Chapter 7

Question 1

If a state’s minimum wage is higher than the federal minimum wage,

Answer 1

employers must pay this higher wage.

Question 2

The FLSA established overtime pay requirements at ______ times the regular pay rate for all hours worked over 40 in a week.

Answer 2

one and one-half

Question 3

The ____________ essentially treats each paycheck as a new act of discrimination.

Answer 3

Lily Ledbetter Fair Pay Act

Question 4

What is true of the expectancy theory?

Answer 4

This theory emphasizes the importance of finding valued rewards for the employee.

Question 5

What is classified as an input in the equity theory?

Answer 5

Loyalty.

Question 6

What is classified as an outcome in the equity theory?

Answer 6

Job security.

Question 7

What is an indicator of external inequity?

Answer 7

Difficulty hiring new employees.

Question 8

What is true of an employer who uses the first-quartile strategy of compensation?

Answer 8

The employer pays the employees below market levels.

Question 9

What is true of an employer who uses the third-quartile strategy of compensation?

Answer 9

The employer pays the employees above market levels.

Question 10

What is true of an employer who uses the second-quartile strategy of compensation?

Answer 10

The employer pays the employees on par with the market levels.

Question 11

What is true of the ranking method of job evaluation?

Answer 11

It is a simple system that places jobs in order to , from highest to lowest, by their value to the organization.

Question 12

What is true of the classification method of job evaluation?

Answer 12

In this method, descriptions of each group of jobs are written and then each job is put into a grade according to the group it best matches.

Question 13

What is true of the point factor method of job evaluation?

Answer 13

It looks at compensable factors in a group of similar jobs and assigns weights to them?

Question 14

The __________ uses external pay data to identify the relative value of jobs based on what other employers pay for similar jobs.

Answer 14

market pricing method

Question 15

What is true of red-circled employees?

Answer 15

They are paid above the range set for a job.

Question 16

What is true of green-circled employees?

Answer 16

they paid below the range set for a job.

Question 17

What is true of pay compression?

Answer 17

It is frequently a result of labor market pay levels increasing faster than current employees’ pay adjustments.

Question 18

The two factors that pay adjustment matrix considers are:

Answer 18

the employee’s performance as rated in an appraisal and the employee’s position in the pay range.

Question 19

True/False: Across-the-board raises are most organizations that follow the pay-for-performance philosophy.

Answer 19

False

Question 20

True/False: The equity theory states that individuals judge fairness in compensation by comparing their inputs and outcomes against the inputs and outcomes of referent others.

Answer 20

True

Question 21

True/False: Distributive justice is the perceived fairness of the process and procedures used to make decisions about employees, including their pay.

Answer 21

False

Question 22

True/False: The practice of using fewer pay grades with much broader ranges than in traditional compensation systems is called broadbanding.

Answer 22

True

Question 23

Define base pay.

Answer 23

Base pay is the basic compensation that an employee receives, usually provided as an hourly wage or a salary. (p. 142)

Question 24

Differentiate between exempt employees and nonexempt employees.

Answer 24

Exempt employees hold positions for which employers are not required to pay overtime. Nonexempt employees must be paid overtime.(p.143)

Question 25

Describe the entitlement philosophy of employee compensation.

Answer 25

The entitlement philosophy of employee compensation holds that individual who have worked another year are entitled to pay increases with little regard for performance differences.(p.146)

Question 26

Describe the pay-for-performance philosophy of employee compensation.

Answer 26

The pay-for-performance philosophy assumes that compensation decisions reflect performance differences. Pay and incentives are structured to reward performance differences among employees.(p.146)