,Indicate whether the statement is true or false.
1. According to the “Road Map to Effective Compensation,” the first step is formulating your reward and compensation
strategy.
a. True
b. False
2. The optimal compensation system is one that adds the most value to the organization, after considering all its costs.
a. True
b. False
3. A compensation system has two components: base pay and performance pay.
a. True
b. False
4. There is often one so-called best compensation system that applies to a broad spectrum of organizations.
a. True
b. False
5. An effective compensation system is important to most organizations because it can mean the difference between
company success and failure.
a. True
b. False
6. The main difference between a reward system and a compensation system is that a reward system rewards only good
performance while a compensation system provides pay to all employees.
a. True
b. False
7. A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means
through which they will be provided.
a. True
b. False
8. The main similarity between extrinsic rewards and intrinsic rewards is that they both satisfy so-called higher order
needs such as survival and security.
a. True
b. False
9. Compensation strategy includes the “how” and “how much” in terms of compensation to be paid.
a. True
b. False
10. There is no one best compensation system that fits all firms.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
,11. As head of the human resources department for a new company, you have been asked to formulate a compensation
strategy. What do you need to determine first?
a. the role that compensation will play in the reward system
b. the correct mix of performance and base pay
c. the total amount of compensation to be provided
d. the role the reward system will play in the compensation
strategy
12. Which statement best describes the key aspect of Maslow’s theory of needs?
a. Extrinsic rewards are more important than intrinsic rewards.
b. Intrinsic rewards are more important than extrinsic rewards.
c. Humans tend to first satisfy their basic needs before higher order needs.
d. Self-esteem needs are more closely tied to rewards than the other
needs.
13. Which of the following best describes the term “reward strategy”?
a. the means through which performance bonuses are paid
b. the mix of rewards provided to organization members
c. the means for recognizing outstanding achievement
d. the means for identifying the key contextual variables for an
organization
14. Which statement most accurately describes the optimal reward system?
a. It adds the most value to the organization after considering all its
costs.
b. It maximizes opportunities for learning and development.
c. It identifies best practices.
d. It provides whatever will satisfy the employee’s needs.
15. An owner of an enterprise asks you to describe the major components of a compensation system. What would you
exclude in your description?
a. base salary
b. performance pay
c. employee benefits
d. flexible work schedules and some element of job autonomy
16. The compensation system typically refers to which aspect of the reward system?
a. the mix of intrinsic and extrinsic rewards
b. the economic or monetary part
c. the entire spectrum of rewards
d. incentives
17. Which of the following statements most accurately describes extrinsic rewards?
a. They focus on factors inherent in the work itself—the job content.
b. They satisfy higher-order human needs.
c. They include monetary and nonmonetary rewards and come from the job context.
d. They involve skill variety, task identity, task significance, autonomy, and
feedback.
, 18. As a small business owner committed to the total rewards approach to compensation, what do you need to establish
before you start to develop your compensation system?
a. a reward system
b. an incentive program
c. a compensation
strategy
d. a reward strategy
19. You are a newly hired director of human resources for a new software company. Your CEO has asked you to provide
the board of directors with recommendations relating to the company’s yet-to-be-established reward system. What should
you tell the board?
a. The various combinations of intrinsic and extrinsic rewards need to be considered.
b. The optimal strategy is the least expensive.
c. Like most companies in Canada, we should adopt a total compensation approach.
d. The plan for creating the compensation system is the most important aspect of the
strategy.
20. Compensation means different things to different stakeholders. For shareholders, what is an important consideration?
a. take-home pay of employees
b. effectiveness of the compensation system in attracting employees
c. financial value of the compensation system to the firm’s bottom
line
d. fairness of the compensation system
21. Which of the following would be an example of an extrinsic reward?
a. interesting and meaningful work
b. pay for performance based on the number of units produced per hour
c. being able to see the company’s product being used by a satisfied customer
d. work that allows for enhanced personal development
22. Which item is considered part of a compensation system?
a. performance pay
b. flexible work schedules
c. positive organizational
culture
d. work/life programs
23. Which of the following best explains intrinsic rewards?
a. Intrinsic rewards focus on increasing an employee’s financial
position.
b. Intrinsic rewards are provided by job content.
c. Intrinsic rewards provide security and employee services.
d. Intrinsic rewards relate to bonuses based on performance.
24. A group of unionized employees negotiating a new contract is holding out for a better indirect pay plan. What should
management offer the group in order to reach an agreement?
a. better services and benefits
b. better training and development opportunities
c. pay for performance
d. a more competitive base pay
1. According to the “Road Map to Effective Compensation,” the first step is formulating your reward and compensation
strategy.
a. True
b. False
2. The optimal compensation system is one that adds the most value to the organization, after considering all its costs.
a. True
b. False
3. A compensation system has two components: base pay and performance pay.
a. True
b. False
4. There is often one so-called best compensation system that applies to a broad spectrum of organizations.
a. True
b. False
5. An effective compensation system is important to most organizations because it can mean the difference between
company success and failure.
a. True
b. False
6. The main difference between a reward system and a compensation system is that a reward system rewards only good
performance while a compensation system provides pay to all employees.
a. True
b. False
7. A reward strategy is the plan for the mix of rewards to be provided to organization members along with the means
through which they will be provided.
a. True
b. False
8. The main similarity between extrinsic rewards and intrinsic rewards is that they both satisfy so-called higher order
needs such as survival and security.
a. True
b. False
9. Compensation strategy includes the “how” and “how much” in terms of compensation to be paid.
a. True
b. False
10. There is no one best compensation system that fits all firms.
a. True
b. False
Indicate the answer choice that best completes the statement or answers the question.
,11. As head of the human resources department for a new company, you have been asked to formulate a compensation
strategy. What do you need to determine first?
a. the role that compensation will play in the reward system
b. the correct mix of performance and base pay
c. the total amount of compensation to be provided
d. the role the reward system will play in the compensation
strategy
12. Which statement best describes the key aspect of Maslow’s theory of needs?
a. Extrinsic rewards are more important than intrinsic rewards.
b. Intrinsic rewards are more important than extrinsic rewards.
c. Humans tend to first satisfy their basic needs before higher order needs.
d. Self-esteem needs are more closely tied to rewards than the other
needs.
13. Which of the following best describes the term “reward strategy”?
a. the means through which performance bonuses are paid
b. the mix of rewards provided to organization members
c. the means for recognizing outstanding achievement
d. the means for identifying the key contextual variables for an
organization
14. Which statement most accurately describes the optimal reward system?
a. It adds the most value to the organization after considering all its
costs.
b. It maximizes opportunities for learning and development.
c. It identifies best practices.
d. It provides whatever will satisfy the employee’s needs.
15. An owner of an enterprise asks you to describe the major components of a compensation system. What would you
exclude in your description?
a. base salary
b. performance pay
c. employee benefits
d. flexible work schedules and some element of job autonomy
16. The compensation system typically refers to which aspect of the reward system?
a. the mix of intrinsic and extrinsic rewards
b. the economic or monetary part
c. the entire spectrum of rewards
d. incentives
17. Which of the following statements most accurately describes extrinsic rewards?
a. They focus on factors inherent in the work itself—the job content.
b. They satisfy higher-order human needs.
c. They include monetary and nonmonetary rewards and come from the job context.
d. They involve skill variety, task identity, task significance, autonomy, and
feedback.
, 18. As a small business owner committed to the total rewards approach to compensation, what do you need to establish
before you start to develop your compensation system?
a. a reward system
b. an incentive program
c. a compensation
strategy
d. a reward strategy
19. You are a newly hired director of human resources for a new software company. Your CEO has asked you to provide
the board of directors with recommendations relating to the company’s yet-to-be-established reward system. What should
you tell the board?
a. The various combinations of intrinsic and extrinsic rewards need to be considered.
b. The optimal strategy is the least expensive.
c. Like most companies in Canada, we should adopt a total compensation approach.
d. The plan for creating the compensation system is the most important aspect of the
strategy.
20. Compensation means different things to different stakeholders. For shareholders, what is an important consideration?
a. take-home pay of employees
b. effectiveness of the compensation system in attracting employees
c. financial value of the compensation system to the firm’s bottom
line
d. fairness of the compensation system
21. Which of the following would be an example of an extrinsic reward?
a. interesting and meaningful work
b. pay for performance based on the number of units produced per hour
c. being able to see the company’s product being used by a satisfied customer
d. work that allows for enhanced personal development
22. Which item is considered part of a compensation system?
a. performance pay
b. flexible work schedules
c. positive organizational
culture
d. work/life programs
23. Which of the following best explains intrinsic rewards?
a. Intrinsic rewards focus on increasing an employee’s financial
position.
b. Intrinsic rewards are provided by job content.
c. Intrinsic rewards provide security and employee services.
d. Intrinsic rewards relate to bonuses based on performance.
24. A group of unionized employees negotiating a new contract is holding out for a better indirect pay plan. What should
management offer the group in order to reach an agreement?
a. better services and benefits
b. better training and development opportunities
c. pay for performance
d. a more competitive base pay
