Test Bank For
Compensation, 14th Edition by Barry Gerhart
Chapter 02 Stra
tegy: The Totality of Decisions
Multiple Choice Questions
1. A compensation system that focuses on competitor's la bor costs is most closely associated with a (n)
stra tegy.
A. innova tor
B. customer-focused
C. cost-cutter
D. differentiated
2. A compensation system using market-based pay is most likely to be part of a(n)Mstra tegy.
A. innova tor
B. cost-cutter
C. cost lea dership
D. customer-focused
3. Flexible-generic job descriptions would most likely be used with a (n) stra tegy.
A. innova tor
B. customer-focused
C. differentiated
D. cost-cutter
4. Mich Inc., a hardware store, has a rating system in place that ra tes employees on their friendliness,
usefulness, and product knowledge. Based onMthe ratings an employee receives, he orMshe gets an i
ncentive. The compensation stra tegy followed by Mich is most closely described as a:
A. customer-focused stra tegy.
B. cost-cutter stra tegy.
C. innova tor stra tegy.
D. differentiation stra tegy.
Hill Education. All rights reserved. NoMreproductionMorMdistribution without the prior written consent of McGraw-
,5. A compensation system focusing on system control a nd work specifica tions is most closely associate
d with a (n) stra tegy.
A. innova tor
B. customer-focused
C. cost-cutter
D. differentiated
6. AllMof the following EXCEPT a re compensation systems associated with a cost-cutter stra tegy.
A. focus on competitor's la bor costs
B. focus on system control and work specifica tions
C. increa se in variable pay
D. customerMsa tisfa ction incentives
7. In the formula predicting performance, the component most closely rela ted to compensation is .
A. A
B. M
C. O
D. C
8. Whole Foods' sha red-
fate philosophy of limiting executive sa laries to no more than 19 times the avera ge pay of full-
time employees is an example of which stra tegic pay decision?
A. External competitiveness
B. Employee contributions
C. Corporate responsibility
D. Internal a lignment
9. Comparisons on the forms of compensation used by other companies a re part of .
A. interna l a lignment
B. external competitiveness
C. employee contributions
D. corporate responsibility
,10. The second step of developing a total compensation stra tegy is to:
A. implement the stra tegy.
B. assess total compensation implica tions.
C. estimate the cost of the stra tegy.
D. map the stra tegy.
11. Which of the following is the correct order of the steps in formulating a total compensation stra tegy?
A. Assess the stra tegy, implement the stra tegy, map the stra tegy, and rea ssess the stra tegy.
B. Assess the stra tegy, map the stra tegy, implement the stra tegy, and rea ssess the stra tegy.
C. Map the stra tegy, implement the stra tegy, assess the stra tegy, and rea ssess the stra tegy.
D. Map the stra tegy, assess the stra tegy, implement the stra tegy, and rea ssess the stra tegy.
12. Based on the opinions of 10,000 U.S. workers, Hudson found that when given their ch
oice of unconventional benefits, most employees would select .
A. more supplementa l insura nce
B. more job training
C. a more flexible work schedule
D. more personal days and family lea ve
13. According to the Hudson survey,
is the single thing that would make 41 percent of the U.S. w
orkers happier.
A. more personal days
B. flexible work schedule
C. more money
D. better health insura nce
14. Which of the following sta tements rega rding a llowing employees a choice in their pay mix is NOT true?
A. Allowing employees their choice is difficult to manage
B. Allowing employees their choice is easy for competitor companies to imita te
C. Providing unlimited choices forMemployees to choose from is difficult to design
D. Providing too many choices can confuse people
15. Union preferences a re a major factor in a total compensation stra tegy.
A. implementing
B. rea ssessing
C. assessing
D. mapping
16. In mapping a totalMcompensation stra tegy, the question of how important compensation is in the ove
ra ll HR stra tegy is part of .
, A. objectives
B. interna l a lignment
C. external competitiveness
D. corporate responsibility
17. refers to openness and communication about pay.
A. Transparency
B. Ownership
C. Prominence
D. Centrality
18. is the measure of how importa nt total compensation is in the overall HR stra tegy.
A. Competitiveness
B. Prominence
C. Centrality
D. Ownership
19. The role non-HR managers play in making pay decisions is called .
A. ownership
B. transparency
C. technology
D. decentralized decision-making
Compensation, 14th Edition by Barry Gerhart
Chapter 02 Stra
tegy: The Totality of Decisions
Multiple Choice Questions
1. A compensation system that focuses on competitor's la bor costs is most closely associated with a (n)
stra tegy.
A. innova tor
B. customer-focused
C. cost-cutter
D. differentiated
2. A compensation system using market-based pay is most likely to be part of a(n)Mstra tegy.
A. innova tor
B. cost-cutter
C. cost lea dership
D. customer-focused
3. Flexible-generic job descriptions would most likely be used with a (n) stra tegy.
A. innova tor
B. customer-focused
C. differentiated
D. cost-cutter
4. Mich Inc., a hardware store, has a rating system in place that ra tes employees on their friendliness,
usefulness, and product knowledge. Based onMthe ratings an employee receives, he orMshe gets an i
ncentive. The compensation stra tegy followed by Mich is most closely described as a:
A. customer-focused stra tegy.
B. cost-cutter stra tegy.
C. innova tor stra tegy.
D. differentiation stra tegy.
Hill Education. All rights reserved. NoMreproductionMorMdistribution without the prior written consent of McGraw-
,5. A compensation system focusing on system control a nd work specifica tions is most closely associate
d with a (n) stra tegy.
A. innova tor
B. customer-focused
C. cost-cutter
D. differentiated
6. AllMof the following EXCEPT a re compensation systems associated with a cost-cutter stra tegy.
A. focus on competitor's la bor costs
B. focus on system control and work specifica tions
C. increa se in variable pay
D. customerMsa tisfa ction incentives
7. In the formula predicting performance, the component most closely rela ted to compensation is .
A. A
B. M
C. O
D. C
8. Whole Foods' sha red-
fate philosophy of limiting executive sa laries to no more than 19 times the avera ge pay of full-
time employees is an example of which stra tegic pay decision?
A. External competitiveness
B. Employee contributions
C. Corporate responsibility
D. Internal a lignment
9. Comparisons on the forms of compensation used by other companies a re part of .
A. interna l a lignment
B. external competitiveness
C. employee contributions
D. corporate responsibility
,10. The second step of developing a total compensation stra tegy is to:
A. implement the stra tegy.
B. assess total compensation implica tions.
C. estimate the cost of the stra tegy.
D. map the stra tegy.
11. Which of the following is the correct order of the steps in formulating a total compensation stra tegy?
A. Assess the stra tegy, implement the stra tegy, map the stra tegy, and rea ssess the stra tegy.
B. Assess the stra tegy, map the stra tegy, implement the stra tegy, and rea ssess the stra tegy.
C. Map the stra tegy, implement the stra tegy, assess the stra tegy, and rea ssess the stra tegy.
D. Map the stra tegy, assess the stra tegy, implement the stra tegy, and rea ssess the stra tegy.
12. Based on the opinions of 10,000 U.S. workers, Hudson found that when given their ch
oice of unconventional benefits, most employees would select .
A. more supplementa l insura nce
B. more job training
C. a more flexible work schedule
D. more personal days and family lea ve
13. According to the Hudson survey,
is the single thing that would make 41 percent of the U.S. w
orkers happier.
A. more personal days
B. flexible work schedule
C. more money
D. better health insura nce
14. Which of the following sta tements rega rding a llowing employees a choice in their pay mix is NOT true?
A. Allowing employees their choice is difficult to manage
B. Allowing employees their choice is easy for competitor companies to imita te
C. Providing unlimited choices forMemployees to choose from is difficult to design
D. Providing too many choices can confuse people
15. Union preferences a re a major factor in a total compensation stra tegy.
A. implementing
B. rea ssessing
C. assessing
D. mapping
16. In mapping a totalMcompensation stra tegy, the question of how important compensation is in the ove
ra ll HR stra tegy is part of .
, A. objectives
B. interna l a lignment
C. external competitiveness
D. corporate responsibility
17. refers to openness and communication about pay.
A. Transparency
B. Ownership
C. Prominence
D. Centrality
18. is the measure of how importa nt total compensation is in the overall HR stra tegy.
A. Competitiveness
B. Prominence
C. Centrality
D. Ownership
19. The role non-HR managers play in making pay decisions is called .
A. ownership
B. transparency
C. technology
D. decentralized decision-making
