This Document Contains Chapters 10 to 12 Chapter 10: Developing Employees and Their Careers True/False 1. The main difference between training and employee development is that training helps employees learn skills that will be helpful in current jobs and employee development helps employees learn skills that will be helpful in future jobs. Answer: True 2. Employee development is not as critical as in the past because most employees have higher levels of education than ten years ago. Answer: False 3. Organizations using the Bargain Laborer strategy are unlikely to invest heavily in employees’ long-term development. Answer: True 4. Formal education does not offer an employee or employer a competitive advantage because so many current and prospective employees are already highly competitive. Answer: False 5. An organization with a Committed Expert HR strategy must have more extensive development programs so that employees do not feel compelled to leave in order to learn, grow and advance in their careers. Answer: True 6. Employee development is equally important for firms with differentiation and cost strategies. Answer: True 7. Organizations pursuing a differentiation strategy are mostly concerned with controlling costs and offering a competitive advantage by offering superior service or products. Answer: False 8. Career patterns for the 21st century are likely to include lateral as well as hierarchical movement within a company, along with movements from company to company. Answer: True 9. The Protean career provides for greater emphasis on professional commitment than organizational commitment. Answer: True 10. The Protean career increasingly emphasizes financial success given that most employees must provide for their own retirement savings. Answer: False 11. Organizations that develop and communicate career paths to employees can help employees achieve career goals and, as a result, employees are likely to reciprocate with greater commitment and job performance. Answer: True 12. An employer tuition reimbursement program is a form of employee development. Answer: True 13. Certificates are a legal requirement in some states in order to conduct business. Answer: False 14. Providing support for employees to gain and maintain certification is one way in which organizations can be attractive to both current and prospective employees. Answer: True 15. The Holland typology is useful for determining employee readiness for expatriate overseas assignments. Answer: False 16. Feedback is more likely to improve performance when an organization encourages employees to talk with others about feedback received and encourages employees to make a public commitment to improving performance. Answer: True 17. Research indicates that employees who take more frequent job rotations have greater salary growth and have more perceived gains in knowledge and skill but find their work to be less satisfying. Answer: False 18. Coaches equip people with the tools, knowledge, and opportunities to become more effective, and the most effective coaches are professionals who work outside of the employee’s work unit or organization. Answer: False 19. Coaching is most frequently employed in the development of front line managers. Answer: False 20. A good coach follows a process of contracting, opening, practicing, planning and evaluating. Answer: True 21. It is helpful for a mentor and protégé to be diverse in their backgrounds and perspectives. Answer: False 22. Pairing protégés with mentors who are successful in their jobs is more likely to result in better learning and performance by the protégé. Answer: True 23. If an organization wants employees to learn to be winners, employees should be mentored by more senior employees who are already winners. Answer: True 24. Competency models can be developed to indicate what types of knowledge, skills, and behaviors will help the organization accomplish its strategy. Answer: True 25. Self-assessment is the process employees use to determine their fit with opportunities in the labor market and with their current employer’s future labor needs. Answer: False 26. In the process of action planning, employees make plans for how they will accomplish their career goals. Answer: True 27. The most effective new employee orientation programs are well-planned, structured programs of four hours or less because new employees can suffer information overload. Answer: False 28. Employees who attend a new employee orientation have significantly higher levels of affective organizational commitment than employees who are not offered an orientation program. Answer: True 29. The most effective new employee orientation programs are conducted by HR professionals. Answer: False 30. High levels of burnout are associated with low levels of commitment and high turnover intention. Answer: True 31. Burnout is highly related to workload, pressure, stress, conflict and unmet expectations. Answer: True 32. The strain of balancing the demands of work and personal life causes only women to be dissatisfied and increase their intention to quit. Answer: False 33. As employees get older, they can lose confidence in their ability to learn and they worry about having their skills become out of date. Answer: True 34. An expatriate is a U.S. employee who relocates to another country to work. Answer: False 35. The most important training for an expatriate should provide specific job knowledge that will be needed to work in the new country. Answer: False Multiple Choice 36. All of the following are positive outcomes of employee development EXCEPT: a) development enhances the organization’s capacity to analyze environmental forces b) development increases the chances that the most capable employees will be attracted to work in the organization c) development enhances retention d) development ensures that employees have the knowledge and skill to effectively perform their current jobs Answer: a 37. How are employee development practices strategic? a) employee development ensures that top-level management is trained so the organization has a competitive advantage b) employee development ensures an organization minimizes training costs c) employee development adds to research findings in the field of human resources d) employee development helps ensure an organization has a continual supply of talented and committed employees Answer: d 38. An organization with a Committed Expert HR strategy: a) will focus on developing skills needed to attract employees from the external labor market b) will focus on low-cost alternatives to development c) will focus on developing skills of existing employees d) will focus on developing skills of existing employees and focus on low-cost alternative development activities Answer: c 39. Organizations using the Free Agent strategy: a) are not likely to invest in employee development since they have an external labor market b) must invest in development to ensure the organization is attractive to employees from the external labor market c) are likely to invest in employee development to enhance employee commitment d) focus on low-cost alternatives to employee development Answer: b 40. Which of the following types of employee development would a firm pursuing a cost strategy be most likely to use? a) job enrichment b) formal education such as university courses and degrees c) computer aided instruction d) support for certificates and licenses including the payment for all fees and continuing education requirements Answer: a 41. Organizations pursuing which HR strategies would be most likely to use work experience for employee development? a) Loyal Soldier and Free Agent b) Committed Expert and Bargain Laborer c) Loyal Soldier and Bargain Laborer d) Bargain Laborer and Free Agent Answer: c 42. All of the following are characteristics of the Protean career EXCEPT: a) high mobility requirements b) emphasis on psychological success c) high levels of organizational commitment d) emphasis on work-related flexibility Answer: c 43. All of the following are programs that help employees develop new knowledge and skills that will help them succeed in their careers EXCEPT: a) computer aided instruction b) completion of formal education c) assessment and feedback d) job experiences Answer: a 44. Using assessment and feedback for development involves: a) collecting performance data and providing feedback to employees about how they can improve their on the job performance b) collecting information and providing feedback to employees about their interests, personality, behaviors, skills and preferences c) collecting performance data from multiple sources and providing feedback to employees d) collecting information about career ladders in the organization and sharing possible career path information with employees Answer: b 45. Which of the following is NOT true about the Holland Typologies? a) Enterprising people enjoy developing and running their own business b) Conventional people enjoy jobs as analysts, bankers, and secretaries c) Realistic people enjoy jobs a mechanics, electricians and farmers d) Investigative people enjoy jobs as scientists, laboratory assistants, and technicians. Answer: a 46. The World of Work Map assessment tool: a) helps identify employees who are ready for overseas assignments b) helps identify employees who are ready for expatriate assignments c) helps people identify whether they prefer working with data or ideas, or people or things d) forms the foundation upon which the Holland typologies is based Answer: c 47. ManagerView360: a) is an example of multisource assessment and feedback b) provides valuable information for job analysis c) provides valuable information for task analysis d) is an example of a career ladder Answer: a 48. Multisource feedback systems work best: a) when used for task analysis b) when the subject is provided information about how each rater responded c) when used for job analysis d) when reliable ratings are provided and the behaviors assessed are job related Answer: d 49. Which of the following is NOT an example of work experiences used for employee development? a) lateral moves b) job analysis c) upward moves d) downward moves Answer: b 50. Downward moves for employee development: a) are sought out by employees b) usually involve an increase in responsibility or status c) can result in an employee who is more likely to quit d) often occur when an employee accepts an overseas assignment Answer: c 51. Research suggests that all of the following characteristics of job experiences enhance development and the employee experiencing a sense of personal growth EXCEPT: a) when the job experience provides greater authority b) when the job experience requires skill at creating change c) when the job experience requires the use of persuasion rather than authority to get things done d) when the job experience involves working closely with people and things Answer: d 52. An effective coach: a) is often employed to support first level supervisors b) is an HR professional c) will use a contract to set up a clear understanding of the nature and duration of the relationship d) will foster a one-on-one relationship between a less experienced employee and a more experienced person (the coach) Answer: c 53. Mentors benefit employees in all the following ways EXCEPT: a) by offering challenging work experiences b) by recommending employees for overseas assignments c) by providing advice and political protection d) by helping the employee build a sense of identity and personal competence Answer: b 54. Which of the following would NOT enhance the success of a mentoring program? a) mentors and protégés should have diverse backgrounds and perspectives b) providing high-quality training to mentors and protégés c) programs should allow mentors and protégés to have input into the type of person with whom they are matched d) encouraging mentors and protégés to set goals Answer: a 55. The career development process: a) is rarely used by organizations employing a Bargain Laborer HR strategy b) is mostly used by organizations employing a Bargain Laborer HR strategy c) includes self-assessment, reality check, goal setting and action planning d) is a series of steps that help employees move up the career ladder of the organization Answer: c 56. In performing a reality check: a) employees receive performance feedback from their supervisors b) employees determine their interests, values and skills c) an employer provides information about the jobs available in the organizational career ladder d) employees assess opportunities in the external market and with their current employer Answer: d 57. All of the following are career-development challenges EXCEPT: a) effectively orienting new employees b) finding employees to accept overseas expatriate assignments c) preventing employee burnout d) helping employees balance work with their personal lives Answer: b 58. A typical new employee orientation program would include all of the following EXCEPT: a) lectures and discussion on the mission, values and history of the organization b) specific information about policies and procedures c) structured meetings between new employees and their managers d) skill training for the job Answer: d 59. An effective employee orientation program: a) can increase commitment and reduce turnover of new employees b) should be scheduled on an employee’s first day of work c) should highlight the positive aspects of working for the organization and minimize problems d) should focus on compensation and benefit issues Answer: a 60. Which of the following is NOT one of the five principles of an effective orientation program? a) give new employees information specific to their new jobs and new bosses b) provide realistic information about the company and the new employee’s role in the company c) teach self-control of thoughts and feelings to help employees manage negative thoughts that arise from the challenges of adapting d) avoid contact with current employees to prevent new employees from interacting with employees who engage in counterproductive performance Answer: d 61. Which of the following is NOT true about balancing the demands of work and personal life? a) allowing employees to work flexible hours can help employees more effectively balance work and their personal lives b) providing assistance with child care can help employees more effectively balance work and their personal lives c) allowing employees time off to deal with family illnesses can help employees more effectively deal with the demands of work and personal life d) employer offered programs that help employees balance work and their personal life are viewed positively only by the employees who qualify for or use the programs Answer: d 62. Employer offered programs that help employees balance the demands of work and personal life: a) increase employee commitment among employees who qualify for or use the programs b) increase employee commitment among all women employees c) increase commitment among all employees d) send a message about how the organization cares about families Answer: c 63. Affinity groups: a) should only be organized for minority groups b) can be formed around a variety of issues including ethnicity, age, sexual orientation and disability c) should only be organized for diverse groups the employer is trying to support d) provide a forum for diverse groups of employees to meet and confer with each other Answer: b 64. All of the following are actions an employer can take to support the continued development of older workers EXCEPT: a) training programs should include a program to retain and improve memory b) continue to provide challenging work assignments c) reward learning via pay for participating in development or contributing new ideas d) emphasize continuous learning Answer: a 65. Culture shock: a) only occurs when an expatriate first arrives in a foreign country b) requires that an expatriate return to his/her home country for a brief period of time c) is stress that stems from the uncertainty and confusion that people can experience when they must deal with an unfamiliar culture d) is more unlikely to occur when an expatriate’s family relocates with the expatriate Answer: c 66. Which of the following is NOT a reason for an overseas assignment to require more preparation? a) if the country where the employee is going is very different b) if the job requires extensive contact with the host society c) if the job requires intensive contact with the host society d) if the overseas job is not a lateral move Answer: d 67. Which of the following is NOT an example of pre-departure support? a) basic language training b) basic knowledge an employee will need upon arrival in the new location c) training that includes coping mechanisms d) access to a local translator Answer: d 68. All of the following are true about on-site resources for expatriate employees EXCEPT: a) on-site resources help an employee adjust to the uncertainties of living in a new culture b) on-site resources can be invaluable for helping the expatriate determine how to behave in certain situations c) a local mentor who is an employee from the expatriate’s home country should be assigned d) opportunities for the expatriate to have conversations with people who understand the culture and the work the expatriate is doing can be helpful Answer: c 69. Which of the following is NOT true about repatriation? a) since repatriation involves an employee and family returning to their home country, readjustment is not a problem b) organizations can assist the repatriate by offering workshops c) meetings between the expatriate and home office managers in the organization can help repatriation d) the repatriate should be given challenging work that allows him/her to use the new skills developed by working in another country Answer: a 70. Which of the items below is NOT the type of support an employer should offer to their employees from other countries who come to the U.S. to work? a) assistance finding jobs for spouses b) new employee orientation programs c) provide accurate information about life in the specific area they will be living and working d) assistance finding housing and schools for children Answer: b Short Answer 71. Using __________ ___________ as a form of development allows organizations to improve employees’ knowledge and skill without pulling them away from work completely, as would occur with formal training. Answer: work experience 72. A pattern of work experiences that people have over the course of their lifetimes is called a ___________. Answer: career 73. A series of work experience that is likely to prepare an employee for high-level jobs, such as management is called a _____________ _________. Answer: career path 74. A __________ __________ is a job change that involves a change in duties without an increase in pay, responsibility, or status. Answer: lateral move 75. ___________ refers to a one-on-one relationship between a less experienced and a more experienced person that is intended to contribute to personal and professional growth. Answer: Mentoring 76. _______-__________ is a process in which employees determine their interests, values, personalities and skills. Answer: Self-assessment 77. The process of bringing people into the organization and helping them adjust so they can perform their work effectively is ______ _________ _________. Answer: new employee orientation 78. An employee who goes to another country to work for a period of time is called a(n) _________________. Answer: expatriate Essays 79. Discuss the steps in the career development process. Answer: A. Self-assessment is a process in which employees determine their interests, values, personalities and skills. It involves the use of psychological tests or exercises that ask employees to consider where they are today and where they want to be in the future. An employee can conduct these activities alone or with the help of their supervisor, or a career coach or counselor. B. The reality phase involves employees gathering information to determine whether their sell-assessments are realistic and how the assessments fit with opportunities in the labor market and with their current employers’ future labor needs. Supervisors can provide a reality check by identifying the subordinate’s strengths and weaknesses and can provide information about opportunities within the company. Labor market opportunities can be found through career centers of colleges and universities, professional associations and publications, computer discussion groups, online resources and through discussions with current incumbents. C. Goal setting involves setting milestones or achievements for the future, such as positions to achieve, skills to be gained and the development efforts to pursue. D. Action planning involves employees making plans for how they will accomplish their goals. This phase includes selecting developmental opportunities that will advance employees’ goals. 80. Discuss the five principles that should guide an effective new employee orientation program. Answer: A. Present realistic information about the company and the new employee’s role in the company. B. Provide support and reassurance to alleviate anxiety and fear. C. Have a successful employee demonstrate how employees can use coping skills to succeed at work, allow for discussion, and encourage practice. D. Teach self-control of thoughts and feelings to help employees manage negative thoughts and feelings that arise from the challenges of adjusting. E. Give new employees information specific to their new jobs and new bosses. Chapter 11: Motivating Employees Through Compensation True/False 1. Employee compensation includes only salary or pay received. Answer: False 2. Paying people more when they contribute more increases motivation, which in turn leads to high performance. Answer: True 3. Good benefits contribute to increased employee retention. Answer: True 4. People who work a moderate amount of overtime on a regular basis are likely to be less satisfied and are more likely to quit. Answer: False 5. A systematic approach to compensation where Human Resource professionals make pay decisions is likely to result in greater perception among employees that they are paid fairly. Answer: False 6. Organizations with an internal labor orientation are willing to accept low retention rates because high levels of turnover create advancement and promotion opportunities for current employees. Answer: False 7. Organizations with an internal labor orientation are likely to have much less secrecy about pay practices, such as how much people make. Answer: True 8. An organization pursuing a cost strategy is likely to adopt compensation practices that reduce labor costs. Answer: True 9. Organizations with a uniform transactional compensation strategy use compensation to differentiate high and low performers. Answer: False 10. Organizations with a uniform relational compensation strategy seek to reduce labor expenses, encourage average rather than outstanding performance and create a setting where high and low performers are treated similarly. Answer: True 11. Organizations with a uniform transactional compensation strategy are likely to link pay increases with time employed with the organization. Answer: False 12. An organization with a Free Agent HR strategy is likely to use variable transactional compensation, which provides strong monetary incentives for high performers. Answer: True 13. Salary compression, like the “glass ceiling,” deals with the situation where newly hired employees earn less than those employed for years. Answer: False 14. Employees demonstrate high motivation when they choose to perform critical work tasks with high intensity and persistence. Answer: True 15. A reward that is given without regard to the occurrence of a desired behavior loses the ability to motivate. Answer: True 16. Goals focus attention away from other activities toward desired behaviors. Answer: True 17. If goals are to act as effective motivators, they must be achievable. Answer: True 18. Setting a difficult goal and providing a bonus only to those who achieve it can encourage everyone to try harder, even those who don’t think they can achieve the stretch goal. Answer: False 19. A problem with motivating employees by offering incremental rewards for achieving progressively higher goals is that some employees are satisfied with the small initial rewards and may not put forth maximum effort. Answer: True 20. Expectancy theory suggests that people are motivated when they believe they will actually receive a reward for high performance. Answer: True 21. Organizations using differentiation strategies tend to use uniform compensation. Answer: False 22. Organizations with uniform compensation systems have a greater need for high motivation than organizations with variable compensation practices. Answer: False 23. A majority of evidence shows that performance increases when high performers are paid more than low performers. Answer: True 24. Many variable compensation practices fail to motivate because the size of the potential reward is not large enough to influence behavior. Answer: True 25. Developing employees so they have skills that are unique to the organization is a way to bind employees to the organization without increasing labor costs. Answer: True 26. To offer competitive pay levels the first thing an organization must do is understand the compensation packages being provided by other organizations. Answer: True 27. A firm with a Free Agent HR strategy is likely to use uniform compensation in order to attract and keep top performers. Answer: False 28. Organizations with external labor strategies emphasize the development of long-term relationships as a competitive advantage. Answer: False 29. Pay level is concerned with how compensation differs among organizations. Answer: True 30. An individual’s compensation within a pay range is determined by factors such as performance level and experience. Answer: True 31. An advantage of job-based point systems is that they allow greater flexibility for assigning pay grades and compensation. Answer: False 32. Job-based pay is beneficial for organizations with the Committed Expert HR strategies. Answer: True 33. A university professor is likely non-exempt under FLSA given their professional status. Answer: False 34. All employees must be paid at least the current federal hourly minimum wage. Answer: False 35. Employees exempt under the Administrative Exemption of the Fair Labor Standards Act primarily manage a department or supervise two or more employees and are involved in employee hiring and firing. Answer: False Multiple Choice 36. Which of the following is NOT true about employee compensation? a) the positive feelings that come from working at a particular place are sometimes seen as a form of compensation b) compensation includes health insurance c) compensation consists of only the monetary rewards an employee receives for working d) compensation includes psychological rewards as well as monetary rewards Answer: c 37. Organizations choosing an external labor orientation: a) hire new employees with the expectation that they will remain employed for a long period of time and develop a strong commitment to the organization b) hire new employees with the expectation that they will not form a long-term attachment to the organization c) focus on developing their employees d) are not overly concerned with internal equity Answer: b 38. An organization with a Free Agent HR strategy: a) must be concerned with external equity, which concerns the fairness of what the company pays compared to other possible employers b) must be concerned with justice c) must be concerned with internal equity, which concerns the fairness of what the company pays compared to other possible employers d) should have narrow pay bands Answer: a 39. Which of the following is NOT characteristic of an organization with a differentiation strategy? a) compensation is used to encourage risk taking b) success depends on outstanding contributions from a few individuals c) there is substantial difference between the pay of high performers and low performers d) compensation is used to develop feelings of inclusion and support from the organization Answer: d 40. An organization that is pursuing a cost strategy: a) uses compensation to encourage risk taking b) has substantial difference between the pay of high performers and low performers c) will tend to have little difference in pay between high and low performers d) is not concerned with internal equity Answer: c 41. The employees working part-time at a local McDonald’s all perform the same duties and receive the same hourly pay. Which type of compensation strategy is McDonald’s using? a) uniform relational compensation b) uniform transactional compensation c) variable transactional compensation d) variable relational compensation Answer: b 42. Which of the following is NOT true about uniform transactional compensation? a) uniform transactional compensation is often associated with the Bargain Laborer HR strategy b) under uniform transactional compensation, pay levels are set at the lowest level that allows the organization to attract enough workers c) employee perceptions concerning fairness are not an issue because pay is “uniform” d) a company that has uniform transactional compensation is not overly concerned with turnover Answer: c 43. Organizations with a uniform relational compensation strategy: a) are likely to differentiate compensation for high and low performers b) use a Bargain Laborer HR strategy c) are likely to have highly flexile compensation practices d) are likely to use benefits such as health insurance and retirement benefits as a part of compensation Answer: d 44. Which of the following is NOT true about variable transactional compensation? a) future rewards such as retirement benefits are likely to be used as a part of compensation b) an organization with variable transactional compensation will likely pay more than other employers c) variable transactional compensation provides strong monetary incentives for high performers d) new employees are often paid more than current employees Answer: a 45. An organization using variable relational compensation: a) strives to have high and low performers treated similarly b) sets pay at the lowest possible level that will still attract enough workers c) provides top performers immediate rewards and also offers long-term incentives such as a retirement program to retain workers d) is likely to have a Loyal Soldier HR strategy Answer: c 46. Motivation consists of these three elements: a) antecedents, contingency and behavior b) behavior choice, intensity of effort and persistence c) antecedents, behavior and consequents d) behavior choice, consequents and persistence Answer: b 47. An employee who wants a career in human resources decides to enroll in a college level Human Resource Management Course. This is an example of which element of motivation? a) behavioral choice b) antecedent c) intensity d) consequent Answer: a 48. Reinforcement theory holds that behavior is influenced by: a) antecedents and persistence b) behavior choice and antecedents c) antecedents and consequents d) behavior choice and intensity of effort Answer: c 49. Which of the following is NOT true about pay-for-performance? a) compensation should be based on behavior so that better performers receive higher pay b) employees whose pay is not contingent generally perform better than employees whose pay is contingent c) linking pay to performance is beneficial when it is part of an overall program of performance assessment, goal setting and feedback d) contingent rewards have a positive effect that endures over time Answer: b 50. Which of the following is NOT true about goal-setting theory? a) goals get people energized and excited about accomplishing something worthwhile b) people work on tasks longer when they have specific goals c) goals encourage the discovery and use of knowledge d) if goals are to act as effective motivators, they must be difficult to achieve and nearly impossible to reach Answer: d 51. According to equity theory: a) motivation concerns people’s belief that they can actually achieve the desired level of performance b) people compare the ratio of their inputs and outcomes with the ratios for others c) valence is the belief that a desirable reward will really be given if the appropriate behavior or outcome is produced d) a valence is the belief that a certain reward is valuable Answer: b 52. All of the following are ways an employee who perceives inequity may behave EXCEPT: a) engage in cyberloafing b) seek other employment c) take more time for lunch and breaks d) pursue formal education to earn an MBA Answer: d 53. Compensation strategies will be viewed as more fair when: a) the employee has a process for appeal if they think they are not being treated fairly b) employees are at the peak of their earnings c) the pay system is administered by Human Resource professionals d) pay outcomes are prescribed by a policy and pay raises are predictable Answer: a 54. According to expectancy theory: a) people compare the ratio of their inputs and outcomes with the ratios for others b) principal and agent relationships impact motivation c) motivation comes from three beliefs: valence, instrumentality, and the belief that the desired level of performance can actually be achieved d) difficult goals are motivating Answer: c 55. All of the following are true about agency theory EXCEPT: a) agents and principals have the same interests with regard to risk b) the interests of agents are never the same as the interests of principals c) wage rates should be higher when employees bear risk d) principals and agents rarely have access to the same information Answer: b 56. Which of the following is NOT likely to increase motivation through compensation? a) linking pay with goals that encourage stretch efforts b) following principles of procedural fairness, including accurate assessment, lack of bias and provide an opportunity for input c) ensuring that interests of owners are not disclosed to employees d) giving higher rewards for those who assume risk Answer: c 57. Variable compensation: a) benefits a great deal from making rewards contingent upon achieving goals b) is appropriate for organizations pursuing a lowest cost strategy c) is appropriate for organizations pursuing a Bargain Laborer HR strategy d) is usually appropriate when employees are not required to take risks Answer: a 58. Procedural fairness is particularly important when which HR strategy is in place? a) Free Agent HR strategy b) Committed Expert HR strategy c) Bargain Laborer HR strategy d) Loyal Soldier HR strategy Answer: b 59. Uniform compensation practices: a) are as effective as variable compensation practices for encouraging high levels of performance b) have rewards structured to reduce the emphasis on extreme levels of individual performance c) will encourage employees to compare themselves to external reference groups d) are employed with the Free Agent HR strategy Answer: b 60. Which of the following is NOT true about pay surveys? a) a problem with pay surveys is choosing the appropriate comparison group b) it is difficulty to obtain salary information from employers that is specific to particular jobs c) a good pay survey must have current up to date data d) for most organizations, national pay surveys are the most useful for determining pay levels Answer: d 61. A pay strategy that pays employees more than what they can earn with other employers: a) is a market challenging strategy b) is a meet-the-market strategy c) is a lead-the-market strategy d) is a lag-the-market strategy Answer: c 62. Organizations that adopt a lead-the-market compensation strategy: a) are more likely to use uniform transactional compensation b) are likely to have an internal labor strategy c) are likely to have a Bargain Laborer HR strategy because increased salary costs are offset by productivity gains d) are likely to have pay that is on the average higher than most organizations Answer: d 63. Which type of method for determining pay structure assigns a numerical value to each job position? a) a job-based pay system b) a skill-based point system c) a point system d) a point pay system Answer: c 64. Under the Hay point system: a) jobs are evaluated in terms of know-how, problem solving, accountability, and working conditions b) jobs are evaluated based upon pay structure c) jobs are evaluated using a lead-the-market strategy d) jobs are evaluated using a lag-the-market strategy Answer: a 65. Which of the following is NOT true of broad banding? a) broad banding results in fewer pay grades b) broad banding allows more flexibility in determining an individual’s pay c) under broad banding more pay grades are available to increase flexibility d) broad banding groups more categories of jobs together in each pay band Answer: c 66. Which of the following is NOT an advantage of point systems? a) point systems provide a clear method for controlling and administering pay b) point systems are flexible and easily adaptable for change c) point systems decrease bias d) point systems make comparison between different jobs easier Answer: b 67. Skill-based pay a) usually results in lower total payroll b) usually results in lower training costs c) usually results in a better-paid workforce d) improves organizational commitment, but has not been shown to improve productivity Answer: c 68. Which HR Strategy benefits from skill based pay linked to specific training? a) Free Agent HR Strategy b) Committed Expert HR strategy c) Bargain Laborer HR strategy d) Loyal Soldier HR strategy Answer: b 69. Employees who are non-exempt under the Fair Labor Standards Act (FLSA): a) can be paid a salary b) are not required to keep track of hours worked c) are not required to be paid overtime when they work in excess of 40 hours d) must keep records for hours worked including beginning and ending times Answer: d 70. Juan, a 21-year-old college senior, works for Verizon Wireless selling mobile phones in a store just off campus. Which of the following is NOT true about Juan’s compensation? a) Juan is exempt under FLSA because his duties involve sales b) Juan must be paid overtime if he works more than 40 hours in a work week c) Juan must keep detailed records of hours worked d) Juan’s pay can be based on sales, as long as the hours worked are tracked and the minimum amount paid equals what would be paid as the minimum wage Answer: a Short Answer 71. The approach to pay that seeks to create a wage structure where people are paid fairly in comparison to what they could earn performing a similar job for another company in the same geographic area is known as ___________-_______ ______. Answer: market-based pay 72. A cost reduction strategy is associated with ___________ rewards. Answer: uniform 73. When new employees earn more than employees who have worked at an organization for a number of years, the situation is known as ________ _________. Answer: salary compression 74. A force that causes people to engage in a particular behavior rather than other behaviors is ________________. Answer: motivation 75. Using a reward such as money to encourage behavior is consistent with ___________ theory. Answer: reinforcement 76. _______ ________ is the amount of overall pay that employees earn in an organization relative to what employees earn in other organizations. Answer: Pay level 77. An organization with a ______-_____-_________ compensation strategy establishes a pay level that is lower than the average comparison group. Answer: lag-the-market 78. The federal legislation that governs compensation practices and helps ensure fair treatment of employees is known as the _______ ________. Answer: Fair Labor Standards Act Essays 79. Discuss the four dimensions of compensation and how they align with overall HR strategy. Answer: A. Variable compensation seeks to pay high performers more than low performers B. Uniform compensation seeks to minimize the differences between the compensation employees receive. It is a useful practice when teamwork is an important component of work. C. Transactional commitment emphasizes short-term pay and bonuses. D. Relational commitment emphasizes long-term incentives and psychological support from the organization. E. Uniform transactional compensation fits with a Bargain Laborer strategy by reducing labor costs. F. Uniform relational compensation is appropriate for organizations pursuing a Loyal Soldier HR strategy. G. Variable relational compensation, which rewards high performers and builds commitment to the organization, aligns with the Committed Expert HR strategy. H. Variable transactional compensation uses short-term monetary incentives and aligns with the Free Agent HR strategy. 80. How should an organization go about effectively establishing its pay level? Describe three pay level strategies. Answer: A. The first step is to conduct a pay survey that provides information about how much other organizations are paying employees. A quality pay survey should use the appropriate comparison group with appropriate geographic and strategic characteristics. It is also important to verify that the jobs being assessed in the comparison group are in fact similar to the jobs within the organization conducting the pay survey. B. An organization can choose one of three pay level strategies: 1. Lag-the-market strategy, which establishes a pay level that is below the average for other organizations 2. Meet-the-market strategy that pays at the average level for other organizations 3. Lead-the-market strategy that is higher than the average for other organizations Chapter 12: Designing Compensation and Benefit Packages True/False 1. Health insurance is the largest component of most compensation packages. Answer: False 2. Benefits such as health insurance, retirement savings, and flexible schedules help enhance employee loyalty to an organization. Answer: True 3. One key to aligning compensation and strategy is to determine how much of employees’ compensation to place at risk. Answer: True 4. Equity theory predicts that motivation is higher when pay is at risk. Answer: False 5. Pay variability increases productivity regardless of the nature of work or assignments. Answer: False 6. Individual incentives have the potential to destroy cooperation among employees. Answer: True 7. Group incentives are not at risk because the synergy of a group ensures productivity. Answer: False 8. Employees are not attracted to organizations that pay a specific level of pay, so all organizations should have some pay at risk. Answer: False 9. An organization with a lead-the-market strategy will likely establish a higher compensation level than an organization with a lag-the-market strategy. Answer: True 10. Dollar for dollar, benefits provide more value to employees because generally employees do not pay taxes on benefits. Answer: True 11. Most employees overestimate the amount of money an employer spends on benefits. Answer: False 12. Social security includes a pension benefit, disability benefit and if a worker dies before retirement, provides a death benefit to a worker’s spouse and dependent children. Answer: True 13. The amount an employer pays for worker’s compensation insurance depends on the nature of the industry and the accident history of the employer. Answer: True 14. Discretionary benefits are optional benefits an employer offers and these benefits are not regulated by the government, as are legally required benefits. Answer: False 15. Money an employer places in a health savings account is not subject to taxes, but must be spent within the plan year. Answer: False 16. Defined benefit plans are highly portable. Answer: False 17. Defined contribution retirement plans are more common than defined benefit retirement plans. Answer: True 18. A potential disadvantage of commission incentives is uneven levels of income over time. Answer: True 19. One way to reduce the risk to employees of a commission incentive system is to offer a low base salary to provide a safety net to cover living expenses when sales are low. Answer: True 20. Merit pay increases focus on past employee performance and reward past performance that exceeded performance expectations. Answer: False 21. A problem with merit pay as a motivator is that the amount of merit pay increase is oftentimes not large enough to have motivation value. Answer: True 22. Merit pay is a short-term immediate incentive to reward employees for past performance. Answer: False 23. A merit bonus is an increase is an employee’s base pay. Answer: False 24. A discretionary team bonus provides a payment when a team completes a specific accomplishment. Answer: False 25. A discretionary team bonus is provided at the discretion of the team’s manager whenever and at whatever level the manger decides. Answer: True 26. Under a gainsharing program, in order to increase the likelihood of motivation, monetary rewards should be paid out as close to the time of performance as possible. Answer: True 27. Employee involvement in a gainsharing program increases employee commitment and trust. Answer: True 28. Stock options provide a long-term incentive that links an individual’s financial interests with the financial interests of others who own stock. Answer: True 29. One advantage of employee stock ownership plans (ESOPs) is favorable tax treatment. Answer: True 30. CEOs who own a significant amount of stock in their companies are unlikely to engage in risky behavior. Answer: True 31. There is a direct and clear relationship between employee stock ownership plans (ESOPs) and employee performance and motivation. Answer: False 32. The optimal level of at-risk compensation depends upon an organization’s HR strategy, and the Free Agent and Committed Expert HR strategies are most likely to include substantial at-risk compensation. Answer: True 33. Meet-the-market pay level strategies are most frequently adopted by organizations pursuing Free Agent and Loyal Soldier HR strategies. Answer: False 34. The highest levels of at-risk pay are associated with the Free Agent HR strategy. Answer: True 35. Under the Free Agent HR strategy, profit sharing and stock plans are fairly common; however, to be effective motivators, there must be near immediate payouts. Answer: True Multiple Choice 36. At-risk pay: a) is compensation that depends upon performance and remains the same until an employee receives an increase in base pay b) usually results in the same level of compensation as more predictable pay c) provides an opportunity to earn more and less compensation d) results in less motivation among low performers Answer: c 37. Organizations pursuing a differentiation strategy: a) should offer a low proportion of employees’ pay at risk b) should provide employees with consistent pay c) should reward employees who loyally complete their work tasks d) should place a high proportion of pay at risk Answer: d 38. All of the following are true about line of sight EXCEPT: a) line of sight is motivating for members of a project group preparing a group report b) employees’ motivation increases when they are rewarded for outcomes that are within their line of sight. c) line of sight is clear for individual assignments d) line of sight allows an employee to see how personal effort is important Answer: a 39. Individual incentives: a) always lead to performance improvement b) work well when workers need to coordinate their efforts c) can result in increased accidents and less productivity when individual incentives are dependent on group performance d) result in performance improvement regardless of work context Answer: c 40. Which of the following is an issue with group incentives? a) line of sight is so obvious that group incentives are not motivating b) group incentives encourage an individual to excel at the expense of team members c) line of sight is so distant with group incentives that individual employees may fail to put forth maximum personal effort. d) little pay is at risk with group incentives, so group incentives are not motivating to the individual employee Answer: c 41. Base pay: a) is at-risk b) provides employees with a sense of security and provides a minimum guaranteed reward for joining an organization c) is highly effective as a motivator d) is not required to comply with minimum wage laws Answer: b 42. Job-based analysis: a) uses a point system to evaluate the worth of jobs and thereby determine base pay b) tends to be more biased than other methods of evaluating jobs c) provides employees with lower compensation when the tasks they do require more knowledge and skill d) provides an incentive for employees to learn new skills Answer: a 43. Which organization would be most likely to have a larger percentage of total compensation at risk? a) an organization with a Bargain Laborer HR strategy b) an organization with a Loyal Soldier HR strategy c) an organization with a lowest cost provider strategy d) an organization with a differentiation strategy Answer: d 44. All of the following are true about employee benefits EXCEPT: a) employee benefits include monetary salary b) employee benefits are not at risk c) employee benefits provide an important component of compensation for organizations with an internal labor orientation d) some employee benefits are required by law Answer: a 45. Which of the following is NOT true of legally mandated benefits? a) legally required benefits are not usually a good means to make employment more attractive than working for a competitor b) legally required benefits are within employees’ line of sight c) legally required benefits include social security, unemployment insurance and worker’s compensation d) legally required benefits are not at-risk compensation Answer: b 46. Which of the following is NOT true about unemployment insurance? a) unemployment insurance operates under federal guidelines and is administered by the states b) in order to qualify for unemployment insurance an individual must have been employed for a minimum time period (usually a year) c) all organizations in a state pay the same percentage of compensation for unemployment insurance d) in order to continue receiving benefits, individuals must demonstrate that they are actively seeking employment Answer: c 47. Which of the following is NOT true about worker’s compensation benefits? a) a percentage of weekly wages is paid to employees during the time when they are unable to work because of an accident b) worker’s compensation is paid for work-related injuries only when an employee was following all prescribed work processes when an accident occurred c) money is paid to workers who are permanently disabled d) medical expenses are paid to injured workers Answer: b 48. Benefit plans that meet the regulations necessary for tax exemption status: a) are known as qualified benefit plans b) are known as legally required benefits c) are regulated by the states d) are known as tax deductible plans Answer: a 49. Which of the following is NOT a downside of Health Maintenance Organizations (HMOs)? a) employees enrolled in HMOs are limited to using the providers that participate in the plan b) there is concern that in their quest to reduce costs, HMOs ration services c) the medical providers who participate in HMOs can be limited because providers elect not to participate in the HMO d) costs to employees are usually greater with HMOs than traditional health care plans Answer: d 50. Which of the following is NOT true about health savings accounts (HSAs)? a) a health savings account is established and owned by the employee b) an HSA must be set up through an employer c) money placed into an HSA is not subject to federal income taxes d) money placed in an HSA can be carried over from year to year Answer: b 51. A defined benefit plan: a) provides an employee with a guaranteed contribution into a retirement plan b) specifies that an employee has particular health insurance coverage c) provides an employee a certain level of income based on factors such as their salary and the number of years worked for the organization d) defines the specific benefits all employees have available through their employer Answer: c 52. An employer contributes 3 percent of salary into an employee’s retirement savings account. This is an example of: a) a defined payment plan b) a defined benefit plan c) a defined contribution plan d) a vested retirement plan Answer: c 53. Under a defined benefit plan, the risk to pay for retirement is assumed by: a) the employer b) the employee c) social security d) worker’s compensation Answer: a 54. Which of the following is NOT true about 401(k) accounts? a) contributions into a 401(k) account are tax deferred b) after retirement, money withdrawn from a 401(k) account is not taxable c) employees can decide how to invest money in a 401(k) from among investment options offered by their employer d) 401(k) accounts are highly portable Answer: b 55. Defined benefit programs make the most sense for organizations with which HR strategies? a) Bargain Laborer and Free Agent HR strategies b) Committed Expert and Bargain Laborer HR strategies c) Loyal Soldier and Free Agent HR strategies d) Committed Expert and Loyal Soldier HR strategies Answer: d 56. The most commonly offered employee benefit is: a) 401(k) plans b) Health Savings Accounts (HSAs) c) pay without work d) health care plans Answer: c 57. Cafeteria benefits: a) provide employee discounts in company or area eating establishments b) allow an employee to choose customized benefits from the benefits offered by their employer c) allow employers to avoid paying social security contributions for employees d) are less costly for employers because all employees are covered under the same benefit programs Answer: b 58. Employees assembling MP3 players are paid a fixed amount for each unit they assemble without a defect. This is an example of: a) merit pay b) merit bonuses c) commissions d) piece-rate incentives Answer: d 59. Which of the following is NOT an advantage for organizations with commission based incentives? a) sales commissions make pay computations relatively easy for organizations to calculate b) sales commissions are paid only when sales are made c) commissions shift some of the risk associated with low sales from the organization to the employee d) commission pay tends to attract employees who excel as sales representatives Answer: a 60. All of the following are potential disadvantages of commission incentives EXCEPT: a) people who are paid commissions may tend to think of themselves as free agents with little loyalty to the organization b) turnover can be high if alternate sales jobs are available c) sales representatives may overly focus on commission generating activities and avoid performing other important tasks d) commission incentive systems can result in sales personnel focusing on long-term results Answer: d 61. In order for merit pay to be motivating: a) the organization must have clear and accurate methods for assessing performance b) all employees should receive a raise that covers the cost of living increase c) it should exceed what an employee would receive under a commission or piece-rate incentive system d) an organization should pursue a Bargain Laborer HR strategy Answer: a 62. All of the following are concerns about merit pay EXCEPT: a) merit pay increases can be a very small proportion of total pay b) the amount of pay at-risk is minimal c) the amount of pay at-risk is significant d) there can be little incentive for employees who have a comfortable salary to maximize contributions to the organization Answer: c 63. All of the following enhance group or team incentives EXCEPT: a) when the size of the group being measured is small b) when rewards are given to team members as they meet their individual goals c) when collective performance can be accurately measured d) when management support for a group incentive rewards system is high Answer: b 64. Which of the following is NOT true about team rewards? a) giving team members equal shares of a team reward builds a sense of unity b) dividing the team reward based on performance may undermine cooperative efforts of the team c) equal allocation of rewards among team members is highly motivating for the team members d) a system that bases team rewards on the value of contributions employees make to a team can encourage both teamwork and individual effort Answer: c 65. Which of the following is NOT true about gainsharing? a) gainsharing focuses on individual and group rewards b) gainsharing is dependent on reducing costs and improving productivity c) gainsharing involves establishing a benchmark for productivity d) under gainsharing, cost savings and productivity increases are shared by employees and the organization Answer: a 66. Gainsharing programs are likely to be successful: a) when the organization pays more than 50% of savings to employees b) when employees are involved in developing and carrying out the plan c) where employees are hired for a limited term to work on specific projects d) with organizations pursuing the Committed Expert HR strategy Answer: a 67. Weaknesses of profit sharing include: a) profit sharing does not align the interests of employees with the interests of owners b) profit sharing does not have effective line of sight c) profit sharing is a strong motivator only when the company is making a profit d) profit sharing puts too much of employee compensation at risk Answer: b 68. Which of the following is NOT true about stock plans and stock options? a) stock plans help align the interests of employees and owners b) stock options help align the interests of employees and owners c) stock options are only offered to high-level executives in large companies d) stock options provide a long-term incentive that links the financial interests of all stock owners Answer: c 69. All of the following are factors for developing a compensation package EXCEPT: a) the organization’s overall competitive strategy must be determined b) the organization’s HR strategy must be determined c) a pay level must be established d) merit pay and/or cost of living increases must be added to base pay Answer: d 70. Organizations with which HR strategy are most likely to have the lowest level of pay at risk? a) Loyal Soldier HR strategy b) Bargain Laborer HR strategy c) Free Agent HR strategy d) Committed Expert HR strategy Answer: b Short Answer 71. _______ ________ is a form of compensation that is not at risk and may consist of an hourly wage or an annual salary. Answer: Base pay 72. A reward based on the collective performance of a group or team is a ___________ _____________. Answer: group incentive 73. ___________ ___________ provides protection for workers who lose their jobs through no fault of their own. Answer: Unemployment insurance 74. A prepaid health plan with a specific health care provider that supplies health services to clients for a fixed rate is known as a(n) ____________ ___________ ____________. Answer: health maintenance organization 75. ___________ ___________ pays benefits to families or other beneficiaries when the insured individual dies. Answer: Life insurance 76. Juan must work for his company for five years before he is eligible to receive the benefits of his company’s retirement plan. After five years of work, Juan is __________. Answer: vested 77. An employer offers benefits to help employees balance work and life responsibilities including flexible schedules and tuition reimbursement. This employer is offering __________ __________. Answer: lifestyle benefits 78. ____________ occurs when groups of workers receive a portion of the financial return from reducing costs and improving productivity. Answer: Gainsharing Essays 79. Discuss base pay and how it is established; discuss the types of individual incentives that can be used to supplement base pay and how each can influence behavior. Answer: A. Base pay is the recurring predictable portion of an employee’s pay. Base pay can be set according to either job-based analysis or skill-based analysis. Job-based analysis focuses on compensating employees for the tasks they perform as part of a particular position. Skill-based analysis focuses on compensating employees for the skills they possess. B. Types of individual incentives: 1. Piece rate incentives pay employees a fixed amount for each piece of output they produce. Piece rate incentives are most effective when the line of sight is such that an individual has sole responsibility for producing a measurable portion of an output. 2. Commissions pay a percentage of the total amount a company receives to the person who performed the work (usually sales). A straight commission system pays only based on receipts generated, for example sales or piece-rate can be combined with a low rate of base pay. Commissions shift some of the risk associated with low sales from the organization to the employee. The employee receives greater rewards for assuming more of the risk of low sales, so if sales are good, employee compensation is usually higher with commissions than with just a salary. The type of person attracted to a position with commission type pay is oftentimes aggressive and performs well in sales, which is good for the company. People paid a commission may have little loyalty to the organization and may be unwilling to perform duties that are not directly related to increasing their commissions. 3. Merit pay is an increase in base pay that is linked to performance. Research suggests that organizations that provide merit pay increases do have higher productivity. To be truly motivational, merit pay must be sufficiently higher for employees with superior performance. Even with merit pay, the vast majority of an employee’s pay is not at risk; only the incremental merit pay increase is at risk. 4. A merit bonus is a sum of money given to an employee in addition to their regular pay. Whereas merit pay increases base pay, a merit bonus does not; rather it is a one-time bonus that must be earned each year. Motivation is maximized when the bonus is tied directly to specific behaviors and outcomes. Merit bonuses put more pay at risk than merit pay and they are designed to strengthen perceptions that pay truly depends on performance, which in turn increases motivation. 80. Discuss employee benefits including the types of legal and discretionary benefits. Answer: A. Legally required benefits are mandated by federal or state governments. The legally required benefits are social security, unemployment insurance and worker’s compensation. 1. Social security is paid by employees and employers and provides retirees a minimum level of financial security after retirement. In addition, spouses and dependent children receive benefits if a worker dies after beginning to receive social security and social security also provides disability benefits. 2. Unemployment insurance provides protection for workers who lose their jobs through no fault of their own. Programs are administered by the states under federal guidelines. In order to qualify for unemployment insurance an individual must have been employed for a minimum time and in order to continue receiving benefits an individual must demonstrate they are actively seeking work. 3. Worker’s compensation provides employees income when they suffer work-related injuries even if their own carelessness caused the injury. Worker’s compensation also pays medical and rehabilitation expenses, payments to workers who are permanently disabled and provides a payment to families of workers who die because of a work-related accident. B. Discretionary benefits include health care plans, supplemental insurance, retirement savings, pay without work and lifestyle benefits. 1. Health care plans provide access to medical services from physicians, hospitals, and other providers. 2. Health savings accounts (HSAs) are personal accounts that people use to pay for health services. Money placed into an HSA is not subject to taxes and can be used only to pay for approved medical services. 3. Supplemental insurance includes life insurance, which pays benefits to families or other beneficiaries when the insured individual dies, and disability insurance, which provides benefits to individuals who have physical or mental disabilities that prevent them from being able to work. 4. Retirement savings programs can include a defined benefit which guarantees that, when an employee retires, they will receive a certain level of income based on factors such as their salary and the number of years they worked for the organization. Or the program can be a defined contribution plan where the company pays a certain amount each month into a retirement savings account for an employee. For a defined benefit plan the employer assumes the risk of providing the employee retirement income. Defined contribution plans shift risk to employees who must make the right choices to ensure retirement income. 5. Pay without work is paid time off. It can be in the form of paid holidays off work, paid time off for vacation, or sick time. It is the most common benefit offered by U.S. employers. 6. Lifestyle benefits oftentimes help employees balance work responsibilities with other aspects of life such as family and leisure activities. Lifestyle benefits include benefits such as concierge services, flexible schedules, tuition for advanced education, help paying for health club memberships, and weight management classes. Test Bank for Human Resource Management: Linking Strategy to Practice Greg L. Stewart, Kenneth G. Brown 9780471717515
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