Strategic Compensation in Canada 5th Edition By Richard Long – Test Bank

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Strategic Compensation in Canada 5th Edition By Richard Long – Test Bank

Chapter 4: Components of Compensation Strategy

TRUE/FALSE

1. The two key questions that must be addressed in designing any compensation system are: a) What role should each of the three compensation components play in the compensation mix? and b) What total level of compensation should be provided?

ANS: T PTS: 1 REF: 108 OBJ: 1

2. An advantage of base pay is that it directly links pay with output or performance.

ANS: F PTS: 1 REF: 110 OBJ: 1

3. Generally, research supports the notion that employees prefer compensation strategies that have performance pay as the key compensation mechanism.

ANS: F PTS: 1 REF: 113 OBJ: 2

4.The main types of individual performance pay are piece rates, commissions, merit pay, and goal-sharing plans.

ANS: F PTS: 1 REF: 113 OBJ: 2

5.Performance pay plans are difficult to administer and have a high discontinuation rate.

ANS: T PTS: 1 REF: 113–114 OBJ: 2

6.An advantage of indirect pay is that benefits receive more favourable income tax treatment than direct pay.

ANS: T PTS: 1 REF: 115–116 OBJ: 3

7.Firms using a human relations strategy tend to embrace indirect pay, often making indirect pay a cornerstone of their compensation strategy.

ANS: T PTS: 1 REF: 119 OBJ: 3

8.One major advantage of job evaluation programs is that they require the use of comprehensive job descriptions.

ANS: F PTS: 1 REF: 125 OBJ: 6

9.Pay for knowledge systems are beneficial for organizations that require great task flexibility from their labour force.

ANS: T PTS: 1 REF: 127 OBJ: 7

10.Competency-based systems have been proven valid, given the wide body of research associated with this compensation system.

ANS: F PTS: 1 REF: 127 OBJ: 7

MULTIPLE CHOICE

1.Which of the following steps is NOT considered part of formulating the compensation strategy?

a.	determining actual dollar values for jobs and individual employees
b.	determining the total level of compensation to provide
c.	determining how each of the mix choices should be structured
d.	determining the mix of compensation components

ANS: A PTS: 1 REF: 108 OBJ: 1

BLM: Higher Order: Understand

2.A particular company wants to make sure employees feel they are appreciated, while at the same time ensuring key employees have a sense of loyalty towards the company. Which of the following systems does this company most likely use?

a.	benefits
b.	performance pay
c.	indirect pay
d.	base pay

ANS: D PTS: 1 REF: 112 OBJ: 1

BLM:Higher Order: Apply

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