Business Administration
Exam Answer Key
Course Introduction
Business Administration is a comprehensive course designed to introduce students to the foundational principles and practices of managing and operating organizations in the modern business environment. Through exploring topics such as management, marketing, finance, human resources, and organizational behavior, students gain a broad understanding of how businesses function and succeed. The course emphasizes critical thinking, problem-solving, leadership, and effective decision-making, equipping students with essential skills for a variety of roles in both the private and public sectors. Case studies, group projects, and real-world applications are integrated to help students connect theory with practical experience.
Recommended Textbook
Strategic Compensation in 5th Canada Edition by Richard Long
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13 Chapters
590 Verified Questions
590 Flashcards
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Chapter 1: A Road Map to Effective Compensation
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Sample Questions
Q1) You have been given the responsibility to develop an effective compensation system for your company. Which of the following should serve as your first focus?
A) understanding your organization and your people
B) formulating and determining budgets
C) designing your performance pay and indirect pay plans
D) implementing, managing, evaluating, and adapting the system
Answer: A
Q2) You are a newly hired director of human resources for a new software company. Your CEO has asked you to provide the board of directors with recommendations relating to the company's yet-to-be-established reward system. What should you tell the board?
A) The various combinations of intrinsic and extrinsic rewards need to be considered.
B) The optimal strategy is the least expensive.
C) Like most companies in Canada, we should adopt a total compensation approach.
D) The plan for creating the compensation system is the most important aspect of the strategy.
Answer: A
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3
Chapter 2: A Strategic Framework for Compensation
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Sample Questions
Q1) Richard, a new employee, is told by a more experienced employee to do only the minimum and not attempt to be a "superstar." What variable best describes what Richard is experiencing?
A) engagement
B) commitment
C) structure
D) culture
Answer: D
Q2) What is the purpose of the strategic framework for compensation?
Answer: There is no such thing as "one best" compensation system that fits all organizations. The most appropriate compensation system for an organization is one that fits the key characteristics of that organization. The strategic framework for compensation provides a model to help us understand the context variables, managerial strategy, and structural variables of an organization and build an effective compensation system.
Q3) According to the textbook, all five contextual variables are of equal importance
A)True
B)False
Answer: False
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Page 4
Chapter 3: A Behavioural Framework for Compensation
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Sample Questions
Q1) An employee survey at a particular company indicated very strong employee job satisfaction levels. Management was elated with the outcome of the survey. What is a likely consequence of having satisfied employees?
A) decreased grievances
B) employees who are more innovative
C) increased job effort
D) improved interdepartmental integration and communication
Answer: A
Q2) The three key employee behaviours that may be desired by employers are membership, task, and citizenship.
A)True
B)False
Answer: True
Q3) Equity theory partially explains the basic notion of perceived inequity between one's view of his or her contribution and the contribution of others in similar contexts.
A)True
B)False
Answer: True
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5
Chapter 4: Components of Compensation Strategy
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Sample Questions
Q1) Performance pay plans are difficult to administer and have a high discontinuation rate.
A)True
B)False
Q2) The main types of individual performance pay are piece rates, commissions, merit pay, and goal-sharing plans.
A)True
B)False
Q3) Which of the following refers to job evaluation?
A) determining how well a job is performed
B) surveying the market
C) ranking all jobs according to their value to the firm
D) establishing the skill level of each employee
Q4) Identify and briefly describe the issues in developing a skill-based pay system.
Q5) An advantage of base pay is that it directly links pay with output or performance.
A)True
B)False
Q6) According to the text, what are the key conditions for using output-related pay?
Q7) Briefly explain the three methods for establishing base pay.
Page 6
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Chapter 5: Performance Pay Choices
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Sample Questions
Q1) Explain the difference between goal-sharing and gain-sharing plans.
Q2) Unions generally oppose profit-sharing plans on the basis of potential manipulation of profits by management and the uncertainty associated with profit sharing when compared with base pay.
A)True
B)False
Q3) A publically traded Canadian corporation provides employees with one year of continuous service and the opportunity to place 6% of their pre-tax income in a plan that may be invested in the company's stock. Furthermore, the company matches the shares by 50% up to a limit of 4% of the employees' pre-tax income. From the perspective of the employee, what are the potential drawbacks of participating in this program?
A) Administrative costs associated with these plans are normally very high.
B) It is extremely difficult for an employee to determine the performance of their stock.
C) They pose too much of a tax burden.
D) If the company does poorly, your job and savings may be at risk.
Q4) Discuss the nature of suggestion systems and some of the problems you need to be aware of.
Q5) Identify and briefly define each of the three types of employee stock plans.
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Chapter 6: Formulating the Reward and Compensation Strategy
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Sample Questions
Q1) A hybrid compensation-level strategy is one that varies across which of the following?
A) employee groups
B) managerial strategies
C) business segments
D) industrial sectors
Q2) Which type of management strategy will use economic variables as key motivators to drive employee behaviour?
A) lead
B) high-involvement
C) classical
D) human relations
Q3) In Canada, organizations face numerous legislated constraints creating so-called "boundaries" to their compensation systems. Which of the following is NOT categorized as a legislated constraint or boundary?
A) Employment Standards Act or the Canada Labour Code
B) Human Rights Act
C) management strategy constraints
D) income tax, both individual and corporate
Page 8
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Chapter 7: Evaluating Jobs: The Job Evaluation Process
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Sample Questions
Q1) You have been asked to present to management potential drawbacks associated with using a job analysis process at your company. Which of the following statements would likely NOT be included in your list of drawbacks?
A) analyzing the jobholder rather than the job
B) gender bias
C) use of technical language
D) use of incorrect benchmark jobs
Q2) With reference to Ontario pay equity legislation, briefly discuss the job evaluation methods that can be used for comparing female and male job classes.
Q3) Mario performs his job at a very high standard. Unfortunately, a job evaluation process determined that he is currently being paid at a level below the minimum in a new pay scale. Which of the following statements best describes Mario's current position in the new pay scale?
A) Mario would be classified as a "constructive employee."
B) Mario would be classified as an "exception-to-the-pay-scale" employee.
C) Mario would be classified as a "green-circled employee."
D) Mario would be classified as a "red-circled employee."
Q4) What should a job description contain if it is to be useful for job evaluation?
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Page 9
Chapter 8: Evaluating Jobs: The Point Method of Job Evaluation
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Sample Questions
Q1) In establishing criteria for movement within a pay range, the three most commonly used are experience, performance, and market rates.
A)True
B)False
Q2) After plotting a regression (market line), you determine that the slope is very steep. What possible conclusion can you make from observing the slope of the regression line?
A) The correlation coefficient is approaching -1 (negative one).
B) There is too much spread in job evaluation points between low-value and high-value jobs.
C) There is not sufficient spread in job evaluation points between low-value and high-value jobs.
D) Lower-value jobs appear to be compensated above market rates.
Q3) What criteria are used to determine movement through the pay range?
Q4) Under pay equity legislation, organizations need to evaluate three out of the four main categories of compensable factors in evaluating jobs.
A)True
B)False
Q5) What are the key considerations in establishing pay grades and pay ranges?
Page 10
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Chapter 9: Evaluating the Market
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Sample Questions
Q1) What are two main disadvantages associated with using informal in-house surveys?
A) complexity and cost
B) cost and reliability issues
C) cost and speed
D) reliability and validity issues
Q2) You have surveyed five companies and obtained the following data regarding the midpoints of the base pay range for the job of "benefit clerk" and the number of employees employed at each company performing that role: $32,000 (Company A with 10 employees), $31,000 (Company B with 20 employees), $30,000 (Company C with 20 employees), $29,000 (Company D with 10 employees), and $29,000 (Company E with 40). What is the weighted mean for this set of data?
A) $30,200
B) $30,000
C) $29,900
D) $29,000
Q3) Data can be collected through personal interviews, random sampling, and questionnaires.
A)True
B)False
Q4) Discuss some of the advantages and disadvantages of in-house surveys.
Page 11
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Chapter 10: Evaluating Individuals
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Sample Questions
Q1) Including a self-appraisal component in the performance appraisal process encourages employees to reflect on the performance of peers
A)True
B)False
Q2) A particular organization uses a forced ranking system to appraise employees. As a peer appraiser, why might an employee be tempted to give colleagues a low rating?
A) Rating errors can be balanced out.
B) A limited amount of merit pay is available.
C) Conflict and ill will among peers is reduced.
D) You can all benefit if you rate each other low.
Q3) What two key elements make management by objectives a highly effective approach to employee motivation?
A) goals and feedback
B) trust and open communication
C) core competencies and engagement
D) involvement and business strategy
Q4) Identify the key characteristics and advantages of 360-degree feedback appraisal system.
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Page 12
Chapter 11: Designing Performance Pay Plans
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Sample Questions
Q1) Identify the fundamental ways in which gain-sharing and goal-sharing plans differ.
Q2) ABC Ltd. generated one million Canadian dollars in profits this year. ABC Ltd. decides to place 200,000 Canadian dollars (20 percent of pre-tax profits) in a bonus pool. In previous years, this figure has ranged from zero to 50 percent of pre-tax profits. What type of formula is ABC Ltd. using to determine contributions into the pool?
A) fixed percentage
B) fixed threshold
C) discretionary
D) percentage approach
Q3) Which of the following gain-sharing plans requires that management has access to historical data so as to be able to calculate a so-called "normal labour cost"?
A) Rucker plan
B) family of measures plan
C) Scanlon plan
D) Improshare plan
Q4) Discuss the key issues in designing a nonmonetary reward plan.
Q5) Briefly describe the Scanlon Plan.
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Page 13
Chapter 12: Designing Indirect Pay Plans
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Sample Questions
Q1) Which of the following plans allows you to tailor your benefit plan to suit your needs and even trade off benefits that are not important to you?
A) health care spending accounts
B) simplified flex plan
C) flexible benefits plan
D) fixed benefits plan
Q2) Which of the following plans would NOT be classified as noncontributory?
A) defined benefit pension plans
B) defined contribution pension plans
C) deferred profit-sharing plans
D) registered retirement saving plans
Q3) What is the first issue in developing an effective benefit system?
A) determining the tax implications
B) examining the compensation cost structure of the organization
C) establishing the administration process
D) determining the role of indirect pay in compensation strategy
Q4) Identify and briefly explain the types of pension plans discussed in the text.
Q5) Describe the main issues in designing the benefits system.
Q6) Identify and briefly explain the most common and important employee services.
Q7) Describe how a health care spending account works.
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Chapter 13: Activating and Maintaining an Effective Compensation System
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Sample Questions
Q1) In order to avoid resistance to a new compensation system, it a good practice to discontinue the usage of the old system before you have fully tested the new system. Otherwise, employees will gravitate to the old and familiar system. .
A)True
B)False
Q2) In evaluating a new compensation system, two main sets of employee attitudes should be examined-job attitudes and compensation attitudes.
A)True
B)False
Q3) Identify and describe the steps necessary for implementing a compensation system.
Q4) Why is it useful to conduct surveys of key employee attitudes before system implementation?
A) to provide information about the new system
B) to have a baseline for future comparisons
C) to solicit recommendations for changes
D) to create perception of employee involvement
Q5) Identify the tasks involved in preparing to implement a compensation system.
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Q6) What are the primary areas for computer applications in a compensation system?