Managerial Compensation Final
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Course Introduction
Managerial Compensation explores the principles, strategies, and practices surrounding the design and implementation of compensation packages for executives and managers. The course examines the relationship between pay structures, incentive plans, performance measures, and organizational outcomes. Students will analyze theoretical and practical aspects of compensation, including equity and ethical considerations, regulatory environments, benchmarking, and the impact of global trends. Case studies and real-world examples are used to assess how compensation can motivate, retain, and align management objectives with shareholder interests.
Recommended Textbook
Strategic Compensation in 4th Canada Edition by Richard Long
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13 Chapters
585 Verified Questions
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Page 2
Chapter 1: A Road Map to Effective Communication
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Sample Questions
Q1) As a small business owner committed to the total rewards approach to compensation what do you need to establish before you start to develop your compensation system?
A) a reward system
B) an incentive program
C) a compensation strategy
D) a reward strategy
Answer: D
Q2) Explain the difference between "extrinsic" and "intrinsic" rewards. Provide examples for each type of reward.
Answer: Extrinsic rewards satisfy our basic needs for survival,security,social requirements and recognition needs.They are derived from the context of the job in the workplace.They include the financial returns,tangible services,and benefits employees receive as part of the employment relationship.Intrinsic rewards satisfy higher level needs for self-esteem,achievement and growth.They are derived from job content rather than job context. They focus on job design and building more opportunities for challenge and achievement into jobs through job enrichment. Intrinsic rewards provide skill variety,task identity,task significance,autonomy and feedback.
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3
Chapter 2: A Strategic Framework for Compensation
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Sample Questions
Q1) Which of the following key cultural values would be detrimental to a high-involvement organization?
A) honesty
B) trustworthiness
C) doing things the way they have always been done
D) open communication
Answer: C
Q2) What are the five contextual variables and why are they important?
Answer: Determined by organizational goals,the five contextual variables are the organization's task environment and domain,corporate strategy,technology,organization size,and work force. These factors in the firm's context determine the most appropriate managerial strategy and structure for the organization (which includes the reward system).A change in any factor may trigger a need to change the managerial strategy and the structural variables.
Q3) Which of the following dimensions is not a contextual variable?
A) control system
B) technology
C) work force
D) organization size
Answer: A
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Chapter 3: A Behavioural Framework for Compensation
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Sample Questions
Q1) What is the definition of membership behaviour?
A) Paying ones dues on time
B) Being polite with others
C) A decision to join and stay with a firm
D) The attitude one holds toward one's job and the workplace
Answer: C
Q2) Summarize the consequences of each job attitude.
Answer: Job satisfaction can lead to decreased work stress,decreased grievances,decreased absenteeism,decreased turnover and positive group norms.Work motivation leads to job effort which should lead to task performance. Organizational identification leads to positive group norms,cooperative behaviour,innovative behaviour,increased job effort,and decreased grievances,absenteeism,and turnover. All of these attitudes are desirable but how important they are to a given firm depends on the nature of the firm and the managerial strategy.
Q3) When employees are faced with reward dissatisfaction,their two main options are to demand higher pay or find a more rewarding job.
A)True
B)False
Answer: False
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Page 5
Chapter 4: Components of Compensation Strategy
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Sample Questions
Q1) Indirect pay is widely used by classical firms since it provides task motivation.
A)True
B)False
Q2) Pay for knowledge systems are beneficial for organizations in which the production or service process peak and ebb at different times.
A)True
B)False
Q3) According to the text,what are the key conditions for using output-related pay?
Q4) Which of the following best explains why medical and dental coverage can be purchased more cheaply by the employer than the employee?
A) Indexation
B) Economies of scale
C) Utility
D) Dividends
Q5) An advantage of performance pay is that workers are paid less this way.
A)True
B)False
Q6) Identify and briefly describe the issues in developing a skill-based pay system.
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Chapter 5: Performance Pay Choices
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Q1) Your employer is considering tying the bonus pool to the firm's profitability and then allocating this amount to employees based on individual merit.With reference to expectancy theory,which component of the merit system will be weakened and thus make it less motivational for you as an employee?
A) Valence
B) Expectancy
C) Instrumentality
D) Effort
Q2) Discuss the nature of suggestion systems and some of the problems you need to be aware of.
Q3) Attendance programs are less risky for organizations in which intrinsic motivation is low in the first place.
A)True
B)False
Q4) Merit bonuses represent a permanent increase to base pay.
A)True
B)False
Q5) There are three types of profit sharing plans discussed in the text.Identify and briefly explain each of them.
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Chapter 6: Formulating the Reward and Compensation Strategy
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Q1) This method involves using a "what if" scenario to determine which compensation-level strategy is most efficient for your organization.
A) Cost-benefit analysis
B) Market share analysis
C) Trial analysis
D) Utility analysis
Q2) Over time pay rates,paid time off,and minimum wage levels are issues covered by what type of legislation?
A) Human rights
B) Employment standards
C) Trade union
D) Tax
Q3) Utility Analysis is used to determine which benefits will be included in the compensation system.
A)True
B)False
Q4) Briefly describe the five main steps in the formulation of compensation strategy.
Q5) Briefly summarize the legislative framework that compensation must comply with.
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Chapter 7: Evaluating Jobs: the Job Evaluation Process
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Q1) The methods for job analysis that are summarized in the text include: observation,interviews,random polling,and functional job analysis.
A)True
B)False
Q2) What does job evaluation determine?
A) he relative contribution made by each job to the success of the organization
B) how good a job employees are doing
C) what changes to the job description are necessary
D) the correct qualifications for employees to be able to perform the job well
Q3) Which job analysis method produces a series of statements that,taken together,describe the job?
A) functional job analysis
B) interviews
C) questionnaires
D) observation
Q4) Two methods of job evaluation are ranking/paired comparison and classification/grading.
A)True
B)False
Q5) What should a job description contain if it is to be useful for job evaluation?
Page 9
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Chapter 8: Evaluating Jobs: the Point Method of Job Evaluation
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Q1) Which of the following components is not considered part of the base pay structure?
A) merit bonuses
B) pay ranges
C) shift differentials
D) pay grades
Q2) Which of the following defines a pay grade?
A) a grouping of jobs for pay purposes
B) the minimum and the maximum pay for a job
C) established with job descriptions
D) feedback from a compensation survey
Q3) Briefly describe the main pitfalls in designing a point method system of job evaluation.
Q4) Which of the following terms refers to the actual minimum and maximum pay rate,in dollar terms,for all the jobs that fall in a particular pay grade?
A) pay range
B) broadbands
C) mrket anchor
D) step progression
Page 10
Q5) What criteria is used to determine movement through the pay range?
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Chapter 9: Evaluating the Market
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Q1) The compa-ratio is calculated by taking the average pay of all employees holding a particular job title and then dividing this by the midpoint of the pay range for that job.
A)True
B)False
Q2) How do you apply your survey data results to a skill-based pay system?
A) Use information from jobs that match the bottom of the skill grid and the top of the skill grid.
B) Develop a market line and calibrate your system against that.
C) Apply the market rates to your jobs
D) Surveys don't capture the appropriate information, and misrepresent actual pay trends.
Q3) Which of the following terms refers to the process of adjusting the survey data to bring it up to date?
A) benchmarking
B) aging the data
C) data alignment
D) pay trending
Q4) Briefly discuss some of the limitations of compensation surveys.
Q5) Discuss some of the advantages and disadvantages of in-house surveys.
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Chapter 10: Evaluating Individuals
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Q1) Which of the following methods has appraisers rate the frequency of occurrence of different employee behaviours?
A) graphic rating scale
B) management by objectives
C) behaviourally anchored rating scales
D) behavioural observation scales
Q2) Identify and describe the various perceptual errors that can affect appraisal accuracy.
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.
Q5) Define and describe the key elements of performance management.
Q6) Describe the conditions under which recognizing individual contributions levels may be essential.
Page 12
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Chapter 11: Designing Performance Pay Plans
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Q1) When should managers be left out of the gain-sharing plan?
A) When they receive other types of bonuses.
B) When the company is unionized.
C) When they do not play a significant role in gain achievement.
D) When approval of the plan is outside the jurisdiction of their department.
Q2) Identify how design issues differ for private corporations.
Q3) Discuss the key issues in designing a nonmonetary reward plan.
Q4) Identify and briefly comment on the key issues in designing profit-sharing plans.
Q5) Gain-sharing is not a viable plan to use if no valid historical benchmark can be set. A)True
B)False
Q6) The first issue in designing a goal-sharing plan is to determine the levels necessary to trigger a bonus payout.
A)True
B)False
Q7) Most firms typically use multi-goal sharing plans.
A)True
B)False
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Chapter 12: Designing Indirect Pay Plans
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Q1) Which of the following plans provides a guaranteed level of income at retirement?
A) defined contribution plan
B) tax deferred plan
C) defined benefit plan
D) registered retirement savings plan
Q2) Which of the following may help to improve employee comprehension of their benefits?
A) employee handbooks
B) periodic newsletters
C) computer-based technology
D) annual pension coverage statements
Q3) Discuss the pros and cons of flexible vs.fixed benefits plans.
Q4) A force hindering flexible benefits is loss of economies of scale in the purchase of benefits.
A)True
B)False
Q5) Identify and briefly explain the most common and important employee services.
Q6) Describe the main issues in designing the benefits system.
Q7) Identify and briefly explain the types of pension plans discussed in the text.
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Chapter 13: Activating and Maintaining an Effective Compensation System
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Q1) Which of the following is not a key factor that needs to be considered when deciding whether to outsource?
A) company size
B) internal capabilities
C) vendor relationship challenges
D) the strategic importance of compensation
Q2) Which of the following is not an indicator of membership behaviour?
A) number of applicants job postings attract
B) number of useful employee suggestions submitted
C) absenteeism
D) employee turnover
Q3) In evaluating a new compensation system,a key issue is the time period that should be used.
A)True B)False
Q4) In the bottom-up approach to compensation budgeting,an arbitrary amount is allocated to compensation and given to department managers for distribution to their employees.
A)True B)False
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