Compensation & Benefits (7)

Front 1

The mix or forms of pay compared to competitors is a part of _____________.

Back 1

competitiveness

Front 2

Which of the following is not a factor explaining differences in pay offered to graduating college students?

Back 2

grades and interview skills

Front 3

_____ refers to the average of the array of rates paid by an employer.

Back 3

Pay level

Front 4

Pay level decisions have a significant impact on expenses. Other things being equal, the higher the pay level, the higher the:

Back 4

labor costs.

Front 5

Which of the following is not a reason a company might pay base wages above market competitors?

Back 5

Competitor production costs are lower

Front 6

If Company A and Company B pay the same total compensation for a job, which of the following is most likely true?

Back 6

The pay mix differs

Front 7

Which of the following is an example of a quoted-price?

Back 7

A product on Amazon

Front 8

_____ is an example of a bourse.

Back 8

The total compensation for a top athlete

Front 9

All of the following except the _____ shape external competitiveness.

Back 9

skill level of employees

Front 10

Which of the following is an example of the demand side of labor?

Back 10

Pay level offered by an employer

Front 11

The market pay rate is the:

Back 11

point at which supply and demand lines cross.

Front 12

Output associated with hiring an additional person, holding constant other production factors, is referred to as:

Back 12

the marginal product of labor.

Front 13

A small lawn care company has two mowers and four employees. If it hires another employee, how productive will productivity of the fifth employee compare to the current two employees?

Back 13

Less productive

Front 14

Employers continue to hire until marginal revenue of the last hire equals their wage rate because as per the first labor market theory assumption:

Back 14

employers seek to maximize profits.

Front 15

In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire.

Back 15

marginal revenue; wage rate

Front 16

The assumption of the upward sloping supply curve may not hold when ____.

Back 16

unemployment is low

Front 17

If Company A raises its pay rate one dollar per hour to hire additional workers and competitors immediately match the increase, what is the most likely result?

Back 17

Higher labor costs for Company A, but not more workers

Front 18

Which theory supports the idea that coal mining should be paid more than office clerical work?

Back 18

Compensating differentials

Front 19

The theory that has the most implications for staffing is _____ theory.

Back 19

efficiency wage

Front 20

Research on efficiency wage theory shows that:

Back 20

more unqualified workers apply

Front 21

_____ theory is typically associated with greater profits.

Back 21

Efficiency wage

Front 22

All of the following are true regarding efficiency wage theory research except __________

Back 22

higher wages reduces profits.

Front 23

Rent sharing is most commonly associated with the _____ theory.

Back 23

efficiency wage

Front 24

__________ theory is the basis for the sorting effect pay strategy has on the composition of a workforce

Back 24

Signaling

Front 25

___________ theory is most useful for explaining variations in pay mix.

Back 25

Efficiency wage

Front 26

Implication of the _____ theory is that pay level affects an employer's ability to recruit.

Back 26

reservation wage

Front 27

In _____ theory, pay is described as noncompensatory.

Back 27

reservation wage

Front 28

If a friend told you they would not accept a job after graduating for less than $50,000 per year, they would be demonstrating the _________ theory.

Back 28

reservation wage

Front 29

A study of graduating college students found they sought jobs with all of the following pay characteristics except ___________

Back 29

variable pay.

Front 30

The _____ theory is the most influential in explaining pay-level differences.

Back 30

human capital

Front 31

_____ sets a maximum pay level an employer can pay.

Back 31

The product market

Front 32

Which of the following factors do not affect an employer's ability to pay high wages?

Back 32

Supply of skilled employees

Front 33

The study referred to in the text on how managers make wage adjustment decisions found:

Back 33

profitability affected the overall pay budget

Front 34

Segmented labor supply involves all of the following except:

Back 34

hiring from different sources and differential pay and benefits for the same work

Front 35

Wages tend to be low in which of the following industries?

Back 35

Education and health care

Front 36

Which of the following is not true of the relationship between employer size and its ability to pay?

Back 36

Talented people prefer to work in larger organizations.

Front 37

Evidence shows that in manufacturing, _____ is positively correlated with hourly wage level.

Back 37

productivity

Front 38

All of the following are important factors in defining a market for compensation purposes except:

Back 38

ability to pay.

Front 39

In which of the following would data from labor market competitors be given more weight than product market competitors data?

Back 39

The supply of labor is responsive to changes in pay

Front 40

The pay policy associated with increased productivity is the _____ policy.

Back 40

hybrid

Front 41

A pay policy most likely to reduce pay dissatisfaction is ____.

Back 41

lead

Front 42

The most common pay policy is ____.

Back 42

match

Front 43

All of the following are advantages of a lead pay policy except ____.

Back 43

reduced vacancy rates

Front 44

Among pay-mix alternatives, base pay is largest in ____.

Back 44

security or commitment

Front 45

The pay-mix component in which benefits is likely to be largest is ____.

Back 45

work-life balance

Front 46

Which of the following is not a consequence of level of competitiveness of total compensation?

Back 46

Increase organization profitability

Front 47

Graduating students receiving the same degree, in the same field from the same college or university, generally receive very similar pay offers.

Back 47

False

Front 48

Differences in starting salaries for college graduates is mainly due to differences in grades and interview skills.

Back 48

False

Front 49

Pay forms is the same concept as pay mix

Back 49

True

Front 50

In determining the compensation strategy, a major strategic decision is whether to mirror what competitors are paying.

Back 50

True

Front 51

Both pay level and pay mix decisions focus on two objectives: (1) control costs and increase revenues and (2) attract and retain employees.

Back 51

True

Front 52

Paying above the market is an effective competitive strategy.

Back 52

False

Front 53

External competitiveness is primarily determined by the impact of government regulations on the firm or industry.

Back 53

False

Front 54

There is no single "going rate" in the labor market for a specific job.

Back 54

True

Front 55

Stores that label each item's price or ads that list a job opening's starting wage are examples of bourses.

Back 55

False

Front 56

An individual manager could be a factor affecting an employer's external competitiveness.

Back 56

True

Front 57

Graduating students usually find themselves in a quoted-labor market.

Back 57

True

Front 58

In a labor market, the demand side focuses on the actions of the employers.

Back 58

True

Front 59

In a labor market, the market rate is where the lines for labor demand and labor supply cross.

Back 59

True

Front 60

The first assumption of labor market theories is that employers always seek to maximize penetration.

Back 60

False

Front 61

Marginal productivity theory argues that when factors of production are held constant, each additional worker is less productive than the last one hired.

Back 61

True

Front 62

Other things being constant, in a hiring scenario, the employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person.

Back 62

True

Front 63

Marginal revenue is measurable and used by managers to determine both pay levels and how many employees to hire.

Back 63

False

Front 64

In practice, organizations use skills and competencies to assess value of labor instead of marginal revenue product.

Back 64

True

Front 65

Compensating differentials theory says that paying above market wages will lead to workers with higher ability.

Back 65

False

Front 66

According to efficiency-wage theory, paying higher wages than competitors lowers labor costs due to more efficient workers.

Back 66

True

Front 67

Signaling theory argues that higher wages leads to greater efficiency.

Back 67

False

Front 68

An employer offering lower base pay with high bonuses is likely signaling they are seeking risk-taking employees.

Back 68

True

Front 69

Signaling theory applies to both the demand and supply side.

Back 69

True

Front 70

Job applicants who will not accept a job that pays below a certain level are acting according to signaling theory.

Back 70

False

Front 71

A study of graduating students found students selected jobs based upon the match between their personalities and employers' pay policies.

Back 71

True

Front 72

It is likely that workers act in accordance with reservation wage theory with respect to both wages and benefits.

Back 72

True

Front 73

The most influential theory explaining pay-level differences is marginal revenue productivity.

Back 73

False

Front 74

Human capital theory assumes that people are paid at the value of their marginal product.

Back 74

True

Front 75

The product market sets the floor on the minimum wage required to attract sufficient numbers of employees.

Back 75

False

Front 76

Employers tend to underestimate the importance of pay to employees and over estimate the role of relationships with the supervisor.

Back 76

True

Front 77

Employers in highly competitive markets are less able to raise prices without loss of revenues.

Back 77

True

Front 78

Segmenting sources of labor is a means of reducing labor costs.

Back 78

True

Front 79

Wages in labor-intensive industries are generally lower than in technology intensive industries.

Back 79

True

Front 80

Talented individuals have a higher marginal value in larger organizations.

Back 80

True

Front 81

The three factors usually used to determine the relevant labor markets are the occupation, geography, and competitors.

Back 81

True

Front 82

Technological advances and lower wage levels offshore are the deciding factors in companies' decisions to outsource jobs.

Back 82

False

Front 83

Combat pay premiums paid to military personnel offset some of the risk of being fired upon is an example of a lead pay-level policy.

Back 83

True

Front 84

A lead policy may force the employer to increase wages of current employees too, to avoid internal misalignment and murmuring.

Back 84

True

Front 85

Research shows that a lead pay strategy reduces turnover.

Back 85

True

Front 86

The text argues the east-risk approach may be to set both pay level and pay mix to match competition.

Back 86

True

Front 87

Explain external competitiveness.

Back 87

External competitiveness refers to the pay relationships among organizations—the organization's pay relative to its competitors. It is expressed in practice by (1) setting a pay level that is above, below, or equal to that of competitors; and (2) determining the mix of pay forms relative to those of competitors.

Front 88

What are the factors that affect decisions on pay level and mix?

Back 88

The factors include (1) competition in the labor market for people with various skills; (2) competition in the product and service markets, which affects the financial condition of the organization; and (3) characteristics unique to each organization and its employees. These factors act in concert to influence pay-level and pay-mix decisions.

Front 89

What are the basic assumptions of labor market theories?

Back 89

Theories of labor markets usually begin with four basic assumptions:

• Employers always seek to maximize profits.

• People are homogeneous and therefore interchangeable.

• The pay rates reflect all costs associated with employment.

• The markets faced by employers are competitive.

Front 90

What is the significance of marginal revenue?

Back 90

Marginal revenue is the money generated by the sale of the marginal product, the additional output from the employment of one additional person. An employer will continue to hire until the marginal revenue generated by the last hire is equal to the costs associated with employing that person. Because other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the marginal revenue of the last hire is equal to the wage rate for that hire.

Front 91

How do managers tackle the fact that neither marginal product nor marginal revenue is directly measurable?

Back 91

Managers need some measure that reflects value. If compensable factors define what organizations value, then job evaluation reflects the job's contribution and may be viewed as a proxy for marginal revenue product. However, compensable factors are usually defined as input rather than value of output. This same logic applies to skills and competencies.

Front 92

What is the principal argument of the compensating differentials theory?

Back 92

The compensating differentials theory argues that if a job has negative characteristics— that is, if the necessary training is very expensive, job security is tenuous, working conditions are disagreeable, or chances of success are low—then employers must offer higher wages to compensate for these negative features.

Front 93

According to efficiency-wage theory, how does increased wages increase efficiency and lower labor costs?

Back 93

According to efficiency-wage theory, high wages may increase efficiency and actually lower labor costs if they:

• Attract higher-quality applicants.

• Lower turnover.

• Increase worker effort.

• Reduce "shirking" (what economists say when they mean "screwing around").

• Reduce the need to supervise employees (academics say "monitoring").

Front 94

Does an above-market wage guarantee a better workforce?

Back 94

Research shows that higher wages actually do attract more qualified applicants. But higher wages also attract more unqualified applicants. Few companies can claim that they choose only superior applicants from the larger pool. So an above-market wage does not guarantee a more productive work force.

Front 95

What is the relevance of signaling in compensation systems?

Back 95

Signaling theory holds that employers deliberately design pay levels and mix as part of a strategy that signals to both prospective and current employees the kinds of behaviors that are sought. Viewed through a marketing lens, how much to pay and what pay forms are offered establishes a "brand" that sends a message to prospective employees, just like brands of competing products and services.

Front 96

What explains the upward sloping supply under the human capital theory?

Back 96

The theory assumes that people are in fact paid at the value of their marginal product. Improving productive abilities by investing in training or even in one's physical health will increase one's marginal product. Consequently, jobs that require long and expensive training should receive higher pay than jobs that require less investment. As pay level increases, the number of people willing to make that investment increases, thereby creating an upward-sloping supply.