Strategic Compensation A Human Resource Management Approach 9th Edition by Joseph J. – Test Bank

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Strategic Compensation, 9e (Martocchio)

Chapter 5 Person-Focused Pay

1) Which pay plan generally rewards employees for meeting work objectives?

A) knowledge-based

B) seniority

C) longevity

D) job-based

Answer: D

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

2) This type of pay system rewards employees for successfully acquiring new job-related

knowledge.

A) person-focused pay

B) competency-based pay

C) merit pay

D) incentive pay

Answer: A

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

3) Which compensation approach refers to three types of person-focused pay programs?

A) competency-based

B) innovation-based

C) service based

D) stair-step

Answer: A

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

4) This type of pay program rewards employees for successfully learning specific curricula.

A) skill-based

B) person-based

C) pay-for-knowledge

D) incentive

Answer: C

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

1

Copyright © 2017 Pearson Education, Inc.5) Which of the following pay systems is used by unions and contractors to reward their

carpenters for increasing carpentry abilities?

A) knowledge-based

B) incentive

C) skill-based

D) merit-based

Answer: C

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

6) When a filing clerk is trained to maintain employee attendance records, it is an example of

acquiring which type of skills?

A) horizontal

B) vertical

C) depth

D) breadth

Answer: A

Difficulty: Easy

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.1: Define person-focused pay.

7) Employees would need to learn these types of skills in order to develop self-managed work

teams.

A) horizontal

B) vertical

C) depth

D) breadth

Answer: B

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

8) In this team, members learn scheduling, coordinating, training, leadership. Which of the

following describes this type of work team?

A) self-regulating

B) supervisory

C) management

D) non-supervised

Answer: A

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

2

Copyright © 2017 Pearson Education, Inc.9) This term refers to the level of specialization or expertise an employee possesses in a

particular job.

A) vertical skills

B) depth of skills

C) breadth of skills

D) horizontal skills

Answer: B

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

10) James, who is a clerical employee of a university, has been trained to perform several kinds

of record-keeping tasks. He maintains employee attendance records, schedules salespeople’s

work shifts, and monitors the use of office supplies for reordering. Which type of knowledge is

necessary to perform all three of these tasks?

A) work-team

B) horizontal

C) breadth

D) depth

Answer: D

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

11) Both unions and contractors, who employ carpenters, use ________ pay plans.

Answer: skill-based

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

12) ________ skills refer to similar skills or knowledge.

Answer: Horizontal

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

13) ________ skills are those skills typically considered supervisory.

Answer: Vertical

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

3

Copyright © 2017 Pearson Education, Inc.14) ________ of skills is the level of expertise or specialization an employee brings to a job.

Answer: Depth

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

15) Describe the concept of competencies.

Answer: The term competency has become increasingly important in HR practice because of the

changing nature of work. Competencies build upon the use of knowledge, skills, and abilities,

which we describe with job analysis. A competency refers to an individual’s capability to

orchestrate and apply combinations of knowledge and skills consistently over time and to

perform work successfully in required work situations. Traditionally, work has been described by

many dimensions including knowledge, skills, and abilities. Although this is largely still the

case, HR and compensation professionals have embraced the ideas of competencies as the field

has increasingly taken on strategic importance.

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.1: Define person-focused pay.

16) Person-focused pay programs that emphasize vertical skills work well at manufacturing

companies that organize work flow around which type of organization?

A) departments

B) high performance work teams

C) task forces

D) business units

Answer: B

Difficulty: Easy

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.2: Describe the usage of person-focused pay.

17) Manufacturing companies that use assembly lines where one employee’s job depends on the

work of at least one other employee can be described as which of the following settings?

A) ad hoc work team

B) semi-autonomous work team

C) continuous process

D) bureaucratized

Answer: C

Difficulty: Easy

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.2: Describe the usage of person-focused pay.

4

Copyright © 2017 Pearson Education, Inc.18) A ________ model specifies and defines all the knowledge and skills necessary for success

in a group of jobs that are set within an industry context.

Answer: competency

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.2: Describe the usage of person-focused pay.

19) Many of the companies known to be using person-focused pay systems generally employ no

fewer than ________ employees.

Answer: 150

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.2: Describe the usage of person-focused pay.

20) Summarize the findings of studies and anecdotal information about the characteristics of

employers that use person-focused pay programs as well as the effectiveness of these programs.

Answer: A wide variety of employers have established person-focused pay programs. Some

targeted studies and anecdotal information suggest that companies of various sizes use person-

focused pay programs. Many companies which use this kind of pay system employ between

approximately 150 and 2,000 employees, the majority of whom operate in the manufacturing

industry. The average company age is approximately 10 years. This study also conjectures that

hundreds of Fortune 1000 firms use skill-based pay for manufacturing or production workers.

There is limited published evidence regarding the effectiveness of person-focused pay plans. One

study found that a skill-based pay plan in a manufacturing setting increased plant productivity by

58 percent, lowered labor cost per part by 16 percent, and showed favorable quality outcomes

(82 percent scrap reduction). Another study demonstrated that participants in a skill-based pay

program increased their skills, and maintained increased skill levels. A more recent study

examined attitudes among participants in a skill-based pay plan. The researchers found that these

plans are perceived to produce superior work outcomes.

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.2: Describe the usage of person-focused pay.

21) Which of the following are the two main reasons given for adopting person-focused

programs?

A) smaller labor markets and strategic outlines

B) market monopolies and lower labor costs

C) technological innovations and increased global competition

D) market monopolies and company turnover

Answer: C

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.3: Name and explain the reasons companies adopt person-focused pay programs.

5

Copyright © 2017 Pearson Education, Inc.22) Which of the following is a reason many European and Pacific Rim employees are better

skilled and able to work more productively than American workers?

A) Both European and Pacific Rim economies provide a higher quality of academic preparation

and workplace learning for the non-college portions of their work forces.

B) Partnerships between public educators and employers are much stronger in the United States.

C) Learning is accorded a higher standing in the operations of the U.S. economy than in the

European and Pacific Rim economies.

D) Americans do not have equal access to educational opportunities.

Answer: A

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.3: Name and explain the reasons companies adopt person-focused pay programs.

23) This is considered “at the heart” of person-focused pay programs.

A) innovation

B) management

C) training

D) data

Answer: C

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.3: Name and explain the reasons companies adopt person-focused pay programs.

24) What are the two most important reasons for adopting person-focused pay?

Answer: Person-focused pay programs represent important innovations in the compensation

field. Person-focused pay systems imply that employees must move away from viewing pay as

an entitlement. Instead, these systems treat compensation as a reward earned for acquiring and

implementing job-relevant knowledge and skills. Advocates of person-focused pay programs

offer two key reasons that firms seeking competitive advantage should adopt this form of

compensation: technological innovation and increased global competition.

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.3: Name and explain the reasons companies adopt person-focused pay programs.

6

Copyright © 2017 Pearson Education, Inc.25) Jamie earned a raise in pay when he finished the training for the Technician 2 position. He

will receive another raise when he finishes the training for the Technician 3 position. The

company is probably using which type of model?

A) stair-step

B) skill blocks

C) job-point accrual

D) cross-departmental

Answer: A

Difficulty: Moderate

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.4: Summarize the varieties of person-focused pay programs.

26) Which person-focused model links pay levels to increased knowledge and skills within the

same general job category?

A) cross-departmental

B) skill blocks

C) job-point accrual

D) stair-step

Answer: B

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

27) This type of person-focused pay plan can result in lending an employee from one area in the

company to other areas.

A) stair-step

B) cross-departmental

C) job-point accrual

D) skill blocks

Answer: B

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

7

Copyright © 2017 Pearson Education, Inc.28) Which one of the following would be correct regarding person-focused pay programs?

A) the skill blocks model only emphasizes horizontal skills

B) the stair-step model addresses depth, while the skill blocks model emphasizes both horizontal

and vertical skills

C) employees do not progress to more complex jobs in the stair-step model

D) competency models do not apply to jobs within the same family

Answer: B

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

29) Which pay model promotes learning and skills development for a wide variety of jobs from

different job families?

A) cross-departmental

B) job-point accrual

C) stair-step

D) skill blocks

Answer: B

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

30) This model is geared to promoting staffing flexibility in a company by training employees in

one area of the company with some of the critical skills that are needed to perform effectively in

another area of the company.

A) the skill blocks

B) the stair-step

C) the job-point accrual

D) the cross-departmental

Answer: D

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

8

Copyright © 2017 Pearson Education, Inc.31) A company that designs, manufactures, and sells only Halloween costumes would probably

benefit most from this model.

A) cross-departmental

B) skill blocks

C) job-point accrual

D) stair-step

Answer: A

Difficulty: Difficult

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.4: Summarize the varieties of person-focused pay programs.

32) A ________ plan encourages employees to develop skills and learn to perform jobs from

different job families.

Answer: job-point accrual

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.4: Summarize the varieties of person-focused pay programs.

33) Which of the following is a characteristic of job-based pay?

A) It compensates employees for the number of jobs in which they possess the skills to perform.

B) It rewards employees on their promise to make positive contributions to the work place.

C) It compensates employees for the jobs they currently perform.

D) A reward is based on the successful acquisition of work-related skills or knowledge.

Answer: C

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.5: Contrast person-focused pay with job-based pay.

34) Which type of pay program applies to an organization-wide context because employees earn

base pay rates for the jobs they perform?

A) person-focused

B) competency-based

C) company-based

D) job-based

Answer: D

Difficulty: Easy

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.5: Contrast person-focused pay with job-based pay.

9

Copyright © 2017 Pearson Education, Inc.35) ________ pay compensates employees for the work they currently perform.

Answer: Job-based

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.5: Contrast person-focused pay with job-based pay.

36) Compare and contrast the concepts of job-based pay and person-focused pay.

Answer: Job-based pay compensates employees for jobs they currently perform, which include

seniority pay, merit pay, and incentive pay. Human resource professionals establish a minimum

and maximum acceptable amount of pay for each job. Under seniority plans, employees receive

automatic increases over time based on the assumption that they further develop their

capabilities, which translate into higher job performance. In the case of merit pay, managers

evaluate employees based on how well they fulfilled their designated roles as specified by their

job descriptions and periodic objectives. Managers then award a permanent merit addition to

base pay, based on employee performance.

Person-focused pay compensates employees for developing the flexibility and skills to perform a

number of jobs effectively. Moreover, these programs reward employees on their potential to

make positive contributions to the workplace based on their successful acquisition of work-

related skills or knowledge. Job-based pay plans reward employees for the work they have done

as specified in their job descriptions or periodic goals (i.e., how well they have fulfilled their

potential to make positive contributions in the workplace).

Finally, job-based pay programs apply to an organization-wide context because employees earn

base pay rates for the jobs they perform. Person-focused pay plans apply in more limited

contexts because not all jobs require complex skill or knowledge.

Difficulty: Difficult

Skill: Concept

AACSB: Analytical Thinking

LO: 5.5: Contrast person-focused pay with job-based pay.

37) This term reflects an approach to job design that results in the development of more

intrinsically motivating and interesting work.

A) job security

B) job enrichment

C) job variety

D) job identity

Answer: B

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

10

Copyright © 2017 Pearson Education, Inc.38) In the garment factory of the XYZ Co., line workers are trained to work at different

manufacturing steps such as grading, cutting, sewing and assembling, pressing, etc. XYZ Co.’s

strategy of training is an example of which of the following?

A) task identity

B) skill variety

C) autonomy

D) feedback

Answer: B

Difficulty: Easy

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

39) Evidence suggests that person-focused pay programs lead to which of the following?

A) diminished employee commitment

B) no significant change in employee satisfaction

C) increased employee commitment

D) higher competitive advantage

Answer: C

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

40) Employees who take advantage of person-focused pay program opportunities may

experience which of the following?

A) difficulty in finding employment elsewhere because person-focused pay programs are always

firm specific

B) higher likelihood of being laid off during periods of business slowdown

C) higher likelihood of remaining employed during periods of business slowdown

D) feelings of inequity

Answer: C

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

11

Copyright © 2017 Pearson Education, Inc.41) Which of the following costs is NOT associated with the use of person-focused pay

programs?

A) payroll

B) overhead

C) training

D) recruitment

Answer: D

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

42) Wei is the HR manager of a manufacturing facility that has used the cross-departmental

system and has noticed that absenteeism rates have been significantly lower since implementing

this system. As a result, Wei may tell the managers that the company is able to do which of the

following?

A) award pay increases to those whose absenteeism is low

B) increase the size of the workforce

C) increase the size of the training budget

D) reduce the size of the workforce

Answer: D

Difficulty: Moderate

Skill: Application of Knowledge

AACSB: Application of Knowledge

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

43) ________ refers to a job design approach that creates more intrinsically motivating and

interesting work environments.

Answer: Job enrichment

Difficulty: Easy

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

44) Person-focused pay programs depend, in large part, on well-designed ________ programs.

Answer: training

Difficulty: Moderate

Skill: Concept

AACSB: Analytical Thinking

LO: 5.6: Explain the advantages and disadvantages of person-focused pay plans.

12

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