CHAP11.TB - Chapter 11 Strategic Compensation Systems...

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Chapter 11 Strategic Compensation Systems True/False 1. External equity philosophy is what primarily determines the type of pay policy implemented. Answer: True Page: 392 Moderate 2. Ideally, the pay structure should reflect the relative worth of jobs in the organization. Answer: True Page: 392 Easy 3. Most organizations have a pay-openness policy. Answer: False Page: 392 Moderate 4. The level of competition a firm faces in the product market is an important consideration when a compensation system is designed. Answer: True Page: 393 Easy 5. Minimum-wage laws are one example of how the nature of the labor market affects compensation in firms. Answer: False Page: 394 Difficult 6. Pay-level policy refers to how different jobs within the organization compare to one another in terms of salary. Answer: False Page: 398 Difficult 7. Wage and salary surveys are designed to help the compensation analyst make informed decisions about wage rates that will maintain external equity. Answer: True Page: 398 Easy 8. If a firm has only a few pay grades, it will be likely to have wide pay ranges.
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Chapter 11—Strategic Compensation Systems Answer: True Page: 400 Moderate 9. "Broadbanding" results in fewer grade bands. Answer: True Page: 401 Moderate 10. Wage compression does not occur when new hires are brought in at about the same salary or higher salaries than the current employees are paid. Answer: False Page: 403 Easy 11. If a major goal of compensation is to motivate employees to work at their best level, then pay-for-performance is not an appealing idea. Answer: False Page: 404 Difficult 12. Merit pay rewards behaviors that are yet to occur. Answer: False Page: 409 Moderate 13. Straight piecework is a form of incentive plan. Answer: True Page: 410 Easy 14. The standard hour plan ties pay to an amount of time it takes to perform a service or complete a task. Answer: True Page: 410 Easy 15. Skill-based pay compensates employees for the skills they possess. Answer: True Page: 411 Easy 16. Gain-sharing plans pay money to employees for reducing costs regardless of how profitable the firm is at the end of the year. Answer: True Page: 412 Difficult 17. An important factor in a gain-sharing plan is to clearly define the eligible employees of a group or unit to be included. Answer: True Page: 413 Moderate 18. Equity theory proposes that employees examine the relationship between their outcomes from the job and their inputs. Answer: True Page: 419 Difficult 11-2
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Chapter 11—Strategic Compensation Systems 19. Expectancy theory explains how employees make comparisons about their compensation levels to other employees. Answer: False Page: 420 Difficult 20. Reinforcement theories explain an individual's behavior as a response to a stimulus in the environment. Answer:
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CHAP11.TB - Chapter 11 Strategic Compensation Systems...

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