Chapter 03 Defining Internal Alignment

Chapter 03: Defining Internal Alignment

Multiple Choice Questions

1. (p. 71-72) The parable of the vineyard owner and compensation paid to the laborers
illustrated: 
A. paying workers according to their productivity.
B. pay based upon the content of the job.
C. pay based upon hours of work.
D. ignorance of the owner towards the content of work.

2. (p.72) Common bases for modern pay structures include all but which of the following? 
A. Content of the work
B. Skills and knowledge required to perform the work
C. External competitiveness and equity
D. Relative value for achieving organizational objectives

3. (p. 72) _____ should support the organization strategy, support the work flow and motivate
behavior toward organization objectives. 
A. The job evaluation process
B. Strategic compensation objectives
C. Employee contributions
D. The pay structure
 
4. (p. 72) In the strategic approach to pay, internal alignment is the _____ issue to be decided. 
A. first
B. second
C. third
D. fourth
 
5. (p. 74) Which of the following is not part of the description of a pay structure? 
A. Pay differentials
B. Criteria determining pay differences
C. Performance pay
D. Number of levels

6. (p. 72-74) Lockheed’s structure of 6 levels of engineers illustrates all of the following
except )____________
A. company strategy
B. the work flow
C. line of sight
D. external equity

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Chapter 03 Defining Internal Alignment

7. (p. 74, 87) Which of the following is an not intention of differentials? 

A. Motivating people to strive for promotion to a higher-paying level
B. Motivating workers to seek additional training
C.  Influencing rate of turnover
D. Motivating worker by productivity incentives

8. (p. 74) When employees can see the relationships between their work, the work of others and
the organization's objectives, this is called 
A. procedural justice.
B. line-of-sight.
C. goal congruence.
D. path-goal-congruence.

9. (p. 78) The most common bases for determining internal structures are: 

A. work content and its value
B. seniority and experience
C. use value and exchange value
D. pay surveys and job evaluation

10. (p. 75) Content refers to the 

A. worth of the work.
B. work performed in a job and how it gets done.
C. relative contribution to the organization objectives.
D. different pay level policies.

11. (p. 746-77) A pay structure based upon the relative contribution of skills, tasks and
responsibilities to the organization's goals is called the _____ approach. 
A. content
B. value
C. job analysis
D. job evaluation

12. (p. 747) The pay for the job of accountant in London, Los Angeles and Berlin is likely to be
different due to 
A. use value.
B. currency exchange rates.
C. demand and supply.
D. exchange value.

13. (p. 77) Most job structures are best described as 

A. job-based.
B. person-based.
C. both person- and job-based.
D. competency based.

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Chapter 03 Defining Internal Alignment

14. (p. 78) Organization factors that shape internal pay structures include all but _____. 
A. technology
B. cost implications
C. HR policy
D. economic pressures

15. (p. 78) Organization factors that shape internal pay structures include all but _____. 
A. strategy
B. human capital
C. culture and customs
D. employee acceptance

16. (p. 79) Marginal productivity theory argues that employers pay _______. 

A. use value
B. exchange value
C. market value
D. capital value

17. (p. 79) Which of the following is not a factor in defining equal work in the Equal Pay Act? 
A. Skill
B. Effort
C. Knowledge
D. Working conditions

 18. (p. 79) The effect of “living wage” laws is ____pay structures.____

A. more person-based
B. flatter more compressed
C. taller more compressed
D. more job-based

19. (p. 79-80) Unions prefer which of the following? 

A. Small pay differences between jobs and seniority-based promotions
B. Large pay differences between jobs and seniority-based promotions
C. Small pay differences between jobs and performance-based promotions
D. Equal pay raises for employees

 20. (p. 80) The modern concept of a "living wage" is most similar to _____. 

A. marginal productivity wage
B. exchange value
C. just wage doctrine
D. bourse

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Chapter 03 Defining Internal Alignment

21. (p. 781) Which of the following is not a component of human capital? 

A. Seniority level
B. Experience
C. Knowledge
D. Education
 
22. (p. 81) Pay for temporary workers is based upon 
A. the internal structure of their home employer.
B. the internal structure of the temporary workplace.
C. strict legislative requirements.
D. education and experience.

23. (p. 81) Which of the following is not one of the changes in organization design that may
affect pay structures? 
A. Outsourcing
B. Dual careers
C. Delayering
D. Temporary workers

24. (p. 782) The number of job and pay levels in an organization is an example of _____. 

A. organization strategy
B. human capital
C. human resource policies
D. work design

25. (p. 82) Which of the following concepts best explains why newly hired workers may be paid
more than longer tenure workers performing very similar work? 
A. Marginal revenue product
B. Supply and demand
C. Exchange value
D. Internal labor market

26. (p. 83) Which of the following pay structure procedures would not increase perceptions of
pay fairness? 
A. Consistency across all employees
B. Use of accurate data
C. Consultants develop the pay structure
D. Including appeals procedures

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Chapter 03 Defining Internal Alignment

27. (p. 83) James says, "I don't trust the way the company determines pay rates in my
department." James is most concerned about _____. 
A. procedural justice
B. distributive justice
C. internal equity
D. external equity

28. (p. 83) Victoria says, "I don't like it that those jobs that are a lot like mine pay more than my
job." Victoria is expressing concern about _____. 
A. external equity
B. exchange value
C. procedural justice
D. distributive justice

29. (p. 80) If a manager wants employees to accept the organization's pay structure, the best
strategy is to 
A. pay everyone the same
B. show them what competitors pay
C. explain to them how pay was determined
D. tell them the pay level is the most the company can pay

30. (p. 83) Which of the following is not a characteristic of an aligned pay structure? 

A. Supports the way work gets done
B. Fits the organization's business strategy
C. Is fair to employees
D. Complies with the Fair Labor Standards Act

31. (p. 84) All of the following statements regarding aligned structures are true except they
_____________

A. support the way work is done.

B. are externally competitive.
C. fit the business strategy
D. are fair to employees.

32. (p. 84) The well-defined jobs at McDonald's and their small differences in pay are an
example of a(n) _____ internal pay structure. 
A. closely tailored
B. loosely coupled
C. very competitive
D. egalitarian

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Chapter 03 Defining Internal Alignment

33. (p. 84) Organizations in a turbulent and unpredictable environment requiring flexibility in

jobs and work processes are likely to be more successful with a(n) _____ internal pay structure. 
A. egalitarian
B. bureaucratic
C. loosely coupled
D. closely tailored

34. (p. 84-85) Egalitarian pay structures have all but which of the following characteristics? 
A. Few levels
B. Small differentials
C. Supports equal treatment
D. Supports individual performers

35. (p. 84-85) Hierarchical pay structures have all but which of the following characteristics? 
A. Supports a close fit with the organization
B. Supports cooperation
C. Many levels
D. Is based upon the job or person

36. (p. 85) Many levels is to opportunities for promotion as fewer levels is to ___________
A. competition.
B. teams.
C. cooperation.
D. loose fit.

37. (p. 85) A problem faced by some organizations using an egalitarian pay structure is _____. 
A. difficulty in external recruitment
B. maintaining cooperation among employees
C. perception of excessive CEO pay
D. difficulty in team work

38. (p. 86-87) The need to explain the rationale for compensation choices to employees is
consistent with ____________ theory.
A. equity
B. tournament
C. institutional
D. marginal productivity

39. (p. 86) Which of the following is not a comparison employees use to judge the fairness of
their organization's pay structure? 
A. Comparing jobs similar to their own
B. Comparing their pay to external pay levels
C. Comparing their pay raises to others in their organization
D. Comparing their job's pay to other jobs in their organization

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Chapter 03 Defining Internal Alignment

40. (p. 88) Which theory predicts individual performance will be maximized when the pay
differentials between job levels is large? 
A. Tournament
B. Equity
C. Marginal productivity
D. Reinforcement theory

41. (p. 89) When cooperation is important for successful organization performance, the best form
of pay is _____. 
A. tournament
B. egalitarian
C. hierarchical
D. institutional

42. (p. 89) There is evidence that a relatively poor performing team member's performance will
improve under a(n) _____ pay structure. 
A. egalitarian
B. hierarchical
C. bureaucratic
D. loosely-coupled

43. (p. 88-89) Which of the following is not true? 

A. Large pay differences in a top management team are associated with high turnover.
B. Egalitarian structures are a better fit for executive groups that need to work closely as a team.
C. Large raises with a promotion increases effort and reduces absenteeism.
D. Tournament theory raises performance of the top performers but reduces motivation of poorer
performers.

44. (p. 85) The institutional model _____. 

A. is adopted by high performing, innovative organization
B. refers to firms that copy innovative practices adopted by other organizations
C. is another name for the bureaucratic model
D. is a hybrid of the hierarchical and egalitarian model

45. (p. 90) In firefighting and rescue squads and global software design teams, a(n) _____
structure is associated with higher performance. 
A. hierarchical
B. institutional
C. egalitarian
D. tournament 

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Chapter 03 Defining Internal Alignment

46. (p. 90) Which of the following are related to greater performance when the work flow
depends on individual contributors? 
A. Egalitarian
B. Hierarchical
C. Tournament
D. Institutional

47. (p. 90) All of the following except ___________are consequences of an aligned structure.
A. increase experience
B. increase cooperation
C. reduce work stoppages
D. facilitate career progression

True / False Questions

 

48. (p. 672) Internal alignment is sometimes called internal equity. 

TRUE

49. (71, 87) The attitudes of the workers in the vineyard parable may be explained by equity
theory.
TRUE

50. (p. 72) A pay structure refers to the array of pay rates for different work or skills within a
single organization. 
TRUE

51. (p. 72) Pay structure refers to the array of pay rates for different work or skills between
competing companies.
FALSE

52. (p. 74) A well-designed pay structure is the major factor affecting an organization's external
competitiveness. 
FALSE

53. (p. 75) Pay differences between levels in an organization are called differentials. 

TRUE

54. (p. 75) The content and value of work are the most common bases for determining internal
structures. 
TRUE

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Chapter 03 Defining Internal Alignment

55. (p. 77) Exchange value is always higher than use value. 

FALSE

56. (p. 75) The content of a job refers to the relative contribution of skills, tasks and
responsibilities to the organization's goals. 
FALSE

57. (p. 77) Job structures based on relative contribution may include market rates.
TRUE

58. (p. 77) A job-based structure focuses on the skills, knowledge and competencies employees
possess. 
FALSE

59. (p. 78) Both external and organizational factors shape internal pay structures. 

TRUE

60. (p 79) According to marginal productivity theory, employers pay use not exchange value.
TRUE

61. (p. 78) Supply and demand for labor, but not supply and demand for products and services
affect internal structures. 
FALSE

62. (p. 79) Wage legislation affects the wage structure at both the minimum and the maximum
pay level. 
TRUE

63. (p. 781) Technology influences organization design, the work and ultimately, the pay
structure. 
TRUE

64. (p. 81) Self-managed work teams and outsourcing can affect the pay structure. 
TRUE

65. (p. 781) An organization's pay structure is affected more by the pay levels and benefits
offered by competitors than its human capital. 
FALSE

66. (p. 782) Pay structures with more levels, though relatively small pay differences between
levels, offer a sense of career progress. 
TRUE 

67. (p. 82) The phenomena of newly hired engineers receiving salaries higher than longer tenure
engineers in an organization is consistent with the concept of internal labor markets. 
TRUE
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Chapter 03 Defining Internal Alignment

68. (p. 83) Experienced workers judge the fairness of their pay by developing an intuitive sense
of what is fair pay. 
FALSE

69. (p. 83) When employees compare the fairness of their pay, they focus primarily on how their
job compares with similar jobs in other organizations. 
FALSE

70. (p. 83) Distributive justice is more important than procedural justice for employee acceptance
of their pay. 
FALSE

71. (p 83) Recent pay research shows that employee participation is the most important factor
influencing employee perceptions of procedural justice.
FALSE

72. (p. 84) Organizations are more likely to be successful when their pay structures are in
internal alignment. 
TRUE

73. (p. 84-85) Egalitarian pay structures send the message that the organization values
differences in work content, individual skills and contributions to the organization. 
FALSE

74. (p. 85) CEOs of organizations with egalitarian pay structures usually have higher salaries
than CEOs in hierarchical pay structures. 
FALSE

75. (p. 85) Egalitarian pay structures may be characterized as delayered or compressed. 

TRUE

76. (p. 825) Egalitarian pay structures are built using person-based criteria. 

FALSE

77. (p. 86) A potential problem in egalitarian pay structures is high performing employees may
feel underpaid and quit. 
TRUE

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Chapter 03 Defining Internal Alignment

78. (p. 86) Equity theory research shows that an egalitarian pay structure will be seen as more
fair than a hierarchical structure. 
FALSE

79. (p. 86) Teachers whose pay is relatively low in their pay structure will feel their pay structure
is fair if they work in a high-paying district. 
TRUE

80. (p. 86) According to recent research, employees make internal pay comparisons more
frequently than external.
FALSE

81. (p. 86-87) Research shows that one quarter to one third of employees question the fairness of
their pay frequently.
TRUE

82. (p. 88) Greater pay dispersion is related to lower turnover among executives.
FALSE

83. (p. 89) The institutional model predicts that it is best to wait for other organizations to adopt
innovative practices. 
FALSE
 
84. (p. 890) There is little evidence that adding additional levels and titles to a career path but
without significant pay increases, motivate employees. 
FALSE

85. (p. 91) Labor unions support small pay differentials. 

TRUE
 
Short Answer Questions
 

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