Chapter 2

Question 1

The question, “How do we win or gain competitive advantage?” is answered by ____________________.

Answer 1

business unit strategies

Question 2

_________________is not associated with the compensation system associated with HR program alignment for an innovator strategy

Answer 2

increased variable pay

Question 3

T/F IBM’s strategy of emphasizing internal alignment has proved successful despite changes in the company’s business strategy

Answer 3

F

Question 4

Whole Foods’ decision to seek and engage employees who are going to help the company make money is an example of which strategic pay decisions?

Answer 4

Objectives

Question 5

The Hudson survey found that \_\_\_\_ percent of employees were satisfied with their compensation but nearly \_\_\_ would change the mix of cash and benefits if they could. 
  A) 75, half 
  B) 30, three-fourths 
  C) 90, one quarter 
  D) 50, one quarter

Answer 5

75, half

Question 6

T/F Because unions represent less than 10 percent of the private sector labor force, they have relatively little influence on companies’ pay strategies and policies.

Answer 6

F

Question 7

T/F Although Microsoft and SAS as in the same industry, their compensation strategies are different

Answer 7

T

Question 8

All of the following is not a test of whether a pay strategy is a source of competitive advantage? 
  A) alignment with business strategy 
  B)  Efficient 
  C) Differentiation 
  D) Adding value

Answer 8

Efficient

Question 9

Whole Food policy of "no secrets" is an example of \_\_\_\_\_\_\_\_\_\_\_ strategic compensation choice. 
  A) objectives 
  B) internal alignment 
  C) employee contributions 
  D) management

Answer 9

Management

Question 10

Which of the following statements is not true?
A) Embedding compensation strategy within the broader HR strategy affects results.
B) It is best to consider all dimensions of compensation strategy vs one dimension.
C) Paying more than competitors is a best practice.
D) Both larger and smaller internal pay differences affect performance.

Answer 10

C) Paying more than competitor is best practice.

Question 11

"Fostering team culture and emphasizing collaboration" falls under which of the following compensation strategies? 
  A) Objective 
  B) Internal alignment 
  C) Externally competitiveness 
  D) Employee contribution

Answer 11

Internal alignment

Question 12

Gaining competitive advantage in the current business is a strategic choice in which of the following level? 
  A) Corporate 
  B) Business unit 
  C) Functional 
  D) Operational

Answer 12

Business Unit

Question 13

According to Michael Porter's strategy work, firms that seek to provide a unique and/or innovative product or service at a premium price are said to follow a \_\_\_\_\_ strategy. 
  A) prospectors 
  B) defenders 
  C) cost leadership 
  D) differentiation

Answer 13

differentiation

Question 14

"Emphasizing on productivity and operational excellence" is part of which of the following strategies? 
  A) Innovator 
  B) Defenders 
  C) Cost cutter 
  D) Customer focused

Answer 14

cost cutter

Question 15

According to Miles and Snow, firms that operate in stable markets and compete on cost are referred to as \_\_\_\_\_. 
  A) defenders 
  B) prospectors 
  C) innovators 
  D) differentiators

Answer 15

defenders

Question 16

Though in different businesses, Medtronic, Merrill Lynch and Google have very similar pay strategies.
A) True
B) False

Answer 16

F

Question 17

Compensation is the key to attracting, retaining, and motivating employees with the abilities necessary to execute the business strategy and handle greater decision-making responsibilities.
A) True
B) False

Answer 17

T

Question 18

All organizations that pay people have a compensation strategy.
A) True
B) False

Answer 18

T

Question 19

The value of offering employees choices in compensation mix may be offset by employees’ poor choices and communication costs.
A) True
B) False

Answer 19

T

Question 20

Alignment is often used in marketing to clarify and communicate a product’s identity.
A) True
B) False

Answer 20

F–mapping is used

Question 21

Can companies in the same industry have different pay strategies?

Answer 21

Yes

Question 22

Can the same company have different pay strategies?

Answer 22

Yes

Question 23

What business strategy supports new products and short response time to market trends?

Answer 23

Innovator-
Michael Porter =”differentiation”
Miles and Snow=”Prospectors”

Question 24

What business strategy stresses doing more with less?

Answer 24

Cost Cutter
Michael Porter=Cost Leadership
Miles and Snow=Defenders

Question 25

What business strategy focuses on delighting customers and bases employee pay on how well they do this?

Answer 25

customer-focused

Question 26

What are the 4 steps to developing a compensation strategy?

Answer 26

1. Assess total compensation implications
2. Map a total compensation strategy
3. Implement strategy
4. Reassess

Question 27

T/F When given their choice of unconventional benefits, most employees would select flexible work schedule and additional family benefits over job training and supplemental insurance

Answer 27

T

Question 28

What are the three test to determine if a pay strategy is a source of advantage?

Answer 28

1. Is it aligned?
2. Does it differentiate?
3. Does it add value?

Question 29

What are the differences between “best practices” and “best fit”?

Answer 29

Best practices are applied universally

Best fit reflects company’s strategy and vision