Unit 12: Compensation Management - Practice Quiz

1 Which of the following is a form of direct compensation?

2 The equity theory of compensation is primarily concerned with which of the following?

3 Compensation that varies based on individual or company performance is called:

4 Which theory links pay to the expectation that effort will lead to rewards?

5 The wage that is just enough to meet the basic survival needs of a worker is called the:

6 Wages paid on the basis of number of units produced are known as:

7 Real wages refer to:

8 The amount of money an employee receives in cash without adjusting for prices is called:

9 A wage higher than the minimum wage but below the living wage is generally termed a:

10 Which of the following is an external factor influencing compensation?

11 The ability of an organisation to pay compensation depends mainly on its:

12 Which factor reflects the influence of trade unions on compensation?

13 Rising prices in the economy that affect wage levels are captured by:

14 Which of the following is an example of a fringe benefit?

15 Incentives are best described as rewards designed to:

16 A payment made to a salesperson based on the value of goods sold is called a:

17 Which of the following is a non-monetary incentive?

18 Employee retention refers to an organisation's ability to:

19 Which of the following best describes employee engagement?

20 A high employee turnover rate generally indicates:

21 A manager argues that employees compare their input-output ratio with that of colleagues and adjust their effort when they perceive unfairness. Which compensation theory best supports this reasoning?

22 A firm links pay to performance so employees believe that greater effort leads to better results and desired rewards. This design is most directly grounded in which theory?

23 Which of the following is classified as a component of direct financial compensation rather than indirect compensation?

24 According to the Fair Wage Committee, which wage sits between the minimum wage and the living wage, taking into account the employer's capacity to pay?

25 An employee's salary stays at per month, but prices rise sharply during the year. Which wage concept has effectively declined?

26 A wage that ensures a worker can meet basic needs plus a measure of comfort, education, and insurance against misfortune is described as the:

27 A worker is paid for each unit produced and completes 150 units in a week. Which wage system is being applied, and what is the weekly wage?

28 A company operating in a region with a strong labour union and high demand for skilled workers raises its pay scales. These pressures are examples of which type of compensation factor?

29 Two employees hold the same job title, but one is paid more due to greater experience and superior performance ratings. Which factor primarily explains this difference?

30 A firm structures its pay so that senior engineers earn more than junior engineers, reflecting the relative worth of jobs within the organisation. This is achieved through:

31 A profitable company can afford generous pay packages, while a struggling competitor cannot match them. Which internal factor is chiefly at work here?

32 A sales team receives a cash bonus tied directly to quarterly targets achieved. This reward is best categorised as:

33 Which of the following is a fringe benefit rather than a direct incentive?

34 Under a group incentive scheme, a bonus of is shared equally among 8 team members. How much does each member receive, and what is the main behavioural aim?

35 Recognition awards, challenging assignments, and public appreciation are examples of which category of incentives?

36 A company offers employees the option to buy company shares at a discounted price to align their interests with organisational performance. This scheme is known as:

37 An organisation notices that engaged employees show higher discretionary effort and lower turnover. Which statement best captures the concept of employee engagement?

38 A firm with a annual attrition rate wants to reduce it. Which of the following is most likely to improve retention?

39 According to Herzberg's two-factor theory applied to retention, which of the following is a motivator that boosts engagement rather than merely preventing dissatisfaction?

40 A company calculates that replacing an employee costs about of annual salary. For an employee earning per year, what is the approximate replacement cost, and why does this matter for retention?

41 A firm restructures pay so that base salary is deliberately kept slightly above market median while variable pay is uncapped and tied to individual output. According to Agency Theory, the primary rationale for this design is to:

42 Under Equity Theory, an employee who perceives an unfavourable outcome/input ratio compared to a referent is LEAST likely to restore equity by:

43 A knowledge-based firm adopts skill-based pay instead of job-based pay. A likely adverse consequence that management must actively control is:

44 As per the classification adopted in India (following the Fair Wages Committee, 1948), which sequence correctly orders wages from lowest to highest?

45 A worker's monthly nominal wage rises from to while the consumer price index rises from to (base ). The change in real wage is approximately:

46 Under a Rowan premium plan, standard time is hours, actual time taken is hours, and the hourly rate is . The total earnings of the worker are:

47 Using the same data (standard hrs, actual hrs, rate ), a worker on a Halsey plan (50% bonus) would earn how much less than under the Rowan plan?

48 A firm operating in a labour surplus economy still pays a substantial wage premium above the market-clearing rate. The Efficiency Wage Theory explains this as a rational strategy primarily because higher wages:

49 An organisation with strong internal equity but weak external competitiveness in its pay structure is most likely to experience:

50 Which combination of factors would most strongly justify a firm setting pay significantly above the industry median (a "lead" policy)?

51 A company's ability to pay is often cited as a compensation determinant. The most defensible interpretation of this factor is that it sets:

52 A sales team is switched from a straight commission plan to a plan with a high base salary and a small bonus. Behaviourally, the most probable outcome is:

53 A gainsharing plan (e.g., Scanlon plan) differs fundamentally from a profit-sharing plan mainly because gainsharing:

54 The primary reason many fringe benefits (such as employer-provided health cover and retirement contributions) are attractive relative to an equivalent cash raise is that they:

55 An incentive scheme rewards individual output in a highly interdependent team-based production process. The most serious dysfunctional consequence is likely to be:

56 Under a straight piece-rate system, if the piece rate is per unit with a guaranteed daily minimum of , a worker producing units in a day earns:

57 A firm reports high employee satisfaction scores but stagnant productivity and rising passive turnover intentions. This pattern most directly illustrates that:

58 Applying Herzberg's Two-Factor Theory to retention strategy, increasing salary and improving physical working conditions will most likely:

59 A company with an annual voluntary turnover of replaces each leaver at a cost equal to of that role's annual salary. If total annual payroll is million and turnover is spread evenly across salary levels, the approximate annual replacement cost is:

60 "Total Rewards" thinking argues that relying on pay alone for retention is often ineffective because: