Employee Benefits and Compensation
Test Questions
Course Introduction
This course provides a comprehensive overview of employee benefits and compensation systems within organizations, analyzing their strategic role in attracting, motivating, and retaining talent. Students will learn about the various types of compensation, including wage structures, incentive programs, and non-cash rewards, as well as legally mandated and voluntary employee benefits such as health insurance, retirement plans, and paid leave. The course covers job evaluation techniques, pay equity, regulatory compliance (including FLSA and ERISA), and emerging trends such as flexible benefits and total rewards strategies. Through case studies and practical exercises, students will develop the skills necessary to design, administer, and assess effective compensation and benefits programs aligned with organizational goals.
Recommended Textbook
Compensation 11th Edition by George Milkovich
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Page 2
Chapter 1: The Pay Model
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Sample Questions
Q1) When unemployment increases,the proportion of the population covered by health insurance decreases.
A)True
B)False
Answer: True
Q2) Cost is to change in the pay model as ______________ are to policy lines.
A) market definitions
B) surveys
C) descriptions
D) incentives
Answer: A
Q3) _____ refers to comparisons among jobs or skills inside a single organization.
A) External competitiveness
B) Internal alignment
C) Pay structure
D) Equitable contributions
Answer: B
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Page 3
Chapter 2: Strategy: The Totality of Decisions
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Sample Questions
Q1) According to the Hudson survey,__________ is the single thing that would make them happier.
A) more personal days and family leave
B) a more flexible work schedule
C) more money
D) better health insurance
Answer: C
Q2) 18.A book listing the previous year's pay of all employees is part of Whole Foods "No-secrets" philosophy.This is an example of which strategic compensation choice?
A) Internal alignment
B) External competitiveness
C) Employee contributions
D) Management
Answer: D
Q3) Work/life balance issues are part of competitiveness decisions in the pay model.
A)True
B)False
Answer: True
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Chapter 3: Defining Internal Alignment
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Sample Questions
Q1) When employees compare the fairness of their pay,they focus primarily on how their job compares with similar jobs in other organizations.
A)True
B)False
Answer: False
Q2) Unions prefer which of the following?
A) Small pay differences between jobs and seniority-based promotions
B) Large pay differences between jobs and seniority-based promotions
C) Small pay differences between jobs and performance-based promotions
D) Equal pay raises for employees
Answer: A
Q3) Which of the following is not one of the changes in organization design that may affect pay structures?
A) Outsourcing
B) Dual careers
C) Delayering
D) Temporary workers
Answer: B
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Chapter 4: Job Analysis
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Sample Questions
Q1) The Position Analysis Questionnaire analyzes jobs in terms of _____.
A) job data
B) duties and responsibilities
C) job elements and tasks
D) employee data
Q2) How is validity important in judging job analysis?
Q3) Which of the following statements regarding reliability of job analyses is not true?
A)Reliability is higher when analysts are professionals.
B) Differences in performance across incumbents affects reliability.
C) Gender and race of analysts affects reliability.
D) Reliability is higher for specific tasks than general ones.
Q4) To be valid,acceptable,and useful,job information must be _____.
A) authentic
B) technical
C) industry specific
D) up to date
Q5) Define interactions.
Q6) Write a short note on Americans with Disabilities Act.
Q7) Discuss the ways information can be collected.
Page 6
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Chapter 5: Job-Based Structures and Job Evaluation
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Sample Questions
Q1) The final result of the job analysis-job description-job evaluation process is a hierarchy of work.
A)True
B)False
Q2) Which of the following compensable factors generic factors of the Equal Pay Act and National Electrical Manufacturers Association (NEMA)is most similar to the Hay plan Factor Know How?
A) Skill
B) Effort
C) Responsibility
D) Working conditions
Q3) An advantage of the Position Analysis Questionnaire for job evaluation is that it can be applied to a wide depth and breadth of work.
A)True
B)False
Q4) How differently is job evaluation seen among managers?
Q5) Job evaluation should include benchmark jobs of all work domains. A)True
B)False
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Chapter 6: Person-Based Structures
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Sample Questions
Q1) What is relevance of flexibility in skill-based plans?
Q2) Paying employees who are frequently moved from one job to another each day is less complex in a job-based pay than a person-based structure.
A)True
B)False
Q3) The scheme used in the text for classifying competencies consists of three groups.Which of the following is not one of them?
A) Personal characteristics
B) Team dynamics
C) Visionary
D) Organization specific
Q4) One of the main advantages of a skill-based plan is that it facilitates matching people to a changing work flow.
A)True
B)False
Q5) Competency-based plans have the potential to clarify new standards and behavioral expectations.
A)True
B)False
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Chapter 7: Defining Competitiveness
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Sample Questions
Q1) An employer offering lower base pay with high bonuses is likely signaling they are seeking risk-taking employees.
A)True
B)False
Q2) Which of the following is not true of the relationship between employer size and its ability to pay?
A) Talented individuals have a higher marginal value in a larger organization.
B) Talented people can influence more people and decisions.
C) Influence of talented people leads to more profits.
D) Talented people prefer to work in larger organizations.
Q3) Job applicants who will not accept a job that pays below a certain level are acting according to signaling theory.
A)True
B)False
Q4) Employers tend to underestimate the importance of pay to employees and over estimate the role of relationships with the supervisor.
A)True
B)False
Q5) Does an above-market wage guarantee a better workforce?
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Chapter 8: Designing Pay Levels, mix, and Pay Structures
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Sample
Questions
Q1) A survey conducted in January,2013 found the median pay effective January 1,2013,for a clerk was $22,000 and the forecast rate of wage increases in the market for 2013 of was 5% and another 5% for 2014.An employer choosing to follow a lead strategy of 4% above the market for the plan year,will need to _____.
A) multiply salary by 105% and then by 109%
B) increase the clerk salary by $2,200
C) multiply the salary by 109%
D) multiply the salary by 114%
Q2) A segmented labor supply requires multiple labor market comparisons.
A)True
B)False
Q3) Many employers use market surveys to validate their own job evaluation results.
A)True
B)False
Q4) The first step in setting competitive pay and designing a pay structure is _____.
A) specify pay-level policy
B) conduct job evaluation
C) draw policy lines
D) specify relevant market
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Chapter 9: Pay-For-Performance: the Evidence
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Sample Questions
Q1) Desired employee behaviors are influenced by ________
A) motivation.
B) ability.
C) environment.
D) ability, motivation and environment.
Q2) Risk-sharing plans include a provision for cuts in base pay that are only recaptured in years when the organization meets performance objectives.
A)True
B)False
Q3) The key ingredient in _____ is careful cost analysis to make sure the dollar cost of the package an employee selects meets employer budgetary limits.
A) gain-sharing plans
B) individual incentive plans
C) success-sharing plans
D) cafeteria-style compensation
Q4) The trend today is toward less stable and less secure compensation packages. A)True
B)False
Q5) Compare risk sharing and success-sharing plans.
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Chapter 10: Pay-For-Performance Plans
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Sample Questions
Q1) When a firm is _____ on business risk and outcomes are _____,corporate performance is higher without any incentive plans.
A) high, well defined
B) high, uncertain
C) low, well defined
D) low, uncertain
Q2) A job involving production of many parts each hour would have a rate based upon a time period per unit of production.
A)True
B)False
Q3) Unions prefer individual to group incentive pay plans since members can earn more money.
A)True
B)False
Q4) Variable pay as a percent of payroll is __ percent.
A) 5
B) 12
C) 17
D) 21
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Chapter 11: Performance Appraisals
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Sample Questions
Q1) Which is the most popular appraisal method which uses outcomes as a standard?
Q2) The most difficult rating error to eliminate is central tendency.
A)True
B)False
Q3) Merit guidelines allocate pay increases based upon:
A) seniority and performance.
B) performance level.
C) performance level and employee position in their pay range.
D) performance and size of merit budget.
Q4) A major difference between rankings and ratings is ratings use an absolute versus a relative scale.
A)True
B)False
Q5) In situations in which the nature of the task is so uncertain that it may be difficult to specify expected goals,the most appropriate rating format is ______________
A) MBO
B) standard rating scale
C) BARS
D) essay
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Chapter 12: The Benefit Determination Process
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Sample Questions
Q1) Which are the four major administration issues regarding in setting up a benefit package?
Q2) The biggest recent trend in health care is consumer-driven health care.
A)True
B)False
Q3) Alternatives to financing benefit plans include all of the following except:
A) contributory
B) 401K
C) noncontributory
D) employee financed
Q4) According to a recent SHRM survey,pay is the top factor driving job satisfaction.
A)True
B)False
Q5) Which of the following is not a major benefits planning and design issue?
A) Benefit adequacy
B) Competitiveness of benefits
C) Cost effectiveness
D) Diversity compliance
Q6) What are the major disadvantages of a flexible benefits package?
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Chapter 13: Benefit Options
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Q1) A major problem with social security is a rising number of retirees without a corresponding increase in contributors.
A)True
B)False
Q2) To be eligible for FMLA,an employee has to have worked for an employer at least 1,250 hours in the previous year.
A)True
B)False
Q3) The first question to ask in determining how much retirement income an employer should provide is:
A) Should Social Security payments be considered?
B) How should seniority be factored into the payout formula?
C) What level of retirement compensation should be provided?
D) Should other, non-Social Security income sources be considered?
Q4) Work-related injuries are covered by workers' compensation but not industrial diseases such as black lung and asbestosis.
A)True
B)False
Q5) What is the central challenge of social security payments? How are they tackled?
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Chapter 14: Compensation of Special Groups
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Q1) Two ways organizations are dealing with equity issues for contingent workers are "boundaryless" careers and hiring top performers as regular employees.
A)True
B)False
Q2) Discuss the types of conflict faced by professional employees with an example.
Q3) Executives,supervisors and sales staff often receive special compensation treatment because _____.
A) these jobs face conflicting demands
B) these jobs are exempt under FLSA
C) recruiting and retention is difficult for these jobs
D) these jobs are covered under the Sarbanes-Oxley Act
Q4) Independent contractors generally are less expensive for employers since they receive no benefits.
A)True
B)False
Q5) Explain any one element of an executive compensation package in detail.
Q6) What is a tally sheet and what is it used for?
Q7) Discuss the compensation strategy for corporate directors.
Q8) List the components of an executive compensation package.
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Chapter 15: Union Role in Wage and Salary Administration
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Q1) There is evidence that an increase in the percent of imports reduces the union wage differential.
A)True
B)False
Q2) Which of the following is true regarding a gainsharing plan?
A) It prevents union members from sharing the wealth.
B) It creates a difficulty in maintaining employment levels in marginal organizations.
C) It becomes ineffective when union members participate in plan development.
D) Not all unions would be in favor of this type of plan.
Q3) Most contracts recognize that jobs in the same occupations should receive different wage rates.
A)True
B)False
Q4) Moving employees through pay ranges using merit increases is becoming more popular than automatic progression.
A)True
B)False
Q5) Briefly summarize the impact of unions on general wages levels.
Q6) Briefly describe gain-sharing plans.
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Chapter 16: International Pay Systems
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Sample Questions
Q1) The degree of discretion managers have to make total compensation a strategic tool is _____.
A) managerial accountability
B) democratic accountability
C) managerial autonomy
D) managerial efficiency
Q2) The primary reason for considering purchasing power for compensation policy is to
A) met tax laws in various countries.
B) to prevent unionization.
C) to determine mix of benefits packages.
D) maintain equity for expatriates.
Q3) A study of both U.S.and Slovenian MBAs found that risk taking was higher among Slovenians.
A)True
B)False
Q4) What is the balance sheet approach? What is its objective?
Q5) Unionization rates are higher in Europe than Asia.
A)True
B)False
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Chapter 17: Government and Legal Issues in Compensation
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Q1) A "living wage" provides for a minimum wage tailored to living costs in a city or geographic area.
A)True
B)False
Q2) What are the three branches of the federal government In the United States? What are their functions?
Q3) Minimum wage jobs are very rare in the software,chemical,oil,and pharmaceutical industries.
A)True
B)False
Q4) The key factors explaining the gender pay gap are differences in _____.
A) qualifications and work/occupation
B) work/occupation and work-related behaviors
C) union membership and discrimination
D) discrimination and firm/industry
Q5) The most frequently jobs misclassified as independent contractors rather than employees are truck drivers,home health aids and construction workers.
A)True
B)False
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Chapter 18: Management: Making It Work
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Q1) A compa-ratio greater than 1 typically means that _____ .
A) the intended policy line has been violated
B) employees are overpaid
C) most employees are new entrants
D) turnover is high
Q2) Comp-ratios above or below 1 suggest compensation is not well-managed.
A)True
B)False
Q3) A CPI of 180 in Memphis and 220 in Philadelphia means that it is more expensive to live in Philadelphia than in Memphis
A)True
B)False
Q4) Policy lines and skill-based pay plans are examples of inherent controls on managers' compensation decisions.
A)True
B)False
Q5) Over half of employees in the private sector work in companies with open pay policies.
A)True
B)False
Page 20
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