Ch11 Developing A Pay Structure Exam Prep - HR Management People Data & Analytics 1e | Test Bank by Talya Bauer by Talya Bauer. DOCX document preview.
Chapter 11: Developing a Pay Structure
Test Bank
Multiple Choice
1. A ______ refers to the way in which an organization applies pay rates to different jobs, skills, or competencies.
A. reward system
B. pay structure
C. total compensation
D. job evaluation
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Opening Case: Equal Pay for the U.S. Women’s National Soccer Team
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
2. Kari is reviewing the value of her salary, benefits, health care, and paid time off. All of these things make up Kari’s ______.
A. pay structure
B. relational returns
C. compensation package
D. equity
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Comprehension
Answer Location: Pay as a Reward
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
3. A ______ refers to the policies, procedures, and practices used by an organization to determine the amount and types of returns individuals, teams, and the organization receive in exchange for their membership and contributions.
A. reward system
B. pay structure
C. total compensation
D. job evaluation
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Reward Systems
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
4. ______ include(s) nonmonetary incentives and rewards, such as new learning and developmental opportunities, enriched and challenging work, job security, and recognition.
A. Broadbanding
B. Relational returns
C. Pay compression
D. External equity systems
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Relational Returns
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
5. Which is an example of a relational return?
A. base salary
B. paid time off
C. 401(k) savings plan
D. tenure (lifetime employment)
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Comprehension
Answer Location: Relational Returns
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
6. ______ subsumes compensation and benefits, which are often referred to as direct pay and indirect pay, respectively.
A. Pay compression
B. Total compensation
C. Pay inversion
D. Broadbanding
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Total Compensation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
7. Which statement best describes the difference between total compensation and relational returns?
A. Total compensation refers to money paid directly to employees; relational returns are all other benefits and perks.
B. Total compensation refers to financial returns and tangible services; relational returns are psychological in nature.
C. Total compensation refers to anything with monetary value given to the employee; relational returns do not have an associated cost.
D. Total compensation includes all financial and nonfinancial returns to employees; relational returns are the nonfinancial component of total compensation.
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Analysis
Answer Location: Relational Returns
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
8. ______ include(s) health, life, and disability insurance; retirement programs; and work–life balance programs.
A. Pay inversion
B. Pay grade
C. Benefits
D. Job structure
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Total Compensation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
9. Benefits may be referred to as ______.
A. direct pay
B. indirect pay
C. base pay
D. variable pay
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Total Compensation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
10. Which is an example of a benefit?
A. employee recognition
B. job security
C. commission
D. health insurance
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Comprehension
Answer Location: Total Compensation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
11. Total compensation includes ______.
A. base pay and health insurance
B. base pay and variable pay
C. compensation and benefits
D. variable pay and health insurance
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Total Compensation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
12. Which of these is the greatest cost for employers?
A. compensation
B. retirement programs
C. disability insurance
D. health insurance
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Total Compensation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
13. ______ provides a way of understanding how an individual’s sense of fairness is influenced by others with whom they compare themselves.
A. The classification system
B. Equity theory
C. Organizational justice theory
D. The point-factor method
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
14. According to equity theory, which is an example of a referent?
A. a colleague in your department
B. a manager in your department
C. the president of your company
D. a friend in a different field
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
15. Striving to maintain a state of perceived equity between oneself and a referent is a defining characteristic of ______ theory.
A. equality
B. equity
C. expectancy
D. reinforcement
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Equity Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
16. Applying principles of equity theory, employees are likely to compare themselves to other employees based on their perceived ratio of ______.
A. rewards to contributions
B. variable pay to base pay
C. compensation to benefits
D. work requirements to life desires
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
17. Applying principles of equity theory, why might employees steal from their company?
A. They want to help others who are under-rewarded.
B. They want to see the company lose money and fail.
C. They are trying to compensate for being under-rewarded.
D. They are angry with a decision their manager made.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
18. According to the equity theory, why might employees increase their contributions to the company?
A. They are trying to compensate for being over-rewarded.
B. They are highly competitive and want to be seen as the best worker on the team.
C. They want to lessen tensions that have arisen with their boss.
D. They are fearful that they are about to be terminated.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
19. Applying equity theory principles, an employee who experiences inequity related to compensation might feel motivated to ______.
A. find additional jobs
B. ask for a raise
C. take on more projects
D. start a business
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
20. Theresa normally feels like she is overpaid relative to her contribution to the company. However, this overpayment does not bother her. What does bother her is being given a difficult project with a short deadline but not being given any extra money for completing it on time. This makes her feel underpaid. She complains to her manager about the lack of fair reward for this work. Theresa is displaying a(n) ______ orientation.
A. equity sensitive
B. benevolent
C. entitlement
D. distributive
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Equity Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
21. Alli likes her job and the organization for which she works. She puts in extra hours for which she is not paid. She is comfortable with being underpaid for her time because she enjoys making a contribution to the firm. When her boss gives her a bonus for her hard work, she is uncomfortable with what she perceives as over-reward. Alli is displaying a(n) ______ orientation
A. equity-sensitive
B. benevolent
C. entitlement
D. distributive
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Equity Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
22. A person comfortable with being over-rewarded has a(n) ______ orientation.
A. equity-sensitive
B. benevolent
C. entitlement
D. distributive
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
23. A person who is comfortable with being under-rewarded has a(n) ______ orientation.
A. entitlement
B. equity-sensitive
C. benevolent
D. equality-sensitive
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
24. ______ stems from equity theory and similarly focuses on perceptions of fairness in the workplace.
A. The classification system
B. Compensable factors method
C. Organizational justice theory
D. The point-factor method
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
25. Organizational justice theory focuses on three types of perceived injustices, which include ______.
A. entitlement, equity, and benevolent
B. distributive, procedural, and interactional
C. distributive, entitlement, and equity
D. equality, equity, and procedural
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
26. Another name for distributive justice is ______.
A. process fairness
B. interpersonal fairness
C. outcome fairness
D. progressive fairness
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
27. Tony thinks quarterly bonuses were allocated unfairly. Which type of organizational justice is Tony concerned with?
A. distributive
B. procedural
C. process
D. interactional
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Organizational Justice Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
28. ______ justice refers to employees’ perceptions of fairness regarding the procedures used to determine how an outcome or resource is determined and distributed.
A. Distributive
B. Procedural
C. Interactional
D. Internal
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
29. ______ justice refers to individuals’ perceptions that they are treated with respect, consideration, dignity, and kindness as well as provided with an adequate explanation regarding the details of a particular process.
A. Distributive
B. Procedural
C. Interactional
D. Internal
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
30. Sydnee works at a law firm where she is compensated fairly for her contribution to the company. All of her coworkers also seem to feel that the allocation of rewards is equitable. However, company leadership is often cold, unkind, or even disrespectful to coworkers. Sydnee is considering leaving the firm, but she has to weigh its high perceived ______ with the low perceived ______.
A. procedural justice; interactional justice
B. interactional justice; procedural justice
C. distributive justice; interactional justice
D. procedural justice; distributive justice
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Organizational Justice Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
31. Another name for procedural justice is ______.
A. process fairness
B. interactional justice
C. process justice
D. distributive fairness
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
32. Using an ethical process to determine how to allocate rewards helps to ensure a perception of ______.
A. procedural justice
B. legal compliance
C. interactional justice
D. external equity
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Organizational Justice Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
33. Employees who perceive the way rewards are determined and allocated is unfair are less likely to ______.
A. quit their job
B. be unhappy with their jobs
C. help others on the job
D. discourage new hires
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Analysis
Answer Location: Organizational Justice Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
34. Travis knows that the company did not make enough in the previous year to justify giving everyone their customary cost-of-living adjustment. He wants to make sure that the process of deciding who does get a pay increase is completely ethical. Travis is attempting to balance what will be perceived as low ______ with high ______.
A. distributive justice; procedural justice
B. procedural justice; distributive justice
C. interactional justice; distributive justice
D. distributive justice; interactional justice
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Application
Answer Location: Organizational Justice Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
35. Drew, a manager, has to tell one of his direct reports that she will not receive a year-end bonus, but her teammates will. Drew knows he will have to communicate this information respectfully. What else does Drew need to do to help create a perception of interactional justice?
A. provide her with an opportunity to do better next year
B. insist that the distribution of rewards was actually equitable
C. tell her decision might be changed if she improves
D. carefully explain that the process used to make this decision was fair
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Analysis
Answer Location: Organizational Justice Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
36. ______ refers to the fairness of pay rates across jobs within an organization.
A. Internal equity
B. Pay inversion
C. Compa-ratio
D. Procedural justice
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Ensuring Internal Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
37. A ______ refers to the ranking of jobs in an organization based on their respective worth.
A. job evaluation
B. job structure
C. point-factor model
D. broadband
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Structure
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
38. Internal equity means that ______.
A. all jobs are paid indirectly proportionally to their alignment with strategy
B. jobs of greater value to the organization are assigned higher pay rates
C. ranking jobs based on their respective worth is procedural and interactional
D. job analyses are conducted for all jobs annually
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Comprehension
Answer Location: Ensuring Internal Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
39. Another name for a job structure is ______.
A. internal alignment
B. job hierarchy
C. internal consistency
D. job evaluation
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Structure
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
40. What method of job evaluation orders jobs based on their respective worth to the company?
A. ranking method
B. job evaluation
C. classification method
D. job hierarchy
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Structure
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
41. What is the first step in creating an equitable job structure?
A. performance appraisal
B. ranking
C. job analysis
D. job evaluation
KEY: Learning Objective: 11.3: Describe the development of a pay structure.REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
42. The three prominent approaches for conducting a job evaluation include the ranking method, the classification method, and the ______.
A. labor market method
B. compa-ratio method
C. point-factor method
D. benchmark method
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
43. The ______ method is perhaps the fastest and simplest way to perform a job evaluation, especially when there are a relatively small number of jobs.
A. ranking
B. point-factor
C. classification
D. taxonomy
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
44. Grayson is undertaking a job evaluation for his small company. The company has only a few positions that need to be evaluated and only a short time in which to complete this evaluation. Which method should Grayson use?
A. classification method
B. four-point method
C. point-factor method
D. ranking method
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Analysis
Answer Location: Job Evaluation
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
45. Which job evaluation method lacks clear criteria for determining why and how a job was graded the way it was graded?
A. classification method
B. four-point method
C. point-factor method
D. ranking method
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
46. Grant is on a team of subject matter experts performing a job evaluation using the ranking method. They have already gathered the job descriptions for the company’s many positions. What should they undertake next?
A. categorize the jobs based on predefined criteria
B. compare the jobs to those of external companies
C. order the jobs in terms of their relative contribution
D. flag any redundant positions for consolidation
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Analysis
Answer Location: Job Evaluation
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
47. The ______ method for job evaluation has discrete levels comprised of one or more jobs that are developed in advance to cover different job types or levels within the organization.
A. ranking
B. point-factor
C. classification
D. taxonomy
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
48. A similarity between the ranking method and the classification method is that ______.
A. neither provides for objectivity when ranking jobs from one level to the next level
B. neither provides a matching job description for a job from one level to the next level
C. neither provides an assessment of how much more valuable a job is from one level to the next level
D. neither provides guidance for determining classification from level to the next level
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Analysis
Answer Location: Job Evaluation
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
49. The ______ method is a common job evaluation approach in organizations which requires the identification, scaling, and application of weights to compensable factors.
A. ranking
B. point-factor
C. classification
D. taxonomy
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
50. Which job evaluation method involves an internal subject matter expert and an external subject matter expert?
A. classification
B. ranking
C. distribution
D. point-factor
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
51. Conducting a point-factor method requires identifying, scaling, and applying weights to the common dimensions by which jobs vary in terms of worth. These common dimensions are called ______.
A. compensable factors
B. calculated points
C. benchmarks
D. compa-ratios
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
52. In job evaluation, ______ are the common dimensions by which jobs vary in terms of worth.
A. rankings
B. point factors
C. compensable factors
D. distributions
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
53. An example of a compensable factor is ______.
A. education
B. wage or salary
C. benefits
D. daily schedule
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Comprehension
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
54. Which approach to job evaluation yields a numerical measure for each job for the sake of comparison with other jobs?
A. ranking method
B. classification method
C. point-factor method
D. distribution method
KEY: Learning Objective: 11.3: Describe the development of a pay structure.REF: Cognitive Domain: Knowledge
Answer Location: Job Evaluation
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
55. ______ refer(s) to the extent to which the pay for a particular job at a particular organization is competitive and fair relative to the pay of the same or similar jobs at other organizations.
A. Compensable factors
B. External equity
C. Classification
D. Organizational justice
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Ensuring External Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
56. The ______ refers to the availability of talent outside of an organization, which can be viewed through the lens of talent supply and demand.
A. labor market
B. external equity
C. market pay line
D. product market
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Labor Market
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
57. When an organization pays its employees less than the average competitor, it is pursuing a ______ strategy.
A. beat-the-market
B. lag-the-market
C. lead-the-market
D. mixed-market
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Comprehension
Answer Location: Market Strategies
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
58. The ______ refers to the final sale of products and services in the marketplace.
A. labor market
B. market review
C. market pay line
D. product market
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Ensuring External Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
59. A ______ is the process of collecting pay data for benchmark jobs from other organizations.
A. broadband
B. market review
C. market pay line
D. product market
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Market Reviews
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
60. To conduct an effective market review, ______ need to be available for benchmark jobs.
A. job descriptions
B. compensable factors
C. job evaluations
D. job titles
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Comprehension
Answer Location: Match Job Descriptions
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
61. ______ refers to a process whereby the analyst identifies when the pay data were originally collected and then weights the data based on the expected change in the market pay rates based on merit-based increases, cost of living adjustments, and other factors that affect pay.
A. Aging
B. Broadbanding
C. Market review
D. Delayering
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Apply Aging Factor
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
62. Some organizations base their pay levels and pay structure directly on their competitors’ pay levels and pay structures, a process that is referred to as ______.
A. market review
B. broadbanding
C. delayering
D. market pricing
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Integrating Internal Equity and External Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
63. The ______ reflects the relationship between the internal job structure of the organization for benchmark jobs and the external pay practices of other organizations.
A. pay policy line
B. pay grade
C. pay rank
D. market pay line
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Market Pay Line
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
64. A ______ represents how an organization translates information about the internal job structure and external pay rates of competitors into actionable pay practices.
A. pay policy line
B. pay grade
C. pay rank
D. market pay line
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Pay Policy Line
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
65. A ______ represents a group of jobs with similar job evaluation point values that are then assigned common pay midpoint, minimum, and maximum values.
A. pay policy line
B. pay grade
C. pay rank
D. broadband
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Pay Grades
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
66. The process of collapsing multiple pay grades into one large grade with a single minimum and maximum is referred to as ______.
A. pay policy line
B. delayering
C. broadbanding
D. market pricing
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Pay Grades
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
67. ______ refers to the fairness of how pay is administered and distributed to individual employees working similar jobs within the same organization.
A. Distributive justice
B. Individual equity
C. Pay justice
D. Interactional justice
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Ensuring Individual Equity
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
68. What kind of pay structure emphasizes people’s unique competencies and skills when determining pay?
A. person-based
B. job-based
C. skill-based
D. task-based
KEY: Learning Objective: 11.4: Identify basic principles underlying person-based pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Person-Based Pay Structures
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
69. In job-based pay structures, employees are paid based on ______.
A. the content of the jobs they perform
B. their unique performance of a task
C. their previous job experience
D. their individual competencies or skills
KEY: Learning Objective: 11.4: Identify basic principles underlying person-based pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Person-Based Pay Structures
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
70. When Maria was starting her small business, she took a class about pay structures. She read about the benefits of person-based pay structures. She would like to use the person-based pay structure at her small business. What should she do?
A. pay employees based on the jobs they perform
B. make sure pay grades are similar across the company
C. determine bonuses based on employees’ personal traits
D. tie employee pay to the unique abilities they contribute
KEY: Learning Objective: 11.4: Identify basic principles underlying person-based pay structures.
REF: Cognitive Domain: Analysis
Answer Location: Person-Based Pay Structures
Difficulty Level: Hard
TOP: AACSB Standard: Systems and processes in organizations
SHRM: Total Rewards
71. Enacted in 1938, the Fair Labor Standards Act (FLSA) introduced major provisions aimed at regulating ______, ______, hours worked, and record keeping.
A. executive pay; minimum wage
B. overtime pay; discrimination
C. worker safety; minimum wage
D. overtime pay; minimum wage
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Fair Labor Standards Act
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
72. ______ refers to those employees who do not fall under the purview of minimum wage and overtime provisions of the Fair Labor Standards Act.
A. Full time
B. Laborer
C. Exempt
D. Requisite
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Fair Labor Standards Act
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
73. ______, issued by President Lyndon B. Johnson in 1965, expanded the protections for different forms of employment discrimination to include employers with federal contracts or subcontracts in excess of $10,000.
A. Executive Order 11246
B. The Fair Labor Standards Act (FLSA)
C. The National Labor Relations Act (NLRA)
D. Internal Revenue Code
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Executive Order 11246
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
74. Enacted in 1935, the ______ includes a provision stipulating that employees protected under the act have a right to discuss pay as part of activities related to collective bargaining and protection, thereby providing an avenue through which employees may uncover pay discrimination.
A. Executive Order 11246
B. The Fair Labor Standards Act (FLSA)
C. The National Labor Relations Act (NLRA)
D. Internal Revenue Code
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: National Labor Relations Act
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
75. ______ occurs when a recently hired employee with relatively little experience earns nearly as much or the same as a more experienced, longer-tenured employee in the same job.
A. Internal equity
B. Aging of pay data
C. Pay inversion
D. Pay compression
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Knowledge
Answer Location: Pay Compression and Inversion
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
76. What reflects how much employees are paid for a given job or pay grade as compared to the espoused pay structure and policies?
A. employee tenure
B. compa-ratio
C. the systematic compression scale
D. pay transparency
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Knowledge
Answer Location: Adherence to Pay Policies
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
77. Why do proponents of pay transparency think it is desirable to make pay information public?
A. It can determine whether a reward system is effective.
B. It can increase equity sensitivity among employees.
C. It can identify people at risk for workplace deviance.
D. It can reduce gaps in gender and race/ethnicity earnings.
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Application
Answer Location: Pay Transparency and Secrecy
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
True/False
1. Employees rank pay as the number one reason for choosing one job over another.
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Knowledge
Answer Location: Pay as a Reward
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
2. A reward system is not helpful in attracting the best talent if the selection process fails to identify the best candidates.
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Comprehension
Answer Location: Reward Systems
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
3. According to equity theory, individuals compare themselves to referent others based on their perceived ratio of the following factors: rewards and contributions.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Equity Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
4. In the context of equity theory, equality and equity are one and the same.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Equity Theory
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
5. Procedural justice refers to the perceived equality regarding allocation of an outcome or resource.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Organizational Justice Theory
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
6. In a fair job structure, employees who work in jobs that contribute more directly to an organization’s attainment of strategic objectives are paid at a higher rate.
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Job Structure
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
7. In job evaluation, a secretary is an example of a benchmark job.
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Application
Answer Location: Market Reviews
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
8. A pay policy line represents how an organization translates information about the internal job structure and external pay rates of competitors into actionable pay practices.
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Knowledge
Answer Location: Pay Policy Line
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
9. The term “exempt” refers to employees who fall under the purview of the minimum wage and overtime provisions of the Fair Labor Standards Act.
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Comprehension
Answer Location: Fair Labor Standards Act
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
10. Pay inversion occurs when the CEO earns several times what the average worker is paid.
KEY: Learning Objective: 11.5: Describe the philosophy and challenges of executive pay structures.
REF: Cognitive Domain: Comprehension
Answer Location: Executive Pay
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
11. The imbalance between what an executive earns and what the average worker earns, in part, is attributed to stock options and other ownership programs related to profits.
KEY: Learning Objective: 11.5: Describe the philosophy and challenges of executive pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Executive Pay
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
12. When executives are paid a lot more than the average employee, stakeholders view the system as internally inequitable.
KEY: Learning Objective: 11.5: Describe the philosophy and challenges of executive pay structures.
REF: Cognitive Domain: Knowledge
Answer Location: Executive Pay
Difficulty Level: Easy
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
13. Pay openness refers to the degree to which employees can discuss pay with each other.
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Comprehension
Answer Location: Pay Transparency and Secrecy
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
14. In 2017, African American/Black and Hispanic/Latino workers earned $0.75 and $0.74, respectively, for every $1.00 White workers earned.
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Comprehension
Answer Location: Pay Transparency and Secrecy
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
15. Pay transparency may increase the pay gap between protected groups.
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Comprehension
Answer Location: Pay Transparency and Secrecy
Difficulty Level: Medium
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
Essay
1. Prepare a strategy that supports an effective reward system.
KEY: Learning Objective: 11.1: Explain the conceptual foundation of compensation and reward systems.
REF: Cognitive Domain: Application
Answer Location: Pay as a Reward
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
2. Examine the difference between equality and equity as it relates to pay structure.
KEY: Learning Objective: 11.2: Describe how to develop internally, externally, and individually equitable and legally compliant pay structures.
REF: Cognitive Domain: Analysis
Answer Location: Equity Theory
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
3. Provide an example that analyzes how a company develops and administers an equitable pay structure.
KEY: Learning Objective: 11.3: Describe the development of a pay structure.
REF: Cognitive Domain: Application
Answer Location: Developing a Pay Structure
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
4. Examine the benefits of a person-based pay structure.
KEY: Learning Objective: 11.4: Identify basic principles underlying person-based pay structures.
REF: Cognitive Domain: Analysis
Answer Location: Person-Based Pay Structures
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
5. Provide and analyze an example of pay compression.
KEY: Learning Objective: 11.6: Evaluate issues of pay administration such as compression and pay transparency.
REF: Cognitive Domain: Analysis
Answer Location: Pay Compression and Inversion
Difficulty Level: Hard
TOP: AACSB Standard: Application of knowledge
SHRM: Total Rewards
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HR Management People Data & Analytics 1e | Test Bank by Talya Bauer
By Talya Bauer