Chapt 12 Mgt

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26.
Which of the following will most likely be a result of using an unplanned approach, in which each employee’s pay is independently negotiated?
A.

dissatisfied employees

B.

equal pay distribution

C.

rates that are stable

D.

easy employment

E.

cost control

a

27.
Caroline, a researcher, believes that an organization needs to plan what they will pay employees in each job. Mark, her colleague, argues that an employee’s pay should be independently negotiated. Which of the following statements will weaken Mark’s argument?
A.

An unplanned approach will likely result in unfairness and dissatisfaction among the employees.

B.

Most of the employees prefer planned pay because negotiation with the management takes time.

C.

Independently negotiated pay will increase the workload and rivalry among the employees.

D.

When the pay is planned by the organization, it creates more employment opportunities.

E.

The pay structure is the same for both an entry-level and a manager-level employee if it has been independently negotiated.

a

28.
Which of the following best defines an organization’s job structure?
A.

It consists of the relative pay for different jobs within the organization.

B.

It is the average amount an organization pays for a particular job.

C.

It comprises the characteristics of jobs that the organization values and chooses to pay.

D.

It comprises regular pay, overtime pay, and bonuses.

E.

It refers to the standard amount that employers must pay under federal and state law.

a

29.
Hamish Life, an insurance company, defines the difference in pay between an entry-level recruiter and an entry-level assembler, as well as the difference between an entry-level recruiter, an HR manager, and the vice president of the human resource department. Which of the following is being exemplified in this scenario?
A.

straight piecework plan

B.

job structure

C.

merit pay system

D.

pay differential

E.

balanced scorecard

b

30.
Which of the following elements establish an organization’s pay structure?
A.

pay ranges and pay differentials

B.

cost control and equity

C.

legal requirements and job descriptions

D.

individual salaries of its employees

E.

job structure and pay level

e

31.
Which of the following statements is true of equal employment opportunity laws?
A.

These laws guarantee equal pay for whites and minorities.

B.

The goal of these laws is for employers to provide equal pay for equal work.

C.

Job descriptions and job structures cannot help organizations demonstrate that they are upholding these laws.

D.

These laws guarantee equal pay for men and women.

E.

Under these laws, employers cannot tie differences in pay to business-related considerations.

b

32.
Cindy and Alex execute the same roles and responsibilities at their organization. However, Alex earns more than Cindy. Under the laws governing equal employment opportunity, which of the following statements will justify the organization’s decision to pay Alex more than Cindy?
A.

Alex is white, and Cindy is black.

B.

Alex has more experience than Cindy.

C.

Cindy has a hearing impairment.

D.

Men have more stamina, so they can work longer hours.

E.

Cindy is an immigrant.

b

33.
Mark and Chloe hold the same position at Rue & West Bros. However, Mark earns more than Chloe. Which of the following will justify the organization’s decision to pay Mark more than Chloe?
A.

Mark meets higher productivity targets than Chloe.

B.

Mark comes from an economically weaker background.

C.

Mark is male.

D.

Chloe is younger than Mark.

E.

Chloe is not a U.S. citizen.

a

34.
Ramon Inc., a software company, uses job evaluations to establish the value of its jobs in terms of criteria such as their difficulty and their importance to the organization. The company then compares the evaluation points awarded to each job with the pay for each job. If jobs have the same number of evaluation points, but are not paid equally, the pay of the lower-paid job is raised. Based on the scenario, identify the policy adopted by the company.
A.

comparable-worth policy

B.

minimum wage policy

C.

average pay policy

D.

merit pay policy

E.

piecework rate policy

a

35.
Which of the following sentences best describes a situation that comparable-worth policies were designed to address?
A.

In a manufacturing company, there are no female managers.

B.

A consumer products company has been sued for racial discrimination.

C.

An agency works with a supermarket’s HR department to design a job that could be held by people with mental disabilities.

D.

In a city government, positions mostly held by women pay less than positions mostly held by men.

E.

At a utility company, jobs that involve physical strain and danger pay more than office jobs.

d

36.
Teno Industries Inc. is a manufacturing company based in Texas. In the year after Teno Industries implemented a comparable-worth policy, its expenses increased, and as a result, profits declined. What difficulty of comparable-worth policies does this example illustrate?
A.

The employer is at an economic disadvantage because of increased pay for some jobs.

B.

The policy overlooks the undervalued work performed by women.

C.

The policy uses job enrichment to establish a pay structure based on market rates.

D.

The employer ignores the evaluation points for each job.

E.

Employees in lower-paid jobs are encouraged to meet the goal of comparable worth.

a

37.
Which of the following is a drawback of a comparable-worth policy?
A.

A free-market economy assumes people will not take differences in pay into account when they choose a career.

B.

Employees may conclude that pay rates are unfair.

C.

The courts prohibit organizations from defending themselves against claims of discrimination by showing that they pay the going market rate.

D.

Grouping jobs will result in rates of pay for individual jobs that do not precisely match the levels specified by the market and the organization’s job structure.

E.

Raising pay for some jobs places the employer at a disadvantage relative to employers that pay the market rate.

e

38.
Which of the following is a federal law that establishes a minimum wage and requirements for overtime pay and child labor?
A.

Fair Labor Standards Act

B.

Americans with Disabilities Act

C.

Family and Medical Leave Act

D.

Employee Retirement Income Security Act

E.

Equal Pay Act

a

39.
Scorla Automobiles is a manufacturing company based in Nevada. The employees of Scorla are paid the lowest amount under federal or state law, which is stated as an amount of pay per hour. Which of the following laws is the organization abiding by in this scenario?
A.

laws governing equal employment opportunity

B.

Fair Labor Standards Act (FLSA) of minimum wage

C.

Fair Labor Standards Act (FLSA) of overtime

D.

laws governing prevailing wages

E.

product market laws

b

40.
Pentrall, a healthcare company, provides a lower training rate to its employees belonging to the age group of 18 to 19 years. The rate is applicable for a period of 90 days. In this case, which of the following laws will justify the organization’s decision to pay the lower pay?
A.

laws governing equal employment opportunity

B.

Fair Labor Standards Act (FLSA) provisions for minimum wage

C.

Fair Labor Standards Act (FLSA) provisions for overtime

D.

laws governing prevailing wages

E.

Fair Labor Standards Act (FLSA) provisions for child labor

b

41.
Which of the following provisions is included in the Fair Labor Standards Act (FLSA)?
A.

personal finance

B.

minimum wage

C.

wage discrimination

D.

environmental hazards

E.

retirement plans

b

42.
Which of the following is a drawback of a minimum wage in terms of social policy?
A.

It assumes people will take differences in pay into account when they choose a career.

B.

It is one and a half times the employee’s usual hourly rate.

C.

It applies only to the hours worked beyond 40 in one week.

D.

It places the employer at an economic disadvantage relative to employers that pay the living wage.

E.

It tends to be lower than the earnings required for a full-time worker to rise above the poverty level.

e

43.
David earns a base rate of $12 an hour and receives a weekly attendance award of $20. He works 40 hours this week. What would be his total compensation for the week?
A.

$480

B.

$600

C.

$500

D.

$520

E.

$250

c

44.
Blyrie Pharma is a pharmaceutical company based in Alabama. Blyrie Pharma expects its employees to work long hours and achieve increased production rates. Employees earn one and a half times the usual hourly rate for working more than 40 hours in one week. Which of the following laws is Blyrie Pharma abiding by in this scenario?
A.

laws governing equal employment opportunity

B.

Fair Labor Standards Act (FLSA) of minimum wage

C.

Fair Labor Standards Act (FLSA) of overtime

D.

laws governing prevailing wages

E.

product market laws

c

45.
Which of the following statements is true of the FLSA requirements for overtime pay?
A.

The overtime rate is one and a half times the employee’s hourly rate, excluding any bonuses or piece-rate payments.

B.

Time worked includes hours spent on production or sales, but not on activities such as attending required classes, cleaning up the work site, and so on.

C.

Overtime must be paid whether or not the employer specifically asked or expected the employee to work the extra hours.

D.

Everyone is eligible for overtime pay.

E.

Most workers paid on an hourly basis are exempt and therefore not subject to the laws governing overtime pay.

c

46.
John is the head of the insurance claims department. John works for longer hours than his subordinates, however, he is not paid overtime for working more than 40 hours per week. Under the FLSA, which of the following will justify the organization’s decision not to give John overtime pay?
A.

John is not a U.S. citizen.

B.

John comes from an economically strong background.

C.

John is unmarried.

D.

John is considered as an exempt employee.

E.

John has lower educational qualifications than his subordinates.

d

47.
Under the FLSA, exempt status of employees depends on their
A.

job responsibilities and salary.

B.

organizational commitment.

C.

job title.

D.

work experience.

E.

job qualifications.

a

48.
_____ means that an employee is paid a given amount regardless of the number of hours worked or quality of the work.
A.

Pay level

B.

Nonexemption

C.

Pay policy line

D.

Piecework rate

E.

Salary basis

e

49.
According to the FLSA, which of the following individuals is most likely a nonexempt employee?
A.

the CEO

B.

a senior administrative employee

C.

an hourly paid employee

D.

an HR manager

E.

the director of marketing

c

50.
Which of the following statements is true about the Fair Labor Standards Act (FLSA)?
A.

The overtime rate under the FLSA is two and a half times the employee’s hourly rate.

B.

The FLSA permits federal contractors to pay less than the prevailing wage rate.

C.

The FLSA permits a subminimum training wage equal to 95% of the minimum wage.

D.

Nonexempt employees are covered by FLSA and include most hourly workers.

E.

Under the FLSA, executive, professional, and administrative employees are considered nonexempt employees.

d

51.
Sapheda Inc., a heavy machinery company, has employees belonging to the age group of 17 to 30. Noah, a 17-year-old, is prohibited from working with heavy machinery tools. Instead, he works in the mail room. Under the laws governing Fair Labor Standards Act (FLSA), which of the following will justify the organization’s decision to forbid Noah from doing heavy machinery work?
A.

Noah cannot be employed in hazardous occupations because he is 17 years old.

B.

Noah is expected to work in a safe environment because he is male.

C.

Noah is not a U.S. citizen, therefore he is prohibited from working in a hazardous environment.

D.

Noah has not yet completed college, therefore he should only be given administrative duties.

E.

Noah comes from an economically weaker background, therefore he is expected to perform clerical duties.

a

52.
Spark Inc., a manufacturing company, hires employees ranging in age from 14 to 25. Which of the following practices by Spark would ensure that it complies with child labor laws?
A.

The employees are all paid the same amount.

B.

The teenage employees earn a training wage for the first year.

C.

Only the workers over 20 earn overtime pay.

D.

All the employees have part-time schedules.

E.

The employees aged 14 and 15 work only in office jobs and for limited time periods.

e

53.
Under the FLSA, which of the following statements is true of child labor?
A.

Children aged 18 and 19 may not be employed in hazardous occupations defined by the Department of Labor.

B.

Children aged 14 and 15 may not be employed in any work associated with interstate commerce.

C.

The FLSA’s restrictions on the use of child labor apply to children younger than 18.

D.

Children aged 18 and 19 may work only outside school hours, in jobs defined as nonhazardous, and for limited time periods.

E.

All the states have laws requiring working papers or work permits for minors.

c

54.
Which of the following statements is true according to the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936?
A.

Under these laws, individuals aged 18 and 19 may not be employed in hazardous occupations defined by the Department of Labor.

B.

Federal contractors must pay their employees at rates at least equal to the prevailing wages in the area.

C.

The overtime rate applies to the hours worked beyond 45 in one week.

D.

Employers must pay a training wage to workers under the age of 15 for a period of up to 60 days.

E.

Organizations can defend themselves against claims of discrimination by showing that they pay the going market rate.

b

55.
SalientVision Inc., a construction company, receives more than $2,000 in federal money. The company pays its employees at rates at least equal to the prevailing wages in the area. The calculation of prevailing rates by the company is based on 30% of the local labor force. In this case, which of the following laws does the company comply with?
A.

the Lloyd-La Follette Act of 1912

B.

the Smith-Connally Act of 1943

C.

the Julie Jargon Act of 1940 and the Eric Morath Act of 1945

D.

the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936

E.

the Humphrey-Hawkins Full Employment Act

d

56.
Cliff Stiff Inc., a cement company, receives more than $2,000 in federal money. The company hires employees belonging to the age group of 25 to 40. Soon after, the Cliff Stiff is charged for violation of law under the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936. Which of the following would most likely explain the reason for the company being sued?
A.

The employees of the company are not being paid at rates at least equal to the prevailing wages in the area.

B.

Cement industry employees are being paid only 15% above the minimum wage.

C.

The company hired employees belonging to the age group of 25 to 30, and they are being employed in hazardous environments.

D.

Individuals eligible for overtime are being paid at one and a half times the employee’s regular pay rate.

E.

Employees below the age of 25 are not being hired by the company.

a

57.
The Davis-Bacon Act of 1931
A.

requires that a lower "training wage" be paid to workers under the age of 20 for a period of up to 90 days.

B.

mandates that employers pay higher wages for overtime, defined as hours worked beyond 40 hours per week.

C.

requires general contractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates found prevailing in the locality.

D.

covers all government contractors receiving $10,000 or more in federal funds.

E.

covers construction contractors that receive more than $2,000 in federal money.

e

58.
The Walsh-Healy Public Contracts Act of 1936
A.

requires that a lower "training wage" be paid to workers under the age of 20 for a period of up to 90 days.

B.

mandates that employers pay higher wages for overtime, defined as hours worked beyond 40 hours per week.

C.

covers construction contractors that receive more than $2,000 in federal money.

D.

requires general contractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the prevailing local wage rates.

E.

covers all government contractors receiving $10,000 or more in federal funds.

e

59.
An organization’s choices about _____ are limited by its response to the economic forces of product markets and labor markets.
A.

pay rates

B.

pay structure

C.

pay differentials

D.

pay grades

E.

pay ranges

b

60.
Which of the following statements is true about a product market?
A.

The cost of labor does not affect the product market because it is an insignificant part of an organization’s costs.

B.

Product-market considerations are of particular concern to a company when its customers place greater importance on product rather than price.

C.

Organizations in a product market are competing to serve the same customers.

D.

Product markets typically place a lower limit on the pay an organization will offer its employees.

E.

Organizations in a product market must increase the cost of labor every quarter.

c

61.
Das Work and Edge Tech are electronics manufacturing companies competing to serve the same customers. The labor-related expense per product for Das Work is $30 higher than that for Edge Tech. However, Das Work makes more profits than Edge Tech. In this case, which of the following actions has contributed to the profits made by Das Work?
A.

It produces high quality goods and charges more for these products than competitors.

B.

It does not provide overtime pay to employees who work more than 40 hours in one week.

C.

It has recently introduced the comparable-worth policy for employees.

D.

It provides free home delivery of purchased goods.

E.

It has a company website where customers can purchase goods online.

a

62.
Organizations under pressure to cut labor costs may respond by
A.

retaining staff levels.

B.

providing pay increases to prevent employee turnover.

C.

postponing hiring decisions.

D.

requiring employees to bear less of the cost of benefits such as insurance premiums.

E.

avoiding automation of routine tasks.

c

63.
Which of the following statements is true about labor markets?
A.

Organizations compete to sell labor in the labor market.

B.

Competition for labor establishes the minimum an organization must pay to hire an employee for a particular job.

C.

Changes in the CPI do not affect the labor market.

D.

Cost-of-living considerations have little impact on labor-market rates.

E.

An organization’s competitors in labor markets only include companies with different products.

b

64.
Guangli is a human resource specialist at Quasio Inc., a business consulting company. To support human resource planning, Guangli monitors trends in the Consumer Price Index. In recent months, the CPI has been rising at an increasing rate. What can Guangli predict based on this information?
A.

A rising cost of living will lead workers in the labor market to seek higher pay.

B.

A falling cost of living will cause workers to leave the labor market.

C.

A rise in employment costs will lead companies to demand more labor.

D.

Competitors in Quasio’s product markets will hold wages steady.

E.

Uncertainty about prices will cause workers to accept lower-paying jobs.

a

65.
Which of the following statements is true about the Consumer Price Index (CPI)?
A.

The CPI helps organizations in the product markets decide an upper limit on the pay they will offer.

B.

Following and studying changes in the CPI helps employers prepare for changes in the demands of the labor market.

C.

The CPI helps organizations lure top-quality employees.

D.

The CPI helps control labor markets’ demand for pay increases.

E.

The CPI helps organizations to compete with companies in other industries that hire similar employees.

b

66.
Although labor and product markets limit organizations’ choices about pay levels, there is a range within which organizations can make decisions. The size of this range depends on the
A.

minimum and maximum wages fixed by the government.

B.

pay of federal contractors.

C.

organization’s competitive environment.

D.

quality of employees.

E.

organization’s global reputation.

c

67.
Economic theory holds that the most profitable pay level, all things being equal, would be at the _____.
A.

lowest possible level

B.

market rate

C.

highest possible level

D.

mid-range level

E.

CPI rate

b

68.
Trevor, the human resource manager at XTech, is advising the company’s business executives that paying more for labor than competitors can support the company’s strategy. Under what conditions might Trevor’s idea be most valid?
A.

XTech pays more to attract top talent, applying employees’ knowledge to be more innovative than competitors.

B.

XTech intends to charge more for than competitors for the same kinds of products.

C.

XTech hopes other companies will eventually match XTech’s pay scale.

D.

Labor costs are a large part of XTech’s total costs.

E.

XTech is developing a low-price strategy that will generate more sales.

a

69.
Inverness Inc., a manufacturing company, believes that pay is an investment that can generate returns in attracting, retaining, and motivating a high-quality workforce. In this case, which of the following statements is true about Inverness?
A.

It considers its employees as resources.

B.

It gives the least importance to profits.

C.

It is a customer-friendly firm.

D.

It tries to keep its labor costs minimal.

E.

It helps employees find higher-paying jobs.

a

70.
Pay policies are one of the most important human resource tools for
A.

reducing competition in the product market.

B.

automating routine activities.

C.

persuading customers that high quality is worth a premium price.

D.

making decisions about product pricing.

E.

encouraging desired employee behaviors.

e

71.
Capnos Inc., an insurance company, incurred losses of about $100 million. To analyze its losses and to overcome them, the company began comparing its own practices against those of its successful competitors. In this scenario, which of the following procedures is adopted by Capnos?
A.

benchmarking

B.

job evaluation

C.

regression analysis

D.

delayering

E.

pay structuring

a

72.
Which of the following U.S. organizations conducts an ongoing National Compensation Survey measuring wages, salaries, and benefits paid to the nation’s employees?
A.

Bureau of Labor Statistics

B.

Society for Human Resource Management

C.

American Management Association

D.

AFL-CIO

E.

Bureau of Economic Analysis

a

73.
According to _____, people measure outcomes such as pay in terms of their inputs.
A.

expectancy theory

B.

equity theory

C.

retributive justice theory

D.

progressive justice theory

E.

economic theory

b

74.
Employees’ conclusions about equity depend on
A.

what they choose as a standard of comparison.

B.

how much money they think the company CEO makes.

C.

what level of income they believe they should be at by this point in their lives.

D.

what benefits they receive.

E.

if they think they can bargain for a higher rate of pay.

a

75.
Which of the following is an advantage of a two-tier wage system?
A.

It helps move jobs out of the country.

B.

It helps eliminate jobs without any legal hassles.

C.

It helps reduce labor costs without cutting employees’ existing salaries.

D.

It helps provide more pay to new employees.

E.

It provides better standards for benchmarking.

c

76.
Research on the effects of two-tier wage plans found that
A.

lower-paid employees were less satisfied on average than higher-paid employees.

B.

lower-paid employees were more satisfied on average than higher-paid employees because they made comparisons with lower-paying alternatives for themselves.

C.

lower-paid employees expected to be promoted into the second tier in a short time span.

D.

equity theory did not come into play for either group and neither group experienced more or less job satisfaction than the other.

E.

both existing employees and new employees have a similar pay rate.

b

77.
Some employees at Los Amigos Inc., a clothing manufacturer, investigate pay rates on Salary.com and learn that Los Amigos has been paying them significantly more than the national average for their jobs. In this case, which of the following is the most likely reaction of the employees at Los Amigo?
A.

The employees will conclude that there must be regional differences in pay.

B.

The employees will be motivated to work much harder.

C.

The employees will find their jobs less challenging.

D.

The employees will find a way to increase their outcomes by stealing.

E.

The employees’ attitudes and behaviors will continue unchanged.

a

78.
Triano Brothers, an insurance firm, follows an administrative procedure for measuring the relative worth of its jobs. The organization does this by assembling and training a committee consisting of people familiar with the jobs. The committee includes a human resource specialist and, if the budget permits, an outside consultant is hired. Which of the following is exemplified in this scenario?
A.

job rotation

B.

job evaluation

C.

merit pay system

D.

job enrichment

E.

work structure

b

79.
Which of the following statements is true of compensable factors?
A.

They are generally statistically derived.

B.

They are the characteristics of a job that a firm values and chooses to pay for.

C.

They refer to the factors that are important for setting the two-tier wage system.

D.

They describe all aspects of the jobs being evaluated.

E.

They are used to ensure equity among employees.

b

80.
Which of the following statements is true about key jobs?
A.

Organizations usually have no survey data available for key jobs.

B.

Key jobs are jobs that have highly unstable content.

C.

Key jobs are jobs that are unique among organizations and are rare to obtain.

D.

Organizations make the process of creating a pay structure more impractical by defining key jobs.

E.

A job with a higher evaluation score than a particular key job would receive higher pay than that key job.

e

81.
A pay policy line
A.

shows the mathematical relationship between the minimum pay and the maximum pay in an organization.

B.

can be generated using a statistical method called regression analysis.

C.

requires market-pay-rate data on all jobs in the organization.

D.

can seldom provide information on the market pay level for a given job evaluation.

E.

reflects the pay structure in the market, which always matches rates in the organization.

b

82.
Which of the following is a drawback of setting pay rates based strictly on a pay policy line?
A.

It increases the administrative burden of managing the compensation system.

B.

Employees have difficulty interpreting regression analysis.

C.

The estimated pay for a job may not reflect conditions in the labor market.

D.

It increases the costs of surveying the market.

E.

It groups jobs, which will result in rates of pay for individual jobs that precisely match the levels specified by the market.

c

83.
Kazuri Inc., a manufacturing company, bases employees’ pay entirely on market forces. In this case, which of the following is a practical drawback faced by the company?
A.

Employees might conclude that the pay rates are unfair.

B.

Supervisors of the company will expect to receive lower pay because of less responsibility.

C.

The highly paid employees will likely be dissatisfied because of more work.

D.

The managers will participate in rotation of responsibilities because they receive lower pay.

E.

All employees will be categorized as exempt employees.

a

84.
Which of the following is a set of possible pay rates defined by a minimum, maximum, and midpoint of pay for employees holding a particular job?
A.

pay grade

B.

pay range

C.

pay differential

D.

compa-ratio

E.

compensation differential

b

85.
Pay ranges are most common for _____.
A.

white-collar jobs

B.

piece-rate jobs

C.

jobs that are covered by union contracts

D.

automotive workers

E.

construction workers

a

86.
Which of the following statements is true about pay ranges?
A.

Pay ranges are most common for blue-collar jobs and those covered by union contracts.

B.

Pay ranges are widest for employees who are at lower levels in terms of their job evaluation points.

C.

Pay ranges generally are designed so that they do not overlap.

D.

The market rate or the pay policy line generally serves as the midpoint of a range for the job.

E.

The less overlap, the more flexibility in transferring employees among jobs.

d

87.
Overlapping _____ give the organization more flexibility in transferring employees among jobs, because transfers need not always involve a change in pay.
A.

pay rates

B.

pay ranges

C.

pay policies

D.

pay differentials

E.

pay ranks

b

88.
Assuming an organization wants to motivate employees through promotions, and assuming enough opportunities for promotions are available, the organization would want to
A.

increase the overlap from one level to the next.

B.

reduce its compa-ratio to less than 1.

C.

implement a broadband pay structure.

D.

limit the overlap from one pay range to the next.

E.

use a fixed interval promotion policy.

d

89.
John and Lisa hold the same position at Flyberry Electronics. However, John earns more than Lisa. In the context of pay structure, which of the following justifies the organization’s decision to pay John more than Lisa?
A.

John works the night shift, and night hours are less desirable for most workers.

B.

John is a U.S. citizen; therefore his pay should be higher than that of non-Americans.

C.

Lisa is pregnant; therefore her productivity is assumed to be lower.

D.

John is physically disabled; therefore he should be paid more than Lisa.

E.

Lisa lives in a location where living expenses are higher.

a

90.
Thomas and Alex are welders working for two different divisions of the same company. Both have the same level of experience. However, Thomas earns more than Alex. Under the Fair Labor Standards Act (FLSA), which of the following will justify the organization’s decision to pay Thomas more than Alex?
A.

Thomas lives in a location where living expenses are higher

B.

Alex is younger than Thomas

C.

Thomas is a U.S. citizen

D.

Alex is physically disabled

E.

Alex works the night shift

a

91.
Which of the following is an adjustment to a pay rate to reflect differences in working conditions or labor markets?
A.

bonus

B.

pay differential

C.

green-circle rate

D.

rank-and-file adjustment

E.

red-circle rate

b

92.
Which of the following statements is true about job-based pay structures?
A.

A pay structure that rewards employees for winning promotions will encourage them to gain valuable experience through lateral career moves.

B.

Their focus on higher pay for higher status can work in favor of efforts for empowerment.

C.

They typically reward desired behaviors, particularly in a rapidly changing environment.

D.

Organizations may avoid change because it requires repeating the time-consuming process of creating job descriptions and related paperwork.

E.

They always encourage flexibility, innovation, quality, and customer service.

d

93.
Which of the following is a disadvantage of a pay structure that rewards employees for winning promotions?
A.

It does not focus on setting pay for groups of jobs.

B.

It does not make adjustments to a pay rate to reflect differences in labor markets.

C.

It discourages employees from gaining valuable experience through lateral career moves.

D.

It rewards employees for acquiring skills but does not provide a way to ensure that employees can use their new skills.

E.

It places the employer at an economic disadvantage relative to other employers that pay the market rate by raising the pay for some jobs.

c

94.
Which of the following is a characteristic of delayering?
A.

It increases an organization’s flexibility.

B.

It increases the opportunities for promoting employees.

C.

It sets pay according to the employees’ level of knowledge.

D.

It encourages a climate of learning.

E.

It decreases the flexibility of managers in making assignments.

a

95.
Joy Limon, a manufacturing company, has a pay structure based on job descriptions. As the company moves toward customizing production to meet customers’ specific needs, it finds that managers are lacking flexibility in both job assignments as well as awarding pay increases to their employees. In this case, which of the following alternatives to job-based pay structures would best help the organization to respond to this problem?
A.

straight piecework plan

B.

skill-based pay system

C.

delayering

D.

quality-based pay system

E.

benchmarking

c

96.
Which of the following is the result of combining more assignments into a single layer, thus giving managers more flexibility in making assignments and awarding pay increases?
A.

outsourcing

B.

broad bands

C.

rightsizing

D.

benchmarks

E.

downsizing

b

97.
Which of the following is a disadvantage of broad bands?
A.

They reduce managers’ flexibility in making assignments.

B.

They always result in pay decreases.

C.

They increase the number of levels in the organization’s job structure.

D.

They reduce the opportunities for promoting employees.

E.

They discourage employees from gaining valuable experience through lateral career moves.

d

98.
Instruck Inc. is a real estate firm based in Colorado. The company ensures that employees’ pay is dependent on what they are capable of doing. The company also supports efforts to empower its employees by encouraging them to be independent and to make decisions in various areas. This, in turn, ensures job enrichment. Based on this information, identify the pay structure being utilized by Instruck.
A.

straight piecework plan

B.

skill-based pay systems

C.

merit pay system

D.

differential piece rates

E.

standard hour plan

b

99.
Which of the following is a disadvantage of skill-based pay systems?
A.

It makes organizations inflexible.

B.

It reduces employee empowerment.

C.

It may result in paying employees for skills they don’t use.

D.

It reduces opportunities for promoting employees.

E.

It limits the number of pay levels by delayering.

c

100.
Which of the following statements is true about skill-based pay?
A.

Skill-based pay provides a way to ensure that employees can use their new skills.

B.

Gathering market data about skill-based pay is easy.

C.

Skill-based pay ensures that the employer pays the employee for learning skills that benefit the employer.

D.

Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures.

E.

Skill-based pay does not require records related to skills, training, and knowledge acquired.

d

101.
Compa-ratio
A.

is defined as the ratio of average pay to the midpoint of the pay range.

B.

is defined as the ratio of the average pay for the grade divided by the minimum pay for the grade.

C.

can range from 0 to 100 percent.

D.

uses data from market-pay surveys.

E.

measures the degree to which new skills learnt are consistent with the increases in pay.

a

102.
Perlis Inc. is a whole-foods distributor. Its human resource department gathers the following data for computing compa-ratios of some positions. Based on the data, for which position is Perlis most likely underpaying for human resources?
A.

shipping clerks: average salary of $22,000, range midpoint of $24,000

B.

inventory clerks: average salary of $20,000, range midpoint of $30,000

C.

order packers: average salary of $24,000, range midpoint of $22,000

D.

purchasing agents: average salary of $30,000, range midpoint of $20,000

E.

warehouse workers: average salary of $20,000, range midpoint of $20,000

b

103.
At Carbon Fine Inc., a maker of premium art pencils, the human resource department is evaluating its pay structure. A compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio of this size?
A.

The company may have difficulty keeping costs under control.

B.

The company may have difficulty attracting and keeping qualified employees.

C.

The company may be in violation of the Fair Labor Standards Act.

D.

The company may have misclassified these employees as exempt when they are nonexempt.

E.

The company may not have met minimum-wage requirements.

a

104.
The _____ requires employers to make jobs available to their workers when they return after fulfilling military duties for up to five years.
A.

Uniformed Services Employment and Reemployment Rights Act

B.

Fair Labor Standards Act

C.

Equal Employment Opportunity Act

D.

National Labor Relations Board

E.

Family and Medical Leave Act

a

105.
Executive pay has drawn public scrutiny in recent years. Which of the following statements best explains the reason?
A.

Top executives’ pay is much higher than average workers’ pay.

B.

Most of the top executives’ pay is in the form of a salary.

C.

Top executives come under the category of exempt employees.

D.

Top executives are paid in the form of commissions.

E.

Executives are denied short-term or long-term incentives with their pay.

a

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