Strategic Management
Pre-Test Questions
Course Introduction
Strategic Management explores the processes by which organizations develop, implement, and evaluate cross-functional decisions to achieve long-term objectives and sustain competitive advantage. The course covers foundational concepts such as industry analysis, internal capability assessment, formulation and execution of business and corporate strategies, and the role of leadership in strategic decision-making.
Students analyze real-world cases, apply strategic frameworks, and develop skills to identify threats and opportunities in dynamic environments, preparing them to navigate and lead in complex business landscapes.
Recommended Textbook
Strategic Compensation in 6th Canada Edition by Richard Long
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Page 2
Chapter 1: A Road Map to Effective Compensation
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Sample Questions
Q1) According to the textbook,what is the primary reason for the increased usage of compensation consultants by organizations?
A) Corporations are contracting out most human resource functions.
B) Given greater standardization associated with compensation systems,it makes sense to use dedicated outside consultants.
C) The level of complexity of compensation systems has increased.
D) It is often cheaper to use to use consultants.
Answer: C
Q2) Which of the following items is a component of the compensation strategy?
A) employee benefits
B) employment security
C) promotion criteria
D) job enrichment
Answer: A
Q3) There is often one so-called best compensation system that applies to a broad spectrum of organizations.
A)True
B)False
Answer: False
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Page 3
Chapter 2: A Strategic Framework for Compensation
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Q1) Which term best describes the scope of business operations undertaken by an organization?
A) integration
B) differentiation
C) craft
D) domain
Answer: D
Q2) As a human resources consultant,you decided to recommend to a business owner that she should use a contingency view to organizational design.In order to support your recommendation,what would you look at first from a business structure perspective?
A) structural variables
B) job design variables
C) financial variables
D) contextual variables
Answer: D
Q3) An organization's vision refers to its long-term,optimal desired state.
A)True
B)False
Answer: True
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Page 4
Chapter 3: A Behavioural Framework for Compensation
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Q1) Which theory is most applicable in explaining why a hockey player who earns $10 million per year is dissatisfied with his pay?
A) equity
B) relative deprivation
C) psychological contract
D) reinforcement
Answer: A
Q2) You operate an inbound call centre serving the various needs of your customers.Over the last several months,you notice that customers are waiting on hold for several minutes before being served.To motivate operators,you introduce an incentive program that rewards those operators that answer over 200 calls per 8-hour shift.Shortly thereafter,wait times drop but service complaints escalate.What kind of reward problem does this vignette describe?
A) failure to produce desired behaviour
B) production of desired behaviour and undesirable consequences
C) production of reward dissatisfaction
D) unfair compensation practices
Answer: B
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5
Chapter 4: Components of Compensation Strategy
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Q1) Which pay type usually makes up a small proportion of total compensation,and may not be used at all by some employers?
A) mandatory benefits
B) wages
C) merit pay
D) salaries
Q2) Generally,research supports the notion that employees prefer compensation strategies that have performance pay as the key compensation mechanism.
A)True
B)False
Q3) As the CEO of a small start-up firm,you would like to reward employees based,in part,on organizational performance.However,cash flow is low.Which pay plan should you consider using?
A) employee stock plans
B) high base pay
C) extensive benefits
D) commissions
Q4) According to the textbook,what are the key conditions for using output-related pay?
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Chapter 5: Performance Pay Choices
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Q1) John works for an aerospace company selling satellites to communication companies.He receives a set percentage of the overall sale price of the satellite in the form of compensation.He does not receive a fixed salary or benefits.Which term best describes John's compensation plan?
A) hybrid commission plan
B) leverage commission plan
C) percentage commission plan
D) straight commission plan
Q2) As a human resource specialist,you have been asked by your organization to lead a discussion on the merits of using internal promotions as a main reward mechanism.Which point would you most likely NOT raise?
A) They are an expensive process,as promotions are typically associated with pay increases.
B) They often carry both intrinsic and extrinsic rewards.
C) They recognize contributions made by strong performers.
D) They are often seen as a key motivation tool for employees.
Q3) The current distribution profit-sharing plan is sometimes called a "cash plan."
A)True
B)False
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Page 7
Chapter 6: Formulating the Reward and Compensation Strategy
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Q1) 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
Q2) Which variable in executive compensation packages accounts for the majority of the value associated with executive pay in Canada?
A) annual bonuses
B) base pay
C) stock grants and stock options
D) perks
Q3) Lag strategies are cost-effective for which type of firms?
A) firms that are labour-intensive
B) firms needing to attract top-quality applicants
C) firms that value employee stability
D) firms that invest heavily in training and development
Q4) 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) Which of the following practices can NOT be used to achieve pay equity?
A) Pay levels for male comparator jobs will be lowered.
B) All positions in a job class will receive adjustments in dollar terms.
C) Each female job class must receive a yearly adjustment until pay equity is achieved.
D) Inequitable female job classes with the lowest job rate must receive a greater adjustment.
Q2) Carlos decides to use a time-and-motion study to gather information about a particular job.What kind of job analysis method is Carlos using?
A) observations
B) interviews
C) questionnaires
D) functional job analysis
Q3) Which of the following is NOT a valid reason to re-evaluate jobs?
A) Labour market conditions change significantly.
B) The strategy of the organization changes.
C) A new performance system is implemented.
D) There is a high level of appeals.
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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Q1) What does the market line determine?
A) whether the firm should lead,lag,or match the market
B) the relationship of job evaluation results to market pay rates
C) the relationship of job evaluation results to a firm's pay grades
D) a pay rate based on a market survey
Q2) Which approach for deriving factor weights tends to be seen as being rather complex and difficult to understand?
A) the "a priori" method
B) the statistical analysis method
C) the testing and functional method
D) the benchmark scallion method
Q3) In exploring solutions to job evaluation problems,what is NOT one of the main steps?
A) Check that benchmark jobs are equivalent to market comparator jobs.
B) Determine if the wrong factors have been included in the job evaluation system.
C) Adjust the point totals of the outlier jobs to improve the correlation coefficient.
D) Examine whether jobs have been badly evaluated.
Q4) Discuss the advantages and disadvantages of the point method of job evaluation.
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Chapter 9: Evaluating the Market
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Q1) In analyzing compensation data that include extreme values,what would be an advisable measure of central tendency to use?
A) compa-ratio
B) mean
C) median
D) inter-quartile range
Q2) Briefly discuss some of the limitations of compensation surveys.
Q3) Which survey source raises concerns among HR professionals about the validity of their data?
A) industry groups
B) formal in-house
C) free websites
D) consultants
Q4) In broad terms,wages paid for a particular "labourer" depend on the relationship between supply and demand for labour,and a specific company's ability to pay.
A)True
B)False
Q5) Identify and briefly describe the four main steps in conducting a compensation survey.
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Chapter 10: Evaluating Individuals
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Q1) Which performance appraisal method builds on the behavioural anchored rating scales by requiring that management provide a "frequency rating" associated with positive behaviour?
A) behaviourally anchored rating scales
B) graphic rating scale
C) behavioural observation scale
D) ranking and forced distribution
Q2) From your perspective as a compensation officer,what is the most important category of reasons for doing performance appraisals?
A) supervisory
B) administrative
C) developmental
D) symbolic
Q3) As a supervisor you have a tendency to rate all employees as "average" in everything.You are guilty of using which perceptual error?
A) halo error
B) contrast effect
C) central tendency error
D) recency effect
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Page 12
Chapter 11: Designing Performance Pay Plans
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Q1) Which statement does NOT accurately describe employee share purchase plans?
A) Employees receive shares at no cost to themselves,usually as a bonus.
B) Employees provide a direct payment of some sort in exchange for the shares.
C) Often the price employees pay for the shares is less than market value.
D) Often employers will match the amount of shares purchased by the employee up to a set limit.
Q2) Research supports the notion that if adequate monetary compensation is in place,coupled with an open and supportive management-employee environment,nonmonetary-based recognition tends to offer little value to stakeholders.
A)True
B)False
Q3) Human resource professionals have identified three types of goal-sharing plans.Which of the following is NOT one of those types?
A) standard plus plans
B) single-goal plans
C) multi-goal plans
D) financially funded plans
Q4) Identify and briefly comment on the key issues in designing profit-sharing plans.
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Page 13
Chapter 12: Designing Indirect Pay Plans
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Q1) For most organizations,what component of its benefits package is second only to mandatory benefits in terms of cost for an organization?
A) employment assistance programs
B) wellness and recreational plans
C) retirement plans
D) pay for time not worked plans
Q2) Deferred profit-sharing plans tend to be classified as "contributory benefits."
A)True
B)False
Q3) What is usually NOT considered by courts in establishing awards relating to notice periods or severance in lieu of notice?
A) whether some element of enticement was involved
B) the likelihood that the employee will secure employment quickly
C) the employee's age
D) the employee's gender
Q4) Describe the main issues in designing the benefits system.
Q5) Identify and briefly explain the types of pension plans discussed in the textbook.
Q6) 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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Q1) Which employee attitude towards the compensation system should be evaluated?
A) satisfaction with the process by which compensation is determined
B) work motivation
C) job satisfaction
D) organizational identification
Q2) Because of complexity and resistance by stakeholders,computers have taken on a secondary role in communicating compensation policies and procedures
A)True
B)False
Q3) 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
Q4) A compensation budget is a forecast of what the firm expects to spend on compensation in the coming year.
A)True
B)False
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