Human Resource Management, 15e (Dessler)

Chapter 11 Establishing Strategic Pay Plans

1) Which of the following terms refers to all forms of pay or rewards going to employees
and arising from their employment?
A) salary
B) employee benefits C)
wage reimbursement D)
employee compensation
Answer: D

2) Which of the following is NOT a type of direct financial payment?

A) wages
B) insurance
C) incentives
D) commissions
Answer: B

3) Which of the following terms refers to pay in the form of financial benefits, such
as insurance?
A) direct financial payments
B) out-of-pocket expenses
C) indirect financial payments
D) sales commissions

4) John is a sales representative in a jewelry store. He typically works 40 hours per week and his
pay is completely based on his sales. He earns a 5% commission for every sale he makes.
Which of the following terms best describes John's situation?
A) pay for performance
B) indirect financial compensation
C) time-based compensation
D) piecework pay
26) Which of the following terms refers to a compensation plan that advances a firm's strategic
goals?
A) strategic management
B) performance pay plan
C) aligned reward strategy
D) workers' compensation

28) What theory of motivation states that people are strongly motivated to maintain a balance
between what they perceive as their contributions and their rewards?
A) Two-factor theory
B) Equity theory
C) Learned needs theory D) Expectancy theory
30) Which of the following is NOT one of the forms of equity related to compensation
issues? A) group
B)external
C) individual
D) procedural

31) 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?
A) distributive B) internal C) external D) procedural

32) 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?
A) distributive
B) procedural
C) internal
D) external

33) Which form of equity refers to the fairness of a job's pay rate in comparison to other
jobs within the same company?
A) external
B) internal
C) distributive
D) individual

34) 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?
A) external
B) internal
C) distributive D) individual
35) 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?
A) internal
B) distributive C) individual D) procedural

36) 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?
A) internal
B) distributive C) individual D) procedural

37) Which form of equity refers to the perceived fairness of the processes used to make
decisions regarding the allocation of pay?
A) internal
B) distributive C) individual D) procedural

38) External equity refers to ________.

A) how a job's pay rate in one company compares to the job's pay rate in other companies
B) the fairness of an individual's pay as compared to a co-worker's pay for the same job
C) the perceived fairness of the processes and procedures used to make decisions about
compensation
D) the use of salary surveys and job evaluation comparisons to monitor pay levels within an
industry

39) Which of the following best defines internal equity?

A) how a job's pay rate in one company compares to the job's pay rate in other companies
B) how fair the job's pay rate is, when compared to other jobs within the same company
C) the fairness of an individual's pay as compared to a co-worker's pay for the same job
D) the perceived fairness of the processes and procedures used to make compensation
decisions

40) Which of the following is used to maintain internal

equity? A) job analysis comparisons
B)organizational charts
C) incentive pay
D) salary surveys

41) What type of equity is a manager most likely trying to maintain through the use of
performance appraisals and incentive pay?
A) internal
B) external
C) Individual
D) procedural

42) Beth, a small business owner, wants to ensure external equity when establishing pay
rates. Beth should most likely ________.
A) use wage curves to price each pay
grade
B) compare performance appraisals
C) conduct a salary survey D) check online pay sites
65) Which of the following terms refers to a systematic comparison done in order to determine
the worth of one job relative to another?
A) job analysis
B) job evaluation
C) job description D) job classification

67) Central basic factors that establish how several jobs compare to one another and
that determine the pay for each job are called ________.
A) compensable factors
B) job evaluation factors
C) ranking factors
D) analysis factors

68) In most cases, the majority of the members on a job evaluation committee are
________. A) managers
B) employees
C) HR specialists
D) union representatives
69) Which of the following is NOT one of the typical methods used by job
evaluation committees to determine the worth of a job?
A) ranking
B) point method
C) job classification D) paired comparison

70) When using the job evaluation method of job classification, raters categorize jobs into groups
of similar jobs called ________.
A) classes B) sections C) grades D) cohorts

71) Which of the following best describes the point method of job evaluation?
A) ranking each job relative to all other jobs based on pay grade
B) categorizing jobs into grades and classes based on specific rules
C) deciding which jobs have a higher number of compensable factors
D) identifying and quantifying the compensable factors present in a
job

72) Which job evaluation method is a quantitative technique involving the identification of
several compensable factors and the degree to which each of these factors is present in the
job? A) ranking method
B) point method
C) job grading method
D) job classification
method

73) Which job evaluation method is used by most modern employers?

A) job classification method
B) job grading method
C) ranking method
D) point method
74) What are the two primary components of computerized job evaluations?
A) compensable factors and benchmark jobs
B) grade definitions and factor comparisons
C) structured questionnaires and statistical models
D) structured questionnaires and grade definitions

83) A ________ is comprised of jobs of approximately equal difficulty or importance

as established by job evaluation.
A) wage curve B) benchmark C) pay grade D) class

84) Which of the following shows the relationship between the value of the job and the
average pay for this job?
A) benchmark B) pay grade C) scatter plot D) wage curve

85) The purpose of the wage curve is to ________.

A) show the relationship between the value of the job and the current average pay rates
B) equate jobs of similar difficulty or importance as established by job evaluation
C) choose benchmark jobs within each pay grade
D) cluster jobs into logical groupings
86) Phil, the owner of Eastline Electronics, recently learned that the current rate being paid for
the position of engineering assistant at his firm falls significantly below the wage line. Which of
the following steps should Phil most likely take to correct this problem?
A) enact a pay freeze for that
job
B) assess a decrease in wages
C) pay a one-time bonus
D) provide a pay raise

87) Which of the following terms refers to a series of steps or levels within a pay grade?
A) pay metric
B) pay range
C) wage class
D) wage curve

88) Which of the following questions is most relevant to developing a market-competitive pay
system?
A) What is the ranking of each job?
B) What is the relevant labor market?
C) What percentage of workers are contingent?
D) What are the local and federal pay regulations?

89) Richard was recently offered a position as vice president of marketing at a national retail
chain. As a top executive at the firm, Richard will most likely be compensated with all of
the following EXCEPT ________.
A) stock options
B) pension plans
C) sales commissions
D) supplemental life insurance
90) What is the primary purpose of offering an executive stock options in a compensation
package?
A) providing the executive with guaranteed bonuses
B) encouraging the executive to increase the firm's value
C) enabling the firm to decrease the executive's base pay
D) offering the executive long-term retirement security