Q&A Hero

Q: Advocates of competency-based pay assert that the system encourages employees to develop the knowledge, skills, and behaviors a firm needs to achieve its strategic goals.

Q: The goal of the economic order quantity (EOQ) model is to maximize the total costs that are categorized as carrying costs and ordering costs.

Q: Most organizations use a market-pricing approach when determining compensation for professional employees such as engineers and scientists.

Q: In the economic order quantity (EOQ) model, one of the costs that gets considered for analysis is the carrying costs of tying up money with inventory.

Q: Job evaluations are used to determine the pay scale of all employees in an organization from hourly workers to the CEO.

Q: Using a fixed-point reordering system, a business might order new inventory when it is down to about one-third of its maximum stock.

Q: If a job evaluation committee uses the ranking method, then the pay grade consists of all jobs that fall within two or three ranks.

Q: A queuing theory analysis for bank teller windows comes up with a value of 0.10 for P, indicating that customers are likely to wait about 10 minutes for each transaction.

Q: An advantage of the job classification method is that the objective nature of the system makes it easy to write the class and grade descriptions.

Q: Another term for queuing theory is "waiting line" theory.

Q: The Equal Pay Act focuses on three compensable factorsknow-how, problem solving, and accountability.

Q: Production data for Streaks is shown. Using linear programming, if the plant makes 100 pairs of running shoes and 100 pairs of soccer shoes, it ends up with $3600 in profit. Monthly Product Running Soccer Capacity (Hours) Design 5 3 750 Manufacture 1.5 1.5 400 Profit per unit $20 $16

Q: Salary surveys are used by firms to collect data on employee benefits as well as wage rates for the purpose of pricing jobs.

Q: Production data for Streaks is shown. Using linear programming, the maximum number of running shoes that the plant can make is 250. Monthly Product Running Soccer Capacity (Hours) Design 5 3 750 Manufacture 1.5 1.5 400 Profit per unit $20 $16

Q: Production data for Streaks is shown. Using linear programming, the maximum number of soccer shoes that the plant can make is 250. Monthly Product Running Soccer Capacity (Hours) Design 5 3 750 Manufacture 1.5 1.5 400 Profit per unit $20 $16

Q: Studies indicate that paying employees too little reduces morale, while overpaying people improves morale.

Q: Production data for Streaks is shown. Using linear programming, if running shoes are represented by R and soccer shoes by S, 5R + 3S < 750 is the correct constraint equation for design. Monthly Product Running Soccer Capacity (Hours) Design 5 3 750 Manufacture 1.5 1.5 400 Profit per unit $20 $16

Q: External equity refers to how fair the job's pay rate is, when compared to other jobs within the same company.

Q: Production data is shown for the number of hours required per unit for the Running and Soccer versions of Streaks, custom made athletic shoes. Using linear programming, if running shoes are represented by R and soccer shoes by S, the expression $16R + $20S is equal to the maximum profit that can be made. Monthly Product Running Soccer Capacity (Hours) Design 5 3 750 Manufacture 1.5 1.5 300 Profit per unit $20 $16

Q: A union is entitled to know the salary of each employee it is representing.

Q: A company is worried about meeting its interest expenses, so it should pay close attention to its times interest earned.

Q: Wage rate has been the main issue negotiated by unions in collective bargaining.

Q: Return on investment measures the ratio of total profits to total assets.

Q: According to the court system, the test that distinguishes an independent contractor from an employee is whether or not the firm provides the worker with health insurance benefits.

Q: An organization with a high leverage ratio has usually been overly cautious and conservative in its borrowing.

Q: The provision of the Family and Medical Leave Act that entitles employees to take up to 12 weeks of unpaid, job-protected leave for the birth of a child only applies to women.

Q: A current ratio of 1.5 to 1 for an organization suggests that the organization will not be able to meet its short-term debt obligations.

Q: While laws exist to protect against discrimination in compensation based on gender and age, no law protects against such discrimination against persons with disabilities.

Q: Liquidity is a measure of an organization's ability to access cash to meet its debt obligations.

Q: Portability rights refer to an employee's ability to transfer his or her vested rights from one organization to another.

Q: The Equal Pay Act states that employees of one sex may not be paid wages at a rate lower than that paid to employees of the opposite sex for doing roughly equivalent work.

Q: Reducing the value of VC in a break-even analysis means that the business needs to sell fewer units to turn a profit.

Q: According to the FLSA, agricultural employees, live-in maids, and taxi drivers are always eligible for overtime pay.

Q: The greater the ratio of TFC to (P - VC) is means that the business needs to sell fewer units to make a profit.

Q: Because the minimum wage is set by the Fair Labor Standards Act, there is no variation from state to state in the minimum wage paid to hourly workers.

Q: The break-even point is computed by the formula BE = [TFC/(P - VC)].

Q: A manager uses break-even analysis to find out how many units of a product he needs to sell to make a profit of zero.

Q: Employers prefer to give time off in lieu of overtime pay because they only have to grant the same number of hours off as the employee worked overtime, while overtime pay is calculated at 150% of normal pay.

Q: According to the Davis-Bacon Act, when employees work more than 40 hours per week, employers must pay overtime at a rate of at least one-and-a-half times the normal pay for any hours worked over 40 in a workweek.

Q: The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. The shop is likely to make $105,000, the sum of both projections.

Q: Performance-based pay is more popular than time-based pay among most employers in the U.S.

Q: The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. Overall, the shop is expected to make $32,000.

Q: Direct financial payments may be based on increments of time and on performance.

Q: The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. If the economy is weak, the shop is likely to make 60 percent of a $25,000 profit, or $15,000.

Q: The decision tree shows the profit outcomes for a sandwich shop in a strong and a weak economy. If the economy is strong, the shop is likely to make an $80,000 profit.

Q: Indirect payments that contribute to an employee's compensation include variable pay like commissions and bonuses.

Q: Financial benefits like employer-paid insurance and vacations are not a part of employee compensation.

Q: Decision trees are unreliable for making pricing decisions.

Q: This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. A minimax Bigg manager choosing S3 would have a greatest possible regret of 2. CA1 CA2 CA3 S1 5 5 3 S2 9 6 1 S3 10 2 5

Q: Which of the following is LEAST likely a benefit of using competency based pay? A) supporting a firm's talent management process B) developing an efficient and legally defensible wage curve C) aiding in the implementation of a high-performance work system D) encouraging the development of skills needed for a firm's strategic goals

Q: Which of the following questions is most relevant to developing a market competitive pay system? A) What is the ranking of each job? B) What is the relevant labor market? C) What percentage of workers are contingent? D) What are the local and federal pay regulations?

Q: This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. The maximum regrets for this table are S1 = 5, S2 = 9, S3 = 12. CA1 CA2 CA3 S1 5 5 3 S2 9 6 1 S3 10 2 5

Q: According to many experts, which of the following would most likely reduce the wage gap between men and women? A) education B) union intervention C) federal legislation D) competency-based pay

Q: This regret matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. A minimax Bigg manager would choose S2 because it has the smallest maximum regret of 1. CA1 CA2 CA3 S1 5 5 3 S2 9 6 1 S3 10 2 5

Q: Which of the following job evaluation methods is associated with almost every comparable worth lawsuit? A) job classification method B) job grading method C) ranking method D) point method

Q: This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S3 maximum regret is 1. CA1 CA2 CA3 S1 8 5 12 S2 9 14 3 S3 16 13 20

Q: Which of the following terms refers to the requirement to pay men and women equal wages for jobs of roughly equivalent value to the employer? A) strategic compensation B) comparable worth C) broad banding D) job grading

Q: This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S2 maximum regret is 9. CA1 CA2 CA3 S1 8 5 12 S2 9 14 3 S3 16 13 20

Q: ________ means collapsing salary grades and ranges into just a few wide levels, each of which contains a relatively wide range of jobs and salary levels. A) Comparable worth B) Job evaluation C) Broad banding D) Job grading

Q: This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S1 maximum regret for CA2 is 8. CA1 CA2 CA3 S1 8 5 12 S2 9 14 3 S3 16 13 20

Q: Homelife, a national chain of high-end furniture stores, employs nearly 800 workers. In the past few years, the company's market share has dropped significantly, and employee turnover has increased. Upper management is considering the implementation of a new compensation policy in its efforts to turn the company around. Historically, the company has paid all employees similarly with some variation for seniority but no distinction between high and low performers. Which of the following, if true, best supports the decision by Homelife executives to implement competency-based pay? A) Homelife will be using the comparable worth method of determining pay to avoid legal problems. B) Most Homelife managers are men, but executives hope to increase the number of minority women working for the company. C) Homelife plans to organize employees into teams, provide regular training, and frequently assess workers' skills and knowledge. D) In an effort to save money, Homelife will be reducing the employee training budget over the next three years.

Q: This payoff matrix gives values for strategies S1, S2, and S3 for the Bigg Company and competitive strategies CA1, CA2, and CA3 for the Large Company. From Bigg's point of view, the S1 maximum regret for CA1 is 8. CA1 CA2 CA3 S1 8 5 12 S2 9 14 3 S3 16 13 20

Q: Regret is computed by subtracting the value of a possible strategy from the greatest value in the entire matrix.

Q: A company using competency-based pay compensates employees for all of the following EXCEPT ________. A) behaviors B) job title C) knowledge D) skills

Q: With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $8 million. Only a pessimistic manager would choose S1.

Q: What is the primary purpose of offering an executive stock options in a compensation package? A) providing the executive with guaranteed bonuses B) encouraging the executive to increase the firm's value C) enabling the firm to decrease the executive's base pay D) offering the executive long-term retirement security

Q: With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $8 million. S2 might be the choice of a pessimistic manager.

Q: Richard was recently offered a position as vice president of marketing at a national retail chain. As a top executive at the firm, Richard will most likely be compensated with all of the following EXCEPT ________. A) stock options B) pension plans C) sales commissions D) supplemental life insurance

Q: Which of the following terms refers to a series of steps or levels within a pay grade? A) pay metric B) pay range C) wage class D) wage curve

Q: With choice S1, a manager sees gains of $10 million and $6 million. With choice S2, a manager sees gains of $12 million and $3 million. The manager chooses S2, so she must be optimistic.

Q: Phil, the owner of Eastline Electronics, recently learned that the current rate being paid for the position of engineering assistant at his firm falls significantly below the wage line. Which of the following steps should Phil most likely take to correct this problem? A) enact a pay freeze for that job B) assess a decrease in wages C) pay a one-time bonus D) provide a pay raise

Q: A pessimistic manager will typically follow a minimin choice.

Q: An optimistic manager will typically follow a maximax choice.

Q: The purpose of the wage curve is to ________. A) show the relationship between the value of the job and the current average pay rates B) equate jobs of similar difficulty or importance as established by job evaluation C) choose benchmark jobs within each pay grade D) cluster jobs into logical groupings

Q: Deming's total quality management system largely ignored the needs of customers.

Q: Which of the following shows the relationship between the value of the job and the average pay for this job? A) benchmark B) pay grade C) scatter plot D) wage curve

Q: A ________ is comprised of jobs of approximately equal difficulty or importance as established by job evaluation. A) wage curve B) benchmark C) pay grade D) class

Q: W. Edwards Deming's ideas about quality and management were first embraced by Japanese companies.

Q: What are the two primary components of computer-aided job evaluations? A) compensable factors and benchmark jobs B) grade definitions and factor comparisons C) structured questionnaires and statistical models D) structured questionnaires and grade definitions

Q: The "Whiz Kids" used statistical methods to improve decision making at the Ford Motor Company in the mid-1940s.