STRATEGIC COMPENSATION A HUMAN
RESOURCE MANAGEMENT
COMPREHENSIVE EXAM SCRIPT VERIFIED
QUESTIONS AND SOLUTIONS GRADED
APLUS
●● Intrinsic compensation
Answer: reflects employees' psychological mind-sets that result from
performing their jobs, for example, experiencing a great feeling from the
belief that one's work matters in the lives of others.
●● Extrinsic compensation
Answer: includes both monetary and nonmonetary rewards.
●● core compensation
Answer: describes the monetary rewards employees receive. There are
seven types of core compensation: two forms of base pay hourly pay (or
wage) and salary, seniority pay, merit pay, incentive pay, cost-of-living
adjustments (COLAs), and pay-for-knowledge and skill-based pay.
●● employee benefits
,Answer: include any variety of programs that provide paid time off (e.g.,
vacation), employee services (e.g., transportation services), and
protection programs (e.g., life insurance).
●● Competitive business strategy
Answer: refers to the planned use of company resources—financial
capital, equipment capital, and human capital—to promote and sustain
competitive advantage. The time horizon for strategic decisions may
span multiple years.
●● Human resource strategies
Answer: specify the use of multiple HR practices to reinforce
competitive business strategy. These statements are consistent with a
company's competitive strategy.
●● Strategic compensation
Answer: refers to the design and implementation of compensation
systems to reinforce the objectives of both HR strategies and
competitive business strategies. Compensation and benefits executives
work with the lead HR executive and the company's chief financial
officer (CFO) to prepare total compensation strategies.
●● Capital
Answer: refers to the factors that enable companies to generate income,
higher company stock prices, economic value, strong positive brand
identity, and reputation. There is a variety of capital that companies use
, to create value, including financial capital (cash) and capital equipment
(state-of-the-art robotics used in manufacturing). Employees represent a
specific type of capital called human capital.
●● Human capital
Answer: as defined by economists, refers to sets of collective
knowledge, skills, and abilities (KSAs) that employees can apply to
create value for their employers. Companies purchase the use of human
capital by paying employees an hourly wage or salary and providing
benefits such as paid vacation and health insurance.
●● Cost leadership strategy or lowest-cost strategy
Answer: focuses on gaining competitive advantage by being the lowest-
cost producer of a product or service within the marketplace, while
selling the product or service at a price advantage relative to the industry
average. Lowest-cost strategies require aggressive construction of
efficient-scale facilities and vigorous pursuit of cost minimization in
areas such as operations, marketing, and human resources.
●● Differentiation strategies
Answer: focus on product or service development that is unique from
those of its competitors. Differentiation can take many forms, including
design or brand image, technology, features, customer service, and price.
●● Base pay
RESOURCE MANAGEMENT
COMPREHENSIVE EXAM SCRIPT VERIFIED
QUESTIONS AND SOLUTIONS GRADED
APLUS
●● Intrinsic compensation
Answer: reflects employees' psychological mind-sets that result from
performing their jobs, for example, experiencing a great feeling from the
belief that one's work matters in the lives of others.
●● Extrinsic compensation
Answer: includes both monetary and nonmonetary rewards.
●● core compensation
Answer: describes the monetary rewards employees receive. There are
seven types of core compensation: two forms of base pay hourly pay (or
wage) and salary, seniority pay, merit pay, incentive pay, cost-of-living
adjustments (COLAs), and pay-for-knowledge and skill-based pay.
●● employee benefits
,Answer: include any variety of programs that provide paid time off (e.g.,
vacation), employee services (e.g., transportation services), and
protection programs (e.g., life insurance).
●● Competitive business strategy
Answer: refers to the planned use of company resources—financial
capital, equipment capital, and human capital—to promote and sustain
competitive advantage. The time horizon for strategic decisions may
span multiple years.
●● Human resource strategies
Answer: specify the use of multiple HR practices to reinforce
competitive business strategy. These statements are consistent with a
company's competitive strategy.
●● Strategic compensation
Answer: refers to the design and implementation of compensation
systems to reinforce the objectives of both HR strategies and
competitive business strategies. Compensation and benefits executives
work with the lead HR executive and the company's chief financial
officer (CFO) to prepare total compensation strategies.
●● Capital
Answer: refers to the factors that enable companies to generate income,
higher company stock prices, economic value, strong positive brand
identity, and reputation. There is a variety of capital that companies use
, to create value, including financial capital (cash) and capital equipment
(state-of-the-art robotics used in manufacturing). Employees represent a
specific type of capital called human capital.
●● Human capital
Answer: as defined by economists, refers to sets of collective
knowledge, skills, and abilities (KSAs) that employees can apply to
create value for their employers. Companies purchase the use of human
capital by paying employees an hourly wage or salary and providing
benefits such as paid vacation and health insurance.
●● Cost leadership strategy or lowest-cost strategy
Answer: focuses on gaining competitive advantage by being the lowest-
cost producer of a product or service within the marketplace, while
selling the product or service at a price advantage relative to the industry
average. Lowest-cost strategies require aggressive construction of
efficient-scale facilities and vigorous pursuit of cost minimization in
areas such as operations, marketing, and human resources.
●● Differentiation strategies
Answer: focus on product or service development that is unique from
those of its competitors. Differentiation can take many forms, including
design or brand image, technology, features, customer service, and price.
●● Base pay
