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Direct Financial Compensation 2
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Direct Financial Compensation 2
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25 Questions

1. The labor market, the job, the employee, and the organization are the primary factors that influence job pricing and compensation.
2. External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms.
3. The classification method of job evaluation is the simplest job evaluation method and requires comparing a job description with a class description.
4. Merit payments are relatively small gifts given to employees for outstanding work or effort during a brief period of time.
5. Firms typically prefer single pay rates rather than pay ranges because of the simplicity and preciseness the system offers.
6. The Scanlon plan provides a financial reward to employees for savings in labor costs that result from their suggestions and serves as a type of participative management program.
7. According to equity theory, people are motivated by financial compensation and prestige.
8. Clawback contract provisions are required for TARP-covered institutions to recover any incentive compensation paid to top executives that was based on inaccurate financial data.
9. A benefit policy provides general guidelines for making compensation decisions.
10. Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and health benefits.
11. Bonuses and performance-based pay have become popular for executive compensation packages because the U.S. tax laws do not allow firms to deduct more than $500,000 of an executive's salary.
12. Nonexempt employees are categorized as executive, administrative, professional employees, and outside salespersons.
13. Indirect financial compensation consists of all financial rewards that are not included in direct compensation, such as commissions and spot bonuses.
14. Compensation is the total of all rewards provided to employees in return for their services.
15. Employee equity exists when employees receive pay according to the relative value of their jobs within the same organization.
16. Pay leaders usually attract more highly qualified applicants than lower paying firms in the same labor market.
17. In the ranking method of job evaluation, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth.
18. During the recession of 2008/2010, salary compression was not a problem for HR managers because of pay cuts and layoffs.
19. Job pricing is represented by a wage curve that represents a smooth progression between pay grades.
20. Nonfinancial compensation consists of the satisfaction that a person receives from the psychological environment in which the person works.
21. Cost-of-living allowances are becoming increasingly popular in labor union contracts.
22. Piecework is an incentive pay plan where employees are paid for each unit they produce.
23. Gainsharing plans are intended to link employees to organizational productivity by focusing on cost-efficiency.
24. One of the primary purposes of the Fair Labor Standards Act of 1938 was to eliminate low wages and excessive working hours.
25. Profit sharing is a compensation plan that helps HR managers with recruiting and retaining employees.

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