48.
A study of IBM showed that its long-standing policy of no layoffs was the major cause of its strong profits.
FALSE
Accessibility: Keyboard Navigation
Difficulty: 1 Easy
Topic: Caveat Emptor-Be an Informed Consumer
49.
Causality is one of the most difficult questions to answer and continues to be an important and sometimes perplexing problem for researchers.
TRUE
Accessibility: Keyboard Navigation
Difficulty: 1 Easy
Topic: Caveat Emptor-Be an Informed Consumer
50.
The R2, which is an output from a regression analysis, is different from correlation in that it tells us what percentage of the variation is accounted for by the variables we are using to predict or explain.
FALSE
Accessibility: Keyboard Navigation
Difficulty: 1 Easy
Topic: Caveat Emptor-Be an Informed Consumer
Short Answer Questions
51.
Describe the perspective of stockholders on compensation.
Stockholders are interested in how employees are paid. Using stock to pay employees creates a sense of ownership that improves performance and increases stockholder wealth. However, granting employees too much ownership dilutes stockholder wealth.
Stockholders have a particular interest in executive pay. The interests of executives are aligned with those of shareholders who hope that company performance will be higher.
Difficulty: 2 Medium
Topic: Compensation: Definition, Please
52.
What are the different ways in which pay can influence employee motivation and behavior?
Pay can influence employee motivation and behavior in two ways:
i. Pay can affect the motivational intensity, direction, and persistence of current employees. The degree to which pay influences individual and aggregate motivation among the employees at any point in time is referred to as an incentive effect.
ii. Pay can also have an indirect, but important influence, via, a sorting effect. Different types of pay strategies cause different types of people to apply to and stay with an organization.
Difficulty: 2 Medium
Topic: Compensation: Definition, Please
53.
Describe the various returns received from work.
Returns are categorized into two types:
i. Relational returns are psychological and include learning opportunities, status, challenging work, and other psychological aspects.
ii. Total compensations are transactional and include:
a. Pay received directly as cash through base pay, merit, incentives, cost-of-living adjustments, etc.
b. Pay received indirectly as benefits through pensions, medical insurance, programs to help balance work and life demands, bright colored uniform, etc.
Difficulty: 2 Medium
Topic: Forms of Pay
54.
List the basic elements of the pay model.
The pay model contains three basic building blocks:
i. the compensation objective,
ii. the policies that form the foundation of the compensation system, and
iii. the techniques that make up the compensation system.
Difficulty: 1 Easy
Topic: A Pay Model
55.
Explain the basic compensation objectives of pay systems.
The basic objectives include efficiency, fairness, ethics, and compliance with laws and regulations.
i. Efficiency can be stated more specifically: (1) improving performance, increasing quality, delighting customers and stockholders, and (2) controlling labor costs.
ii. The fairness objective calls for fair treatment for all employees by recognizing both employee contributions (e.g., higher pay for greater performance, experience, or training) and employee needs (e.g., a fair wage as well as fair procedures).
iii. Ethics means the organization cares about how its results are achieved. Because it is so important, it is inevitable that managing pay sometimes creates ethical dilemmas.
iv. Compliance as a pay objective means conforming to federal and state compensation laws and regulations. If laws change, pay systems may need to change, too, to ensure continued compliance. As companies go global, they must comply with the laws of all the countries in which they operate.
Difficulty: 2 Medium
Topic: A Pay Model