Human Resource Management Raymond Noe 11e – Test Bank

Human Resource Management, 11e (Noe)

Chapter 11   Pay Structure Decisions

1) Pay level refers to the relative pay of jobs in an organization.

Answer:  FALSE

Explanation:  Job structure refers to the relative pay of jobs in an organization. Pay level is defined as the average pay (including wages, salaries, and bonuses) of jobs in an organization.

Difficulty: 1 Easy

Topic:  Introduction

Learning Objective:  11-01 List the main decision areas and concepts in employee compensation management.

Bloom’s:  Remember

AACSB:  Analytic

Accessibility:  Keyboard Navigation

2) The equity theory suggests that people evaluate the fairness of their situations by comparing them with how they were treated in their previous organization.

Answer:  FALSE

Explanation:  Equity theory suggests that people evaluate the fairness of their situations by comparing them with those of other people. According to the theory, a person (p) compares her own ratio of perceived outcomes O (pay, benefits, working conditions) to perceived inputs I (effort, ability, experience) to the ratio of a comparison other (o).

Difficulty: 1 Easy

Topic:  Equity Theory and Fairness

Learning Objective:  11-01 List the main decision areas and concepts in employee compensation management.

Bloom’s:  Remember

AACSB:  Analytic

Accessibility:  Keyboard Navigation

3) Job evaluation is a more appropriate tool for internal equity pay comparisons than market pay surveys.

Answer:  TRUE

Explanation:  Internal equity pay comparisons focus on what employees within the same organization, but in different jobs, are paid. Job evaluation is more appropriate to use for internal equity pay comparisons than pay market surveys.

Refer To: Table 11.2

Difficulty: 2 Medium

Topic:  Equity Theory and Fairness

Learning Objective:  11-01 List the main decision areas and concepts in employee compensation management.

Bloom’s:  Understand

AACSB:  Analytic

Accessibility:  Keyboard Navigation

4) The upper bound placed by product market competition is more constrictive when labor costs are a larger share of total costs.

Answer:  TRUE

Explanation:  Product market competition places an upper bound on labor costs and compensation. This upper bound is more constrictive when labor costs are a larger share of total costs and when demand for the product is affected by changes in price (i.e., when demand is elastic).

Difficulty: 2 Medium

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Understand

AACSB:  Analytic

Accessibility:  Keyboard Navigation

5) Ciara is doing a comparison of available workers to the number of available jobs for the unemployment commission, otherwise called a labor market competition.

Answer:  TRUE

Explanation:  Labor market competition is a reflection of the number of workers who are available relative to the number of jobs that are available. Shortages and surpluses influence pay levels as organizations compete to hire similar employees.

Difficulty: 2 Medium

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Understand

AACSB:  Analytic

Accessibility:  Keyboard Navigation

6) Alpha Omega compares its practices set by management with the standard set in each unit as a benchmark.

Answer:  FALSE

Explanation:  To compete for talent, organizations use benchmarking, a procedure in which an organization compares its own practices against those of the competition. In compensation management, benchmarking against product market and labor market competitors is typically accomplished through the use of one or more pay surveys, which provide information on going rates of pay among competing organizations.

Difficulty: 2 Medium

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Understand

AACSB:  Analytic

Accessibility:  Keyboard Navigation

7) Product market comparisons that focus on labor costs deserve greater weight when the product demand is inelastic.

Answer:  FALSE

Explanation:  Product market comparisons that focus on labor costs are likely to deserve greater weight when (1) labor costs represent a large share of total costs, (2) product demand is elastic (it changes in response to product price changes), (3) the supply of labor is inelastic, and (4) employee skills are specific to the product market (and will remain so).

Difficulty: 1 Easy

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Remember

AACSB:  Analytic

Accessibility:  Keyboard Navigation

8) Anne and Matthias are both electricians and active members in their union. Without asking each other, they can assume they make the same amount of money.

Answer:  TRUE

Explanation:  For blue-collar jobs, particularly those covered by collective bargaining contracts, there may be a single rate of pay for all employees within the job.

Difficulty: 2 Medium

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Understand

AACSB:  Analytic

Accessibility:  Keyboard Navigation

9) Nonkey jobs are those that are common to many organizations.

Answer:  FALSE

Explanation:  Nonkey jobs are those that are unique to organizations and that cannot be directly valued or compared through the use of market surveys. Therefore, they are treated differently in the pay-setting process.

Difficulty: 1 Easy

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Remember

AACSB:  Analytic

Accessibility:  Keyboard Navigation

10) Internal job worth can be measured using the administrative tool of job evaluation.

Answer:  TRUE

Explanation:  One typical way of measuring internal job worth is to use an administrative procedure called job evaluation. A job evaluation system is composed of compensable factors and a weighting scheme based on the importance of each compensable factor to the organization.

Difficulty: 1 Easy

Topic:  Developing Pay Levels

Learning Objective:  11-02 Describe the major administrative tools used to manage employee compensation.

Bloom’s:  Remember

AACSB:  Analytic

Accessibility:  Keyboard Navigation