job-based pay plan

81. When setting up a job-based
pay plan, it is important for a firm to:
a) have a relatively flat management hierarchy.
b) develop the plan independent of employee input.
c) use an external consulting firm to ensure objectivity.
d) differentiate among depth, horizontal, and
vertical skills.
e) establish a way for employees to improve pay
without moving into management.

82. A skill-based approach to
compensation is built on which of the following characteristics?
a) Workers are paid for performing well-defined jobs.
b) The greater the variety of job-related skills a worker possesses,
the more he/she should be paid.
c) Each job must be very clearly described with highly defined tasks.
d) The primary objective is to allocate pay so that the most important
jobs command the highest pay.
e) The job is the most important element to consider in setting

83. Skill-based pay plans pose
some risks to the organization, such as:
a) increasing employees’ frustration when they
hit the top of the pay structure.
b) not fitting higher levels of the organization.
c) bias against women and minorities.
d) not taking into account the nature of the business.
e) being more subjective and arbitrary than job-based pay plans.

84. The compensation law that
affects most pay structures in the United States is:
a) Executive Order 11246.
b) the Fair Labor Standards Act.
c) the Civil Rights Act of 1991.
d) the Internal Revenue Tax Code.
the Equal Pay Act.

85. Compensation law identifies
two categories of employees, exempt and non-exempt. Which of the following is
an example of a non-exempt employee?
a) A manager
b) A salesperson
c) An HRM professional
d) An hourly employee on the production line
e) A retail store supervisor

86. An exempt employee:
is one who receives at least
minimum wage and overtime pay.
works as a temporary employee.
is more costly to a firm than
a nonexempt employee.
is not covered by the Fair
Labor Standards Act.
works part time rather than
full time.

87. The Equal Pay Act prohibits
compensation discrimination between men and women doing substantially the same
job, except when:
a) the pay differential is due to gender.
b) the titles of the jobs in question are different.
c) there is no apparent disparate impact from the practice.
d) the base pay for the job is minimum wage.
e) seniority or productivity are the basis for the differential.


Case 10.1
A company is reviewing its compensation system. The president wants
employees to be paid wages and benefits comparable to competitors. He wants to
be as fair as possible. He also wants to have maximum flexibility in being able
to move people around to different jobs, as the company needs to, without
having to worry about adjusting their pay. The Finance VP suggests that the
company should tie compensation costs more closely to productivity and profit.
When profits are down, compensation costs should be reduced as well. She also
believes that employees should be paid for what they produce, not for their
time, and the compensation program should apply to all equally. The VP of HRM
suggests that the key to the company’s success is their employees. People
should be paid for their skills or knowledge, not just because they are
fulfilling certain jobs. He also feels that it would be simpler to implement a
compensation system by level rather than by job.

88. Refer to Case 10.1. The
company president is expressing a concern about:
a) external equity.
b) labor market-based wages.
c) individual equity.
d) distributive justice.
internal equity.

89. Refer to Case 10.1. The
Finance VP would most likely favor a(n):
a) fixed pay system.
b) variable pay system.
c) membership-based system.
d) individual-centered system.
e) egalitarian compensation system.

90. Refer to Case 10.1. The
compensation system that would meet the president’s concerns about fairness and
flexibility would be a(n) _____ compensation system.
a) fixed pay
b) variable pay
c) membership-based
d) performanc