Ch01
Student: ___________________________________________________________________________
1. Pay for executives is supposed to be tied to the:
A. the company's financial performance.
B. the company's reputation.
C. the financial needs of the employee.
D. the company's growth potential.
E. the cost of living index.
2. All forms of financial returns and tangible services and benefits that employees receive as part of an
employment relationship are known as _____.
A. compensation
B. total rewards
C. base pay
D. relational returns
E. merit pay
3. _____ refer to one-time payments for meeting previously established performance objectives.
A. Cost-of-living adjustments
B. Incentives
C. Merit increments
D. Relational returns
E. Allowances
4. Which of the following is NOT part of an employee's total compensation?
A. Paid vacation
B. Health insurance
C. Promotions
D. Cost-of-living adjustments
E. Merit pay
5. A merit increase is best described as:
A. an increment to base pay that recognizes past work behaviour.
B. psychological returns employees believe they receive in the workplace.
C. a one-time reward for past performance that does not increase base pay.
D. percentage increment to base pay provided to all employees regardless of performance.
E. compensation given to provide for items that are in short supply.
6. Which of the following best describes relational returns?
A. All rewards received by employees, including cash compensation, benefits, and psychological returns
B. All forms of financial returns and tangible services that employees receive as part of an employment
C. Programs that help employees better integrate their work and life responsibilities
D. One-time payments for meeting previously established performance objectives
E. The psychological returns people believe they receive in the workplace
7. Which of the following refers to pay calculated at an hourly rate?
A. Salary
B. Wage
C. Merit increase
D. Total reward
E. Compensation
,8. _____ include psychological aspects of work such as recognition and status, challenging work, and
learning opportunities.
A. Cognitive returns
B. Relational returns
C. Compensational returns
D. Subjective returns
E. Qualitative returns
9. Which of the following best describes cost-of-living adjustment?
A. One-time payments for meeting previously established performance objectives
B. Increment to base pay in recognition of past work behaviour
C. Percentage increment to base pay provided to all employees regardless of performance
D. Compensation to provide for items that are in short supply
E. Consolidated pay which is not subject to any change regardless of the cost-of-living
10. An incentive payment:
A. is part of an employee's base wage.
B. is non-taxable and therefore highly preferred by employees.
C. refers to psychological returns employees believe they receive in the workplace.
D. ties pay increases directly to an employee's performance.
E. is made to provide for items that are in short supply.
11. _____ includes cash compensation, benefits, and relational returns.
A. Total compensation
B. Total cash benefit
C. Total base pay
D. Total reward
E. Total incentive
12. Total compensation does NOT include:
A. base pay.
B. incentives.
C. relational returns.
D. insurance benefits.
E. allowances
13. Which of the following pay forms is cash compensation?
A. Financial planning
B. Insurance
C. Pensions
D. Allowances
E. Stock options
14. Which of the following best describes allowances?
A. One-time payments for meeting previously established performance objectives
B. Percentage increment to base pay provided to all employees regardless of performance
C. Programs that help employees better integrate their work and life responsibilities
D. Compensation to provide for items that are in short supply
E. Pay calculated at an annual or monthly rate
15. Which of the following is a benefit component of total compensation?
A. Incentives
B. Cost-of-living adjustment
C. Allowances
D. Merit increase
E. Relational returns
,16. _____ refers to the compensation given to purchase items that are in short supply.
A. Variable pay
B. Incentive
C. Cost-of-living adjustment
D. Allowance
E. Wage
17. Which of the following is a form of relational return?
A. Life Insurance
B. Allowances
C. Recognition and status
D. Monitory incentives
E. Benefits
18. Which of the following statements is true about the forms of pay?
A. Relational returns are more transactional than total compensation.
B Unlike relational returns, total compensation typically refers to the psychological returns people believe
. they receive in the workplace.
C. Base pay, incentives, and cost-of-living adjustments are the typical relational returns.
DMerit increases refer to the same percentage increase that everyone receives regardless of performance
. in order to maintain pay levels relative to increases in the cost of living.
E. Base pay tends to reflect the value of the work or skills and generally ignores differences attributable to
individual employees.
19. Which of the following is a work/life program?
A. Stock options
B. Health insurance
C. Telecommuting
D. Employment Insurance
E. Cost-of-living adjustment
20. Which of the following is true of the present value perspective?
A. It considers today's initial offers to employees.
B. It considers future bonuses, merit increases, and promotions.
C. It establishes a limit on the amount spent on benefits.
D. It creates an external competitiveness through future promises.
E. It assesses the present value of a company to offer stock options to employees.
21. _____ as a pay objective involves abiding by various federal, provincial, and territorial compensation
laws and regulations.
A. Fairness
B. Efficiency
C. Alignment
D. Compliance
E. Competitiveness
22. Internal alignment may be achieved by:
A. creation of cross-functional departments.
B. matching competitors' wage rates.
C. paying below-market base wages but offering training and rapid promotion.
D. compensating employees at above-market rates.
E. comparing pay between jobs or skill levels inside a single organization.
23. Which of the following is true of internal alignment?
A. It does not influence the company's compensation objectives.
B. It compares pay between jobs inside a single organization.
C. It uses incentive programs as a technique to implement the policy.
D. It places greater emphasis on performance than the other policies.
E. It relates to comparison of compensation with that of competitors.
, 24. External competitiveness refers to:
A. competitiveness between different departments in a company.
B. the relative importance of jobs within a company.
C. comparison of product prices with that of competitors.
D. comparison of compensation with that of competitors.
E. inflationary pressure caused by external market factors.
25. Which of the following pay policies lays emphasis on performance?
A. Employee contributions
B. Administration of the pay system
C. External competitiveness
D. Internal alignment
E. Management
26. When executive pay is excessive relative to company performance, profits are diverted away from
stockholders to the executives.
True False
27. Cost-of-living adjustment refers to percentage increment to base pay provided to employees based on
their performance.
True False
28. Total rewards refer to the psychological returns employees believe they receive in the workplace.
True False
29. Merit pay is a one-time payment for meeting previously established performance objectives.
True False
30. Total compensation includes psychological aspects of work such as recognition and status, challenging
work, and learning opportunities.
True False
31. Base wage is the cash compensation an employer pays for the work performed.
True False
32. Total compensation only includes salary and incentives; not benefits.
True False
33. Incentives may be long-term or short-term.
True False
34. Making contributions to Workers' Compensation is at discretion of the employer.
True False
35. Allowances are rewards given to employees based on their performance.
True False
36. Procedural fairness is the fairness of the process used to make a decision.
True False
37. Pay objectives provide standards for evaluating the effectiveness of the pay system.
True False
38. External competitiveness refers to pay comparisons between different skill levels in an organization.
True False
39. Pay relationships within the organization affect employee decisions to stay with the organization.
True False
40. While external competitiveness directly affects efficiency, it does not affect fairness.
True False
Student: ___________________________________________________________________________
1. Pay for executives is supposed to be tied to the:
A. the company's financial performance.
B. the company's reputation.
C. the financial needs of the employee.
D. the company's growth potential.
E. the cost of living index.
2. All forms of financial returns and tangible services and benefits that employees receive as part of an
employment relationship are known as _____.
A. compensation
B. total rewards
C. base pay
D. relational returns
E. merit pay
3. _____ refer to one-time payments for meeting previously established performance objectives.
A. Cost-of-living adjustments
B. Incentives
C. Merit increments
D. Relational returns
E. Allowances
4. Which of the following is NOT part of an employee's total compensation?
A. Paid vacation
B. Health insurance
C. Promotions
D. Cost-of-living adjustments
E. Merit pay
5. A merit increase is best described as:
A. an increment to base pay that recognizes past work behaviour.
B. psychological returns employees believe they receive in the workplace.
C. a one-time reward for past performance that does not increase base pay.
D. percentage increment to base pay provided to all employees regardless of performance.
E. compensation given to provide for items that are in short supply.
6. Which of the following best describes relational returns?
A. All rewards received by employees, including cash compensation, benefits, and psychological returns
B. All forms of financial returns and tangible services that employees receive as part of an employment
C. Programs that help employees better integrate their work and life responsibilities
D. One-time payments for meeting previously established performance objectives
E. The psychological returns people believe they receive in the workplace
7. Which of the following refers to pay calculated at an hourly rate?
A. Salary
B. Wage
C. Merit increase
D. Total reward
E. Compensation
,8. _____ include psychological aspects of work such as recognition and status, challenging work, and
learning opportunities.
A. Cognitive returns
B. Relational returns
C. Compensational returns
D. Subjective returns
E. Qualitative returns
9. Which of the following best describes cost-of-living adjustment?
A. One-time payments for meeting previously established performance objectives
B. Increment to base pay in recognition of past work behaviour
C. Percentage increment to base pay provided to all employees regardless of performance
D. Compensation to provide for items that are in short supply
E. Consolidated pay which is not subject to any change regardless of the cost-of-living
10. An incentive payment:
A. is part of an employee's base wage.
B. is non-taxable and therefore highly preferred by employees.
C. refers to psychological returns employees believe they receive in the workplace.
D. ties pay increases directly to an employee's performance.
E. is made to provide for items that are in short supply.
11. _____ includes cash compensation, benefits, and relational returns.
A. Total compensation
B. Total cash benefit
C. Total base pay
D. Total reward
E. Total incentive
12. Total compensation does NOT include:
A. base pay.
B. incentives.
C. relational returns.
D. insurance benefits.
E. allowances
13. Which of the following pay forms is cash compensation?
A. Financial planning
B. Insurance
C. Pensions
D. Allowances
E. Stock options
14. Which of the following best describes allowances?
A. One-time payments for meeting previously established performance objectives
B. Percentage increment to base pay provided to all employees regardless of performance
C. Programs that help employees better integrate their work and life responsibilities
D. Compensation to provide for items that are in short supply
E. Pay calculated at an annual or monthly rate
15. Which of the following is a benefit component of total compensation?
A. Incentives
B. Cost-of-living adjustment
C. Allowances
D. Merit increase
E. Relational returns
,16. _____ refers to the compensation given to purchase items that are in short supply.
A. Variable pay
B. Incentive
C. Cost-of-living adjustment
D. Allowance
E. Wage
17. Which of the following is a form of relational return?
A. Life Insurance
B. Allowances
C. Recognition and status
D. Monitory incentives
E. Benefits
18. Which of the following statements is true about the forms of pay?
A. Relational returns are more transactional than total compensation.
B Unlike relational returns, total compensation typically refers to the psychological returns people believe
. they receive in the workplace.
C. Base pay, incentives, and cost-of-living adjustments are the typical relational returns.
DMerit increases refer to the same percentage increase that everyone receives regardless of performance
. in order to maintain pay levels relative to increases in the cost of living.
E. Base pay tends to reflect the value of the work or skills and generally ignores differences attributable to
individual employees.
19. Which of the following is a work/life program?
A. Stock options
B. Health insurance
C. Telecommuting
D. Employment Insurance
E. Cost-of-living adjustment
20. Which of the following is true of the present value perspective?
A. It considers today's initial offers to employees.
B. It considers future bonuses, merit increases, and promotions.
C. It establishes a limit on the amount spent on benefits.
D. It creates an external competitiveness through future promises.
E. It assesses the present value of a company to offer stock options to employees.
21. _____ as a pay objective involves abiding by various federal, provincial, and territorial compensation
laws and regulations.
A. Fairness
B. Efficiency
C. Alignment
D. Compliance
E. Competitiveness
22. Internal alignment may be achieved by:
A. creation of cross-functional departments.
B. matching competitors' wage rates.
C. paying below-market base wages but offering training and rapid promotion.
D. compensating employees at above-market rates.
E. comparing pay between jobs or skill levels inside a single organization.
23. Which of the following is true of internal alignment?
A. It does not influence the company's compensation objectives.
B. It compares pay between jobs inside a single organization.
C. It uses incentive programs as a technique to implement the policy.
D. It places greater emphasis on performance than the other policies.
E. It relates to comparison of compensation with that of competitors.
, 24. External competitiveness refers to:
A. competitiveness between different departments in a company.
B. the relative importance of jobs within a company.
C. comparison of product prices with that of competitors.
D. comparison of compensation with that of competitors.
E. inflationary pressure caused by external market factors.
25. Which of the following pay policies lays emphasis on performance?
A. Employee contributions
B. Administration of the pay system
C. External competitiveness
D. Internal alignment
E. Management
26. When executive pay is excessive relative to company performance, profits are diverted away from
stockholders to the executives.
True False
27. Cost-of-living adjustment refers to percentage increment to base pay provided to employees based on
their performance.
True False
28. Total rewards refer to the psychological returns employees believe they receive in the workplace.
True False
29. Merit pay is a one-time payment for meeting previously established performance objectives.
True False
30. Total compensation includes psychological aspects of work such as recognition and status, challenging
work, and learning opportunities.
True False
31. Base wage is the cash compensation an employer pays for the work performed.
True False
32. Total compensation only includes salary and incentives; not benefits.
True False
33. Incentives may be long-term or short-term.
True False
34. Making contributions to Workers' Compensation is at discretion of the employer.
True False
35. Allowances are rewards given to employees based on their performance.
True False
36. Procedural fairness is the fairness of the process used to make a decision.
True False
37. Pay objectives provide standards for evaluating the effectiveness of the pay system.
True False
38. External competitiveness refers to pay comparisons between different skill levels in an organization.
True False
39. Pay relationships within the organization affect employee decisions to stay with the organization.
True False
40. While external competitiveness directly affects efficiency, it does not affect fairness.
True False
