Which of the following steps is NOT considered part of formulating the compensation strategy?
- A . determining actual dollar values for jobs and individual employees
- B . determining the total level of compensation to provide
- C . determining how each of the mix choices should be structured
- D . determining the mix of compensation components
A particular company wants to make sure employees feel they are appreciated, while at the same time ensuring key employees have a sense of loyalty towards the company.
Which of the following systems does this company most likely use?
- A . benefits
- B . performance pay
- C . indirect pay
- D . base pay
Johnny is compensated based on a rate of $25.00 per hour worked.
Which of the following terms best describes the manner in which Johnny is compensated?
- A . commission
- B . wage
- C . piece rate
- D . salary
Which of the following is a reason why employees may prefer base pay over performance pay?
- A . Performance pay is more predictable.
- B . Base pay is directly related to their performance level.
- C . They dislike uncertainty about their compensation.
- D . Market conditions are always changing.
As a human resource consultant, you have been asked to provide some rationale why an organization may decide to use base pay as a cornerstone for a compensation scheme.
Which of the following notions would you advance in supporting your argument?
- A . It provides an organization with more labour flexibility in the allocation of tasks.
- B . It guarantees employee performance and aligns salaries to performance.
- C . It is the most popular; hence, the organization should use it.
- D . Unions are most likely to agree with management’s approach, given this scheme encourages individual performance.
Which of the following conditions make it impractical to use output-related pay?
- A . Output is easy to measure.
- B . Output is very stable.
- C . Output cannot be controlled by the individual employee.
- D . Output is easy to price in terms of its value to the employer.
As an employer, you believe it is always a good idea to pay people for their contributions to organizational results.
Which of the following plans would likely be the key component of the compensation plan?
- A . indirect pay
- B . base pay
- C . pay for knowledge
- D . performance pay
A particular organization wants to include in their compensation system some element of organizational performance linkage, while at the same time it wants to encourage employee commitment.
In addition to base pay, which of the following would most likely be included in this compensation mix?
- A . merit pay
- B . piece rates
- C . profit sharing
- D . targeted incentives
As the new owner of a car dealership, you have become concerned with some behaviour being displayed by most of your sales force. You have decided to change the compensation systems. Yet, you are very concerned with your ability to meet payroll if sales decrease.
Which of the following pay plans should you consider using?
- A . employee stock plans
- B . targeted incentives
- C . extensive benefits
- D . competency-based plan
Which of the following is an objective of variable pay?
- A . to help retain long-service employees
- B . to help link individual performance to individual pay
- C . to help promote cost savings initiatives by employees
- D . to help keep labour costs down
Which pay type usually makes up a small proportion of total compensation, and may not be used at all by some employers?
- A . mandatory benefits
- B . wages
- C . merit pay
- D . salaries
Which of the following is the most important potential disadvantage of performance pay?
- A . It increases the need for layoffs in poor economic conditions.
- B . It does not fit well with high-involvement management.
- C . It is mainly effective in small companies.
- D . It does not pay off for some employers.
Which of the following is an example of mandatory indirect pay?
- A . major health benefits such as medical coverage
- B . registered retirement savings plans (RRSPs) benefits
- C . employee services
- D . workers’ compensation benefits
Your company offers you pay for time not worked, disability benefits, supplemental medical coverage, and a full range of free employee services.
These items refer to which component of the compensation mix?
- A . direct pay
- B . base pay
- C . indirect pay
- D . performance pay
As a consultant, you have been asked by an organization to provide a menu of indirect benefits that
the employer does not have to provide by law.
Which of the following would you NOT include in your menu?
- A . employment insurance
- B . company pension plan
- C . psychological counseling
- D . supplemental medical coverage
Which of the following best explains why medical and dental coverage can be purchased more cheaply by the employer than the employee?
- A . indexation
- B . economies of scale
- C . utility
- D . dividends
Which of the following variables offers the most likely explanation for the decrease in popularity of "defined benefit plans" by employers in Canada?
- A . They provided poor returns on pension plan investments, and longevity of employees increased.
- B . Defined benefit plans are simply not popular among employees.
- C . They help organizations plan more accurately; hence, they make it easier to fund these liabilities.
- D . Employers believe defined contribution plans are much more unpredictable from a funding perspective.
A flexible benefits system with cost sharing on individual benefits is a good fit for which type of firm?
- A . human relations firm
- B . high-involvement firm
- C . classical firm
- D . firm with no managerial strategy
As a general rule, organizations using a high-involvement managerial strategy use indirect pay as a way to encourage which of the following relationships?
- A . employer-community relationship
- B . employee-task relationship
- C . employer-employee relationship
- D . employer-union relationship
Which methods are used to establish base pay?
- A . market pricing, job evaluation, and pay for knowledge
- B . job analysis, competency testing, and demographics
- C . tenure, job preview, and environmental analysis
- D . knowledge, education, and market pricing