Question : 11) A company designs its compensation system around the philosophy : 1346300

11) A company designs its compensation system around the philosophy that employees exchange their skills and contributions for pay. As a consequence, employees feel fairly compensated when the ratio of their inputs and outputs is equivalent to those of other employees whose job demands are similar to their own. This company’s compensation system is based on a ________ compensation model.

A) balanced equity

B) labor market

C) free market

D) distributive justice

12) The distributive justice model is based on the idea that:

A) employees prefer keeping salary issues private.

B) employers pay what employees deserve to receive.

C) employees make input/output comparisons to their co-workers.

D) employers will never pay above-market wages unless external equity occurs.

13) You are trying to convince the management of Marcelle, Inc. to pay its employees the “going rate”, no more, no less. You are trying to:

A) reach external equity.

B) reach internal equity.

C) reduce Marcelle’s work force.

D) increase Marcelle’s work force.

14) According to your text, which of the following questions is LEAST relevant to developing an effective compensation plan?

A) Will compensation link pay with group performance?

B) Will the compensation plan be developed by HR managers?

C) Will compensation decisions be made by unit managers?

D) Will the compensation plan emphasize nonmonetary rewards?

15) A company using a labor market model holds the philosophy that:

A) the wage rate for any given job is set at the point where the supply of labor equals the demand for that labor in the marketplace.

B) internal equity is more important than external equity in a balanced labor market.

C) egalitarian pay policies are more effective than elitist policies when labor demand is high.

D) nonmonetary rewards are more effective motivators than monetary rewards.

16) Balancing equity is most likely difficult because:

A) EEOC regulations are extensive and complicated.

B) internal and external equity often oppose one another.

C) open pay employers strive primarily for internal equity.

D) managers prefer focusing on establishing external equity.

17) An emphasis on external equity is most important for:

A) large, global corporations.

B) established firms in highly stable markets.

C) newer, smaller firms in quickly changing markets.

D) privately owned firms in highly competitive industries.

18) Variable compensation systems work best:

A) with smaller, less well-established firms with younger employees.

B) in difficult economies with high rates of inflation.

C) when the job market is flooded with qualified workers.

D) in larger, established companies that need significant productivity improvement.

19) On average, ________ of a U.S. employee’s pay is variable.

A) 5%

B) 10%

C) 15%

D) 20%

20) According to your text, as employees’ base pay increases, their:

A) variable pay decreases.

B) overall compensation stabilizes.

C) nonmonetary compensation decreases.

D) overall compensation is more subject to risk.