228 terms

# Z441 Final

Chapters 7-16
###### PLAY
1) This term is defined as an in-depth examination of the external and internal environmental factors that are likely to have the greatest impact on the future of the company.
A) market-competitive pay structure
B) regression analysis
C) competitive strategy
D) strategic analysis
D. Strategic Analysis
This BLS survey provides the quarterly measure of changes in labor and compensation costs, and is used as the principle economic indicator for the Federal Reserve.
A) National Compensation Survey
B) Employment Cost Index
C) Employer Costs for Employee Compensation
D) National Benefit Index
B) Employment Cost Index
These are reference points against which jobs within the company are judged.
A) benchmark jobs
B) relevant labor markets
C) internal labor markets
D) human resource capabilities
A) benchmark jobs
These are used as reference points for setting pay levels.
A) mean pay
B) median pay
C) market-competitive pay
D) benchmark jobs
D) benchmark jobs
When using compensation survey data, statistical analyses are used to integrate this with the external market, in order to determine pay rates.
A) internal pay scales
B) nominal pay rates
C) internal pay benchmarks
D) internal job structures
D) internal job structures
In statistical analysis, this term is used to signify the possible extreme observations.
A) deviations
B) extremities
C) outliers
D) variants
C) outliers
These are the two types of central tendency measures that are pertinent to compensation.
A) mode and arithmetic mean
B) median and mode
C) mode and quartile
D) arithmetic mean and median
D) arithmetic mean and median
These are tools used by employers to determine the pay levels needed to recruit highly qualified employees.
A) strategic surveys
B) external market surveys
C) compensation surveys
D) internal market surveys
C) compensation surveys
This term refers to the distance of each salary figure from the mean.
A) standard deviation
B) quartile
C) percentile
D) deviated mean
A) standard deviation
What does Quartile 3 represent?
A) the number of figures that are above 25%
B) the number of figures that fall below 25%
C) the number of figures that are above 75%
D) the number of figures that fall below 75%
D) the number of figures that fall below 75%
XYZ Company is a world leader in medical device manufacturing. Aiming to continue its market position in this industry, XYZ Company pursues differentiation strategy. As a result, in order to attract and retain best employees, this company compensates its employees higher than almost all competitors. What kind of pay level policy does XYZ Company follow?
A) market match
B) market lag
D) market pay line
Market match policies are generally set to which quartile in the salary survey?
A) 1st
B) 2nd
C) 3rd
D) 4th
B) 2nd
29) Market lag policies are generally set to which quartile in the salary survey?
A) 1st
B) 2nd
C) 3rd
D) 4th
A) 1st
31) ________ represent the fields of potentially qualified candidates for particular jobs.
Relevant labor markets
________ refers to a group of two or more jobs that are based on similar work characteristics, duties, and responsibilities.
Occupational classification
HR professionals rely on ________ jobs as reference points for setting pay levels.
benchmark
________ represents the amount of spread or dispersion in a set of data.
Variation
________ allow compensation professionals to describe the distribution of data based on four groupings.
Quartiles
The market ________ policy distinguishes a company from competition by compensating employees less than most competitors.
lag
The market ________ policy most closely follows the typical market pay rates because companies pay according to the market pay line.
match
41) Explain the role of compensation surveys. Why is it important to update survey data?
Compensation professionals assess competitors' pay practices with compensation surveys. Compensation surveys are important because instead of guessing, compensation professionals can gather realistic views of competitors' wage and salary practices. This information is crucial to build competitive compensation systems.

When companies establish pay structures, they are anticipating the future costs to the company. Compensation professionals typically use historical survey data to build said structures. Unfortunately, this data may not accurately reflect the changes that may occur in the economy and the fortunes of the company. So, companies update survey data to correct for any lags that may occur.
Explain market pay line. How is it used in the context of pay level policies such as market lead, market lag, and market match?
Paying well below or well above the typical market rate for jobs can create a competitive disadvantage for companies. Regression analysis helps to establish pay rates for a set of jobs that are consistent with the typical pay rates of the external market. Regression analysis finds the best-fitting line between two variables and the best fitting line is referred to as market pay line. The typical market pay rate is represented by market pay line. Market lead policies refer to the pay levels that fall above the market pay line, whereas market lag policies refer to the pay levels that fall below the market line. Market match policy follows the market pay line.
Elaborate on the link between a company's pay level policy and its strategic mandate.
A company can choose from three pay level policies: 1) market lead, 2) market lag, or 3) market match. The market lead policy will compensate employees more highly than its competitors. Conversely, a market lag policy will compensate employees less than one's competitors. The market match policy follows the typical market rates.

Companies pursuing a differentiation strategy will opt for a market lead or market match policy. The market lead policy can be used to attract the very best employees to promote its competitive strategy. For less labor-intensive industries, a market match policy will suffice because they can use funds toward capital needs. Companies pursuing a lowest cost strategy would more likely adopt a market lag policy. Companies can realize cost savings by paying lower than the market pay line. However, these firms may have difficulty attracting and retaining highly qualified employees. Typically, companies will use more than one pay policy simultaneously.
What represents the relationship between a company's valuation of jobs based on job evaluation and the valuation of jobs within the external market, as assessed by compensation surveys?
A) market-competitive pay structure
C) pay range
D) market pay line
D) market pay line
This term refers to the groupings of jobs based on compensable factors, for the purpose of applying pay policies.
A) market lines
B) market-competitive pay structures
D) pay ranges
These represent the horizontal dimension of pay structures.
A) pay ranges
C) job evaluation points
Midpoint, minimum, and maximum are values used to define which of the following?
B) pay ranges
C) pay structures
D) pay levels
B) pay ranges
In establishing pay grades, which pay rate is established first?
A) minimum pay rate
B) midpoint
C) third quartile
D) maximum pay rate
B) midpoint
If the company adopts a market lag policy, how will that company's pay range midpoint compare to the market average?
A) The midpoint will be the same as the market average.
B) not enough information to determine
C) The midpoint will be higher than the market average.
D) The midpoint will be lower than the market average.
D) The midpoint will be lower than the market average.
Which term is used to describe the situation where the pay spread between newly hired employees and more qualified job incumbents is small?
A) pay structures
B) pay compression
C) red circle pay rates
D) green circle pay rates
B) pay compression
This type of pay rate applies to an employee who is demoted but is paid more than the maximum rate for the pay grade he is now in.
B) green circle
C) red circle
D) multi-tier pay
C) red circle
Richard's job has a compa-ratio of 0.85. What does this ratio tell about Richard's pay rate?
A) Richard's pay is highly competitive with the market.
B) Richard's pay is not competitive with the market.
C) There is no way to judge the competitiveness of Richard's pay.
D) You need more information to be able to judge Richard's pay.
B) Richard's pay is not competitive with the market.
This theory suggests that an employee must regard his own ratio of merit increase pay to performance as similar to the ratio for other comparably performing people in the company.
A) comparable ratio theory
B) comparable pay theory
C) equality theory
D) equity theory
D) equity theory
With which sales compensation plan does the level of pay not vary when sales volume does?
A) commission-only plan
B) salary-only (base pay) plan
C) salary (base pay)-plus-bonus plan
D) salary (base pay)-plus-commission plan
B) salary-only (base pay) plan
Jasmine Black believes that the company should share part of the risk for her sales position. Which sales compensation plan should she pursue?
A) salary-only plan
B) salary-plus-commission plan
C) commission-plus-draw plan
D) commission-only plan
C) commission-plus-draw plan
D) commission-only plan
B) salary-plus-commission plan
This is a loan from the company to the employee that is carried forward indefinitely until the employee sells enough to repay it.
A) commission-plus-draw plan
B) a recoverable draw
C) a non-recoverable draw
D) an interest-free loan
B) a recoverable draw
This type of commission draw acts as a salary because employees are not obligated to repay the loans if they do not sell enough to cover the amount.
A) nonrecurring draw
B) safe draw
C) nonrecoverable draw
C) nonrecoverable draw
In which situation is a commission-only plan best suited?
A) The salesperson has little influence over the sales.
B) The company is following a lowest-cost strategy.
C) Extensive training or expertise is required.
D) The sales cycle is long.
B) The company is following a lowest-cost strategy.
This term describes a set of skills necessary to perform a specific job or a group of similar jobs.
A) skill range
C) skill block
D) skill structure
C) skill block
Alejandro Martinez is responsible for setting up the pay structure for his company. He believes that newly hired employees should not be paid as much as established employees. Accordingly, what type of pay structure should Mr. Martinez use?
B) sales incentives
C) two-tiered
D) merit pay
C) two-tiered
What types of companies are most likely to utilize two-tier wage systems?
A) unionized firms
B) sales firms
C) public sector companies
D) private sector companies
A) unionized firms
________ assign different pay rates for jobs of unequal worth, and provide the basic framework for recognizing differences in individual's contributions.
Pay Structures
________ represent the vertical dimension of pay structures.
Pay ranges
________ rates pay wages higher than the maximum listed in order to help retain valued employees fielding big job offers elsewhere.
Red circle
________ describe the allocation of monetary resources to fund pay structures.
________ is a form of compensation based upon a percentage of the selling price of a product or service.
Money that covers the basic living expenses of sales professionals is better known as a ________.
draw
________ makes sure that employees have at least a minimally acceptable level of skill proficiency upon completion of a training unit.
Certification
Compare and contrast merit pay systems and sales compensation.
Employees earn permanent merit increases based on their performance. In sales incentive compensation plans, salespeople's compensation relies on incentives. The key in this compensation program is to align salespeople's financial interest with the company's marketing objectives. In merit based pay system, an employee's reward is generally based on someone else's subjective evaluation of the employee's past performance. However, in sales compensation programs, employees receive rewards when they meet pre-established levels of performance. Moreover, salespeople's compensation is variable to the extent that it is composed of incentives. In merit pay systems, employees earn base pay for their job that is increased periodically with permanent pay raises or one-time bonuses.
Which of the following is an example of a welfare practice?
A) overtime pay
B) regular wages
C) workers' compensation laws
D) employee recreational areas
D) employee recreational areas
This is a mental or physical disability for which medical advice, diagnosis, care, or treatment was received, during a designated period preceding the beginning of disability insurance coverage.
A) preeligibility condition
B) exclusive condition
C) eliminating condition
D) preexisting condition
D) preexisting condition
Self-inflicted wounds and drug dependency are generally considered as what in most short-term disability insurance plans?
A) partial disability provisions
B) exclusion provisions
C) elimination provisions
D) preexisting conditions
B) exclusion provisions
Companies that offer long-term disability insurance plans only require an elimination period that runs how long?
A) 12-18 months
B) 1-2 months
C) 8-12 months
D) 3-6 months
D) 3-6 months
Employer sponsored disability plans supplement legally required benefits established by which law?
A) COBRA
B) ERISA
C) NLRA
D) OASDI
B) ERISA
By what percentage have total healthcare expenditures risen since 1960?
A) 100%
B) 500%
C) 2000%
D) 5000%
D) 5000%
Unscheduled absenteeism has climbed to its highest levels in XYZ Company last month. In order to reduce the costs associated with unscheduled absenteeism HR professionals in XYZ Company decided to change their paid time off policy. This company used to grant each employee 10 vacation days, 5 paid days for sick leave, and 4 days for personal leave. With the new policy, this company combines vacation, sick leave, and personal leave policies into one single paid time off policy (i.e., 19 days). The management decided to keep funeral leave as a stand-alone policy. What is XYZ Company's new policy called?
A) integrated paid time off
B) combined paid time off
C) sabbatical leave
D) volunteer leave
A) integrated paid time off
This policy allows employees to schedule time off without having to justify the reasons, and is more effective in controlling absenteeism than other types of absence control policies.
A) personal paid time off
B) social service leaves
C) sick leaves
D) integrated paid time off
D) integrated paid time off
Which of the following is true about providing paid time off for volunteer services?
A) They often help promote the company's overall image in the public eye.
B) They have a negative correlation with employee retention.
C) They make it more difficult to balance work and life demands.
D) They take away from commitment to the company.
A) They often help promote the company's overall image in the public eye.
XYZ Company provides a program for its employees who need help dealing with the effects of domestic violence. XYZ Company can offer this kind of service through which of the following programs?
A) employee welfare program
B) employee assistance program
C) wellness program
D) employer assistance program
B) employee assistance program
Referrals to on-site child care or elder care centers and company-sponsored day care programs are examples of which type of service?
A) employee assistance programs
B) family assistance programs
C) day care
D) cessation programs
B) family assistance programs
Full or partial reimbursement of training costs is which type of benefit?
A) financial assistance
B) employee assistance
C) tuition reimbursement
D) sabbatical leave
C) tuition reimbursement
Due to a recent merger with another major airline, ABC Airlines decided to layoff some of its employees. ABC Airlines offers training sessions to teach job search and interviewing techniques to those laid off employees. What kind of service was provided by this airline?
A) employee assistance program
B) tuition reimbursement
C) wellness program
D) outplacement assistance
D) outplacement assistance
Outplacement assistance programs are best suited for which condition?
A) new plant openings
B) mergers and acquisitions
C) workforce increases
D) global operations
B) mergers and acquisitions
Which of the following would be considered an act as part of a company's wellness program?
A) putting a soda machine in the break room
B) giving out cigars to expecting fathers
C) offering anti-smoking courses
D) giving employees free pizza at lunch
C) offering anti-smoking courses
Which of the following is a strategic purpose fulfilled by discretionary benefits?
A) accommodating a diverse workforce
B) becoming similar to competing firms
C) encouraging employee entitlements
D) keeping a fixed workforce
A) accommodating a diverse workforce
In the 1940s and 1950s, companies began offering ________ as an alternative to pay hikes in order to motivate employees through greater work benefits.
welfare practices
welfare benefits
________ replaces income for employees who become unable to work because of sicknesses or accidents.
Retirement programs, or ________, provide income to employees and their beneficiaries during some or all of their retirement.
pension plans
________ are paid time off for professional activities such as a research project or a curriculum development.
________ programs help bring employees to the workplace and back home again by using more energy-efficient forms of transportation.
________ are career and personal programs designed to develop the job-hunting skills and strategies of employees being laid off or terminated.
Employers sponsor ________ to promote employees' physical and psychological health.
What kind of discretionary benefits would help companies to have better control over absenteeism?
Integrated paid time off policies combine holiday, vacation, sick leave, and personal leave policies into a single paid time off policy. This allows employees to schedule time off without justifying the reasons. Family assistance programs can also be helpful in controlling employee absence. Flexible scheduling and leave allow employees to take time off during work hours to take care of relatives or emergency situations. Flexible scheduling such as compressed work weeks and flextime help employees to balance the demands of work and family.
What are the implications of discretionary benefits for strategic compensation?
Discretionary benefits, like core compensation, can contribute to a company's competitive advantage.

Management can use discretionary benefit offerings to promote particular employee behaviors that have strategic value.

A company can use discretionary benefits to distinguish itself from the competition.

Discretionary benefits also serve a strategic purpose by accommodating the needs of a diverse workforce.

Finally, the tax advantage afforded companies from offering particular discretionary benefits has strategic value.
A new employee comes into your office and asks you how many hours a year he has to work to qualify as a year towards his vesting requirements. What would you tell him?
A) 1,000
B) 1,400
C) 800
D) 1,200
A) 1,000
What specifies the rate at which participants accumulate benefits?
A) accrual rules
B) combination procedures
C) Sarbanes-Oxley
D) build-up rules
A) accrual rules
These represent a series of payments for the life of the participant and beneficiary.
A) collateral payments
B) periodic payments
C) lump sum distributions
D) annuities
D) annuities
What type of retirement plan is a 401(k)?
A) defined contribution
B) defined benefit
C) qualified benefit
D) nonqualified benefit
A) defined contribution
What type of pension plan commonly includes profit-sharing plans, stock bonus plans, and employee stock ownership plans?
A) defined benefit
B) defined contribution
C) deferred contribution
D) deferred benefit
B) defined contribution
This type of defined contribution plan, also known as a CODA, permits only private sector or tax-exempt employers' employees to tax defer part of their compensation to the trust of a qualified plan.
A) 401(k) plan
B) profit sharing plan
C) gain sharing plan
D) incentive plan
A) 401(k) plan
Which of the following is associated with 401(k) plans?
A) Employees pay taxes on their contribution.
B) Employees do not pay taxes on their contributions.
C) Investment gains are taxed.
D) Employees cannot deduct their contributions from taxable income.
B) Employees do not pay taxes on their contributions.
These types of insurance plans provide protection against health care expenses in the form of cash benefits paid to the insured, or directly to the provider after the services are rendered.
A) point-of-service plans
B) managed care plans
C) fee-for-service plans
D) health savings accounts
C) fee-for-service plans
Which of the following is NOT a benefit covered by fee-for-service plans?
A) hospitalization benefits
B) dentist visits
C) physician visits
D) surgical benefits
B) dentist visits
This term refers to the percentage of the health bill the insured employee is required to pay.
A) coinsurance
D) co-payment
A) coinsurance
What is coinsurance?
A) when both parents have employer-sponsored insurance coverage for their children
B) two insurance companies combine to offer a group policy to an employer
C) the amount an employee has to pay out-of-pocket before the insurance kicks in
D) the percentage of covered expenses paid by the insured
D) the percentage of covered expenses paid by the insured
This is the condition for which medical advice, diagnosis, care, or treatment was received or recommended during a designated period prior to coverage.
B) preexisting condition
C) second opinions
D) exclusion criteria
B) preexisting condition
In which plan do employees possess the option to receive care from health care providers outside the designated network of physicians, paying more for the choice?
A) fee-for-service plans
B) preferred provider organizations
C) HMOs
D) point-of-service plans
D) point-of-service plans
These types of insurance plans are set up to cover things like dental care, vision care, and prescription drugs.
A) flexible savings plans
B) flexible services accounts
C) carve-out plans
D) health services accounts
C) carve-out plans
This consumer-driven health care option allows employees to contribute pre-tax wages annually to pay for qualified medical expenses, but they will lose the balance not used at year's end.
A) flexible spending accounts
B) health reimbursement arrangements
C) health savings accounts
D) flexible savings accounts
A) flexible spending accounts
________ refers to an employee's nonforfeitable rights to pension benefits.
________ plans permit employees to defer part of their compensation to the trust of a qualified defined contribution plan.
Under a preferred provider organization (PPO), higher ________ are set for services rendered by nonnetwork providers to discourage participants from using services outside of the network.
________ accounts allow employees to pay for specified health care costs not covered by an employer's insurance plan.
Compare and contrast defined contribution plans with defined benefit plans.
Under defined contribution plans, employers and employees make annual contributions to separate accounts established for each participating employee, based on a formula contained in the plan document. These formulas typically call for employers to annually contribute a given percentage of each participant's compensation. The most common types of these plans are profit-sharing plans, employee stock ownership plans (ESOPs), deferred 401(k) plans, and savings and thrift plans.

Under defined benefit plans, employees are guaranteed retirement benefits as spelled out in the plan document. This benefit is expressed in terms of a monthly sum equal to a percentage of a participant's preretirement pay multiplied by the number of years he or she has worked for the employer. The contributions an employer makes typically fluctuate from year to year.

Defined benefit and defined contribution plans differ in a number of ways. One difference is the likelihood an employee will achieve retirement income objectives. With a defined benefit plan, the employees know what amount of benefits they will receive upon retirement. With a defined contribution plan, employees will not know this in advance. Another difference is the cost of the two types of plans. With a defined contribution plan, employers know the plan's cost on a year-to-year basis; this is unknown with a defined benefit plan. A third difference is that although both plans are complex to administer, companies find that defined benefit plans are more burdensome.
Define health insurance concepts such as insurance policy and premium and explain the different types of health insurance programs. What are the differences among these programs?
Insurance policy specifies the amount of money the insurance company will pay for particular services such as physical examinations. Premium is the negotiated amount that employers pay insurance companies to establish insurance policies. Broadly there are three health insurance programs: 1) fee-for-service plans, 2) managed care plans, and 3) point-of-service plans.

Fee-for-service plans pay benefits on a reimbursement basis. A cash benefit is paid to the insured or directly to the healthcare provider for the healthcare services. Hospital expenses, surgical expenses, and physician charges are considered eligible health expenses.

Managed care plans limit employees' choice of doctors and hospitals to control costs. Health maintenance organizations, a common form of managed care plans, offer prepaid services. On the contrary, fee-for-service plans offer reimbursement. Also, coinsurance rates are generally lower in HMO plans.

Point-of-service plans combine the features of fee-for-service plans and HMOs. Like HMOs, employees pay a nominal copayment for each visit to a designated network of physicians. However, employees can receive care from providers outside the designated network of physicians with paying somewhat more for this choice.
How often will Jill receive an unemployment check?
A) daily
B) weekly
C) bi-monthly
D) monthly
B) weekly
To be fully insured under OASDI, an employee would have to work at least how long?
A) 24 months
B) 5 years
C) 10 years
D) 12 months
C) 10 years
In 2022, how old will Cary have to be to receive full Social Security benefits?
A) 57
B) 62
C) 65
D) 67
D) 67
Medicare Part A is based on what type of health care option?
A) preferred provider plan
B) medical savings account
C) managed care plan
D) fee-for-service
D) fee-for-service
How is Medicare Part A financed?
A) payroll taxes paid only by employers
B) out-of-pocket
C) payroll taxes paid by both employers and employees
D) congressional fiat
C) payroll taxes paid by both employers and employees
Which of the following is covered by Medicare Part A?
A) home health care
B) IV drugs
C) surgery expenses
D) doctor's bills
A) home health care
Medicare Select is one of the choices under which Medicare Plan?
A) Medicare Prescription Drug Program
C) Medigap
D) Medicare+Choice
C) Medigap
Which Medicare plan offers enrollees lower premiums in exchange for limiting their choice of health care providers?
A) Medicare+Choice
B) Medigap
C) Medicare Select
C) Medicare Select
Which Medicare plan allows enrollees to use medical savings accounts?
B) Medigap
C) Medicare Select
D) Medicare Prescription Drug Program
Due to the fact that the costs of benefits has risen so dramatically in recent years, the majority of the companies decided to finance discretionary benefits using
A) noncontributory financing.
B) contributory financing.
C) employee-financed benefits.
D) employer-financed benefits.
B) contributory financing.
Mary works at a pharmaceutical company as a customer service representative. Her employer allows her to choose the set of benefits she will receive on top of preestablished sets of benefits such as medical insurance, and term life insurance. The company gave her credits equal to 6% of her salary with which she decided to purchase dental and vision insurance. This pharmaceutical company uses what kind of benefits plan?
A) cafeteria plan
B) flexible benefits plan
C) employee-financed plan
D) core plus option plan
D) core plus option plan
Income discontinuity caused by the ________ led to the Social Security Act as a means to protect families from financial devastation in the event of unemployment.
________ occurs when a worker has his or her job status negatively affected or is terminated as a result of filing a workers' compensation claim.
________ financing implies that the company assumes total costs for each discretionary benefit.
How does a state determine if an individual is eligible for unemployment insurance benefits?
Being unemployed does not necessarily entitle one to qualify for unemployment insurance benefits. Several criteria have been developed for individuals to qualify for these benefits. To be eligible, an individual must: 1) not have left a job voluntarily, 2) be able and available to work, 3) be actively seeking work, 4) not have refused an offer of suitable employment, 5) not be unemployed because of a labor dispute (except in a few states), and 6) not have had employment terminated because of gross violations of conduct established within the workplace. In addition, all states require sufficient previous earnings, typically \$1,000 during the last four quarter periods combined.
Explain disability benefits under OASDI. Compare it with the workers' compensation.
The SSA pays benefits to seriously disabled workers and family members. Social Security pays only for total disability. The disability must last for at least 1 year or it should result in death. Workers' compensation insurance programs are designed to cover expenses due to work-related accidents. For work-related injuries, workers' compensation pay medical care immediately. It pays temporary disability benefits after 3-7 days of waiting period. Workers' compensation pays permanent, partial, and total disability benefits to employees. It also pays benefits to survivors of workers who die due to work-related issues. On the contrary, in Social Security workers receive pay benefits for long-term disabilities when the disabilities preclude work. Social Security begins after a 5-month waiting period.
What does the IRS use the term "key employees" for?
A) for non-discrimination rules in retirement benefits
B) for non-discrimination rules in health insurance benefits
C) to determine the necessity of top-heavy provisions in employer-sponsored qualified retirement plans
D) to determine the necessity of top-heavy provisions in employer-sponsored health insurance plans
C) to determine the necessity of top-heavy provisions in employer-sponsored
The IRS considers Sylvia to be a highly compensated employee for Beautiful Pictures, Inc., which means she has at least one of which of the following qualifications in the preceding year?
A) 1% owner in the top paid employee group
B) 5% owner in the top paid employee group
B) 5% owner in the top paid employee group
Which of the following are the two main components of current core compensation?
A) base pay & bonuses
B) base pay & legally-required benefits
C) bonuses & legally-required benefits
D) base pay & discretionary benefits
A) base pay & bonuses
As the vice-president, Sheila will receive short-term incentive compensation awards based on which two conditions?
A) her rank and compensation level
B) her age and department
C) her department and rank
D) her age and compensation level
A) her rank and compensation level
These entitle an executive to purchase company stock in the future for a predetermined price.
A) nonstatutory stock options
B) incentive stock options
C) restricted stock options
D) phantom stock options
B) incentive stock options
These rights provide employees with an opportunity to purchase a number of stocks at a designated price within a specified period of time.
A) stock option
B) stock grant
C) disposition
D) exercise of one's grant
A) stock option
This is the difference between the stock price at the time of purchase and the lower stock price at the time an executive receives the stock option.
A) disposition value
B) discounted value
C) fair market value
D) capital gains
D) capital gains
When he became CEO, Duane was given a stock option that does not require him to exercise his options in order to receive income. Which plan is it?
A) stock appreciation rights
B) discount stock
C) restricted stock
D) golden parachute
A) stock appreciation rights
After the recent merger of ABC and XYZ Airlines, the former CFO of XYZ Airlines, John, lost his employment in the newly merged airline. Which compensation agreement extends pay and benefits for John?
A) discount stock option plans
B) incentive stock options
C) phantom stock
D) golden parachutes
D) golden parachutes
The recently appointed CEO of XYZ Inc. uses a luxury summerhouse owned by the company for rest and relaxation with his family as well as a place to invite important clients before a lucrative business deal. XYZ Inc. also provides a membership to an exclusive country club to its CEO. These kinds of benefits offered to CEOs are called
A) discretionary bonuses.
B) perquisites.
C) golden parachutes.
D) clawback provisions.
B) perquisites.
Using this executive compensation theory, shareholders negotiate the compensation contracts with the executive in hopes of aligning the executive's interests with theirs.
A) agency
B) tournament
C) social comparison
D) strategic
A) agency
Under SEC rules, which of the following is true?
A) Shareholders may be subject to personal liability for paying excessive executive compensation.
B) Publicly held corporations must disclose executive compensation information to shareholders, but not the public.
C) Board of director members can sue a corporation for excessive executive compensation.
D) Board of director members may be subject to personal liability for paying excessive executive compensation.
D) Board of director members may be subject to personal liability for paying excessive executive compensation.
Company stock shares are the main form of executives' ________ compensation.
Shareholders' interests are represented by a ________ who weigh the pros and cons of top executives' decisions.
Most contingent workers were employed as what, in 2005?
A) on-call employees
B) temporary employees
C) leased employees
D) independent contractors
A) on-call employees
What is it called when Tanesha and Jaunita both work part-time to complete the duties of one full-time position?
A) job sharing
B) freelancing
C) dual staffing
D) safe harboring
A) job sharing
If a company wanted to hire contingent workers as a way to screen workers for possible full-time employment, which type of worker would the company likely employ?
A) consultants
B) temporary
C) freelance
D) leased
B) temporary
Which type of contingent worker would work for a company on a long-term basis, presumably on an indefinite basis?
A) part-time employees
B) temporary employees
C) leased employees
D) independent contractors
C) leased employees
ARAMARK providing cafeteria service workers to a client company is an example of the utilization of which type of employees?
A) part-time employees
B) leased employees
C) temporary employees
D) independent contractors
B) leased employees
Who has the authority to define a "year of service" for pension protection purposes?
A) the human resources department
B) the chief executive officer
C) the union
D) the U.S. Department of Labor
D) the U.S. Department of Labor
What type of test is used to determine if an independent contractor is financially dependent?
A) right to control test
B) safe harbor test
C) economic reality test
D) financial dependence test
C) economic reality test
This type of telecommuting involves executives who travel extensively and maintain control over projects through the use of telephones, faxes, and e-mail.
A) neighborhood work center
B) satellite work center
D) electronic remote work center
________ have full-time jobs, and plan on having long-term relationships with their employers.
________ part-time employees work fewer than 35 hours per week because they are unable to find full-time employment.
A special kind of part-time employment agreement whereby two or more part-time employees perform a full-time job is better known as ________.
Discuss flexible work schedules from the perspective of both unions and employees.
Flexible work schedules such as flextime schedules, compressed workweek schedules, and telecommuting help employees balance the demands of work life and home life. Flexible work schedules provide employees to spend more time with their children. For instance, telecommuting arrangements let parents be near their infants or preschool-age children. Compressed workweeks and telecommuting reduce commuting time and expense for employees. Moreover, compressed workweeks and telecommuting provide more time together for dual-career couples. On the other hand, unions generally do not support flexible work schedules. They are concerned about the workers' safety and health due to long hours of working under compressed workweeks or flextime. Besides, unions do not like their members to be telecommuters due to concerns about: employee isolation, uncompensated overtime, and company monitoring in the home.
What are the strategic issues involved with contingent and flexible workers for a company pursuing a lowest cost strategy?
Because of the reduction in benefits that are given to contingent workers, such employment seems to work well with a lowest cost imperative. Flexible schedules can also work to reduce costs by decreasing absenteeism. Training is also a factor in the ability of companies to pursue this strategy. Although well-trained contingent workers may reduce company training costs, company-specific training may be needed, and a company may not be able to realize productivity benefits if these employees depart. Such an argument is moot if companies establish a track record of high productivity, quality, and exemplary customer service.
What does the term repatriation refer to?
A) sending an expatriate's family to the foreign country with him
B) an expatriate going back to an overseas assignment she had been to before
C) an expatriate returning home to work after completing an overseas assignment
D) teaching an expatriate about the customs and culture of a foreign country
C) an expatriate returning home to work after completing an overseas assignment
If your company hired a Canadian manager to work in your plant in Taiwan, she would be considered which type of international employee?
A) foreign country national
B) third country national
C) host country national
D) non-host country national
B) third country national
An international assignment is considered long-term when it lasts at least how long?
A) 3 months
B) 6 months
C) 2 years
D) 1 year
D) 1 year
How are hardship allowances usually paid to expatriates?
A) over a two year period
B) added to monthly salary amount
C) several small payments
D) single lump sum
B) added to monthly salary amount
Tuition reimbursement and day care assistance fall under this category.
A) boosted enhancements
B) protection programs
C) paid time off
D) service practices
D) service practices
Which of the following is considered an enhanced benefit for expatriates?
A) emergency leave
B) education reimbursement for expatriates' children
C) host country holiday pay
D) pay for host country vacation days
B) education reimbursement for expatriates' children
Which of the following are used by the State Department to determine the per diem schedules?
A) length of stay, family size
B) location, family size
C) cost of living, family size
D) length of stay, location
B) location, family size
If the local index in Tegucigalpa, Honduras is 99, what does that mean?
A) the cost of living in Tegucigalpa is 1% lower than in Washington, D.C.
B) the cost of living in Tegucigalpa is 99% lower than in Washington, D.C.
C) the cost of living in Tegucigalpa is 1% higher than in Washington, D.C.
D) the cost of living in Tegucigalpa is 99% higher than in Washington, D.C.
A) the cost of living in Tegucigalpa is 1% lower than in Washington, D.C.
What happens under tax equalization?
A) Expatriates realize tax benefits whenever actual taxes are less than the hypothetical tax.
B) The employee pays the foreign income tax, but not the U.S. government tax.
C) Employers reimburse expatriates for the difference between the hypothetical tax and the actual income tax.
D) The employer takes the responsibility for paying the income tax on behalf of the expatriates.
D) The employer takes the responsibility for paying the income tax on behalf of the expatriates.
________ is the transition process of working in a domestic assignment in a worker's home country after having worked on an international assignment abroad.
________ nationals are foreign national citizens who work in U.S. companies' branch offices or manufacturing plants in countries other than the United States or their own home countries.
An ________ is the price at which one country's currency can be swapped for another.
exchange rate
________ is the increase in prices for consumer goods and services.
The ________ allowance compensates expatriates for their sacrifices while on assignment.
Former under-developed countries of the world are experiencing which of these conditions, thus eliciting greater interconnections with U.S. employers?
B) economic downturn
C) labor shortages
D) improved standard of living
D) improved standard of living
In which country do companies incur the highest hourly cost for employing a manufacturing worker?
A) China
B) Norway
C) United States
B) Norway
Which one of the following is NOT a characteristic of NAFTA?
A) NAALC
B) convergence of labor standards
C) only Mexico and United States are members
C) only Mexico and United States are members
Canada can best be defined as which of the following?
A) autocracy
B) federal republic
C) constitutional monarchy
D) communist state
C) constitutional monarchy
The United States, Canada, and Mexico are part of a trade bloc better known as ________.
NAFTA
In China, the minimum wage rates are set by ________.
During when did the U.S. economy experienced the longest recession after World War II?
A) between February 2005 and July 2008
B) between December 2008 and January 2010
C) between April 2007 and December 2009
D) between December 2007 and June 2009
D) between December 2007 and June 2009
Which one of the following is NOT one of the long-term implications of underemployment?
A) Underemployment may slow down the economic recovery from recession.
B) Underemployment will likely lead to higher spending by companies.
C) Underemployment will most likely lead to a reduced consumption of goods and services.
D) Underemployment will probably result in reduced business production.
B) Underemployment will likely lead to higher spending by companies.
Which one of the developing Asian countries has the highest average pay rate?
A) Vietnam
B) China
C) Indonesia
B) China
Tim owns a fruit distribution company and hires around 100 employees. Before PPACA became a law, he did not provide health insurance coverage for the workers. After March 2010, he started to provide the coverage. However, from then on, the costs of his company have been increasing exponentially. Which of the following cannot be one of the ways to limit the rising costs of offering health care coverage?
A) lowering wages to offset the costs of health insurance
B) decreasing the size of his workforce
C) limiting the waiting periods to receive health care coverage to 90 days (for new workers)
D) imposing lifetime benefit caps at \$1 million
D) imposing lifetime benefit caps at \$1 million
Which one of the following is NOT true about labor participation rate?
A) Labor participation rate for younger workers is expected to decline.
B) Labor participation rate for older workers is expected to rise.
C) Labor participation rate for women is expected to increase slightly.
D) Labor participation rate for men is expected to increase slightly.
D) Labor participation rate for men is expected to increase slightly.
Which of the following is a typical benefit preferred by employees with children (male or female, coupled or uncoupled)?
A) life insurance
B) insurance with prescription drug benefits
C) generous vacation allowances
D) physical fitness programs
A) life insurance
Which of the following is NOT a typical benefit preferred by older workers?
A) insurance with prescription drug benefits
B) generous sick-leave allowances
C) flexible work schedules
D) disability insurance
C) flexible work schedules
________ refers to a general slowdown in economic activity.
________ is a situation in which a worker is forced to work part-time due to economic situations although s/he is willing to work full-time.
________ is a situation in which a worker possesses more qualifications, skill, and education than is required by his/her existing job.
_____ enables compensation professionals to establish pay rates for a set of jobs that are consistent with typical pay rates for jobs in the external market.
A) Mean
B) Standard deviation
C) Quartile
D) Regression analysis
D) Regression analysis
_____ is representative of typical market pay rates relative to a company's job structure.
A) Low-cost strategies
B) Consumer price index
C) Market pay line
D) Baseline
C) Market Pay Line
This term describes the policy that most closely follows the typical market pay rates because companies pay according to the market pay line.
A) market match policy
B) market lag policy
D) compensation factors
A) Market match policy
Which of the following is not one of the three pay level policies?
A) Market excess
B) Market lag
C) Market match
A) Market Excess
_____ distinguishes companies from their competitors, but by compensating employees less than competitors.
B) Market match policy
C) Alternation ranking
D) Market lag policy
D) Market lag policy
The Consumer Price Index is the most commonly used method for tracking price changes throughout the United States.
True or False?
True
Human resource professionals determine the pay levels for jobs based on typical market pay rates for similar jobs.
True or False?
True
Compensation professionals should not rely on statistics to analyze compensation survey data.
True or False?
False
Irrelevant labor markets represent the fields of potentially qualified candidates for particular jobs.
True or False?
False
The U.S. Bureau of Labor Statistics provides free salary surveys to the public.
True or False?
True
What determines the relationship between each employee's pay rate relative to the pay range midpoint?
A) market based test
B) compa-ratio
B) compa-ratio
What method is used when it becomes necessary to pay an employee at a rate that is greater than the pay range maximum?
A) pay compression
B) green circle rates
C) red circle rates
C) red circle rates
Select the term that groups jobs for pay policy application.
B) pay range
D) compa-ratio
Which of the following is true concerning two-tier pay structures?
A) Newly hired employees are paid less than established employees.
B) It gives supervisors greater responsibility for administering each employee's compensation.
C) It cuts down on the employee turn-over rate.
D) It dramatically reduces management layers.
A) Newly hired employees are paid less than established employees.
Which of the following is a limitation of the two-tier pay system?
A) Under the temporary basis, employees progress from lower entry level pay rates to the higher pay rates.
B) Lower paying scales apply to newly hired employees.
C) The lower pay scale applied to newly hired employees may restrict the employer's ability to recruit and retain highly qualified employees.
D) Long-service employees are rewarded.
C) The lower pay scale applied to newly hired employees may restrict the employer's ability to recruit and retain highly qualified employees.
Companies with multiple geographically dispersed locations must maintain the same pay structure throughout the organization, regardless of the location.
True or False?
False
The midpoint pay value is the difference between the maximum and minimum pay rates of a given pay grade.
True or False?
False
Below minimum pay range rates are known as green circle rates.
True or False?
True
Compa-ratios are calculated by dividing pay range mid-point by employees pay rate.
True or False?
False
Equity theory suggests that an employee must regard his or her own ratio of merit increase pay as similar to the ratio of merit increase pay for comparably performing people in the company.
True or False?
True
As of March 2011, companies spent an average of ____________ per employee annually to provide discretionary benefits.

\$15,000
\$17,500
\$20,000
\$20,500
\$15,000
Which of the following is not a reason companies offer discretionary benefits?

Promote desired employee behaviors
Distinctions from competitors
Decrease turnover
Distinctions from competitors
Which of the following is not a valid type of life insurance?
universal
whole
term
Describes the type of leave that provides time off for professional activities such as research or curriculum development.
sabbatical
personal
volunteerism
professional development
sabbatical
Which of the following conditions does not include manifestation of short-term disability?

recovery for injuries
alcoholism
recovery from surgery
pregnancy
alcoholism
Short term disability insurance provides benefits from a period of six months to life.
True
False
False
Companies offer most paid time off as a matter of custom, particularly paid holidays, vacations, and sick leave.
True
False
True
Companies favor providing paid time off work for volunteering because it enables employees to balance work and life demands.
True
False
True
Companies offer Employee Assistance Programs to support employees through difficulties that might interfere with job performance.
True
False
True
Outplacement assistance is one type of discretionary benefit which can be offered to employees who voluntarily leave the company.
True
False
False
Which of the following design configurations is not used by companies to establish retirement or pension plans?

defined benefit plan
hybrid plan
HMO plan
defined contribution plan
HMO plan
This term is used by the IRS to describe the plan that defines benefits for each employee by reference to the amount of the employee's hypothetical account balance.
golden handcuffs
ESOPs
cash balance plans
stock bonus plan
cash balance plans
What is defined as the percentage of covered expenses paid by the insured?
deductible
coinsurance
out-of-pocket minimum
coverage
coinsurance
_____ refers to an employee's nonforfeitable rights to pension benefits.
Vesting
Seniority
Longevity
Exempt
Vesting
50%
72%
25%
5%
72%
The Great Depression of the 1930s gave rise to employer-sponsored health insurance programs.
True
False
True
HMOs use primary care physicians to control costs by reducing the number of unnecessary visits to a specialist.
True
False
True
The money set aside in a Flexible Spending Account (FSA) that is not used by the end of the year rolls over and can be used the following year.
True
False
False
Managed care plans emphasize cost control by limiting an employee's choice of doctors and hospitals.
True
False
True
Lump sum distributions are single payments of benefits.
True
False
True
The key legally required benefits are not mandated by which law?
A) Social Security Act of 1935
B) various state worker's compensation laws
C) Family and Medical Leave Act of 1993
D) Civil Rights Act
D) Civil Rights Act
As of March 2011, U.S. companies spent an average of ________ per employee annually to provide legally required benefits.
\$3,500
\$3,000
\$6,000
\$4,800
\$4,800
Which one of the following programs was not developed within the Social Security Act of 1935 as an aim to relieve social maladies?
Family Medical Leave Act
Unemployment Insurance
Medicare
Old Age, Survivor, and Disability Insurance
Family Medical Leave Act
Which of the following is required to establish eligibility for unemployment insurance benefits?
Be able and available for work
Be actively seeking work
Not have refused an offer of suitable employment
All of the above
All of the above
Which Act extends workers' compensation coverage to civilian employees of the U.S. government?
A) Federal Employees' Compensation Act
B) Fair Labor Standards Act
C) U.S. Government Compensation Act
D) Social Security Act
A) Federal Employees' Compensation Act
Workers' compensation insurance came into existence during the 1950s when industrial accidents were very common and workers suffered from occupational illnesses at an alarming rate.
True
False
False
If employees within a company can choose from among a set of benefits, as opposed to all employees receiving the same benefit, the company is using a flexible benefits plan or cafeteria plan.
True
False
True
The FSA Program lets you use tax free dollars to pay for medical expenses, dependent care expenses or both.
True
False
True
In March 2011, employee benefits accounted for 30.4% of total compensation costs.
True
False
True
In most states, employees have the right to sue employers who retaliate against them for filing a workers' compensation claim.
True
False
True
This term refers to pay and benefits provided to executives after a termination that results from a change in ownership or corporate takeover.

restricted stock
golden parachute
discount stock
phantom stock
golden parachute
Which of the following is not a theoretical explanation for setting executive compensation?

social comparison theory
equity theory
tournament theory
agency theory
equity theory
The (IRS) recognizes two groups of employees who play a major role in a company's policy decisions. Which of the following are these two groups?
A) highly compensated and key employees
B) residents and CEOs
C) upper and middle management
D) CEOs and other key employees
A) highly compensated and key employees
A person is considered a key employee if they own at least _____% of the employer.

A) 6
B) 8
C) 5
D) 10
C) 5
When an executive receives restricted stock, he/she has ownership control over the disposition of the stock __________________.

A) immediately
B) after meeting individual performance goals
C) after a predetermined period, often 5-10 years
D) after the company stock price reaches an optimal level
C) after a predetermined period, often 5-10 years
Executive compensation has both core and employee benefits elements.
True
False
True
In most cases, annual base pay represents the largest part of a CEO's total compensation.
True
False
False
The Sarbanes-Oxley Act of 2002 was signed into law in response to corporate accounting scandals at Enron, Tyco, and other large U.S. companies.
True
False
True
A survey of executive compensation practices revealed that more companies are offering perks to their CEOs, up from 77.6% in 2009 to 89.8% in 2010.
True
False
False
There is significant evidence showing that U.S. executive compensation pay practices undermine companies' ability to compete in the global marketplace.
True
False
False