concept
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'>) "his allows business professionals to determine where they currently stand in the mar#et
based on both the external mar#et context and internal factors/
A) mar#et analysis
B) comparative analysis
C) +18 degree analysis
) strategic analysis
Answer!
ifficulty! *oderate
"ype! Concept
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'6) What represents the pay rate differences for &obs and employee contributions of une.ual
worth to a company?
A) merit pay
B) incentive pay
C) retention pay
) pay structures
Answer!
ifficulty! *oderate
"ype! Concept
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'0) "hese build upon pay grades9 and include maximum9 minimum9 and mid)point pay rates for
&obs in particular pay grades/
A) pay ranges
B) pay slopes
C) piece rates
) pay determinates
Answer! A
ifficulty! ,asy
"ype! Concept
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+8) Which of the following are sta#eholders within a company?
A) line managers
B) executives
C) unions
) all of the above
Answer!
ifficulty! ,asy
"ype! Concept
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+1) FFFFFFFF compensation refers to the mental state of employees as a result of their
performance on the &ob/
Answer! :ntrinsic
ifficulty! *oderate
"ype! Concept
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+') FFFFFFFF pay systems reward employees with base pay raises according to their length of
service on the &ob/
Answer! 5eniority
ifficulty! ,asy
"ype! Concept
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++) FFFFFFFF decisions are made in order to support the fulfillment of strategic decisions/
Answer! "actical
ifficulty! ,asy
"ype! Concept
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+-) 5trategic management involves distinguishing between FFFFFFFF and FFFFFFFF in
attempting to achieve company goals9 thus ma#ing strategic management an inexact process/
Answer! threats9 opportunities
ifficulty! ifficult
"ype! Concept
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+<) Competitive FFFFFFFF is the use of company resources =such as capital9 technology9 and
human resources) to promote and sustain competitive advantage/
Answer! strategy
ifficulty! *oderate
"ype! Concept
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+1) (GH uses FFFFFFFF strategy based on brand image and price premium in between its :ams
and ,u#anuba brands/
Answer! differentiation
ifficulty! *oderate
"ype! Application
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+>) ;uman resource professionals are FFFFFFFF employees9 because they exist to provide
support services for line employees/
Answer! staff
ifficulty! *oderate
"ype! Concept
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+6) Companies that are implementing FFFFFFFF plans generally increase the amount of
classroom and on)the)&ob training9 as these types of plans ma#e training necessary rather than
optional/
Answer! pay)for)#nowledge
ifficulty! *oderate
"ype! Concept
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+0) ,mployment FFFFFFFF occurs when an employeeAs agreement to perform wor# is ended9 be
it voluntarily or involuntarily/
Answer! termination
ifficulty! ,asy
"ype! Concept
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-8) ue to recent economic downturn9 CDE Co/ decided to shut down one of its appliance
manufacturing plants in the @nited 5tates and therefore around +88 wor#ers need to be laid off/
CDE Co/ will award these laid off wor#ers with 1 months of FFFFFFFF pay/
Answer! severence
ifficulty! ifficult
"ype! Application
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-1) What is merit pay? ,xplain the role of performance appraisals in merit pay programs/
Answer! According to merit pay programs9 employeesA compensation should be determined by
differences in &ob performance/ @nder merit pay programs9 employees get permanent increases
to their base pay based on their performance/ (erformance appraisals are #ey issue in merit pay
programs/ :n order to have a successful merit pay program9 employees should be able to see the
lin# between their performance and pay increases/ *erit pay systems re.uire specific
performance appraisal approaches9 and choosing9 designing9 and implementing such plans are
crucial for the success of merit pay programs/
ifficulty! *oderate
"ype! 5ynthesis
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-') What is pay)for)#nowledge plan? ,xplain the role of training in pay)for)#nowledge plans/
Answer! (ay)for)#nowledge programs reward managerial9 service9 or professional wor#ers for
successfully learning specific curricula/ "his type of pay systems reward employees for the
range9 depth9 and types of #nowledge they are capable of applying to their &obs/ esigning and
implementing training programs are crucial in the success of pay)for)#nowledge programs/
"hrough training programs9 employees learn the necessary s#ills and #nowledge for performing
their &ob9 and this in turn increases their pay/ :n this type of pay systems9 training is necessary
rather than optional/
ifficulty! *oderate
"ype! 5ynthesis
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-+) What is a constituency? ;ow does it affect the ;2 department?
Answer! "he ;2 department does not exist in isolation/ 2ather9 it must respond to a variety of
parties9 each with their own interests/ :n fact9 the success of an ;2 department may depend on
how well it serves various constituencies/ Constituencies can include employees9 line managers9
executives9 unions9 the @/5/ government9 and customers/ ,ach of these groups expects certain
actions by the ;2 department9 rates these actions according to their own standards9 and tries to
set up goals or present constraints within their realm of understanding/ As a result9 the ;2
department plays the role of a &uggler trying to meet often)competing goals presented by multiple
constituencies/
ifficulty! *oderate
"ype! Concept
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