Chapter 9: Compensation and Benefits

Question 1

Which of the following motivation theories is NOT based on content perspectives?

a. Vroom’s expectancy

b. Maslow’s hierarchy of needs

c. Herzberg’s two-factor

d. McClelland’s acquired needs

Answer 1

a. Vroom’s expectancy

Question 2

__________ is the approach an organization utilizes to implement its value system and philosophy regarding pay.

a. A job classification system
b. A pay structure
c. A pay range
d. A pay grade

Answer 2

b. pay structure

Question 3

Which of the following types of pay has the LEAST potential of being motivating or conductive to higher productivity?

a. Piece-rate pay
b. Hourly pay
c. Commissions
d. Team-based pay

Answer 3

b. Hourly pay

Question 4

Why might highly qualified employees opt to work at below-market rates of pay?

a. When high turnover rates make it a good choice.

b. When they cannot find a higher-paying first-quartile job.

c. When they are earning non-monetary rewards and benefits.

d. When employment rates are high.

Answer 4

c. When they are earning non-monetary rewards and benefits.

Question 5

What does the overtime provision of the Fair Labor Standards Act mandate?

a. That exempt employees may not be asked to work more than 40 hours per week.

b. That employees who work more than 40 hours a week must be paid one and a half times their regular hourly wage.

c. That employees must be paid double their regular salary for working on holidays, weekends, or outside of regular business hours.

d. That employers may not use overtime as a substitute for hiring new full-time employees.

Answer 5

b. That employees who work more than 40 hours a week must be paid one and a half times their regular hourly wage.

Question 6

__________ relies on pay, benefits, or other rewards to motivate employees.

a. Performance motivation
b. Extrinsic motivation
c. Intrinsic motivation
d. Philosophical motivation

Answer 6

b. Extrinsic motivation

Question 7

Which of the following types of pay has the LEAST potential of being motivating or conductive to higher productivity?

a. Piece-rate pay
b. Hourly pay
c. Commissions
d. Team-based pay

Answer 7

b. Hourly pay

Question 8

__________ is the approach an organization utilizes to implement its value system and philosophy regarding pay.

a. A job classification system
b. A pay grade
c. A pay structure
d. A pay range

Answer 8

c. A pay structure

Question 9

Why might highly qualified employees opt to work at below-market rates of pay?

a. When they are earning valuable benefits.

b. When employment rates are high.

c. When high turnover rates make it a good choice.

d. When they cannot find a higher-paying first-quartile job.

Answer 9

a. When they are earning valuable benefits.

Question 10

What does the overtime provision of the Fair Labor Standards Act mandate?

a. That employees must be paid double their regular salary for working on holidays, weekends, or outside of regular business hours.

b. That exempt employees may not be asked to work more than 40 hours per week.

c. That employees who work more than 40 hours a week must be paid one and a half times their regular hourly wage.

d. That employers may not use overtime as a substitute for hiring new full-time employees.

Answer 10

c. That employees who work more than 40 hours a week must be paid one and a half times their regular hourly wage.

Question 11

Which of the following laws is LEAST associated with determining compensation?

a. Fair Labor Standards Act
b. Equal Pay Act
c. National Labor Relations Act
d. Family and Medical Leave Act

Answer 11

d. Family and Medical Leave Act

Question 12

The main factor that leads to broadbanding is when internal salaries are not adjusted promptly as labor market pay levels increase.

a. True
b. False

Answer 12

False

Question 13

How do U.S. employers often try to ensure that their employees assigned overseas have the same purchasing power they would in the United States?

a. By using a balance sheet approach.
b. By paying their employees’ U.S. taxes.
c. By employing a comparable-worth approach.
d. By keeping salaries stable when currencies fluctuate.

Answer 13

a. By using a balance sheet approach.

Question 14

Which of the following motivation theories is NOT based on content perspectives?

a. Herzberg’s two-factor
b. Vroom’s expectancy
c. Maslow’s hierarchy of needs
d. McClelland’s acquired needs

Answer 14

b. Vroom’s expectancy

Question 15

According to Maslow’s hierarchy, which of the following reflects the correct order of needs?

a. Safety, physiological, belongingness, Esteem, self-actualization
b. Physiological, safety, esteem, self-actualization, belongingness
c. Physiological, safety, belonging, esteem, self-actualization
d. Self-actualization, esteem, safety, physiological, belongingness

Answer 15

c. Physiological, safety, belonging, esteem, self-actualization

Question 16

__________ relies on pay, benefits, or other rewards to motivate employees.

a. Philosophical motivation
b. Intrinsic motivation
c. Extrinsic motivation
d. Performance motivation

Answer 16

c. Extrinsic motivation

Question 17

__________ compensates employees based on their ability to learn and acquire more skills or expand their knowledge, which in turn helps them become valuable assets to an organization.

a. Competency-based pay
b. Outcome-based pay
c. Merit pay
d. Executive pay

Answer 17

a. Competency-based pay

Question 18

Which kind of organization would be most likely to use a middle-market labor strategy?

a. A business with a shortage of cash

b. An organization that relies on nonmonetary rewards to attract talent

c. An established organization with a strong reputation

d. A business that wants to be very selective in its hiring process

Answer 18

c. An established organization with a strong reputation

Question 19

focus on the source that triggers motivation: people’s needs

Answer 19

content perspectives

Question 20

simplifies Maslow’s hierarchy and divides core needs into three groups, represented by the abbreviation ERG

(and what are they)

Answer 20

Alderfers ERG theory

1) existence
2) relatedness
3) growth

Question 21

describes factors that can increase and decrease employee motivation and satisfaction

Answer 21

Herzberg’s two-factor theory

Question 22

argues that there are two types of needs: ones that people are born with and others that are acquired through life experiences.

Answer 22

McClelland’s Acquired Needs Theory

Question 23

focus on the process leading to motivation and address the reasons and mechanisms for people’s actions as well as the resulting level of satisfaction

Answer 23

process and equity perspectives

Question 24

explains the motivation process using three dimensions:

1) expectancy (effort leads to high performance)

2) instrumentality (probability that successful performance will lead to desired outcomes)

3) valence: (relative weight or value that an employee places on particular rewards or outcomes)

Answer 24

Vroom’s Expectancy Theory

Question 25

view humans as being motivated to pursue challenging goals

Answer 25

Goal-setting theories

Question 26

employees choose specific behaviors based on whether they believe they are treated fairly.

Answer 26

equity theory

Question 27

Employees are motivated by knowing that their employer treats them with fairness, respect, and dignity

Answer 27

Justice theories

Question 28

aptures the essence of behavioral perspectives—that is, behaviors followed by positive consequences tend to increase in frequency, while behaviors followed by negative consequences tend to decrease in frequency

Answer 28

Thorndike’s law of effect

Question 29

assess the pay of each job in relation to prevailing market rates.

Answer 29

market pricing structures

Question 30

emphasize equity of pay within and across jobs in the organization rather than a concern with external equity or rates of pay for similar jobs in the external market

Answer 30

internally equitable structures

Question 31

the process of establishing the relative worth of jobs within a single organization based on job content, which has been determined by prior job analysis and defined in in job descriptions, and the value added to the organization’s pursuit of strategic goals and objectives while disregarding such extraneous factors as market pricing

Answer 31

job evaluation

Question 32

orders the job descriptions from highest to lowest based on some overarching definition of relative value or contribution to organizational success

Answer 32

job ranking

Question 33

involves using taxonomies (i.e., methods of arranging or categorizing) to group work, functions, duties, tasks, knowledge, skills, abilities, and behaviors within jobs in a manner that is rational and logical from the organization’s point of view in relation to the achievement of its strategic goals and objectives

Answer 33

job classification

Question 34

Jobs within each class

Answer 34

job family

Question 35

What is this process called:

1. selection of compensable factors to represent what the organization values based on the strategic direction of the business and how work contributes to its strategic goals and objectives
2. factor scales are constructed reflecting the differing degrees within each factor
3. Factor weights reflect the relative importance of the factor to the total job, and typically factor weights are determined by allocating 100 points among the various factors
4. benchmark jobs are assigned
5. A hierarchy of job families is established that translates the firm’s internal alignment policy into a consistent compensation system by ensuring that individual jobs are placed within job families having similar factor points

Answer 35

point-factor method

Question 36

a hybrid approach promising the potential for combining the positive points of both market pricing and internal equity pay structures

Answer 36

job component model

Question 37

a regression equation that summarizes the relationship between the going rates paid by competitors in the market for labor and the compensable factors deemed important to the internal equity of an employer’s pay structure

Answer 37

market line

Question 38

a percentage above or below the market line where the employer intends to strategically place itself when translating pay-level policy into practice

Answer 38

pay policy line

Question 39

determines how much the job incumbent should be paid

Answer 39

pay grades

Question 40

jobs with similar compensable factors are grouped around benchmark jobs into job families, and job families of relative similar compensable worth are grouped into pay grades having a minimum and maximum pay for each grade.

Answer 40

market banding

Question 41

process that reduces the number of pay grades by combining some of them and widening the ranges

Answer 41

broadbanding

Question 42

opposite of broadbanding

Answer 42

pay compression

Question 43

offering salaries below the market rate—usually in the lowest quartile (25%) of employers in its market. An organization may pursue this strategy if it is experiencing a shortage of funds or has a sufficient number of workers, or if unemployment rates are high

Answer 43

below market strategy

Question 44

often used by organizations with established reputations. These organizations are attractive to talented employees for other reasons, such as stability and opportunities for advancement

Answer 44

middle-market strategy

Question 45

credits and debits associated with a foreign assignment are balanced against the standard of what the employee would have experienced if remaining in United States

Answer 45

balance sheet approach