Chapter 1: Effective Compensation System Overview Quiz
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Questions and Answers

What is the single largest operating expenditure for Canadian employers?

  • The level of alignment of compensation system with firm’s strategy
  • High compensation costs as a percentage of firm’s total expenses
  • Value of compensation system to the job candidates
  • Take home pay (correct)

    • What aspect is considered a key part of getting organization members to do what the organization wants?

  • The level of alignment of compensation system with firm’s strategy (correct)
  • High compensation costs as a percentage of firm’s total expenses
  • Value of compensation system to the job candidates
  • Take home pay

    • What needs must employees perceive that accepting a job with an employer will help satisfy?

  • All the above (correct)
  • Economic needs for basic necessities of life
  • Needs for security, social interaction, status
  • Achievement, recognition, growth and development

    • What is the purpose of the compensation system?

    <p>To align with firm’s strategy</p> Signup and view all the answers

    What percentage of operating budgets typically compensates employees?

    <p>70-90%</p> Signup and view all the answers

    What does the compensation system aim to help create among qualified persons?

    <p>Recognition and growth opportunities</p> Signup and view all the answers

    What is the key aspect of a compensation strategy related to the total amount of compensation?

    <p>How much compensation should be paid</p> Signup and view all the answers

    Which component of a compensation system is generally based on a unit of time worked?

    <p>Base pay</p> Signup and view all the answers

    What is the blueprint for creating the reward system within an organization?

    <p>Reward Strategy</p> Signup and view all the answers

    Which type of pay involves noncash items or services that cater to specific employee needs?

    <p>Indirect pay</p> Signup and view all the answers

    When should interns be paid according to the text?

    <p>Interns should always be compensated</p> Signup and view all the answers

    What must be developed before establishing the compensation system within an organization?

    <p>Reward Strategy</p> Signup and view all the answers

    What are the two types of human needs mentioned in the text?

    <p>Primary and secondary needs</p> Signup and view all the answers

    Which of the following is a characteristic of intrinsic rewards?

    <p>Received during performance of the behavior</p> Signup and view all the answers

    What is the main difference between rewards and incentives according to the text?

    <p>Incentives are promised rewards for future behavior, while rewards are given after behavior</p> Signup and view all the answers

    Which of the following is NOT an example of broader rewards mentioned in the text?

    <p>Base Pay</p> Signup and view all the answers

    What do total rewards encompass according to the content?

    <p>The mix of extrinsic and intrinsic rewards along with compensation</p> Signup and view all the answers

    In the context of reward systems, what does a compensation system primarily focus on?

    <p>Economic aspect of rewards only</p> Signup and view all the answers

    What is the main purpose of a compensation system?

    <p>To help achieve organizational strategies and objectives</p> Signup and view all the answers

    Why is an effective compensation system important for most organizations?

    <p>To attract, retain, and motivate employees</p> Signup and view all the answers

    What distinguishes extrinsic rewards from intrinsic rewards?

    <p>Extrinsic rewards are tangible rewards, while intrinsic rewards are intangible rewards.</p> Signup and view all the answers

    What distinguishes a reward system from a compensation system?

    <p>A reward system is broader and includes non-monetary recognition, while a compensation system is narrower and includes only monetary rewards.</p> Signup and view all the answers

    Why must a compensation system be viewed in the context of the total reward system and the broader organizational environment?

    <p>To align compensation with organizational culture and values</p> Signup and view all the answers

    What is one key criterion for evaluating the success of a compensation system?

    <p>The alignment with organizational goals</p> Signup and view all the answers

    What is the primary goal of compensation systems?

    <p>Satisfy basic human needs</p> Signup and view all the answers

    Which role focuses on determining the budget in designing a compensation system?

    <p>Manager of Compensation</p> Signup and view all the answers

    In the context of reward systems, what do extrinsic rewards primarily address?

    <p>Basic human needs</p> Signup and view all the answers

    What is the last component that should serve in designing an effective compensation system for a company?

    <p>Implementing and evaluating the system</p> Signup and view all the answers

    Which aspect is NOT addressed by compensation systems according to the text?

    <p>Employee motivation techniques</p> Signup and view all the answers

    What is the combination of intrinsic and extrinsic rewards called in an organization?

    <p>Reward system</p> Signup and view all the answers

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