1. In the opening case in
chapter 10, an experienced computer programmer complains that new hires start
at Sigma, Inc. at 15% more than his salary.
Dr. Smith’s answer reveals that Sigma’s compensation system is built on
a(n) ______ compensation model.
a) balanced equity
b) distributive justice
c) labor market
d) free market
e)
egalitarian

2. In
the opening case in chapter 10, a secretary complains that janitors make more
money than she does. Her complaints and
Dr. Smith’s response show that Sigma’s compensation system:
a) may lack internal equity.
b) uses variable pay to induce performance.
c) uses individual-based pay.
d) stresses non-monetary rewards.
e)
is a decentralized pay system.

3. The
compensation system of a company:
a)
has no bearing on the labor
costs of the business.
b)
relates exclusively to
attracting employees.
c)
has a direct relationship on
labor costs and whether employee costs contribute or detract from business
profitability.
d)
is free from all government
regulation.
e)
all of the above

4. Compensation
consists of a number of elements. An employee’s base compensation:
a) is that portion of an employee’s pay mix designed to reward good
performance.
b) consists of a wide variety of programs, such as health insurance, time
off, etc.
c) is his/her fixed pay, and is generally the largest part of his/her
total compensation package.
d) is made up of the special “extras” or perks that are allocated,
based on status within the company.
e) consists of the bonuses or profit sharing that underpin the
employee’s total compensation.

5. Employees’ total
compensation consists of which of the following?
a)
Base compensation, personnel
costs, payroll
b)
Payroll, base compensation,
indirect compensation
c)
Benefits, pay incentives,
personnel costs
d)
Base compensation, pay
incentives, indirect compensation
e)
Payroll, pay incentives, base
compensatio

6. Perquisites,
also called “perks”:
a)
are a special type of benefits,
generally reserved for upper-level managers.
b)
are a special type of pay
incentive, generally reserved for upper-level managers.
c)
make up 60% of employees’
total compensation.
d)
is another name for indirect
compensation that includes health benefits, vacation and unemployment
compensation.
e)
make up 30% of employees’
total compensation.

7. Indirect
compensation in a pay mix consists of:
a) the salary or hourly wage the employee receives on a regular
basis.
b) the variety of programs, such as health
insurance, time off, etc., the employee receives.
c) the package of special perks an employee receives based on his/her
status in the company.
d) that part of an employee’s pay designed to motivate good
performance.
e) incentives that may or may not be paid to an employee, such as
bonuses.

8. Employee earnings:
a)
correlate directly with
employee job satisfaction.
b)
are the most important factor
in whether a job candidate takes a job or not.
c)
don’t affect feelings of self
worth.
d)
are relatively easy to manage
and take little consideration.
e)
indicate prestige, power, and
employees’ self worth.

9. In
order for a compensation system to work well, it must:
a) enable the firm to achieve its objectives.
b)
ensure low employee turnover.
c) follow an egalitarian strategy.
d)
be developed according to the
individual business’ environment and characteristics.
e)
a and d

10. Cornilia is concerned that
her roommate, who works for a different company, receives about 25% more pay
and better benefits than Cornilia does for a very similar job. Cornilia’s
concern reflects the compensation issue of:
a) job versus individual pay.
b) external equity.
c) open versus secret pay administration.
d) fixed versus variable pay.
e)
a and d