Testbank
to accompany
Human Resource
Management
th
4 Edition
by
Raymond J. Stone
prepared by
Pamela Mathews
John Wiley & Sons Australia, Ltd
Chapter 12 : Employee Compensation
Multiple Choice Questions
1.
By rewarding desired results an organisation’s compensation policies and practices
can:
(a)
(b)
(c)
(d)
3.
5.
attract highly skilled applicants to the organisation
reinforce employee behaviour that realises its strategic business objectives
encourage employees to work harder and faster
stimulate the interest of employees in their tasks
Some critics argue that collective employee relations and unions can be undermined
by
(a)
(b)
(c)
(d)
give the employee equitable treatment
measure and reward appropriately the employee’s performance
provide regular salary and performance reviews
attract and keep the desired quality mix of employees
6.
An objective for the employee of a compensation program would be to
7.
(a) control compensation costs
(b) provide regular salary and performance reviews
(c) motivate employees to improve their performance
(d) comply with legal requirements
Before determining the compensation given to a job incumbent it is necessary to
(a)
(b)
(c)
(d)
8.
c
Fac
H
enterprise bargaining
negotiated award rates
pay for performance
bonus incentive schemes
A compensation objective for the organisation would
(a)
(b)
(c)
(d)
b
App
M
access the financial needs of the employee
review compensation packages at other organisations
conduct a job analysis and job evaluation
decide how valuable the employee is to the organisation
Components of a systematic salary administration program include
(a) job evaluation; salary survey; performance evaluation; pay for performance
(b) job evaluation; organisational objectives; performance evaluation; pay for
performance
(c) job evaluation; job description; performance evaluation; pay for performance
(d) organisational objectives; job description; salary survey; merit pay
d
Fac
M
b
Fac
M
c
Und
M
a
Fac
H
9.
Gross overpayment or underpayment of employees gives rise to employee
dissatisfaction due to
(a)
(b)
(c)
(d)
lack of motivation to work harder
above average compensation
the difficulty of achieving intrinsic rewards for performance
the lack of fairness employees perceive
10. A systematic model of determining the worth to the organisation of the job in
relation to other jobs is
(a)
(b)
(c)
(d)
job review, job ranking, task classification, job audit
job classification, job grading, performance review, task analysis
job ranking, job grading, points and factor comparison
job grading, job review, job audit, factor comparison
12. The approach to job evaluation that sizes jobs by placing them in rank order is
known as
(a)
(b)
(c)
(d)
broad experience and knowledge of the job is required by the grader
satisfactory job descriptions have to be written for each of the grades
it is necessary to observe and interview the current job holder
it is important to recognise the differences between jobs
15. An approach to job evaluation in which numerical values are assigned to specific job
factors and the sum of those values provides a quantitative assessment of a job’s
relative worth is
(a)
(b)
(c)
(d)
c
Fac
M
d
Fac
L
job grading
job structuring
job factor analysis
job ranking
14. For job grading to be accurate
(a)
(b)
(c)
(d)
b
Fac
L
salary survey
job evaluation
job grading
salary formula
11. The most common systems of job evaluation are
(a)
(b)
(c)
(d)
d
Fac
M
b
App
M
c
Fac
H
job rating
job grading
point system
factor comparison
16. When choosing the weights of each job factor, the gradations within each factor, the
factors themselves, and the number of factors the point system of job evaluation
becomes flawed due to
b
Und
H
(a)
(b)
(c)
(d)
objectivity
subjectivity
negativity
reflectivity
17. Factor comparison is a refinement of which job evaluation systems
(a)
(b)
(c)
(d)
job grading and job classification
job analysis and point system
job structuring and job ranking
job ranking and point system
19. Which of the following is not a commonly used ‘pre-packaged’ job evaluation
system
(a)
(b)
(c)
(d)
b
Und
M
qualifications, experience, working conditions
know-how, problem-solving, accountability
creativity, risk-taking, experience
job tasks, initiative, performance results
22. Role-based evaluation developed by the Hay Group views work in terms of
(a) evolving roles that reflect the growing ability of the incumbents to add value to
an organisation
(b) a collection of continually changing activities
(c) a series of related tasks that have been grouped into a single job simply for the
sake of convenience
(d) a few related activities that are grouped together to provide structure and control
within the organisation
23. Role-based evaluation combines elements of job evaluation and
(a)
(b)
(c)
(d)
c
Fac
L
Hay guide chart profile
Watson Wyatt MULTICOMP
McTavish JEVRE
Weighted job questionnaire
20. The Hay guide chart profile bases its job evaluation on an examination of three
factors. These are
(a)
(b)
(c)
(d)
d
Fac
H
strategic flexibility
skill development
job re-design
people-centred approaches
24. The Mercer Cullen Egan Dell method of job evaluation measures
a
Und
M
d
Fac
L
b
(a)
(b)
(c)
(d)
quantity and quality of effort
cognition, education and decision accountability
education, experience, and problem-solving skills
initiative, creativity, and risk-taking
25. MULTICOMP uses which statistical method to evaluate questionnaire responses
(a)
(b)
(c)
(d)
factor analysis
two-factor theory
multiple regression analysis
cluster analysis
26. The Weighted job questionnaire asks questions about five core job factors. This
includes all of the following except
(a)
(b)
(c)
(d)
ease of use
provider support
flexibility
size of organisation
28. Which of the following is not a frequent criticism of job descriptions
(a)
(b)
(c)
(d)
incompatibility with the organisation’s strategic business objectives and culture
difficulty of comprehension
negative attitudes of employees in supplying accurate information
time spent on writing the description
29. If inaccurate or incomplete job descriptions were used as a guide in HR decision
making it can
(a)
(b)
(c)
(d)
c
Fac
H
a
Fac
M
work attitudes
working conditions
problem solving
skill and knowledge
27. When selecting a job evaluation approach the HR manager should consider
(a)
(b)
(c)
(d)
Fac
M
d
App
H
c
Fac
M
a
Und
H
cloud employee roles and organisational objectives
help to make objectives and strategies more flexible
ensure the appointment of employees with the right skills and abilities
result in job descriptions being totally ignored
30. The main purpose of a salary survey is
(a) as the vehicle used by most job evaluation systems to translate words into
b
Und
H
numbers
(b) to relate the organisation’s salaries to those for similar jobs in other
organisations
(c) to attract and keep the desired quality mix of employees
(d) to comply with legal requirements
31. The salary survey provides information on
(a)
(b)
(c)
(d)
compensation packages offered by the competition
minimum award rates as determined by the Government
base salaries and benefits
bonus and incentive schemes used to enhance employee motivation
32. The information provided in the salary survey can be used by the HR manager to
(a) determine overall labour costs
(b) highlight how HR activities have reduced labour costs
(c) assess the contribution of each job holder to the achievement of organisational
objectives
(d) calculate the organisation’s competitive position and plan any corrective action
required
33. The salary survey helps to ensure
(a)
(b)
(c)
(d)
appropriate compensation is offered to new entrants
external equity is achieved and maintained
that a perception of fairness is achieved
employees are not over or underpaid
34. An essential tool in salary administration that presents all salary ranges over the
whole spectrum of job sizes is
(a)
(b)
(c)
(d)
c
Fac
L
d
App
H
b
Und
M
a
Fac
M
salary structure
graphic rating scales
effort-reward differentiation
salary review chart
35. The salary range
(a) graphically depicts the salaries currently being paid for jobs, related to job size
(b) presents all salary ranges over the whole spectrum of job sizes
(c) sets the minimum and maximum scheduled amounts paid for a job at a
particular job size
(d) identifies the standard salary, and how much above or below that figure is being
paid for each job
36. The clustering of formerly numerous individual pay grades into a few broad pay
grades is known as
c
Und
H
d
Fac
L
(a)
(b)
(c)
(d)
salary range
narrow banding
job evaluation
broadbanding
37. Organisations wanting to restructure and flatten, redefine career paths and encourage
personal growth through lateral job movement may make use of which pay system
(a)
(b)
(c)
(d)
standard salary range
broadbanding
salary structures
job evaluation
38. Which of the following is not one of the basic market postures that an organisation
uses to position itself in the pay market
(a)
(b)
(c)
(d)
lead to internal competition
have a negative impact on morale and motivation
reduce the organisation’s ability to attract high quality employees
promote increased employee performance
41. Pay secrecy can
(a)
(b)
(c)
(d)
a
Fac
L
a salary policy line
a salary structure
a salary range
a salary curve
40. Inequities in compensation can:
(a)
(b)
(c)
(d)
d
Fac
L
pay above market average
pay market average
pay below market average
pay determined by yearly profits
39. A graphical representation of the organisation’s predicted salary midpoints for the
12-month period ahead is known as
(a)
(b)
(c)
(d)
b
App
H
generate mistrust of the compensation program
reduce employee motivation and inhibit the organisation’s effectiveness
increase commitment and loyalty to the organisation
both (a) and (b)
42. When the difference in pay rates between jobs is too small employees may feel
(a) unmotivated to improve performance
(b) pay secrecy exists
(c) pay compression exists
b
Und
M
d
Und
M
c
Fac
M
(d) pay inequities exist
43. Executive remuneration has increased rapidly because of all of the following except
(a)
(b)
(c)
(d)
talent shortages
performance
executive salary disclosures
globalisation
44. An organisation that uses length of time on the job to determine pay levels and
increases is using
(a) seniority-based pay
(b) pay-for-performance
(c) merit-based pay
(d) skill-based pay
45. Merit pay aims to
(a) develop a productive, efficient, effective organisation that enhances employee
motivation and performance
(b) reward employees for their commitment and loyalty to the organisation
(c) encourage employees to gain additional skills, competencies and knowledge
that will increase their personal satisfaction and value to the organisation
(d) ensure that salary packages offered by the organisation are competitive
46. An effective pay-for-performance system should
(a)
(b)
(c)
(d)
be competitive
eliminate the need for performance appraisals
create a link between reward and performance
encourage initiative and creativity
47. An advantage of skill-based pay is claimed to be that
(a) if too many skills are permitted the plan may become too complex and thus
difficult to administer and for employees to understand
(b) employees trained in several different jobs may not be able to perform all of
them better than a group of workers trained only in one job
(c) some employees may not have the ability or the desire to acquire new skills or
knowledge and therefore may resist skill based pay
(d) multiskilling reinforces a high involvement management style, in which
employees are given responsibility
48. To determine the appropriate salary increases for an employee’s performance the
organisation matches
(a)
(b)
(c)
(d)
the salary index and performance index
effort and performance ratings
merit based index and performance evaluation
performance increases and work attitude
b
Fac
L
a
Fac
L
a
Und
H
c
Fac
M
d
Und
H
a
Und
M
49. Which of the following is not one of the main types of salary review
(a)
(b)
(c)
(d)
flexible-date reviews
fixed-date reviews
job specialisation reviews
anniversary reviews
50. Which of the following does not have to be considered when determining
promotional increases
(a)
(b)
(c)
(d)
the probability of future promotions
the employee’s age and length of service
the salaries of other employees at the new job level
the average salary for equivalent positions in other organisations within the
same industry
c
Fac
L
d
App
H
True/False Questions
1.
For many organisations employee compensation is the biggest single cost of doing
business.
T
Fac
L
2.
A formal compensation policy is an asset to the organisation, but does not have to be
communicated to all employees.
F
Und
M
4.
Inadequate compensation planning leads to lack of compliance with applicable state
and federal laws and awards.
T
Und
M
5.
Job ranking is a job evaluation method that sizes jobs using a series of written
classifications and then ranks them in order of the perceived value of their
contribution to the achievement of organisational objectives.
F
App
H
6.
If you were using a point system to evaluate jobs you would assign numerical values
to specific job factors, and the sum of those values provides a quantitative
assessment of a job’s relative worth.
T
App
H
8.
The Hay guide chart profile can be used to evaluate all jobs because all jobs require
some degree of know-how, problem solving and accountability.
T
Und
M
10. Cognition, education and decision accountability are the key factors examined
within the Mercer Cullen Egan Dell method of job evaluation.
T
Fac
M
11. Watson Wyatt has successfully promoted two job evaluation systems:
FACTORCOMP and SKABCOMP.
F
Fac
L
13. A job description provides an ideal blueprint of what the job is expected to look like
in five to ten years.
F
Fac
L
14. Salary surveys can either be based on matching similar jobs on their content or
matching jobs according to their job size.
T
Fac
H
15. The problem with salary surveys is that they mainly include low-paying
organisations, inaccurate information, and narrow job descriptions.
F
Und
M
16. A salary line is a graphic representation of the salary structure within an
organisation, and what the employee’s next step-up is likely to be.
F
Fac
M
17. A salary range normally depicts what an employee is currently earning and what
they can reasonably expect to be earning in five years time if they remain with the
organisation.
F
Und
H
18. Broadbanding should be compatible with an organisation’s culture, vision and
business strategy.
T
Und
M
19. Pay secrecy is the norm in most private sector organisations.
T
Fac
L
21. Senior executive pay levels often appear to have little to do with responsibility or
performance.
T
Fac
L
22. Seniority-based pay recognises the correlation between experience and performance.
T
Fac
M
23. Research into merit pay suggests that a merit increase must be at least 15% of base
pay to produce the desired effects on employee attitudes and behaviour.
F
Fac
H
24. Organisations that adopt skill-based pay are likely to encourage employee
involvement.
T
Und
M
25. Salary increases that occur automatically each year on a specified date, irrespective
of performance are known as promotional increases.
F
Und
M
Essay Questions
1.
Critically discuss the importance of linking an organisation’s compensation
approach to its strategic business objectives.
2.
An effective compensation program has a number of objectives. Examine the
objectives of the organisation and the employee and how these can be used to
maximise performance and motivation.
3.
Job evaluation is undertaken to determine the relative worth of jobs within an
organisation. Explain the importance of up-to-date, accurate, well-written job
descriptions for effective job evaluation.
4.
Critically discuss the difference between pay-for-performance, and skill-based pay;
and provide examples of when they might be used.