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Human Resource Management, 12e (Mondy) Chapter 9: Direct Financial Compensation Multiple-Choice Questions 1) Current trends in executive pay

involve linking compensation with ________. A) multi-year contract packages B) deferred stock options C) performance results D) seniority systems Answer: C Explanation: C) The business and regulatory environment has changed and many organizations are rethinking executive compensation practices, including pay, bonuses, and severance pay. Performance assessment and accountability are the leading trends, and many executive salaries are now linked to performance results. Diff: 2 Page Ref: 236-238 Chapter: 9 Skill: Concept LO: 1 2) Which term refers to the total of all rewards provided to employees in return for their services? A) benefits B) commissions C) bonuses D) compensation Answer: D Explanation: D) Compensation is the total of all rewards provided to employees in return for their services. Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Diff: 1 Page Ref: 238 Chapter: 9 Skill: Concept LO: 1

3) Wages, salaries, bonuses, and commissions are referred to as ________. A) financial benefits B) direct financial compensation C) indirect financial compensation D) discretionary workplace benefits Answer: B Explanation: B) Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Indirect financial compensation (benefits) consists of all financial rewards that are not included in direct financial compensation, such as health insurance and social security. Diff: 2 Page Ref: 238-239 Chapter: 9 Skill: Concept LO: 1 4) Which of the following is an example of indirect financial compensation? A) sales commission B) annual bonus C) social security D) hourly wage Answer: C Explanation: C) Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Indirect financial compensation consists of all financial rewards that are not included in direct financial compensation, such as Social Security. Diff: 2 Page Ref: 238-239 Chapter: 9 Skill: Concept LO: 1 5) As a pediatric nurse, Cary experiences a significant amount of job satisfaction, which is considered ________. A) nonfinancial compensation B) indirect compensation C) organizational fit D) personal equity Answer: A Explanation: A) Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. This aspect of nonfinancial compensation involves both psychological and physical factors within the firm's working environment. Diff: 2 Page Ref: 238-239 Chapter: 9 Skill: Application LO: 1

6) What form of compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works? A) nonfinancial compensation B) direct financial compensation C) indirect financial compensation D) total internal compensation Answer: A Explanation: A) Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. This aspect of nonfinancial compensation involves both psychological and physical factors within the firm's working environment. Diff: 1 Page Ref: 238-239 Chapter: 9 Skill: Concept LO: 1 7) Which term refers to the motivation theory that involves people comparing their job contributions and benefits to those of others? A) expectancy theory B) equity theory C) reinforcement theory D) hierarchy theory Answer: B Explanation: B) Equity theory is the motivation theory that people assess their performance and attitudes by comparing both their contribution to work and the benefits they derive from it to the contributions and benefits of comparison others whom they selectand who in reality may or may not be like them. It evolved from social comparison theorythe theory that individuals must assess and know their degree of performance and the correctness of their attitudes in a situation. Lacking objective measures of performance or correct attitudes, they compare their performance and attitudes to those of others. Diff: 1 Page Ref: 239 Chapter: 9 Skill: Concept LO: 2 8) Which term refers to a perception of fair pay treatment for employees? A) direct compensation B) financial equity C) benchmark job D) team equity Answer: B Explanation: B) Financial equity means a perception of fair pay treatment for employees. Ideally, compensation will be evenhanded to all parties concerned and employees will perceive it as such. Diff: 1 Page Ref: 239

Chapter: 9 Skill: Concept LO: 2 9) Assembly workers at GM receive wages that are comparable to those received by assembly workers at Ford. What form of equity most likely exists at GM? A) internal equity B) employee equity C) external equity D) team equity Answer: C Explanation: C) External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Compensation surveys help organizations determine the extent to which external equity is present. Internal equity exists when employees receive pay according to the relative value of their jobs within the same organization. Diff: 2 Page Ref: 239 Chapter: 9 Skill: Application LO: 2 10) As an HR manager, what tool would you most likely use to determine if external equity exists at your firm? A) job analyses B) job evaluations C) labor statistic reports D) compensation surveys Answer: D Explanation: D) External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Compensation surveys help organizations determine the extent to which external equity is present. Diff: 2 Page Ref: 239 Chapter: 9 Skill: Application LO: 2 11) What form of equity exists when employees are paid according to the relative value of their jobs within the same organization? A) internal B) employee C) external D) team Answer: A Explanation: A) Internal equity exists when employees receive pay according to the relative value of their jobs within the same organization. External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Diff: 2 Page Ref: 239

12) As an HR manager, what tool would you most likely use to determine if internal equity exists at your firm? A) job analysis B) job evaluation C) compensation survey D) behavioral methods study Answer: B Explanation: B) Job evaluation is a primary means for determining internal equity. Compensation surveys help organizations determine the extent to which external equity is present. Diff: 2 Page Ref: 239 Chapter: 9 Skill: Application LO: 2 13) What form of equity exists when individuals performing similar jobs for the same firm are paid according to factors unique to the individual, such as performance level or seniority? A) internal B) employee C) external D) team Answer: B Explanation: B) Employee equity exists when individuals performing similar jobs for the same firm receive pay according to factors unique to the employee, such as performance level or seniority. Internal equity exists when employees receive pay according to the relative value of their jobs within the same organization. Diff: 1 Page Ref: 239-240 Chapter: 9 Skill: Concept LO: 2 14) What form of equity is achieved when work groups are rewarded based on group productivity? A) internal B) employee C) external D) team Answer: D Explanation: D) Team equity is achieved when teams are rewarded based on their group's productivity. Employee equity exists when individuals performing similar jobs for the same firm receive pay according to factors unique to the employee, such as performance level or seniority. Internal equity exists when employees receive pay according to the relative value of their jobs within the same organization. Diff: 1 Page Ref: 240 Chapter: 9 Skill: Concept

LO: 3 15) In most cases, which of the following is NOT a determinant of direct financial compensation? A) organization B) marital status C) labor market D) employee's job Answer: B Explanation: B) Historically, the organization, the labor market, the job, and the employee all have influenced job pricing and the ultimate determination of an individual's financial compensation. These factors continue to play an important role, while marital status does not. Diff: 2 Page Ref: 240 Chapter: 9 Skill: Concept LO: 3 16) Which of the following provides general guidelines for making compensation decisions? A) pay leaders B) market rates C) compensation policies D) compensation packages Answer: C Explanation: C) A compensation policy provides general guidelines for making compensation decisions. An organization often, formally or informally, establishes compensation policies that determine whether it will be a pay leader, a pay follower, or strive for an average position in the labor market. Diff: 1 Page Ref: 241 Chapter: 9 Skill: Concept LO: 4 17) Organizations that pay higher wages and salaries than competing firms are referred to as ________. A) market rate leaders B) going rate leaders C) pay followers D) pay leaders Answer: D Explanation: D) Pay leaders are organizations that pay higher wages and salaries than competing firms. Companies that choose to pay below the market rate because of poor financial conditions or a belief that they do not require highly capable employees are pay followers. Diff: 2 Page Ref: 241 Chapter: 9

18) Benson Enterprises pays higher salaries than its competitors in order to attract high quality, productive employees. Which type of compensation policy is most likely in place at Benson Enterprises? A) market rate B) pay leader C) pay follower D) individual rate Answer: B Explanation: B) Pay leaders are organizations that pay higher wages and salaries than competing firms, so Benson is a pay leader. Companies that choose to pay below the market rate because of poor financial conditions or a belief that they do not require highly capable employees are pay followers. Diff: 2 Page Ref: 241 Chapter: 9 Skill: Application LO: 4 19) The average pay that most employers provide for a similar job in a particular area or industry is known as the ________ rate. A) pay follower B) pay leader C) market D) wage Answer: C Explanation: C) The market (going) rate is the average pay that most employers provide for a similar job in a particular area or industry. Many organizations have a policy that calls for paying the market rate. In such firms, management believes that it can employ qualified people and yet remain competitive. Diff: 1 Page Ref: 241 Chapter: 9 Skill: Concept LO: 4 20) Firms which pay below the average labor market price for jobs will most likely have ________. A) higher productivity levels B) higher turnover rates C) lower unit labor costs D) fewer grievances Answer: B Explanation: B) Paying the lowest wage possible does not save money and may be quite expensive. In addition to hiring unproductive workers, organizations that are pay followers may have a high turnover rate, as their most qualified employees leave to join higher-paying organizations. Diff: 3 Page Ref: 241 Chapter: 9 Skill: Concept

LO: 4 21) A method used to obtain data regarding what other firms are paying for specific jobs or job classes within a given labor market is referred to as a ________. A) market survey B) turnover survey C) compensation survey D) critical analysis survey Answer: C Explanation: C) A compensation survey is a means of obtaining data regarding what other firms are paying for specific jobs or job classes within a given labor market. Virtually all compensation professionals use compensation surveys either directly or indirectly. Diff: 1 Page Ref: 242 Chapter: 9 Skill: Concept LO: 5 22) What is the most important standard for determining pay? A) pay leaders B) market rates C) geographic areas D) organizational levels Answer: B Explanation: B) Of all the wage criteria, market rates remain the most important standard for determining pay. In a competitive environment, the marketplace determines economic worth, and this is the critical factor. Diff: 2 Page Ref: 242 Chapter: 9 Skill: Concept LO: 5 23) If a person is to maintain a previous level of real wages then a pay increase must be roughly equivalent to the ________ A) cost of living increase B) industry average C) national average D) market rate Answer: A Explanation: A) Although not a problem in recent years, the logic for using cost of living as a pay determinant is both simple and sound: when prices rise over time and pay does not, real pay is actually lowered. A pay increase must be roughly equivalent to the increased cost of living if a person is to maintain his or her previous level of real wages. Diff: 2 Page Ref: 242 Chapter: 9 Skill: Concept LO: 5

24) What are the two primary factors that affect cost of living? A) salaries and location B) location and inflation C) inflation and food prices D) housing prices and location Answer: B Explanation: B) Inflation is not the only factor affecting cost of living; location also comes into play. A pay increase must be roughly equivalent to the increased cost of living if a person is to maintain his or her previous level of real wages. Diff: 2 Page Ref: 242 Chapter: 9 Skill: Concept LO: 5 25) When the United Auto Workers negotiate with GM and Ford for higher wages, which legislation supports the union's right to engage in collective bargaining? A) Civil Rights Act B) Equal Pay Act C) Davis-Bacon Act D) Wagner Act Answer: D Explanation: D) The National Labor Relations Act (Wagner Act) declared legislative support, on a broad scale, for the right of employees to organize and engage in collective bargaining. The Davis-Bacon Act of 1931 was the first national law to deal with minimum wages. Diff: 2 Page Ref: 242 Chapter: 9 Skill: Concept LO: 5 26) An escalator clause in a labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics' cost-of-living index rises is known as a ________. A) BARS B) COPE C) COLA D) POS Answer: C Explanation: C) When a union emphasizes cost of living, it may pressure management into including a cost-of-living allowance. A cost-of-living allowance (COLA) is an escalator clause in the labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics cost-of-living index rises. Diff: 1 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5

27) All of the following are typical results of a booming economy EXCEPT ________. A) greater competition for workers B) higher cost of living C) greater supply of labor D) higher price of labor Answer: C Explanation: C) The economy definitely affects financial compensation decisions. For example, a depressed economy generally increases the labor supply. A booming economy results in greater competition for workers and the price of labor is driven upward. In addition, the cost of living typically rises as the economy expands. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 28) Which Act was the first national law to deal with minimum wages? A) Davis-Bacon Act B) Railway Labor Act C) Norris-LaGuardia Act D) Fair Labor Standards Act Answer: A Explanation: A) The Davis-Bacon Act of 1931 was the first national law to deal with minimum wages. It mandates a prevailing wage for all federally financed or assisted construction projects exceeding $2,000. The Secretary of Labor sets the prevailing wage at the union wage, regardless of what the average wage is in the affected locality. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 29) Which Act requires federal construction contractors with projects valued in excess of $2000 to pay at least the prevailing wages in the area? A) Railway Labor Act B) Davis-Bacon Act C) Norris-LaGuardia Act D) Fair Labor Standards Act Answer: B Explanation: B) The Davis-Bacon Act of 1931 mandates a prevailing wage for all federally financed or assisted construction projects exceeding $2,000. The Secretary of Labor sets the prevailing wage at the union wage, regardless of what the average wage is in the affected locality. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5

30) Which Act requires companies with federal supply contracts exceeding $10,000 to pay prevailing wages? A) Davis-Bacon Act B) Walsh-Healy Act C) Norris-LaGuardia Act D) Fair Labor Standards Act Answer: B Explanation: B) The WalshHealy Act of 1936 requires companies with federal supply contracts exceeding $10,000 to pay prevailing wages. The Davis-Bacon Act of 1931 mandates a prevailing wage for all federally financed or assisted construction projects exceeding $2,000. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 31) Which Act establishes a minimum wage, requires overtime pay and record keeping, and provides standards for child labor? A) Davis-Bacon Act B) Walsh-Healy C) Norris-LaGuardia Act D) Fair Labor Standards Act Answer: D Explanation: D) The FLSA attempts to eliminate low wages by setting a minimum wage, and to make long hours expensive by requiring a higher pay rate, overtime, for excessive hours. It also requires record keeping, and provides standards for child labor. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 32) The Fair Labor Standards Act (as amended) provides for all of the following EXCEPT ________. A) minimum wage B) overtime pay C) age discrimination D) child labor standards Answer: C Explanation: C) The FLSA attempts to eliminate low wages by setting a minimum wage, and to make long hours expensive by requiring a higher pay rate, overtime, for excessive hours. It also requires record keeping, and provides standards for child labor. However, it does not address age discrimination. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5

33) Which federal law established standards for child labor? A) Social Security Act B) Walsh-Healey Act C) Fair Labor Standards Act D) Labor Management Relations Act Answer: C Explanation: C) The FLSA attempts to eliminate low wages by setting a minimum wage, and to make long hours expensive by requiring a higher pay rate, overtime, for excessive hours. It also requires record keeping, and provides standards for child labor. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 34) Overtime pay is not legally required for ________. A) nonexempt employees B) exempt employees C) blue-collar workers D) salaried employees Answer: B Explanation: B) Although the FLSA covers most organizations and employees, certain classes of employees are specifically exempt from overtime provisions. Exempt employees are categorized as executive, administrative, professional, or outside salespersons. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 5 35) A senior statistician would probably be categorized as what type of employee under the Fair Labor Standard Act? A) administrative B) executive C) professional D) outside salesperson Answer: C Explanation: C) A professional employee, such as a senior statistician, performs work requiring advanced knowledge in a field of learning, normally acquired through a prolonged course of specialized instruction. An executive employee is essentially a manager with broad authority over subordinates. An administrative employee, although not a manager, occupies an important staff position in an organization and might have a title such as account executive or market researcher. Diff: 2 Page Ref: 243-244 Chapter: 9 Skill: Application LO: 5

36) Which of the following would NOT be an exempt employee under the Fair Labor Standard Act? A) production manager B) machine operator C) senior statistician D) outside salesperson Answer: B Explanation: B) Exempt employees are categorized as executive, administrative, professional, or outside salespersons. A machine operator would be nonexempt. Diff: 2 Page Ref: 243-244 Chapter: 9 Skill: Application LO: 5 37) Which 2009 law requires publicly-traded covered institutions to permit a shareholder vote to approve compensation for top executives? A) Fair Labor Standards Act B) National Labor Relations Act C) Emergency Economic Stabilization Act D) American Recovery and Reinvestment Act Answer: D Explanation: D) In 2008, the Emergency Economic Stabilization Act (EESA) created the Troubled Assets Relief Program (TARP) and included certain executive compensation provisions that were to apply to any financial institution that received financial assistance under TARP. In February of 2009, the American Recovery and Reinvestment Act (ARRA) amended the executive compensation provisions that apply to institutions that would receive or had already received TARP funds, so-called "covered institutions." According to ARRA, any publicly-traded covered institution had to permit, in any proxy or consent for any shareholder meeting, a nonbinding shareholder vote to approve the compensation of the institution's executives. Diff: 2 Page Ref: 244 Chapter: 9 Skill: Concept LO: 5

38) The systematic process of determining the skills, duties, and knowledge required for performing jobs in an organization is referred to as ________. A) HR planning B) job analysis C) job evaluation D) compensation analysis Answer: B Explanation: B) Job analysis is the systematic process of determining the skills and knowledge required for performing jobs. Job evaluation is a process that determines the relative value of one job in relation to another. Diff: 1 Page Ref: 244 Chapter: 9 Skill: Concept LO: 6 39) What is the primary by-product of job analysis? A) human resource planning B) job evaluation C) equity analysis D) job description Answer: D Explanation: D) Job analysis is the systematic process of determining the skills and knowledge required for performing jobs. The primary by-product of job analysis is the job description, a written document that describes job duties or functions and responsibilities. Diff: 2 Page Ref: 244 Chapter: 9 Skill: Concept LO: 6 40) What is the process that determines the relative value of one job in relation to another? A) job specification B) job description C) job evaluation D) job analysis Answer: C Explanation: C) Job evaluation is a process that determines the relative value of one job in relation to another. Job analysis is the systematic process of determining the skills and knowledge required for performing jobs. Diff: 2 Page Ref: 244 Chapter: 9 Skill: Concept LO: 7

41) The primary purpose of job evaluation is to ________. A) prepare job descriptions B) eliminate internal pay inequities C) lay the groundwork for job analysis D) price jobs within a geographic area Answer: B Explanation: B) Job evaluation determines the value of the job to the company. The primary purpose of job evaluation is to eliminate internal pay inequities that exist because of illogical pay structures. Job descriptions are essential to all job evaluation methods. Diff: 2 Page Ref: 244 Chapter: 9 Skill: Concept LO: 7 42) What is the LEAST likely reason that a firm would use job evaluation? A) eliminating pay inequities B) identifying the organization's job structure C) estimating the average industrial wage rate D) developing a hierarchy of job value for creating a pay structure Answer: C Explanation: C) Many firms continue to use job evaluation to identify the organization's job structure; to eliminate pay inequities and bring order to the relationships among jobs, and to develop a hierarchy of job value for creating a pay structure. It is less likely that job evaluation would be used for determining the average wages in an industry. Diff: 3 Page Ref: 244 Chapter: 9 Skill: Application LO: 7 43) Irene, an HR manager, needs to use a quantitative job evaluation method. Which two methods would meet Irene's needs? A) point and ranking B) ranking and classification C) point and factor comparison D) factor comparison and classification Answer: C Explanation: C) The four traditional job evaluation methods are the ranking, classification, factor comparison, and point. The ranking and classification methods are nonquantitative, whereas the factor comparison and point methods are quantitative approaches. Diff: 2 Page Ref: 245 Chapter: 9 Skill: Application LO: 7

44) Omar works in the HR department at a large manufacturing firm. Omar needs a simple method for conducting a job evaluation. Which method would be most appropriate for Omar? A) factor comparison B) classification C) ranking D) point Answer: C Explanation: C) The ranking method is the simplest of the four job evaluation methods. In the job evaluation ranking method, the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company. Diff: 2 Page Ref: 245 Chapter: 9 Skill: Application LO: 7 45) Which job evaluation method involves defining a number of grades to describe a group of jobs? A) ranking B) classification C) factor comparison D) point Answer: B Explanation: B) The classification method involves defining a number of classes or grades to describe a group of jobs. In the job evaluation ranking method, the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company. Diff: 1 Page Ref: 245 Chapter: 9 Skill: Concept LO: 7 46) In which job evaluation method do evaluators make decisions based on five universal elements? A) ranking B) classification C) factor comparison D) paired-comparison Answer: C Explanation: C) The factor comparison method of job evaluation assumes that there are five universal factors consisting of mental requirements, skills, physical requirements, responsibilities, and working conditions. The evaluator makes decisions on these factors independently. Diff: 1 Page Ref: 245 Chapter: 9 Skill: Concept LO: 7

47) How many universal job factors are there with the factor comparison job evaluation method? A) 3 B) 5 C) 7 D) 9 Answer: B Explanation: B) The factor comparison method of job evaluation assumes that there are five universal factors consisting of mental requirements, skills, physical requirements, responsibilities, and working conditions. The evaluator makes decisions on these factors independently. Diff: 1 Page Ref: 245 Chapter: 9 Skill: Concept LO: 7 48) Which of the following is NOT one of the universal job factors of the factor comparison method? A) working conditions B) abstract thinking skills C) physical requirements D) responsibilities Answer: B Explanation: B) The factor comparison method of job evaluation assumes that there are five universal factors consisting of mental requirements, skills, physical requirements, responsibilities, and working conditions. Abstract thinking skills are not a specific category with this method. Diff: 2 Page Ref: 245 Chapter: 9 Skill: Concept LO: 7 49) Eric, an HR manager, is using a job evaluation method in which he assigns numerical values to specific job factors before calculating the sum of the values. Which method is Eric most likely using? A) factor comparison B) classification C) ranking D) point Answer: D Explanation: D) In the point method, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Application LO: 7

50) Historically, some variation of which job evaluation plan has been the most popular option? A) ranking B) classification C) factor comparison D) point Answer: D Explanation: D) Historically, some variation of the point plan has been the most popular option. In the point method, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Concept LO: 7 51) Nicole, an HR professional, needs to develop a job evaluation for a data analyst position at her firm. Nicole's manager wants a quantitative job evaluation that will be useful for a long time. Which method would be most appropriate? A) point B) profile C) classification D) ranking Answer: A Explanation: A) In the point method, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth. Historically, a redeeming feature of the method has been that, once developed, the plan was useful over a long time. Ranking and classification methods are nonquantitative. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Application LO: 7 52) Which job evaluation plan uses the compensable factors of know-how, problem solving, and accountability? A) Hay guide chart-profile method B) classification method C) factor comparison method D) point method Answer: A Explanation: A) The Hay guide chart-profile method (Hay plan) is a widely used refined version of the point method used by approximately 8,000 public and private-sector organizations worldwide to evaluate clerical, trade, technical, professional, managerial, and/or executive-level jobs. It uses the compensable factors of know-how, problem solving, accountability, and additional compensable elements. Diff: 1 Page Ref: 246

Chapter: 9 Skill: Concept LO: 7 53) As the HR manager at a new firm, Kelly is responsible for the process of job evaluation. Kelly has completed a job evaluation for each position at the firm. What will most likely be the result of Kelly's work? A) job hierarchy B) financial equity C) job enlargement D) organizational fit Answer: A Explanation: A) The process of job evaluation results in a job hierarchy. It might reveal, for example, that the job of senior accountant is more valuable than the job of machinist, which, in turn, is more valuable than the job of receptionist. At this point, you know the relative value of these jobs to the company, but not their absolute value. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Application LO: 7 54) Placing a dollar value on a job's worth is called ________. A) job analysis B) job enlarging C) job evaluation D) job pricing Answer: D Explanation: D) Job pricing results in placing a dollar value on a job's worth. It takes place after evaluation of a job and the relative value of each job in the organization has been determined. Firms often use pay grades and pay ranges in the job-pricing process. Diff: 1 Page Ref: 246 Chapter: 9 Skill: Concept LO: 8 55) Which term refers to a grouping of similar jobs to simplify job pricing? A) job analysis B) pay range C) pay grade D) job pricing Answer: C Explanation: C) A pay grade is the grouping of similar jobs to simplify pricing jobs. A pay range includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference. Firms often use pay grades and pay ranges in the job-pricing process. Diff: 1 Page Ref: 246 Chapter: 9

56) Which tool is frequently used by managers to determine the appropriate number of pay grades for a company? A) bar graphs B) pie charts C) flow charts D) scatter diagrams Answer: D Explanation: D) Plotting jobs on a scatter diagram is often useful to managers in determining the appropriate number of pay grades for a company. When this tool is used, a certain point spread determines the width of the pay grade. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Concept LO: 8 57) In determining pay grades, each dot on a scatter diagram represents ________. A) one job B) one worker C) a job cluster D) a department Answer: A Explanation: A) Plotting jobs on a scatter diagram is often useful to managers in determining the appropriate number of pay grades for a company. Each dot on the scatter diagram represents one job. The location of the dot reflects the job's relationship to pay and evaluated points, which reflect its worth. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Concept LO: 8 58) The fitting of plotted points to create a smooth progression between pay grades is known as a ________. A) job cluster B) wage curve C) wage range D) pay range Answer: B Explanation: B) A wage curve is the fitting of plotted points to create a smooth progression between pay grades. A pay range includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference. Diff: 2 Page Ref: 247 Chapter: 9 Skill: Concept LO: 8

59) When the point system is used, a ________ line is the most likely result. A) straight B) curved C) U-shaped D) inverted U-shaped Answer: A Explanation: A) A wage curve is the fitting of plotted points to create a smooth progression between pay grades. The line drawn minimizes the distance between all dots and the line; a line of best fit may be straight or curved. However, when the point system is used, a straight line is often the result. Diff: 2 Page Ref: 247 Chapter: 9 Skill: Concept LO: 8 60) What includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference? A) job cluster B) pay curve C) job rank D) pay range Answer: D Explanation: D) A pay range includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference. A pay curve is the fitting of plotted points to create a smooth progression between pay grades. Diff: 2 Page Ref: 247 Chapter: 9 Skill: Concept LO: 8 61) Pay differentials need to be greater to be meaningful, especially ________. A) at lower job levels B) at higher job levels C) during periods of recession D) during periods of inflation Answer: B Explanation: B) The rate ranges established should be large enough to provide an incentive to do a better job. At higher levels, pay differentials may need to be greater to be meaningful. For example, a $200-per-month salary increase means more to an employee earning $2,000 per month (a 10 percent increase) than to an employee earning $5,000 per month (a 4 percent increase). Assuming an inflation rate of 4 percent, the latter employee's real pay would remain unchanged. Diff: 3 Page Ref: 248 Chapter: 9 Skill: Concept LO: 8

62) What is a technique that collapses many pay grades into a few wide bands to improve organizational effectiveness? A) job banding B) job clustering C) downsizing D) broadbanding Answer: D Explanation: D) Broadbanding is a technique that collapses many pay grades (salary grades) into a few wide bands to improve organizational effectiveness. Organizational downsizing and restructuring of jobs have created broader job descriptions, with the result that employees perform more diverse tasks than they previously did. Broadbanding creates the basis for a simpler compensation system that de-emphasizes structure and control and places greater importance on judgment and flexible decision making. Diff: 1 Page Ref: 248 Chapter: 9 Skill: Concept LO: 8 63) What creates the basis for a simpler compensation system that de-emphasizes structure and places greater importance on flexible decision-making? A) job evaluation B) broadbanding C) gainsharing D) clustering Answer: B Explanation: B) Broadbanding is a technique that collapses many pay grades (salary grades) into a few wide bands to improve organizational effectiveness. Broadbanding creates the basis for a simpler compensation system that de-emphasizes structure and control and places greater importance on judgment and flexible decision making. Diff: 2 Page Ref: 248 Chapter: 9 Skill: Concept LO: 8

64) Ryan, an HR manager at a publishing firm, may begin broadbanding jobs. Which of the following is NOT a benefit of broadbanding? A) focusing on vertical promotional options B) simplifying the firm's compensation system C) encouraging employees to develop laterally D) adding flexibility to the firm's compensation system Answer: A Explanation: A) Broadbanding creates the basis for a simpler compensation system that de-emphasizes structure and control and places greater importance on judgment and flexible decision making. Broadbanding may add flexibility to the compensation system, promote lateral development of employees and direct attention away from vertical promotional opportunities. Diff: 3 Page Ref: 248 Chapter: 9 Skill: Application LO: 8 65) As an HR manager at an electronics firm, you learn that the position of Technician I at your firm is underpaid. What would be the best way to handle this situation? A) notify the affected workers and their union representatives B) immediately increase the pay for workers in that job C) give workers in that job a bonus at the end of the year D) wait until the next broadbanding opportunity Answer: B Explanation: B) Good management practice would be to correct this inequity as rapidly as possible by placing the job in the proper pay grade and increasing the pay of those in that job. Waiting too long could be a problem if the employees find out before the pay is corrected. Diff: 3 Page Ref: 248-249 Chapter: 9 Skill: Application LO: 8 66) As an HR manager, you learn that an employee is being overpaid. What would be the best way to handle this situation? A) promote the employee to a job in a higher pay grade B) bring the job rate and employee into line with a pay cut C) freeze the rate until cost-of-living increases bring it into line D) redesign the job by quantifying it with the factor comparison method Answer: A Explanation: A) An ideal solution to the problem of an overpaid job is to promote the employee to a job in a higher pay grade. Another possibility would be to bring the job rate and employee pay into line through a pay cut, but this is generally not a good management practice. Somewhere in between these two possible solutions is a third: to freeze the rate until across-the-board pay increases bring the job into line. Diff: 3 Page Ref: 249

Chapter: 9 Skill: Application LO: 8 67) Todd, a financial analyst, was recently hired by Maxwell Enterprises. After one year with the firm, Todd will be eligible to receive a pay increase added to his base pay that is based on his performance level. Which term best describes this type of compensation? A) commission B) merit pay C) piecework D) spot bonus Answer: B Explanation: B) Merit pay is a pay increase added to employees' base pay based on their level of performance. Piecework is an incentive pay plan in which employees are paid for each unit they produce. Spot bonuses are relatively small monetary gifts provided to employees for outstanding work or effort during a reasonably short period of time. Diff: 2 Page Ref: 249 Chapter: 9 Skill: Application LO: 9 68) Which type of compensation increases an employee's base pay? A) bonus B) merit pay C) spot bonus D) variable pay Answer: B Explanation: B) Merit pay is added to an employee's base pay. Variable pay, which includes bonuses and spot bonuses, is a one-time financial award. Diff: 2 Page Ref: 249 Chapter: 9 Skill: Concept LO: 9 69) What is the most common variable pay for performance? A) merit pay B) bonus C) skill-based pay D) piecework Answer: B Explanation: B) The most common type of variable pay for performance is the bonus, a one-time annual financial award, based on productivity that is not added to base pay. Merit pay, which is not variable, is a pay increase added to employees' base pay based on their level of performance. Diff: 2 Page Ref: 250 Chapter: 9 Skill: Concept

70) Which term refers to a one-time annual financial award based on productivity? A) bonus B) merit award C) skill-based pay D) competency-based pay Answer: A Explanation: A) The most common type of variable pay for performance is the bonus, a one-time annual financial award, based on productivity that is not added to base pay. Diff: 1 Page Ref: 250 Chapter: 9 Skill: Concept LO: 9 71) Ellen received a one-time bonus of $500 from her employer as a reward for her significant contribution on a project. Which of the following did Ellen most likely receive? A) performance incentives B) experience bonuses C) premium payments D) spot bonuses Answer: D Explanation: D) Spot bonuses are relatively small monetary gifts provided to employees for outstanding work or effort during a reasonably short period of time. If an employee's performance has been exceptional, the employer may reward the worker with a one-time bonus of as low as $50 and $100 or $500 and perhaps $5,000 shortly after the noteworthy actions. Diff: 2 Page Ref: 250 Chapter: 9 Skill: Application LO: 9 72) Claudia works as a seamstress at a clothing company. She receives $10 for each pair of pants she sews. What type of pay plan is Claudia's employer most likely using? A) variable pay B) piecework C) lump sum pay D) skill-based pay Answer: B Explanation: B) Piecework is an incentive pay plan in which employees are paid for each unit they produce. Claudia is paid $10 a unit, so if she produces 10 units a day, Claudia will earn $100. Diff: 2 Page Ref: 250 Chapter: 9 Skill: Application LO: 9

73) John works at a company that uses a variety of heavy machines. John knows how to operate three of the machines, and if he learns how to use another one, his pay will increase. Which type of compensation plan is most likely used by John's employer? A) variable pay B) invariable pay C) lump sum pay D) skill-based pay Answer: D Explanation: D) Skill-based pay is a system that compensates employees for their jobrelated skills and knowledge, rather than his or her present job. The system assumes that employees who know more are more valuable to the firm and, therefore, they deserve a reward for their efforts in acquiring new skills. Diff: 2 Page Ref: 250 Chapter: 9 Skill: Application LO: 9 74) Which performance-based pay system assumes that employees who know more are more valuable to the firm and deserve to be rewarded for their efforts in acquiring new skills? A) variable pay B) merit pay C) lump sum pay D) skill-based pay Answer: D Explanation: D) Skill-based pay is a system that compensates employees for their jobrelated skills and knowledge, rather than his or her present job. The system assumes that employees who know more are more valuable to the firm and, therefore, they deserve a reward for their efforts in acquiring new skills. Diff: 1 Page Ref: 250 Chapter: 9 Skill: Concept LO: 9

75) Anna, a marketing manager, frequently takes development and training courses to learn new skills. Anna is financially rewarded by her employer each time she acquires a new capability. What type of compensation plan is most likely used by Anna's employer? A) variable pay B) skill-based pay C) lump sum pay D) competency-based pay Answer: D Explanation: D) Competency-based pay is a compensation plan that rewards employees for the capabilities they attain. It is a type of skill-based pay plan for professional and managerial employees. Variable pay involves receiving bonuses for specific accomplishments. Diff: 2 Page Ref: 251 Chapter: 9 Skill: Application LO: 9 76) Labor unions tend to favor ________ as the basis for compensation changes. A) performance B) experience C) seniority D) skill Answer: C Explanation: C) Although management generally prefers performance as the primary basis for compensation changes, unions tend to favor seniority. Many union leaders consider performance evaluation systems to be too subjective, permitting management to reward favorite employees arbitrarily. Diff: 2 Page Ref: 251 Chapter: 9 Skill: Concept LO: 9 77) The provision of vacation days is generally provided on the basis of ________. A) seniority B) team performance C) organization membership D) experience and knowledge Answer: C Explanation: C) Employees receive some compensation components without regard to the particular job they perform or their level of productivity. They receive them because they are members of the organization. For example, an average performer occupying a job in pay grade 1 may receive the same number of vacation days, the same amount of group life insurance, and the same reimbursement for educational expenses as a superior employee working in a job classified in pay grade 10. Diff: 2 Page Ref: 251 Chapter: 9 Skill: Concept

LO: 9 78) Firms most likely reward all employees regardless of position the same group life insurance in order to ________. A) lower expenses B) recognize loyalty C) avoid litigation D) overcome biases Answer: B Explanation: B) Employees receive some compensation components without regard to the particular job they perform or their level of productivity but because they are members of the organization. The purpose of rewards based on organizational membership is to maintain a high degree of stability in the workforce and to recognize loyalty. Diff: 2 Page Ref: 251 Chapter: 9 Skill: Application LO: 9 79) Which of the following is a disadvantage associated with team-based pay? A) Exemplary performers become disgruntled and quit. B) Performance standards are difficult to develop. C) Output is difficult to categorize and assess. D) Members lack the time to assist others. Answer: A Explanation: A) Team incentives have both advantages and disadvantages. On the positive side, firms find it easier to develop performance standards for groups than for individuals, the output of a team is more likely to reflect a complete product or service, and employees may be more inclined to assist others and work collaboratively. A potential disadvantage for team incentives relates to exemplary performers who perceive that they contribute more than other employees in the group then become disgruntled and leave. Diff: 3 Page Ref: 252 Chapter: 9 Skill: Concept LO: 10 80) Entry-level engineers at A-1 Manufacturing are paid as much as engineers who have been with the firm for five years. Which of the following best describes the situation at A-1? A) single-rate pay system B) competency-based pay C) union representation D) salary compression Answer: D Explanation: D) Salary compression occurs when less experienced employees are paid as much as or more than employees who have been with the organization a long time due to

a gradual increase in starting salaries and limited salary adjustment for long-term employees. Diff: 2 Page Ref: 253 Chapter: 9 Skill: Application LO: 10 81) A compensation plan that results in the distribution of a predetermined percentage of the firm's profits to employees is referred to as ________. A) team sharing B) piecework C) profit sharing D) broadbanding Answer: C Explanation: C) Profit sharing is a compensation plan that results in the distribution of a predetermined percentage of the firm's profits to employees. Many firms use this type of plan to integrate the employees' interests with those of the company. Diff: 1 Page Ref: 253-254 Chapter: 9 Skill: Concept LO: 10 82) Which type of profit sharing plan provides payment to employees in cash or stock as soon as profits have been determined? A) deferred plan B) current plan C) performance plan D) gainsharing plan Answer: B Explanation: B) Current plans provide payment to employees in cash or stock as soon as profits have been determined. Deferred plans involve placing company contributions in an irrevocable trust, credited to individual employees' accounts. The funds are normally invested in securities and become available to the employee (or his or her survivors) at retirement, termination, or death. Diff: 1 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 83) Which type of profit sharing plan places company contributions in an irrevocable trust and credits individual employees' accounts? A) deferred plan B) current plan C) stock plan D) defined plan Answer: A Explanation: A) Deferred plans involve placing company contributions in an irrevocable

trust, credited to individual employees' accounts. The funds are normally invested in securities and become available to the employee (or his or her survivors) at retirement, termination, or death. Current plans provide payment to employees in cash or stock as soon as profits have been determined. Diff: 1 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 84) Vesting on a graduated basis has a tendency to ________. A) discourage participation B) improve recruiting C) increase hiring D) reduce turnover Answer: D Explanation: D) Vesting determines the amount of profit an employee owns in his or her account. A gradual approach to vesting encourages employees to remain with the firm, thereby reducing turnover. Diff: 2 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 85) Which of the following is a profit sharing plan designed to bind employees to the firm's performance by providing incentive payment based on improved company performance? A) deferred B) profit sharing C) compression D) gainsharing Answer: D Explanation: D) Gainsharing plans are designed to bind employees to the firm's productivity and provide an incentive payment based on improved company performance. The goal of gainsharing is to focus on improving cost-efficiency, reducing costs, improving throughput, and improving profitability. Diff: 2 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 86) Which of the following is a gainsharing plan that provides a financial reward to employees for labor cost savings resulting from their suggestions? A) deferred plan B) Scanlon plan C) current plan D) Rucker plan Answer: B

87) What gainsharing plan embodies management-labor cooperation, collaborative problem-solving, teamwork, trust, gainsharing, open-book management and servant leadership? A) deferred plan B) Scanlon plan C) Roth plan D) current plan Answer: B Explanation: B) Scanlon plans are not only financial incentive systems, but also systems for participative management. The Scanlon plan embodies management/labor cooperation, collaborative problem solving, teamwork, trust, gainsharing, open-book management, and servant leadership. Diff: 2 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 88) Individuals performing in professional jobs are compensated initially for their ________. A) productivity B) goal achievement C) knowledge D) extensive experience Answer: C Explanation: C) A professional employee performs work requiring advanced knowledge in a field of learning, normally acquired through a prolonged course of specialized instruction. Examples of exempt professionals often employed in industry include scientists, engineers, and accountants. Their pay, initially, is for the knowledge they bring to the organization. Diff: 2 Page Ref: 254-255 Chapter: 9 Skill: Concept LO: 10 89) In which method of sales compensation do salespersons receive a fixed salary regardless of their sales levels? A) straight commission B) variable pay C) straight salary D) spot bonus Answer: C Explanation: C) The straight salary approach is one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their sales levels. At the other extreme is straight commission, in which the person's pay is totally determined as a percentage of sales. Diff: 1 Page Ref: 255 Chapter: 9

90) When continued service after the sale is essential, a firm will most likely compensate sales representatives with ________. A) bonus only B) straight salary C) straight commission D) bonus plus commission Answer: B Explanation: B) The straight salary approach is one extreme in sales compensation. In this method, salespersons receive a fixed salary regardless of their sales levels. Organizations use straight salary primarily to emphasize continued product service after the sale. Diff: 2 Page Ref: 255 Chapter: 9 Skill: Concept LO: 10 91) In which method of sales compensation is a salesperson's pay totally determined as a percentage of sales? A) straight commission B) part salary C) straight salary D) straight bonus Answer: A Explanation: A) With straight commission, the person's pay is totally determined as a percentage of sales. In the straight salary approach, salespersons receive a fixed salary regardless of their sales levels. Diff: 1 Page Ref: 255 Chapter: 9 Skill: Concept LO: 10 92) In most cases, a firm prefers to link the salary growth of its highest level managers to market rates and ________. A) cost of living increases B) public compensation policies C) overall corporate performance D) contingent worker compensation Answer: C Explanation: C) The executive package depends on the magnitude of the responsibility, risk, and effort shouldered by the chief executive. Organizations typically prefer to relate salary growth for the highest-level managers to market rates and overall corporate performance, including the firm's market value. Diff: 3 Page Ref: 256 Chapter: 9 Skill: Concept LO: 11

93) The U.S. tax law does not allow companies to deduct more than ________ of an executive's salary. A) $500,000 B) $1 million C) $2 million D) $3 million Answer: B Explanation: B) The U.S. tax law does not allow companies to deduct more than $1 million of an executive's salary; therefore, most firms keep it below that amount. It is because of the million dollar deduction maximum that bonuses and performance-based pay have become popular. Diff: 2 Page Ref: 256 Chapter: 9 Skill: Concept LO: 11 94) What incentive plan allows executives to buy a specified amount of stock in the future at or below the current market price? A) stock option B) indexed stock option C) open-end stock option D) closed-end stock option Answer: A Explanation: A) Stock option plans give the executive the option to buy a specified amount of stock in the future at or below the current market price. The stock option is a long-term incentive designed to integrate the interests of management with those of the organization. Diff: 1 Page Ref: 257 Chapter: 9 Skill: Concept LO: 11 95) Special benefits provided by a firm to a small group of key executives are known as ________. A) incentive bonuses B) golden parachutes C) stock options D) perquisites Answer: D Explanation: D) Perquisites (perks) are any special benefits provided by a firm to a small group of key executives and designed to give the executives "something extra." A golden parachute contract is a perquisite that protects executives in the event that another company acquires their firm or if the executive is forced to leave the firm for other reasons. Diff: 1 Page Ref: 257 Chapter: 9 Skill: Concept

96) An executive perquisite that protects executives in the event that the executive is forced to leave the firm is known as a ________. A) golden parachute contract B) stock option plan C) Scanlon plan D) spot bonus Answer: A Explanation: A) A golden parachute contract is a perquisite that protects executives in the event that another company acquires their firm or if the executive is forced to leave the firm for other reasons. At times, golden parachute contracts have been abused but such contracts appear to be lessening. Diff: 2 Page Ref: 257 Chapter: 9 Skill: Concept LO: 12 97) PetFair, a national chain of pet supply stores, employs nearly 1,000 workers. In the past two years, the firm's market share has dropped and employee turnover has increased. The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers. Currently, PetFair employees receive compensation primarily based on years with the firm and job level. Which of the following, if true, best supports the argument that PetFair should focus on external equity issues when developing a new compensation plan? A) Compensation surveys indicate that PetFair competitors are pay leaders in the industry. B) PetFair employees receive annual performance appraisals and training opportunities. C) Exit interviews indicate dissatisfaction among PetFair managers in different departments. D) All PetFair employees receive the same benefits options and vacation time upon hiring. Answer: A Explanation: A) External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Compensation surveys help organizations determine the extent to which external equity is present. Pay leaders are firms that pay higher wages than competing firms, so if PetFair's competitors are paying more, then the firm probably needs to address external equity issues. Diff: 3 Page Ref: 239 Chapter: 9 Skill: Critical Thinking LO: 2

98) PetFair, a national chain of pet supply stores, employs nearly 1,000 workers. In the past two years, the firm's market share has dropped and employee turnover has increased. The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers. Currently, PetFair employees receive compensation primarily based on years with the firm and job level. Which of the following, if true, best supports the argument that PetFair should implement a competency-based pay system? A) PetFair uses the classification method to price management jobs. B) PetFair sales representatives earn straight commissions. C) PetFair managers experience variable work assignments. D) PetFair offers a profit-sharing plan to top executives. Answer: C Explanation: C) Competency-based pay is a type of skill-based pay plan for professional and managerial employees. The disappearance of the traditional job provides the primary rationale for this change. If managers at PetFair have variable and unstable work assignments, with roles that cannot be assigned a valid pay rate in traditional job evaluation plans, then a competency-based pay system is appropriate. Diff: 3 Page Ref: 251 Chapter: 9 Skill: Critical Thinking LO: 9 99) PetFair, a national chain of pet supply stores, employs nearly 1,000 workers. In the past two years, the firm's market share has dropped and employee turnover has increased. The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers. Currently, PetFair employees receive compensation primarily based on years with the firm and job level. Which of the following questions is most relevant to the decision to implement a variable pay system? A) What is the average base salary of PetFair managers? B) What impact has salary compression had on PetFair recruiting? C) How will spot bonuses improve productivity and morale at PetFair? D) How will gainsharing improve employee-management relationships at PetFair? Answer: C Explanation: C) Variable pay involves using bonuses based on productivity as a way to improve productivity. Spot bonuses are small monetary gifts that would not be applied to a worker's base salary. Salary compression and gainsharing are less relevant to the decision regarding variable pay. Diff: 3 Page Ref: 250 Chapter: 9 Skill: Critical Thinking LO: 9

100) PetFair, a national chain of pet supply stores, employs nearly 1,000 workers. In the past two years, the firm's market share has dropped and employee turnover has increased. The vice president of human resources at PetFair suggests implementing a new compensation policy to improve the firm's performance and retain quality workers. Currently, PetFair employees receive compensation primarily based on years with the firm and job level. Which of the following, if true, best supports the idea of offering a Scanlon plan to employees at PetFair? A) The environment at PetFair lacks teamwork, trust, and collaboration among employees. B) Perquisites for key executives at PetFair were eliminated during the 2008 recession. C) PetFair uses broadbanding to price jobs at all levels of the organization. D) The Hay plan is already utilized successfully at PetFair. Answer: A Explanation: A) The Scanlon plan provides a financial reward to employees for savings in labor costs resulting from their suggestions. The Scanlon plan embodies management/labor cooperation, collaborative problem solving, teamwork, trust, gainsharing, open-book management, and servant leadership, so offering the Scanlon plan may improve the PetFair environment. Perks, broadbanding, and the Hay plan are less relevant to the issue of the Scanlon plan. Diff: 3 Page Ref: 254 Chapter: 9 Skill: Critical Thinking LO: 10 True/False and Essay Questions 1) Compensation is the total of all rewards provided to employees in return for their services. Answer: TRUE Explanation: Compensation is the total of all rewards provided to employees in return for their services. The overall purposes of providing compensation are to attract, retain, and motivate employees. Diff: 1 Page Ref: 238 Chapter: 9 Skill: Concept LO: 1 2) Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and health benefits. Answer: FALSE Explanation: Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Indirect financial compensation consists of all financial rewards that are not included in direct financial compensation., such as health benefits. Diff: 2 Page Ref: 238-239 Chapter: 9

3) Indirect financial compensation consists of all financial rewards that are not included in direct compensation, such as commissions and spot bonuses. Answer: FALSE Explanation: Indirect financial compensation consists of all financial rewards that are not included in direct financial compensation., such as health benefits. Direct financial compensation consists of the pay that a person receives in the form of wages, salaries, commissions, and bonuses. Diff: 2 Page Ref: 238-239 Chapter: 9 Skill: Concept LO: 1 4) Nonfinancial compensation consists of the satisfaction that a person receives from the psychological environment in which the person works. Answer: TRUE Explanation: Nonfinancial compensation consists of the satisfaction that a person receives from the job itself or from the psychological and/or physical environment in which the person works. This aspect of nonfinancial compensation involves both psychological and physical factors within the firm's working environment. Diff: 1 Page Ref: 238-239 Chapter: 9 Skill: Concept LO: 1 5) According to equity theory, people are motivated by financial compensation and prestige. Answer: FALSE Explanation: Equity theory states that a person is motivated in proportion to the perceived fairness of the rewards received for a certain amount of effort as compared with what others receive. Diff: 2 Page Ref: 239 Chapter: 9 Skill: Concept LO: 2 6) Financial equity refers to the perception of fair pay treatment for employees. Answer: TRUE Explanation: Financial equity means a perception of fair pay treatment for employees. Firms and individuals view fairness from several perspectives. Ideally, compensation will be evenhanded to all parties concerned and employees will perceive it as such. Diff: 1 Page Ref: 239 Chapter: 9 Skill: Concept LO: 2

7) External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Answer: TRUE Explanation: External equity exists when a firm's employees receive pay comparable to workers who perform similar jobs in other firms. Compensation surveys help organizations determine the extent to which external equity is present. Diff: 1 Page Ref: 239 Chapter: 9 Skill: Concept LO: 2 8) Employee equity exists when employees receive pay according to the relative value of their jobs within the same organization. Answer: FALSE Explanation: Employee equity exists when individuals performing similar jobs for the same firm receive pay according to factors unique to the employee, such as performance level or seniority. Internal equity exists when employees receive pay according to the relative value of their jobs within the same organization. Diff: 2 Page Ref: 239 Chapter: 9 Skill: Concept LO: 2 9) Team equity is achieved when teams are rewarded based on their group's productivity. Answer: TRUE Explanation: Team equity is achieved when teams are rewarded based on their group's productivity. However, achieving equity may be a problem when it comes to team incentives. Diff: 1 Page Ref: 240 Chapter: 9 Skill: Concept LO: 2 10) The labor market, the job, the employee, and the organization are the primary factors that influence job pricing and compensation. Answer: TRUE Explanation: Historically, the organization, the labor market, the job, and the employee all have influenced job pricing and the ultimate determination of an individual's financial compensation. These factors continue to play an important role. Diff: 2 Page Ref: 240 Chapter: 9 Skill: Concept LO: 3

11) A benefit policy provides general guidelines for making compensation decisions. Answer: FALSE Explanation: A compensation policy provides general guidelines for making compensation decisions. Some employees may perceive their firm's compensation policies as being fair and unbiased and others may have different opinions. Diff: 2 Page Ref: 241 Chapter: 9 Skill: Concept LO: 4 12) Pay leaders usually attract more highly qualified applicants than lower paying firms in the same labor market. Answer: TRUE Explanation: Pay leaders are organizations that pay higher wages and salaries than competing firms. These higher-paying firms usually attract more highly qualified applicants than lower-paying companies in the same labor market. Diff: 2 Page Ref: 241 Chapter: 9 Skill: Concept LO: 4 13) The pay leader rate is the average pay that most employers provide for a similar job in a particular area or industry. Answer: FALSE Explanation: The market (going) rate is the average pay that most employers provide for a similar job in a particular area or industry. Pay leaders are organizations that pay higher wages and salaries than competing firms. Diff: 1 Page Ref: 241 Chapter: 9 Skill: Concept LO: 4 14) Firms use compensation surveys to develop budgets and compensation structures. Answer: TRUE Explanation: Organizations use surveys for two basic reasons: to identify their relative position with respect to the chosen competition in the labor market, and to provide input in developing a budget and compensation structure. Diff: 2 Page Ref: 242 Chapter: 9 Skill: Concept LO: 4

15) Cost-of-living allowances are becoming increasingly popular in labor union contracts. Answer: FALSE Explanation: A cost-of-living allowance (COLA) is an escalator clause in the labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics' costof-living index rises. Recently, cost-of-living allowances in union contracts have been disappearing. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 4 16) The Walsh-Healy Act was the first national law to mandate a minimum wages. Answer: FALSE Explanation: The Davis-Bacon Act of 1931 was the first national law to deal with minimum wages. The WalshHealy Act of 1936 requires companies with federal supply contracts exceeding $10,000 to pay prevailing wages. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 4 17) One of the primary purposes of the Fair Labor Standards Act of 1938 was to eliminate low wages and excessive working hours. Answer: TRUE Explanation: The purpose of the FLSA is to establish minimum labor standards on a national basis and to eliminate low wages and long working hours. The FLSA attempts to eliminate low wages by setting a minimum wage, and to make long hours expensive by requiring a higher pay rate, overtime, for excessive hours. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 4 18) Nonexempt employees are categorized as executive, administrative, professional employees, and outside salespersons. Answer: FALSE Explanation: Exempt employees are categorized as executive, administrative, professional, or outside salespersons. These classes of workers are exempt from overtime provisions. Diff: 2 Page Ref: 243 Chapter: 9 Skill: Concept LO: 4

19) Job evaluation is a process that determines the relative value of one job in relation to another. Answer: TRUE Explanation: Job evaluation is a process that determines the relative value of one job in relation to another. Basically, it determines the value of the job to the company. The primary purpose of job evaluation is to eliminate internal pay inequities that exist because of illogical pay structures. Diff: 1 Page Ref: 244 Chapter: 9 Skill: Concept LO: 7 20) The classification method of job evaluation is the simplest job evaluation method and requires comparing a job description with a class description. Answer: FALSE Explanation: The classification method involves defining a number of classes or grades to describe a group of jobs. In evaluating jobs by this method, the raters compare the job description with the class description. However, the ranking method is the simplest of the four job evaluation methods. Diff: 2 Page Ref: 245 Chapter: 9 Skill: Concept LO: 7 21) In the ranking method of job evaluation, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth. Answer: FALSE Explanation: In the job evaluation ranking method, the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company. In the point method, raters assign numerical values to specific job factors, such as knowledge required, and the sum of these values provides a quantitative assessment of a job's relative worth. Diff: 2 Page Ref: 245-246 Chapter: 9 Skill: Concept LO: 7 22) The Hay guide chart-profile method is a refined version of the point method that is used by both public and private-sector organizations. Answer: TRUE Explanation: The Hay guide chart-profile method (Hay plan) is a widely used refined version of the point method used by approximately 8,000 public and private-sector organizations worldwide to evaluate clerical, trade, technical, professional, managerial, and/or executive-level jobs. Diff: 1 Page Ref: 246 Chapter: 9

23) The Hay plan is exclusively used for evaluating federal and state government jobs. Answer: FALSE Explanation: The Hay guide chart-profile method (Hay plan) is a widely used refined version of the point method used by approximately 8,000 public and private-sector organizations worldwide to evaluate clerical, trade, technical, professional, managerial, and/or executive-level jobs. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Concept LO: 7 24) Pay grades and pay ranges are frequently used in the job-pricing process. Answer: TRUE Explanation: Job pricing results in placing a dollar value on a job's worth. It takes place after evaluation of a job and the relative value of each job in the organization has been determined. Firms often use pay grades and pay ranges in the job-pricing process. Diff: 2 Page Ref: 246 Chapter: 9 Skill: Concept LO: 8 25) A pay grade is the grouping of similar jobs to simplify pricing jobs. Answer: TRUE Explanation: A pay grade is the grouping of similar jobs to simplify pricing jobs. In following this approach, you avoid a false suggestion of preciseness. Diff: 1 Page Ref: 246 Chapter: 9 Skill: Concept LO: 8 26) Firms typically prefer single pay rates over pay ranges because of the simplicity and preciseness the system offers. Answer: FALSE Explanation: Pay ranges are generally preferred over single pay rates because they allow a firm to compensate employees according to performance and length of service. A pay range includes a minimum and maximum pay rate with enough variance between the two to allow for a significant pay difference. Diff: 2 Page Ref: 247 Chapter: 9 Skill: Concept LO: 8

27) Organizational downsizing and job restructuring have led to more narrow job descriptions and the increased use of broadbanding. Answer: FALSE Explanation: Organizational downsizing and restructuring of jobs have created broader job descriptions, with the result that employees perform more diverse tasks than they previously did. Broadbanding creates the basis for a simpler compensation system that de-emphasizes structure and control and places greater importance on judgment and flexible decision making. The use of broadbanding has declined in recent years. Diff: 2 Page Ref: 248 Chapter: 9 Skill: Concept LO: 8 28) According to research, merit pay, which is similar to an annual bonus, is highly successful in motivating employee performance and improving compensation satisfaction. Answer: FALSE Explanation: Merit pay is a pay increase added to employees' base pay based on their level of performance. Past studies by compensation professionals have determined that merit pay is marginally successful in influencing pay satisfaction and performance. Diff: 2 Page Ref: 249 Chapter: 9 Skill: Concept LO: 9 29) Merit pay is a one-time financial award based on productivity. Answer: FALSE Explanation: Merit pay is a pay increase added to employees' base pay based on their level of performance. A bonus is a one-time annual financial award based on productivity and not added to base pay. Diff: 1 Page Ref: 250 Chapter: 9 Skill: Concept LO: 9 30) Merit payments are relatively small gifts given to employees for outstanding work or effort during a brief period of time. Answer: FALSE Explanation: Spot bonuses are relatively small monetary gifts provided to employees for outstanding work or effort during a reasonably short period of time. Merit pay is a pay increase added to employees' base pay based on their level of performance. Diff: 1 Page Ref: 250 Chapter: 9 Skill: Concept LO: 9

31) Piecework is an incentive pay plan where employees are paid for each unit they produce. Answer: TRUE Explanation: Piecework is an incentive pay plan in which employees are paid for each unit they produce. Piecework is especially prevalent in the production/operations area. Diff: 1 Page Ref: 250 Chapter: 9 Skill: Concept LO: 9 32) Competency-based pay plans are increasingly common as employees shift from traditional jobs to variable work assignments. Answer: TRUE Explanation: Competency-based pay is a compensation plan that rewards employees for the capabilities they attain. The disappearance of the traditional job provides the primary rationale for the shift towards this system. Today, employees are said to have variable and unstable work assignments, with roles that cannot be assigned a valid pay rate in traditional job evaluation plans. Diff: 2 Page Ref: 251 Chapter: 9 Skill: Concept LO: 9 33) Seniority is the length of time an employee has been associated with the company, division, department, or job. Answer: TRUE Explanation: Seniority is the length of time an employee has been associated with the company, division, department, or job. Although management generally prefers performance as the primary basis for compensation changes, unions tend to favor seniority. Diff: 1 Page Ref: 251 Chapter: 9 Skill: Concept LO: 9 34) During the 2008/2010, salary compression was not a problem for HR managers because of pay cuts and layoffs. Answer: FALSE Explanation: Salary compression continued to be a major challenge for compensation managers even in a recession when pay cuts and freezes were the focus of the daily news. As workers discover inequities in their pay, resentment and lower productivity may follow with the employees ultimately leaving the company when the economy improves. Diff: 2 Page Ref: 253 Chapter: 9 Skill: Concept LO: 10

35) Profit sharing is a compensation plan that helps HR managers with recruiting and retaining employees. Answer: TRUE Explanation: Profit sharing is a compensation plan that results in the distribution of a predetermined percentage of the firm's profits to employees. Profit-sharing plans can aid in recruiting, motivating, and retaining employees, which usually enhances productivity. Diff: 2 Page Ref: 253-254 Chapter: 9 Skill: Concept LO: 10 36) Gainsharing plans are intended to link employees to organizational productivity by focusing on cost-efficiency. Answer: TRUE Explanation: Gainsharing plans are designed to bind employees to the firm's productivity and provide an incentive payment based on improved company performance. The goal of gainsharing is to focus on improving cost-efficiency, reducing costs, improving throughput, and improving profitability. Diff: 2 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 37) The Scanlon plan provides a financial reward to employees for savings in labor costs that result from their suggestions and serves as a type of participative management program. Answer: TRUE Explanation: The Scanlon plan provides a financial reward to employees for savings in labor costs resulting from their suggestions. Scanlon plans are not only financial incentive systems, but also systems for participative management. Diff: 2 Page Ref: 254 Chapter: 9 Skill: Concept LO: 10 38) Bonuses and performance-based pay have become popular for executive compensation packages because the U.S. tax laws do not allow firms to deduct more than $500,000 of an executive's salary. Answer: FALSE Explanation: The U.S. tax law does not allow companies to deduct more than $1 million of an executive's salary; therefore, most firms keep it below that amount. It is because of the million dollar deduction maximum that bonuses and performance-based pay have become popular. Diff: 2 Page Ref: 256 Chapter: 9 Skill: Concept LO: 11

39) A golden parachute contract is a perquisite that protects executives in the event that another company acquires their firm. Answer: TRUE Explanation: A golden parachute contract is a perquisite that protects executives in the event that another company acquires their firm or if the executive is forced to leave the firm for other reasons. Diff: 1 Page Ref: 257 Chapter: 9 Skill: Concept LO: 12 40) Clawback contract provisions are required for TARP-covered institutions to recover any incentive compensation paid to top executives that was based on inaccurate financial data. Answer: TRUE Explanation: A clawback policy allows the company to recover compensation if subsequent review indicates that payments were not calculated accurately or performance goals were not met. TARP-covered institutions are required to implement "clawback" provisions that operate to recover any bonus, retention, or other incentive compensation that was paid to any senior executive officer or any of the next twenty most highly compensated employees of the institution as a result of financial information that is later found to be materially inaccurate. Diff: 2 Page Ref: 258 Chapter: 9 Skill: Concept LO: 12 Human Resource Management, 12e (Mondy) Chapter 10: Indirect Financial Compensation (Benefits) and Nonfinancial Compensation Multiple-Choice Questions 1) Which of the following best defines two in a box? A) providing two banking services to key customers B) requiring applicants to interview with two managers C) giving two executives the same job and responsibilities D) requiring two employees to work overtime and weekends Answer: C Explanation: C) Some companies are giving two executives the same responsibilities and the same title and letting them decide how the work is to be divided (Two in a Box). Unlike job sharing, it is a full-time job for both executives and has some risk for the employer. Diff: 3 Page Ref: 264 Chapter: 10 Skill: Concept LO: 11

2) Two managers who are given the same responsibilities and the same title and allowed to decide how to divide the work are most likely participating in ________. A) two in a box B) flexible sharing C) succession planning D) compressed work sharing Answer: A Explanation: A) Some companies are giving two executives the same responsibilities and the same title and letting them decide how the work is to be divided (Two in a Box). Unlike job sharing, it is a full-time job for both executives and has some risk for the employer. Diff: 2 Page Ref: 264 Chapter: 10 Skill: Concept LO: 11

3) Executives who participate in two in a box most likely benefit from the increased ________. A) ability to balance work and life B) ownership in the organization C) opportunity to travel overseas D) reliance on new technology Answer: A Explanation: A) Two in a box refers to the corporate strategy of giving two executives the same responsibilities and the same title and letting them decide how the work is to be divided. Executives benefit because they have more schedule flexibility, which helps them balance work and family. The executives can share the responsibility of going to meetings and traveling overseas. Diff: 3 Page Ref: 265 Chapter: 10 Skill: Concept LO: 11 4) All financial rewards that are NOT included in direct financial compensation are known as ________. A) bonuses B) wages C) commissions D) benefits Answer: D Explanation: D) Indirect financial compensations (benefits) include all financial rewards not included in direct financial compensation. Health insurance and life insurance are examples of indirect financial compensation. Bonuses, wages, and commissions are direct financial compensation. Diff: 1 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1 5) In general, why do employees receive benefits from their employer? A) organizational membership B) employee productivity C) corporate performance D) level of education Answer: A Explanation: A) As a rule, employees receive benefits because of their membership in the organization. Benefits are typically unrelated to employee productivity, corporate performance, or employee education. Diff: 2 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1

6) Which of the following is an advantage of indirect financial compensation? A) always less costly for small businesses B) typically linked to worker productivity C) usually nontaxable to the employee D) always government sponsored Answer: C Explanation: C) Indirect financial compensation has two distinct advantages: (1) it is generally nontaxable to the employee and (2) the cost of some benefits may be much less for large groups of employees than for individuals. Benefits are typically unrelated to employee productivity. Some benefits are required by the government but not all. Diff: 3 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1 7) According to the U.S. Bureau of Labor Statistics, indirect financial compensation accounts for approximately ________ of employers' total compensation costs. A) 10% B) 30% C) 50% D) 70% Answer: B Explanation: B) According to the U.S. Bureau of Labor Statistics, benefits account for nearly 30 percent of employers' total compensation costs, but over the past decade, the change in benefits costs has outpaced the change in the cost of wages and salaries. Diff: 2 Page Ref: 267 Chapter: 10 Skill: Concept LO: 1 8) Benefits are valuable for all of the following reasons EXCEPT ________. A) improving job satisfaction B) recruiting new employees C) retaining current employees D) improving worker productivity Answer: D Explanation: D) Benefits are typically unrelated to employee productivity, although they may be valuable in recruiting and retaining employees, they do not generally serve as motivation for improved performance. According to a recent SHRM survey, benefits are the second most important driver of job satisfaction. Diff: 2 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1

9) In most cases, the costs of voluntary benefits are paid by ________. A) government agencies B) state governments C) employees D) employers Answer: C Explanation: C) Voluntary benefits are usually 100 percent paid by the employee but the employer typically pays the administrative cost. Often a hybrid situation exists in which employers pay a portion of the benefit and the employee pays for additional services. Diff: 2 Page Ref: 266-267 Chapter: 10 Skill: Concept LO: 1 10) WorldatWork is a professional organization focused on the issue of ________. A) career development B) compensation C) HR planning D) offshoring Answer: B Explanation: B) The American Compensation Association is now WorldatWork, the Professional Association for Compensation, Benefits, and Total Rewards. The change reflects the new emphasis on total rewards rather than direct and indirect financial compensation. Diff: 2 Page Ref: 267 Chapter: 10 Skill: Concept LO: 1 11) Everything an employee perceives to be of value resulting from the employment relationship is best known as ________. A) global perks B) total rewards C) whole wages D) fringe benefits Answer: B Explanation: B) The concept of total rewards is about all the ways in which people are rewarded when they come to workpay, benefits and the other non-financial rewards put together to make a coherent and integrated whole. Total rewards include training, career development, pay, and work-life balance tools. Diff: 1 Page Ref: 267, 268 Chapter: 10 Skill: Concept LO: 1

12) Mandated benefits currently account for about what percentage of total compensation costs? A) 10% B) 35% C) 50% D) 65% Answer: A Explanation: A) Employers provide most benefits, but the law requires others. These legally required benefits currently account for about 10 percent of total compensation costs. They include Social Security, unemployment insurance, and workers' compensation. Diff: 2 Page Ref: 267 Chapter: 10 Skill: Concept LO: 2 13) Legally required benefits currently include all of the following EXCEPT ________. A) Social Security B) workers' compensation C) unemployment insurance D) health insurance coverage Answer: D Explanation: D) Employers provide most benefits, but the law requires others. These legally required benefits currently account for about 10 percent of total compensation costs. They include Social Security, unemployment insurance, and workers' compensation. Diff: 2 Page Ref: 267 Chapter: 10 Skill: Concept LO: 2 14) What Act created a system of retirement benefits? A) Family and Medical Leave Act B) Fair Labor Standards Act C) Social Security Act D) Equal Pay Act Answer: C Explanation: C) The Social Security Act of 1935 created a system of retirement benefits. It also established the Social Security Administration. Subsequent amendments to the Act added other forms of protection, such as disability insurance, survivors' benefits, and Medicare. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2

15) What Act requires employers to share equally with employees the cost of old age, survivors, and disability insurance? A) Fair Labor Standards Act B) Family and Medical Leave Act C) Social Security Act D) Benefits and Security Act Answer: C Explanation: C) The Social Security Act of 1935 created a system of retirement benefits. Subsequent amendments to the Act added other forms of protection, such as disability insurance, survivors' benefits, and Medicare. Although employees must pay a portion of the cost of Social Security coverage, the employer makes an equal contribution and considers this cost to be a benefit. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 16) Thomas was involved in a serious car accident, and he cannot return to work for 8 weeks. Which of the following would most likely provide Thomas with income while he is incapacitated? A) life insurance B) disability insurance C) direct financial compensation D) unemployment compensation Answer: B Explanation: B) Disability insurance protects employees against loss of earnings resulting from total incapacity. Unemployment insurance provides monetary payments to workers whose jobs have been terminated, but Thomas will be returning to work after 8 weeks. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Application LO: 2 17) Which of the following protects employees against an earnings loss when they are totally incapacitated? A) unemployment insurance B) disability insurance C) paid time off D) sabbaticals Answer: B Explanation: B) Disability insurance protects employees against loss of earnings resulting from total incapacity. Unemployment insurance provides monetary payments to workers whose jobs have been terminated. Diff: 1 Page Ref: 268 Chapter: 10 Skill: Concept

LO: 2 18) Margaret's husband, who worked as an accountant, recently died from a heart attack while on vacation. Which of the following would most likely be provided to Margaret? A) survivors' benefits B) discretionary benefits C) unemployment compensation D) supplemental Medicaid payments Answer: A Explanation: A) Survivors' benefits are provided to certain members of an employee's family when the employee dies. Discretionary benefits include paid vacations and sick pay. Unemployment insurance provides workers whose jobs have been terminated through no fault of their own. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Application LO: 2 19) When an employee dies, which of the following would most likely be paid to the employee's family? A) disability insurance B) survivors' benefits C) unemployment insurance D) discretionary benefits Answer: B Explanation: B) Survivors' benefits are provided to certain members of an employee's family when the employee dies. Discretionary benefits include paid vacations and sick pay. Unemployment insurance provides workers whose jobs have been terminated through no fault of their own. Diff: 1 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 20) Which of the following would most likely be eligible for Medicare? A) Alex, a 35 year old unemployed mechanic B) Brenda, a 42 year old school teacher C) Charles, a 66 year old retired realtor D) Debra, a 21 year old college student Answer: C Explanation: C) Medicare provides hospital and medical insurance protection for individuals 65 years of age and older and for those who have become disabled. Therefore, Charles would most likely be eligible, while the others would not. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Application LO: 2

21) Which of the following provides hospital and medical insurance protection for individuals who are 65 years of age or older? A) Medicare B) HMO C) Medicaid D) PPO Answer: A Explanation: A) Medicare provides hospital and medical insurance protection for individuals 65 years of age and older and for those who have become disabled. HMOs and PPOs are managed health care plans provided by employers. Diff: 1 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 22) Which of the following pays for Social Security? A) state and local government B) employer and employee C) employer only D) employee only Answer: B Explanation: B) Although employees must pay a portion of the cost of Social Security coverage, the employer makes an equal contribution and considers this cost to be a benefit. Approximately 95 percent of the workers in this country pay into and may draw Social Security benefits. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 23) What is a significant issue facing the Social Security program? A) outsourcing of jobs B) retiring baby-boomers C) growing unemployment rate D) rising workers' compensation costs Answer: B Explanation: B) The Social Security program currently is running a surplus, but the retirement of the 77-million-member baby-boom generation is looming. Unless Congress makes changes by 2041, the program will have used up its surplus and will no longer be able to pay full benefits. Outsourcing, unemployment, and workers' compensation are less relevant to Social Security. Diff: 3 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2

24) What will be the retirement age in 2027? A) 65 B) 66 C) 67 D) 68 Answer: C Explanation: C) The retirement age today is 66. It will increase in 2027, until it reaches age 67. These changes will not affect Medicare, with full eligibility under this program holding at age 65. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 25) The current retirement age is ________. A) 65 B) 66 C) 67 D) 68 Answer: B Explanation: B) The retirement age today is 66. It will increase in 2027, until it reaches age 67. These changes will not affect Medicare, with full eligibility under this program holding at age 65. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 26) Jackie's employer is downsizing to reduce expenses, and Jackie has been informed that she will be laid off. What is the maximum number of weeks that Jackie can receive unemployment compensation? A) 13 B) 26 C) 39 D) 52 Answer: B Explanation: B) Unemployment insurance provides workers whose jobs have been terminated through no fault of their own monetary payments for up to 26 weeks or until they find a new job. The intent of unemployment payments is to provide an unemployed worker time to find a new job equivalent to the one lost without suffering financial distress. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Application LO: 2

27) Which of the following pays for unemployment insurance? A) state and local governments B) employer and employee C) employee only D) employer only Answer: D Explanation: D) A payroll tax paid solely by employers funds the unemployment compensation program. Unemployment insurance is based on both federal and state statutes and, although the federal government provides guidelines, the programs are administered by the states and therefore benefits vary by state. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 28) Which of the following is the LEAST likely purpose of unemployment insurance payments? A) giving workers time to find equivalent jobs B) minimizing the number of workers needing welfare C) continuing worker health benefits to prevent financial distress D) sustaining consumer spending during difficult economic times Answer: C Explanation: C) The intent of unemployment payments is to provide an unemployed worker time to find a new job equivalent to the one lost without suffering financial distress. Without this benefit, workers might have to take jobs for which they are overqualified or end up on welfare. Unemployment compensation also serves to sustain consumer spending during periods of economic adjustment. COBRA extends healthcare coverage to unemployed workers, not unemployment insurance. Diff: 3 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 29) Jack, a construction worker, slipped and fell at a job site. As a result, Jack injured his knee and needs physical therapy and medical care. Jack's medical expenses would most likely be covered by ________. A) workers' compensation insurance B) unemployment insurance C) life insurance D) Medicaid Answer: A Explanation: A) Workers' compensation benefits provide a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses. Unemployment insurance, life insurance, and Medicaid would not cover Jack's expenses for a work-related injury. Diff: 2 Page Ref: 268 Chapter: 10

Skill: Application LO: 2 30) Workers' compensation insurance pays for medical expenses related to ________. A) pre-existing conditions B) pregnancy complications C) off-duty accidents D) job-related illnesses Answer: D Explanation: D) Workers' compensation benefits provide a degree of financial protection for employees who incur expenses resulting from job-related accidents or illnesses. Workers' compensation would not likely cover pre-existing conditions unless they were job-related. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 31) Benefit payments made as a result of unilateral management decisions in nonunion firms and from labormanagement negotiations in unionized firms are known as ________. A) flexible spending benefits B) direct financial compensation C) discretionary benefits D) workers' compensation Answer: C Explanation: C) Discretionary benefits are benefit payments made as a result of unilateral management decisions in nonunion firms and from labormanagement negotiations in unionized firms. Major categories of discretionary benefits include payment for time not worked, health care, life insurance, retirement plans, employee stock option plans, and employee services. Diff: 1 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3 32) Which of the following is NOT a discretionary benefit? A) sabbaticals B) health benefits C) paid vacations D) overtime payments Answer: D Explanation: D) Discretionary benefits are benefit payments made as a result of unilateral management decisions in nonunion firms and from labormanagement negotiations in unionized firms. Sabbaticals, health benefits, and paid vacations are discretionary benefits, but overtime payments are required for nonexempt employees. Diff: 2 Page Ref: 269 Chapter: 10

33) Workers in which of the following countries take the fewest number of vacation days? A) Italy B) Brazil C) Canada D) United States Answer: D Explanation: D) As compared with other countries, the average of 13 days Americans take annually is small. According to the World Tourism Organization, Italians take 42 days, French take 37 days, and Brazilians take 34 days. Canadians double the number of vacation days per year that are taken in the United States. Diff: 2 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3 34) In most firms, vacation time varies by ________. A) performance appraisal results B) organizational rank C) education level D) personal needs Answer: B Explanation: B) Vacation time may vary with organizational rank. Top earning managers typically receive more vacation days than entry level workers. Diff: 2 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3 35) Which term refers to a certain number of days each year that employees can use for any purpose? A) sabbatical B) paid vacation C) paid time off D) medical leave Answer: C Explanation: C) Paid time off (PTO) is a certain number of days off provided each year that employees can use for any purpose. With a PTO plan, all the reasons for time off sick, vacation, and personal daysare grouped together and no one has to lie. Diff: 1 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3

36) Which of the following is LEAST likely to be an advantage of providing paid time off to employees? A) simpler administration B) more job sharing options C) higher employee satisfaction D) fewer last minute absences Answer: B Explanation: B) With a PTO plan, all the reasons for time offsick, vacation, and personal daysare grouped together and no one has to lie. There are numerous possible benefits for PTO, including simpler administration, fewer carry-over issues, high employee satisfaction, fewer creative excuses for time off, earlier advance notice of timeoff needs, fewer last-minute absences, and fewer conflicts about time-off usage. Diff: 3 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3 37) Carson Enterprises is considering the idea of replacing personal leave and vacation time with paid time off. Which of the following best supports this decision? A) Employees at Carson express satisfaction with the firm's current PPO. B) Last minute absences are a significant problem among Carson employees. C) Retirement plans held by Carson employees suffered during the recession. D) Carson employees are given the opportunity to telecommute when needed. Answer: B Explanation: B) With a PTO plan, all the reasons for time offsick, vacation, and personal daysare grouped together and no one has to lie. Such plans can have numerous benefits including simpler administration, earlier advance notice of time-off needs, and fewer last-minute absences. PTOs are less relevant to health care plans, retirement plans, or telecommuting. Diff: 3 Page Ref: 269-270 Chapter: 10 Skill: Critical Thinking LO: 3 38) Which term refers to temporary leaves of absence from an organization, usually at reduced pay? A) personal leave B) medical leave C) paid time off D) sabbatical Answer: D Explanation: D) Sabbaticals are temporary leaves of absence from an organization, usually at reduced pay. Often sabbaticals help to reduce turnover and keep workers from burning out, hopefully returning revitalized and more committed to their work. Diff: 1 Page Ref: 270 Chapter: 10 Skill: Concept

LO: 3 39) Carson Enterprises is considering the idea of adding sabbaticals to its discretionary benefits plan. Which of the following best supports this decision? A) Numerous employees at Carson have elderly parents who need medical attention. B) The health and safety record at Carson has been problematic in recent years. C) Many experienced employees at Carson have quit because of burnout. D) The majority of Carson employees have small children in daycare. Answer: C Explanation: C) Sabbaticals are temporary leaves of absence from an organization, usually at reduced pay. Often sabbaticals help to reduce turnover and keep workers from burning out, hopefully returning revitalized and more committed to their work. If the firm has high turnover, sabbaticals may help. Diff: 3 Page Ref: 270 Chapter: 10 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 40) What type of indirect financial compensation is the most expensive for most businesses? A) life insurance B) health care insurance C) retirement programs D) unemployment compensation Answer: B Explanation: B) Health care represents the most expensive item in the area of indirect financial compensation. Life insurance, retirement plans, and unemployment compensation are less costly types of indirect financial compensation. Diff: 2 Page Ref: 270 Chapter: 10 Skill: Concept LO: 3 41) Capital Manufacturing provides health care benefits for each of its 300 employees. How much does Capital Manufacturing most likely spend on health care for each of its employees? A) $5,000 B) $10,000 C) $15,000 D) $20,000 Answer: B Explanation: B) Management consultant Towers Perrin found that the cost of insuring employees rose by 7 percent in 2010, making the average spent per employee to be $10,212. The survey also found that the employee share of health premiums would rise 10 percent on average, to $2,292. Diff: 2 Page Ref: 270

42) It has been said that health care benefits represent the most expensive cost in the area of indirect financial compensation. Which of the following is NOT a factor that has combined to create this situation? A) shrinking population B) growing demand for medical care C) inefficient administrative processes D) increasingly expensive medical technology Answer: A Explanation: A) A number of factors have combined to create the high cost of health care: an aging population; a growing demand for medical care; increasingly expensive medical technology; and inefficient administrative processes. Diff: 3 Page Ref: 270 Chapter: 10 Skill: Concept LO: 3 43) Julie has health insurance through her employer. The managed-care health organization used by Julie's employer covers all services for a fixed fee. However, Julie may only use the doctors and health facilities chosen by the managed-care health organization. Julie is most likely a member of a ________. A) point-of-service B) health maintenance organization C) preferred provider organization D) exclusive provider organization Answer: B Explanation: B) HMOs cover all services for a fixed fee but exercise control over which doctors and health facilities a member may use. PPOs provide incentives for members using services within the system, but out-of-network providers may be used at higher costs. Diff: 2 Page Ref: 271 Chapter: 10 Skill: Application LO: 3

44) If David uses an in-network provider of his employer's managed-care health organization, then he pays lower fees than if he uses an out-of-network provider. David is most likely a member of a(n) ________. A) HMO B) POS C) PPO D) FSA Answer: C Explanation: C) Preferred provider organizations (PPOs) are managed-care health organizations in which incentives are provided to members to use services within the system; out-of-network providers may be used at greater cost. HMOs cover all services for a fixed fee but exercise control over which doctors and health facilities a member may use. Diff: 2 Page Ref: 271 Chapter: 10 Skill: Application LO: 3 45) Stephanie, who belongs to a managed-care health organization, is experiencing knee pain and needs to see a specialist. Stephanie must first visit a primary care physician and receive a referral to see a knee specialist. Stephanie has access to out-of-network healthcare if necessary. Stephanie is most likely a a member of a ________. A) health maintenance organization B) exclusive provider organization C) preferred provider organization D) point-of-service Answer: D Explanation: D) Point-of-service (POS) requires a primary care physician and referrals to see specialists, as with HMOs, but permits out-of-network health care access. HMOs do not pay for out-of-network health care. Diff: 2 Page Ref: 271 Chapter: 10 Skill: Application LO: 3

46) What managed-care health organization offers a smaller PPO provider network and usually provides little, if any, benefits when an out-of-network provider is used? A) point-of-service B) health maintenance organization C) preferred provider organization D) exclusive provider organization Answer: D Explanation: D) Exclusive provider organizations (EPOs) offer a smaller PPO provider network and usually provides little, if any, benefits when an out-of-network provider is used. Point-of-service (POS) requires a primary care physician and referrals to see specialists, as with HMOs, but permits out-of-network health care access. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 47) Flexible spending accounts and health savings accounts are examples of ________. A) consumer-driven health care plans B) legally required health benefits C) major medical benefits D) point of service plans Answer: A Explanation: A) Consumer-driven health care plans give each employee a set amount of money annually with which to purchase health care coverage which involves highdeductible insurance coverage combined with a tax-advantaged account like a flexible spending account or health savings account. They are a good way for employers to provide the same caliber of benefits to their employees while also reducing premiums and involving employees in the cost of coverage. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3

48) Which of the following is a tax-free health spending and savings account available to individuals and families with qualified high-deductible health insurance policies? A) defined health benefit plan B) flexible spending account C) health savings account D) cash balance plan Answer: C Explanation: C) Health savings accounts (HSA) are tax-free health spending and savings accounts available to individuals and families who have qualified high-deductible health insurance policies as determined by IRS regulations. A flexible spending account (FSA) is a health benefit plan established by employers that allows employees to deposit a certain portion of their salary into an account (before paying income taxes) to be used for eligible expenses. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 49) Which term refers to a benefit plan established by employers that allows employees to deposit a certain portion of their pre-tax salary into an account to be used for eligible expenses? A) provider account B) health savings account C) flexible spending account D) defined health benefit account Answer: C Explanation: C) A flexible spending account (FSA) is a health benefit plan established by employers that allows employees to deposit a certain portion of their salary into an account (before paying income taxes) to be used for eligible expenses. Health savings accounts (HSA) are tax-free health spending and savings accounts available to individuals and families who have qualified high-deductible health insurance policies as determined by IRS regulations. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 50) The Patient Protection and Affordable Care Act of 2010 placed a limit of ________ on flexible spending accounts. A) $500 B) $2,500 C) $4,500 D) $7,500 Answer: B Explanation: B) Under The Patient Protection and Affordable Care Act of 2010 there is a limit of $2,500 on a flexible spending account. Also, employees will no longer be able to use FSA funds to pay for over-the-counter medications.

Diff: 1 Page Ref: 272 Chapter: 10 Skill: Concept LO: 3 51) Howard Paper Company, which employs 1,200 workers, is planning to establish a worksite medical clinic at its manufacturing facility. Which of the following best supports this decision? A) Most Howard employees prefer the firm's PPO plan to the HMO option. B) Few Howard employees understand how to utilize flexible spending accounts. C) Vaccinations and minor injuries account for most weekday doctor visits by Howard employees. D) OSHA investigations reveal that Howard requires most employees to wear protective equipment. Answer: C Explanation: C) On-site health care assists in treating minor illnesses and injuries, vaccinations, physical therapy, and providing follow-up care. Employers can reduce the number of visits employees make to more costly facilities, such as physicians' offices and hospital emergency rooms. The approach reduces time spent on doctors' visits and recovery, which is why a worksite medical clinic would benefit Howard. Diff: 3 Page Ref: 272 Chapter: 10 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 52) Which of the following covers extraordinary expenses that result from long-term or serious health problems? A) medical reduction plans B) alternative exploration C) major medical benefits D) utilization review Answer: C Explanation: C) Some plans provide for major medical benefits to cover extraordinary expenses that result from long-term or serious health problems. The use of deductibles is a common feature of medical benefits. Diff: 1 Page Ref: 272 Chapter: 10 Skill: Concept LO: 3

53) What type of insurance is a benefit commonly provided to protect an employee's family in the event of the employee's death? A) long term care B) utilization care C) group life insurance D) disability insurance Answer: C Explanation: C) Group life insurance is a benefit provided to protect the employee's family in the event of his or her death. Although the cost of group life insurance is relatively low, some plans call for the employee to pay part of the premium. Diff: 1 Page Ref: 272 Chapter: 10 Skill: Concept LO: 3 54) What type of retirement plan provides the participant with a fixed benefit upon retirement? A) defined contribution B) deferred contribution C) defined benefit D) deferred balance Answer: C Explanation: C) A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 55) Leroy has a formal retirement plan based on his final years' average salary and years of service at Royce Pharmaceuticals. Which type of plan does Leroy most likely have? A) defined contribution B) defined benefit C) cash balance D) 401(k) Answer: B Explanation: B) A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Although defined benefit formulas vary, they are typically based on the participant's final years' average salary and years of service. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Application LO: 3

56) Maura's retirement plan requires her employer to make specific contributions to a retirement fund established for Maura. Which type of plan does Maura most likely have? A) defined contribution plan B) deferred contribution plan C) defined benefit plan D) deferred salary plan Answer: A Explanation: A) A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee. A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Application LO: 3 57) A defined contribution plan in which employees may defer income up to a maximum amount allowed is a ________. A) stock option plan B) cash balance plan C) hybrid plan D) 401(k) plan Answer: D Explanation: D) A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed. A cash balance plan is a hybrid plan with elements of both defined benefit and defined contribution plans. Diff: 1 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 58) What type of retirement plan has elements of both defined benefit plans and defined contribution plans? A) 401 (k) plan B) 403 (b) plan C) benefit plan D) cash balance plan Answer: D Explanation: D) A cash balance plan is a hybrid plan with elements of both defined benefit and defined contribution plans. A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed. Diff: 1 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3

59) Sharon's employer offers a defined contribution plan. The firm contributes stock shares to a trust in hopes of aligning employee interests with the interest of the firm. Sharon is most likely invested in a(n) ________. A) employee stock option plan B) defined contribution plan C) defined benefit plan D) cash balance plan Answer: A Explanation: A) An employee stock option plan (ESOP) is a plan in which a firm contributes stock shares to a trust. The trust then allocates the stock to participating employee accounts according to employee earnings. ESOP advocates have promoted employee ownership plans as a means to align the interests of workers and their companies to stimulate productivity. Diff: 2 Page Ref: 274 Chapter: 10 Skill: Application LO: 3 60) A defined contribution plan in which a firm contributes stock shares to a trust is known as a(n) ________. A) shift differential B) voluntary benefits C) employee stock option plan D) employee relocation benefits Answer: C Explanation: C) An employee stock option plan (ESOP) is a plan in which a firm contributes stock shares to a trust. The trust then allocates the stock to participating employee accounts according to employee earnings. Diff: 1 Page Ref: 274 Chapter: 10 Skill: Concept LO: 3 61) Curt has been offered a position with Premium Processing. As part of its benefits package, the firm offers child care, educational assistance, and relocation benefits. Which term best describes the benefits offered by Premium Processing? A) voluntary benefits B) cash balance plans C) employee services D) disability protection Answer: C Explanation: C) Organizations offer a variety of benefits that can be termed "employee services." These benefits encompass a number of areas, including child care, educational assistance, food services/subsidized cafeterias, scholarships for dependents, and relocation benefits. Diff: 2 Page Ref: 274 Chapter: 10

Skill: Application LO: 3 62) Educational assistance, subsidized cafeterias, and relocation benefits are examples of ________. A) mandatory benefits B) employee services C) severance pay D) premium pay Answer: B Explanation: B) Organizations offer a variety of benefits that can be termed "employee services." These benefits encompass a number of areas, including child care, educational assistance, food services/subsidized cafeterias, scholarships for dependents, and relocation benefits. Diff: 2 Page Ref: 274 Chapter: 10 Skill: Concept LO: 3 63) Michael works as an engineer in Arizona, but he has been offered a better position with RayCo, a firm in Minnesota. RayCo will ship the family's belongings to Minnesota and will provide Michael and his family with temporary housing for three months. Which of the following best describes the type of compensation offered by RayCo? A) flexible spending B) relocation benefits C) voluntary benefits D) premium pay Answer: B Explanation: B) Relocation benefits are company-paid shipments of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home. Relocation packages vary but most companies will pay for household moving and packing expenses and temporary living expenses for up to six months until the home sells. Diff: 2 Page Ref: 275 Chapter: 10 Skill: Application LO: 3

64) Which term refers to company-paid shipments of household goods and temporary living expenses? A) unemployment compensation B) relocation benefits C) premium payments D) disability benefits Answer: B Explanation: B) Relocation benefits are company-paid shipments of household goods and temporary living expenses, covering all or a portion of the real estate costs associated with buying a new home and selling the previously occupied home. Relocation packages vary but most companies will pay for household moving and packing expenses and temporary living expenses for up to six months until the home sells. Diff: 1 Page Ref: 275 Chapter: 10 Skill: Concept LO: 3 65) Eliot receives overtime compensation when he works on Sundays and holidays in his job as a warehouse manager. Which of the following does Eliot most likely receive? A) supplemental wages B) voluntary benefits C) premium pay D) spot bonuses Answer: C Explanation: C) Premium pay is compensation paid to employees for working long periods of time or working under dangerous or undesirable conditions. Some firms voluntarily pay overtime for hours worked beyond eight in a given day and pay double time, or even more, for work on Sundays and holidays. Diff: 2 Page Ref: 276 Chapter: 10 Skill: Application LO: 6

66) Rodrigo is employed as a window washer for multiple skyscrapers in Chicago. Rodrigo receives additional pay for working under extremely dangerous conditions. Rodrigo most likely earns ________. A) supplemental pay B) overtime pay C) premier pay D) hazard pay Answer: D Explanation: D) Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. Window washers of skyscrapers and military pilots often receive hazard pay for their precarious working conditions. Diff: 2 Page Ref: 276 Chapter: 10 Skill: Application LO: 6 67) Sara works from midnight until 8:00 a.m. as a technician at a manufacturing facility and earns an extra $3.00 per hour for the inconvenience. Which of the following does Sara most likely receive? A) supplemental wage pay B) shift differential pay C) overtime pay D) hazard pay Answer: B Explanation: B) Sara receives shift differential pay for the inconvenience of working undesirable hours. This type of pay may be provided as additional compensation per hour and is used extensively in the health care practitioners and technical occupations. Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. Diff: 2 Page Ref: 276 Chapter: 10 Skill: Application LO: 6 68) Additional money paid to an employee for the inconvenience of working undesirable hours is known as ________. A) overtime pay B) base pay C) hazard pay D) shift differential pay Answer: D Explanation: D) Shift differential pay is for the inconvenience of working undesirable hours. This type of pay may be provided as additional compensation per hour and is used extensively in the health care practitioners and technical occupations. Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. Diff: 1 Page Ref: 276

Chapter: 10 Skill: Application LO: 6 69) Hazard pay and shift differential pay are types of ________. A) customized benefits B) overtime pay C) voluntary benefits D) premium pay Answer: D Explanation: D) Premium pay is compensation paid to employees for working long periods of time or working under dangerous or undesirable conditions. Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. Shift differential pay is for the inconvenience of working undesirable hours. Diff: 1 Page Ref: 276 Chapter: 10 Skill: Concept LO: 6 70) Through her employer, Jillian is able to purchase vision and dental insurance at a reduced rate. Jillian's employer pays any administrative fees. Jillian's employer most likely offers ________. A) voluntary benefits B) customized benefits C) health savings accounts D) flexible spending accounts Answer: A Explanation: A) As firms search for ways to reduce costs, many organizations are moving to voluntary benefits which are 100 percent paid by the employee but the employer typically pays the administrative cost. Common voluntary benefits include vision insurance, dental insurance, and long-term care insurance. Diff: 2 Page Ref: 276 Chapter: 10 Skill: Application LO: 4 71) Which of the following permits employees to make yearly selections to largely determine their compensation package by choosing between taxable cash and numerous benefits? A) employee stock option plans B) customized benefit plans C) health savings accounts D) flexible spending plans Answer: B Explanation: B) Customized benefit plans permit employees to make yearly selections to largely determine their benefit package by choosing between taxable cash and numerous benefits. Customized plans permit flexibility in allowing each employee to determine the compensation components that best satisfy his or her particular needs.

Diff: 1 Page Ref: 277 Chapter: 10 Skill: Concept LO: 5 72) Which law gives employees the opportunity to temporarily continue their health insurance coverage if they are terminated from their job? A) Health Insurance Portability and Accountability Act B) Consolidated Omnibus Budget Reconciliation Act C) Americans with Disabilities Act D) Rehabilitation Act Answer: B Explanation: B) The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 was enacted to give employees the opportunity to temporarily continue their coverage, which they would otherwise lose because of termination, layoff, or other changes in employment status. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provide protection for Americans who move from one job to another, who are self-employed, or who have preexisting medical conditions. Diff: 2 Page Ref: 277 Chapter: 10 Skill: Concept LO: 7 73) Jeff lost his job in November 2010. According to COBRA, Jeff may keep his employer's health care coverage until ________. A) December 2010 B) May 2011 C) November 2011 D) May 2012 Answer: D Explanation: D) Under COBRA, individuals may keep their coverage, as well as coverage for their spouses and dependents, for up to 18 months after their employment ceases. The individual, however, must pay for this health insurance, and it is expensive. Diff: 3 Page Ref: 277 Chapter: 10 Skill: Application LO: 7

74) Which law provides protection for workers who are self-employed or move from one job to another? A) Health Insurance Portability and Accountability Act B) Consolidated Omnibus Budget Reconciliation Act C) Americans with Disabilities Act D) Rehabilitation Act Answer: A Explanation: A) The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provide protection for Americans who move from one job to another, who are selfemployed, or who have preexisting medical conditions. The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 was enacted to give employees the opportunity to temporarily continue their coverage, which they would otherwise lose because of termination, layoff, or other changes in employment status. Diff: 2 Page Ref: 277 Chapter: 10 Skill: Concept LO: 7 75) Anne, who has a preexisting medical condition, recently changed jobs. Which legislation was passed to protect individuals such as Anne? A) Patient Protection and Affordable Care Act B) Family and Medical Leave Act C) Health Insurance Portability and Accountability Act D) Consolidated Omnibus Budget Reconciliation Act Answer: C Explanation: C) The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provide protection for Americans who move from one job to another, who are selfemployed, or who have preexisting medical conditions. The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 was enacted to give employees the opportunity to temporarily continue their coverage, which they would otherwise lose because of termination, layoff, or other changes in employment status. Diff: 2 Page Ref: 277 Chapter: 10 Skill: Application LO: 7

76) The primary reason for enacting ERISA was to ________. A) force insurance companies to accept workers with preexisting medical conditions B) extend long-term healthcare coverage to unemployed individuals C) require employers to create employee retirement plans D) strengthen current and future retirement programs Answer: D Explanation: D) The Employee Retirement Income Security Act (ERISA) of 1974 strengthens existing and future retirement programs. Mismanagement of retirement funds was the primary spur for this legislation. Diff: 3 Page Ref: 277-278 Chapter: 10 Skill: Concept LO: 7 77) The intent of which Act is to ensure that when employees retire, they receive deserved pensions? A) Health Insurance Portability and Accountability Act B) Consolidated Omnibus Budget Reconciliation Act C) Older Workers Benefit Protection Act D) Employee Retirement Income Security Act Answer: D Explanation: D) The Employee Retirement Income Security Act (ERISA) of 1974 strengthens existing and future retirement programs. Mismanagement of retirement funds was the primary spur for this legislation that intends to protect employee pensions. Diff: 2 Page Ref: 277-278 Chapter: 10 Skill: Concept LO: 7 78) Which Act is a 1990 amendment to the ADEA and extends its coverage to all employee benefits? A) Health Insurance Portability and Accountability Act B) Consolidated Omnibus Budget Reconciliation Act C) Older Workers Benefit Protection Act D) Employee Retirement Income Security Act Answer: C Explanation: C) The Older Workers Benefit Protection Act of 1990 (OWBPA), an amendment to the Age Discrimination in Employment Act, prohibits discrimination in the administration of benefits on the basis of age, but also permits early retirement incentive plans as long as they are voluntary. Diff: 2 Page Ref: 278 Chapter: 10 Skill: Concept LO: 7

79) Which law prohibits discrimination in the administration of benefits on the basis of age, but also permits early retirement incentive plans as long as they are voluntary? A) Rehabilitation Act B) Civil Rights Act of 1964 C) Age Discrimination Act D) Older Workers Benefit Protection Act Answer: D Explanation: D) The Older Workers Benefit Protection Act of 1990 (OWBPA), an amendment to the Age Discrimination in Employment Act, prohibits discrimination in the administration of benefits on the basis of age, but also permits early retirement incentive plans as long as they are voluntary. Diff: 2 Page Ref: 278 Chapter: 10 Skill: Concept LO: 7 80) Which of the following employers must comply with the Family and Medical Leave Act? A) Rand Automotive, 24 employees B) Compton Electronics, 47 employees C) McKnight Publishing, 82 employees D) all of the above Answer: C Explanation: C) The Family and Medical Leave Act (FMLA) of 1993 applies to private employers with 50 or more employees and to all governmental employers regardless of number. Therefore, only McKnight Publishing would be required to comply with FMLA guidelines. Diff: 2 Page Ref: 278 Chapter: 2 Skill: Application LO: 7 81) Which Act provides employees up to 12 weeks a year of unpaid leave in specified situations? A) Social Security Act B) Family and Medical Leave Act C) Fair Labor Standards Act D) Patient Protection and Affordable Care Act Answer: B Explanation: B) The Family and Medical Leave Act (FMLA) of 1993 applies to private employers with 50 or more employees and to all governmental employers regardless of number. The FMLA provides employees up to 12 weeks a year of unpaid leave in specified situations. Diff: 2 Page Ref: 278 Chapter: 10 Skill: Concept

82) Which Act contains a variety of provisions designed to strengthen the funding rules for defined benefit pension plans? A) Older Workers Benefit Protection Act B) Civil Rights Act of 1964 C) Pension Protection Act D) Rehabilitation Act Answer: C Explanation: C) The Pension Protection Act (PPA) of 2006 contains a variety of provisions designed to strengthen the funding rules for defined benefit pension plans. The bill seeks to ensure that employers make greater contributions to their pension funds. Diff: 1 Page Ref: 278 Chapter: 10 Skill: Concept LO: 7 83) All of the following are true about the Patient Protection and Affordable Care Act of 2010 EXCEPT that ________. A) individuals cannot be denied health insurance because of a pre-existing condition B) insurance companies cannot cancel a policy if the insured becomes sick C) individuals who do not purchase health insurance will be fined D) children over 21 cannot remain on their parents' policy Answer: D Explanation: D) According to the Patient Protection and Affordable Care Act of 2010, individuals must purchase health insurance or risk being fined; children can stay on their parents' policy until they are 26 years old; insurance companies cannot cancel a policy if the insured gets sick; and a person cannot be denied insurance simply because they have a pre-existing health condition. Diff: 3 Page Ref: 278-279 Chapter: 10 Skill: Concept LO: 7 84) According to the text, how did MedStar improve employee satisfaction with the firm's compensation and benefits? A) communicating information about the program B) adding stock option plans as a benefit C) offering flexible spending accounts D) increasing employee coverage Answer: A Explanation: A) According to research, 70% of MedStar employees were dissatisfied with the firm's compensation and benefits program because they did not believe them to be competitive. However, MedStar's compensation and benefits were competitive, which the firm communicated to workers. By improving communication, the firm improved employee satisfaction. Diff: 3 Page Ref: 279 Chapter: 10

Skill: Concept LO: 8 85) What are the two components of nonfinancial compensation? A) job and salary B) job and job environment C) salary and job environment D) premium pay and job schedule Answer: B Explanation: B) The components of nonfinancial compensation consist of the job itself and the job environment. Salary and premium pay are financial compensations. Diff: 2 Page Ref: 279 Chapter: 10 Skill: Concept LO: 9 86) Steve is employed as an accounts manager at an advertising agency. Steve has been offered a similar position at another firm for an equivalent salary and benefits package. When making his decision, Steve should focus primarily on nonfinancial compensation factors. Which of the following questions is LEAST relevant to Steve's decision to remain at his current job? A) Is the job meaningful and challenging? B) Is the employee stock option plan risky? C) Is there a possibility for increased responsibility? D) Is there an opportunity for growth and achievement? Answer: B Explanation: B) A stock option plan is a type of financial compensation, so it is less relevant to nonfinancial compensation factors. Steve needs to consider whether his current job is challenging and whether it will allow him to advance and grow. Diff: 3 Page Ref: 279-280 Chapter: 10 Skill: Critical Thinking LO: 9 87) Which of the following is a job environment factor that is part of a total compensation package? A) sound policies B) working conditions C) congenial co-workers D) all of the above Answer: D Explanation: D) Policies, working conditions, and co-workers are elements of the job environment that serve as nonfinancial compensation factors. For a job to be satisfactory, the physical environment, practices, and people need to be satisfactory as well. Diff: 1 Page Ref: 280-282 Chapter: 10 Skill: Concept

88) Policies that improve the job environment for employees will most likely ________. A) encourage high standards B) establish arbitrary rules C) require little documentation D) restrict creative activities Answer: A Explanation: A) If a firm's policies show consideration rather than disrespect, fear, doubt, or lack of confidence, the result can be rewarding to both the employees and the organization. Policies that are arbitrary and too restrictive alienate people, but policies that encourage high standards are beneficial. Diff: 2 Page Ref: 280-281 Chapter: 10 Skill: Concept LO: 10 89) Which term refers to organizational rewards such as office location, desk size, and job title? A) intangible rewards B) perquisites C) status symbols D) motivators Answer: C Explanation: C) Status symbols are organizational rewards that take many forms such as office size and location, desk size and quality, how close one's private parking space is to the office, floor covering, and job title. Perks are limited to key executives and include limousines and company cars. Diff: 1 Page Ref: 281 Chapter: 10 Skill: Concept LO: 10 90) All of the following are used by firms to assist employees with achieving a work-life balance EXCEPT ________. A) job sharing B) telecommuting C) job enlarging D) compressed workweeks Answer: C Explanation: C) For employers, creating a balanced worklife environment can be a key strategic factor in attracting and retaining the most talented employees, so many firms offer flextime, a compressed workweek, job sharing, and telecommuting. Job enlarging involves increasing an employee's tasks, so it does not increase a worker's time flexibility. Diff: 2 Page Ref: 282 Chapter: 10 Skill: Concept

91) Max, a newspaper photographer, is allowed to choose his own working hours, within certain limitations. Which of the following is most likely offered by Max's employer? A) telecommuting B) job sharing C) part-time work D) flextime Answer: D Explanation: D) Flextime is the practice of permitting employees to choose their own working hours, within certain limitations. In job sharing, two part-time people split the duties of one job in some agreed-on manner and are paid according to their contributions. Diff: 2 Page Ref: 283 Chapter: 10 Skill: Application LO: 11 92) In a flextime system, core time is when ________. A) employees may vary their schedules B) employees must report to meetings C) all employees must be present D) all employees change shifts Answer: C Explanation: C) In a flextime system, employees typically work the same number of hours per day as they would on a standard schedule. However, they work these hours within what is called a bandwidth, which is the maximum length of the workday. Core time is that part of the day when all employees must be present. Flexible time is the period within which employees may vary their schedules. Diff: 2 Page Ref: 282-283 Chapter: 10 Skill: Concept LO: 11 93) An employee who works four 10-hour days is most likely working under which of the following arrangements? A) flextime B) telecommuting C) compressed work week D) executive job sharing plan Answer: C Explanation: C) The compressed work week is an arrangement of work hours that permits employees to fulfill their work obligation in fewer days than the typical five-day, eight-hour-a-day, work week. A common compressed work week is four 10-hour days. In a flextime system, employees typically work the same number of hours per day as they would on a standard schedule. Diff: 2 Page Ref: 283 Chapter: 10 Skill: Concept

LO: 11 94) Which of the following most likely attracts people who want to work fewer than forty hours per week? A) flextime B) job sharing C) telecommuting D) compressed work week Answer: B Explanation: B) Job sharing is an approach to work that is attractive to people who want to work fewer than 40 hours per week. In job sharing, two part-time people split the duties of one job in some agreed-on manner and are paid according to their contributions. Diff: 2 Page Ref: 283 Chapter: 10 Skill: Concept LO: 11 95) If two part-time people split the duties of one job and are paid according to their contributions then they are most likely participating in ________. A) succession planning B) flexible sharing C) telecommuting D) job sharing Answer: D Explanation: D) In job sharing, two part-time people split the duties of one job in some agreed-on manner and are paid according to their contributions. Telecommuting is a work arrangement whereby employees are able to remain at home and perform their work using computers and other electronic devices that connect them with their offices. Diff: 1 Page Ref: 283 Chapter: 10 Skill: Concept LO: 11 96) A work arrangement whereby employees are able to remain at home and perform their work using computers that connect them with their offices is referred to as ________. A) gainsharing B) broadbanding C) job sharing D) telecommuting Answer: D Explanation: D) Telecommuting is a work arrangement whereby employees are able to remain at home (or otherwise away from the office) and perform their work using computers and other electronic devices that connect them with their offices. Diff: 1 Page Ref: 284 Chapter: 10 Skill: Concept

97) Which of the following jobs is most appropriate for telecommuting? A) machine operator B) college professor C) computer programmer D) sales representative Answer: C Explanation: C) Telecommuters generally are information workers. They accomplish jobs that require, for example, analysis, research, writing, budgeting, data entry, or computer programming. Teleworkers also include illustrators, loan executives, architects, attorneys, and publishers. Diff: 2 Page Ref: 284 Chapter: 10 Skill: Concept LO: 11 98) Which of the following is most likely an advantage of allowing employees to telecommute? A) decreased cost of health insurance coverage B) improved manager-employee relationships C) decreased need for office space D) improved team building Answer: C Explanation: C) One advantage of telecommuting is that it eliminates the need for office space. However, telecommuting may weaken the ties between employees and their firms and between employees and their co-workers. Telecommuting has little effect on health benefits. Diff: 3 Page Ref: 284 Chapter: 10 Skill: Concept LO: 11 99) Which of the following is a potential problem associated with telecommuting? A) using technology B) handling overtime C) requiring relocation D) complying with the ADA Answer: B Explanation: B) A concern that has crept into using telecommuting is how does a company handle the mandates of overtime, minimum wage, and recordkeeping provisions for all employees not considered exempt under FLSA. With their notebook computer in hand, employees can handle duties that are normally required at the office. An employer who permits a new mother to remain at home, taking care of the baby, certainly does not work a straight eight-hour shift. The question then arises as to how long she has worked, assuming that she is a nonexempt employee. Diff: 3 Page Ref: 284-285 Chapter: 10

100) Which of the following is the LEAST likely advantage to firms that offer part-time employment? A) reduced nonfinancial compensation B) improved work-life balance C) reduced worker turnover D) improved productivity Answer: A Explanation: A) Firms that offer part-time employment are meeting the demands of workers who want a better work-life balance. Companies that offer part-time employment show increased rates of productivity and less employee turnover than other companies. Although financial compensation would decrease, nonfinancial compensation is less likely to change. Diff: 3 Page Ref: 285-286 Chapter: 10 Skill: Concept LO: 11 True/False and Essay Questions 1) Surveys indicate that benefits and job security are the most important factors in job satisfaction. Answer: TRUE Explanation: According to a recent SHRM survey, benefits are the second most important driver of job satisfaction, coming in just behind job security. Diff: 2 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1 2) As a rule, employees receive benefits because of their productivity in an organization. Answer: FALSE Explanation: As a rule, employees receive benefits because of their membership in the organization. Benefits are typically unrelated to employee productivity; therefore, although they may be valuable in recruiting and retaining employees, they do not generally serve as motivation for improved performance. Diff: 2 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1

3) Benefits do not generally serve as motivation for improved performance Answer: TRUE Explanation: As a rule, employees receive benefits because of their membership in the organization. Benefits are typically unrelated to employee productivity; therefore, although they may be valuable in recruiting and retaining employees, they do not generally serve as motivation for improved performance. Diff: 2 Page Ref: 266 Chapter: 10 Skill: Concept LO: 1 4) According to the U.S. Bureau of Labor Statistics, benefits account for nearly 60 percent of employers' total compensation costs. Answer: FALSE Explanation: According to the U.S. Bureau of Labor Statistics, benefits account for nearly 30 percent of employers' total compensation costs, but over the past decade, the change in benefits costs has outpaced the change in the cost of wages and salaries. Diff: 2 Page Ref: 267 Chapter: 10 Skill: Concept LO: 1 5) The Social Security Act of 1935 created a system of retirement benefits. Answer: TRUE Explanation: The Social Security Act of 1935 created a system of retirement benefits. It also established the Social Security Administration. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 6) Disability insurance, survivors' benefits, Medicare, and unemployment insurance are provided by and administered by the Social Security Administration. Answer: FALSE Explanation: The Social Security Administration oversees disability insurance, survivors' benefits, and Medicare. Unemployment insurance is based on both federal and state statutes and, although the federal government provides guidelines, the programs are administered by the states rather than the SSA. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2

7) Unemployment insurance provides workers whose jobs have been terminated through no fault of their own, monetary payments for up to 26 weeks. Answer: TRUE Explanation: Unemployment insurance provides workers whose jobs have been terminated through no fault of their own monetary payments for up to 26 weeks or until they find a new job. The intent of unemployment payments is to provide an unemployed worker time to find a new job equivalent to the one lost without suffering financial distress. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 8) Individual states administer both unemployment insurance and workers' compensation benefits. Answer: TRUE Explanation: As with unemployment compensation, the various states administer individual programs, which are subject to federal regulations. Diff: 2 Page Ref: 268 Chapter: 10 Skill: Concept LO: 2 9) The Family and Medical Leave Act apply to private employers with 30 or more employees and to all governmental employers regardless of number. Answer: FALSE Explanation: The Family and Medical Leave Act (FMLA) of 1993 applies to private employers with 50 or more employees and to all governmental employers regardless of number. Diff: 2 Page Ref: 278 Chapter: 10 Skill: Concept LO: 7 10) A growing number of companies are replacing sick leave and vacation time with paid time off to simplify administration. Answer: TRUE Explanation: In lieu of sick leave, vacation time, and a personal day or two, a growing number of companies are providing paid time off (PTO), a certain number of days off provided each year that employees can use for any purpose. There are numerous possible benefits for PTO, including simpler administration, fewer carry-over issues, high employee satisfaction, and fewer creative excuses for time off. Diff: 2 Page Ref: 269 Chapter: 10 Skill: Concept LO: 3

11) Sabbaticals are temporary leaves of absence from an organization, usually at a reduced amount of pay. Answer: TRUE Explanation: Sabbaticals are temporary leaves of absence from an organization, usually at reduced pay. Although sabbaticals have been used for years in the academic community, they have only recently entered the private sector. Diff: 1 Page Ref: 270 Chapter: 10 Skill: Concept LO: 3 12) According to the Fair Labor Standards Act, firms are required to give employees a 10 minute rest break every four hours. Answer: FALSE Explanation: The Fair Labor Standards Act does not require employers to give workers a rest break, and only 10 states require it to be given. Usually the break mandated is 10 minutes for every four hours worked. Diff: 2 Page Ref: 270 Chapter: 10 Skill: Concept LO: 3 13) The aging population and inefficient administrative processes have been factors in the rising cost of health care. Answer: TRUE Explanation: A number of factors have combined to create the high cost of health care including an aging population, a growing demand for medical care, increasingly expensive medical technology, and inefficient administrative processes. Diff: 2 Page Ref: 270 Chapter: 10 Skill: Concept LO: 3 14) Health maintenance organizations cover all services for a fixed fee but control is exercised over which doctors and health facilities a member may use. Answer: TRUE Explanation: Health maintenance organizations (HMOs) cover all services fora fixed fee but exercise control over which doctors and health facilities a member may use. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3

15) Point-of-service plans require members to obtain specialist referrals from primary care physicians. Answer: TRUE Explanation: Preferred provider organizations are managed-care health organizations in which incentives are provided to members to use services within the system; out-ofnetwork providers may be used at greater cost. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 16) Health maintenance organizations offer a smaller PPO provider network and usually provide little, if any, benefits when an out-of-network provider is used. Answer: FALSE Explanation: Exclusive provider organizations (EPOs) offer a smaller PPO provider network and usually provides little, if any, benefits when an out-of-network provider is used. Health maintenance organizations (HMOs) cover all services for a fixed fee but exercise control over which doctors and health facilities a member may use. Diff: 1 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 17) With a health savings account, an employee can set aside an unlimited amount of pretax funds to pay for medical expenses. Answer: FALSE Explanation: HSAs let workers put up to $6,150 a year in a pretax account that they can tap for medical expenses. Individuals deposit money on a pretax basis to pay for doctor visits, prescriptions, and other expenses, as well as to save for future medical expenses and build savings long-term. Diff: 2 Page Ref: 271 Chapter: 10 Skill: Concept LO: 3 18) A primary disadvantage of flexible spending accounts is the requirement regarding the submission of receipts for reimbursement purposes. Answer: FALSE Explanation: With FSAs, there is no requirement to submit receipts for reimbursement. Instead, your purchase is deducted from the balance in the account. Diff: 2 Page Ref: 271-272 Chapter: 10 Skill: Concept LO: 3

19) Money deposited into FSAs can be rolled over into the next year, while HSA funds left over at the end of the year are forfeited. Answer: FALSE Explanation: A disadvantage of an FSA is that generally, employees forfeit any amounts left unspent in the accounts at year-end. However, any amount in an HSA left over at the end of the year may be used to pay medical expenses in future years. Diff: 2 Page Ref: 272-273 Chapter: 10 Skill: Concept LO: 3 20) On-site healthcare is a benefit offered by many firms that serves to curb health care costs and improve employee productivity. Answer: TRUE Explanation: On-site health care is one way of curbing health care costs and also providing an employee benefit. Employers can reduce the number of visits employees make to more costly facilities, and employees are less likely to leave work to take care of minor injuries and illnesses. Diff: 2 Page Ref: 272 Chapter: 10 Skill: Concept LO: 3 21) A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Answer: TRUE Explanation: A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Although defined benefit formulas vary, they are typically based on the participant's final years' average salary and years of service. Diff: 1 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 22) The popularity of defined benefit plans has remained steady for many years, but interest in the risky plans has dropped sharply during the 2008/2010 recession. Answer: TRUE Explanation: Use of defined benefit plans has declined in recent years. However, many workers lost considerable money in their 401(k)s during the recession of 2008/10, causing them to have more faith in defined benefit plans, which provide participants with fixed benefits upon retirement. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3

23) A defined contribution plan requires specific contributions by an employer to an employee's retirement or savings fund. Answer: TRUE Explanation: A defined contribution plan is a retirement plan that requires specific contributions by an employer to a retirement or savings fund established for the employee. The majority of Fortune 100 companies now offer new salaried employees only a defined contribution plan. Diff: 1 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 24) A 401(k) plan is a defined benefit plan in which employees may defer income up to a maximum amount allowed. Answer: FALSE Explanation: A 401(k) plan is a defined contribution plan in which employees may defer income up to a maximum amount allowed. A defined benefit plan is a formal retirement plan that provides the participant with a fixed benefit upon retirement. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 25) The 2008/2010 recession caused 401(k) balances to fall sharply and firms to reduce or eliminate 401(k) matching plans. Answer: TRUE Explanation: Assets in IRAs and defined contribution plans such as 401(k)s fell more than $2 trillion in 2008. From the end of 2007 to the end of March 2009, the average 401(k) balance fell 31 percent. As a result of the recession, some firms have reduced or eliminated their matches to the account. Diff: 2 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3 26) A cash balance plan is a hybrid retirement fund with elements of both defined benefit and defined contribution plans. Answer: TRUE Explanation: For some organizations, a hybrid fund may be the desired approach to retirement plans. A cash balance plan is a plan with elements of both defined benefit and defined contribution plans. Diff: 1 Page Ref: 273 Chapter: 10 Skill: Concept LO: 3

27) Employee stock option plans, which are limited to key executives, allow employees to sell shares prior to retirement. Answer: FALSE Explanation: ESOPs were long reserved for executives, but now they are often offered to employees working at lower levels in the firm. Although the potential benefits of ESOPs are attractive, some employees want the ability to sell their shares prior to retirement, which ESOPs do not allow. Diff: 2 Page Ref: 274 Chapter: 10 Skill: Concept LO: 3 28) Most advocates of ESOPs appreciate the stability of these retirement plans, as shown during the recession of 2008/2010. Answer: FALSE Explanation: Many people do not want to take the chance that the stock is going to be less valuable when they retire. Periods of wild rides in the stock market, such as with the recession of 2008/10, also dampen worker enthusiasm for ESOPs. Diff: 2 Page Ref: 274 Chapter: 10 Skill: Concept LO: 3 29) Company child care arrangements have been linked to reduced absenteeism and enhanced retention and recruiting. Answer: TRUE Explanation: Company child-care arrangements tend to reduce absenteeism, protect employee productivity, enhance retention and recruiting, promote the advancement of women, and make the firm an employer of choice. According to the National Conference of State Legislatures, an estimated 80 percent of employees miss work due to unexpected child-care coverage issues. Diff: 2 Page Ref: 274 Chapter: 10 Skill: Concept LO: 3 30) Internal Revenue Service regulations allow for educational assistance benefits to be non-taxable up to $10,000 per year. Answer: FALSE Explanation: Educational assistance plans can go a long way in improving employee retention. Internal Revenue Service regulations allow for educational assistance benefits to be nontaxable up to $5,250 per year, although the average educational reimbursement by employers is $1,600 per year. Diff: 2 Page Ref: 275 Chapter: 10 Skill: Concept LO: 3

31) Most firms that offer food services hope to enhance employee morale and increase worker productivity. Answer: TRUE Explanation: Firms that supply food services or subsidized cafeterias hope to increase productivity, minimize wasted time, enhance employee morale, and develop a healthier workforce. Diff: 1 Page Ref: 275 Chapter: 10 Skill: Concept LO: 3 32) Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. Answer: TRUE Explanation: Additional pay provided to employees who work under extremely dangerous conditions is called hazard pay. A window washer for skyscrapers in New York City might receive extra compensation because of the precarious working conditions. Diff: 1 Page Ref: 276 Chapter: 10 Skill: Concept LO: 6 33) COBRA gives employees the opportunity to temporarily continue their health insurance coverage after a termination or layoff. Answer: TRUE Explanation: The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 was enacted to give employees the opportunity to temporarily continue their coverage, which they would otherwise lose because of termination, layoff, or other changes in employment status. The Act applies to employers with 20 or more employees. Diff: 2 Page Ref: 277 Chapter: 10 Skill: Concept LO: 7 34) The Health Insurance Portability and Accountability Act includes a regulation designed to protect the privacy of personal health information. Answer: TRUE Explanation: The Health Insurance Portability and Accountability Act (HIPAA) of 1996 provide protection for Americans who move from one job to another, who are selfemployed, or who have preexisting medical conditions. As an element of HIPAA, there is now a regulation designed to protect the privacy of personal health information. Diff: 2 Page Ref: 277 Chapter: 10 Skill: Concept LO: 7

35) The Employee Retirement Income Security Act requires employers to create and fund employee retirement plans and sets vesting standards. Answer: FALSE Explanation: ERISA does not force employers to create employee retirement plans. It does set standards in the areas of participation, vesting of benefits, and funding for existing and new plans. Diff: 2 Page Ref: 277-278 Chapter: 10 Skill: Concept LO: 7 36) Nonfinancial compensation factors such as capable managers and congenial coworkers can increase employee satisfaction. Answer: TRUE Explanation: A job's physical environment is a nonfinancial compensation factor and includes sound policies, capable managers, and friendly co-workers. Diff: 2 Page Ref: 280-281 Chapter: 10 Skill: Concept LO: 10 37) Flextime is the practice of permitting employees to choose their own working hours, within certain limitations. Answer: TRUE Explanation: Flextime is the practice of permitting employees to choose their own working hours, within certain limitations. With flextime, workers usually work the same number of hours per day as with a standard schedule. Diff: 1 Page Ref: 282 Chapter: 10 Skill: Concept LO: 11 38) Employees on a compressed work week split the duties of one job and work less than forty hours a week. Answer: FALSE Explanation: The compressed work week is an arrangement of work hours that permits employees to fulfill their work obligation in fewer days than the typical five-day, eighthour-a-day, work week. In job sharing, two part-time people split the duties of one job in some agreed-on manner and are paid according to their contributions. Diff: 2 Page Ref: 283 Chapter: 10 Skill: Concept LO: 11

39) Telecommuting is limited to information workers because jobs in the fields of banking and architecture require employees to work in a corporate office. Answer: FALSE Explanation: Telecommuters generally are information workers. They accomplish jobs that require, for example, analysis, research, writing, budgeting, data entry, or computer programming. Teleworkers also include illustrators, loan executives, architects, attorneys, and publishers. Diff: 2 Page Ref: 284 Chapter: 10 Skill: Concept LO: 11 40) Firms that offer part-time employment opportunities are shown to benefit from improved worker productivity and reduced employee turnover. Answer: TRUE Explanation: Companies that offer part-time employment show increased rates of productivity and less employee turnover than other companies. Part-time employment adds many highly qualified individuals to the labor market by permitting employees to address both job and personal needs. Diff: 2 Page Ref: 285-286 Chapter: 10 Skill: Concept LO: 11 Human Resource Management, 12e (Mondy) Chapter 11: A Safe and Healthy Work Environment Multiple-Choice Questions 1) Studies show that workplace smoking has all of the following effects EXCEPT ________. A) reducing health care resources B) increasing employee turnover C) reducing worker productivity D) increasing absenteeism Answer: B Explanation: B) Numerous studies have concluded that workplace smoking is not only hazardous to employees' health, but is also detrimental to the firm's financial health. Employees who smoke consume more health care resources, experience greater absenteeism, and tend to be less productive while at work. Diff: 2 Page Ref: 293 Chapter: 11 Skill: Concept LO: 1 2) What involves protecting employees from injuries caused by work-related accidents? A) safety

B) health C) wellness D) morale Answer: A Explanation: A) Safety involves protecting employees from injuries caused by workrelated accidents. Included within the umbrella definition of safety are factors related to repetitive stress injuries and workplace and domestic violence. Health refers to employees' freedom from physical or emotional illness. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 1

3) The owner of Hanson Manufacturing is considering the idea of establishing a smokefree workplace and instigating an incentive plan to encourage employees to quit smoking. According to CDC research, Hanson Manufacturing will gain approximately ________ in productivity from each smoker who quits the habit. A) $200 B) $500 C) $2,000 D) $5,000 Answer: C Explanation: C) The CDC concluded that each employee who smokes costs employers $1,897 in lost productivity each year. Businesses pay an average of $2,189 in workers' compensation costs for smokers, compared with $176 for nonsmokers. Diff: 2 Page Ref: 293 Chapter: 11 Skill: Application LO: 1 4) What term refers to employees' freedom from physical or emotional illness? A) safety B) health C) prevention D) morale Answer: B Explanation: B) Health refers to employees' freedom from physical or emotional illness. Safety involves protecting employees from injuries caused by work-related accidents. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 1 5) What agency enforces the Occupational Safety and Health Act? A) Office of Federal Contract Compliance Programs B) National Safety Administration C) Occupational Safety and Health Administration D) Equal Employment Opportunity Commission Answer: C Explanation: C) The Occupational Safety and Health Act of 1970 created the Occupational Safety and Health Administration (OSHA). OSHA aims to ensure worker safety and health in the United States by working with employers and employees to create better working environments. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 2

6) Which of the following was created to ensure worker safety and health? A) ADEA B) FLSA C) OSHA D) EEOC Answer: C Explanation: C) The Occupational Safety and Health Act of 1970 created the Occupational Safety and Health Administration (OSHA). OSHA aims to ensure worker safety and health in the United States by working with employers and employees to create better working environments. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 2 7) In order to prove that an employer has violated the general duty clause, OSHA must prove all of the following exist EXCEPT that ________. A) the hazard was likely to cause minor injuries B) a condition in the workplace presented a hazard C) a feasible means existed to reduce the hazard D) the employer or its industry recognized the hazard Answer: A Explanation: A) In order to prove a violation of the general duty clause, OSHA has to demonstrate: 1) That a condition or activity in the workplace presented a hazard; 2) That the employer or its industry recognized this hazard; 3)That the hazard was likely to cause death or serious physical harm; and 4) That a feasible and effective means existed to eliminate or materially reduce the hazard. Minor hazards would not necessarily warrant a general duty clause violation. Diff: 3 Page Ref: 294-295 Chapter: 11 Skill: Concept LO: 2 8) Since its inception, OSHA has helped to cut workplace fatalities by how much? A) 10 percent B) 30 percent C) 60 percent D) 90 percent Answer: C Explanation: C) Since its inception, OSHA has helped to cut workplace fatalities by more than 60 percent and occupational injury and illness by 40 percent. At the same time, U.S. employment has more than doubled from 56 million workers at 3.5 million worksites to 147 million workers at 7.2 million sites. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2

9) Since its inception, OSHA has helped to cut occupational injury and illness rates by how much? A) 10% B) 40% C) 80% D) 100% Answer: B Explanation: B) Since its inception, OSHA has helped to cut workplace fatalities by more than 60 percent and occupational injury and illness by 40 percent. At the same time, U.S. employment has more than doubled from 56 million workers at 3.5 million worksites to 147 million workers at 7.2 million sites. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 10) Approximately, how many inspectors does OSHA have? A) 500 B) 1,000 C) 2,500 D) 5,000 Answer: B Explanation: B) OSHA has more than 2,220 employers of which 1,100 are inspectors. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 11) ABC Manufacturing received one citation for a serious hazard. What is the maximum penalty for this violation? A) $13,000 B) $11,000 C) $9,000 D) $7,000 Answer: D Explanation: D) A serious hazard citation has a maximum penalty of $7,000. A willful citation might have a maximum amount of $70,000 per violation. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Application LO: 2

12) If 10 employees were exposed to one hazard that the employer intentionally did not eliminate, what would be the maximum penalty? A) $400,000 B) $500,000 C) $600,000 D) $700,000 Answer: D Explanation: D) A willful citation might have a maximum amount of $70,000 per violation. Calculated instance by instance, if 10 employees were exposed to one hazard the employer intentionally did not eliminate, the penalty amount would immediately jump to $700,000. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Application LO: 2 13) OSHA has authorized stricter enforcement measures for employers that ________. A) employ illegal immigrants B) fail to provide bilingual safety information C) frequently request voluntary safety checks D) repeatedly violate health and safety standards Answer: D Explanation: D) OSHA has authorized stricter enforcement measures for manufacturers and other employers that repeatedly violate health and safety standards. In 2009, managers at more than 13,500 workplaces received letters notifying them that their rates of days away from work, restricted work, or job transfer injury and illness were higher than average based on a survey of 80,000 worksites' 2007 safety data. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 14) Thompson Manufacturing has been designated a recalcitrant employer by OSHA. As a result, Thompson will most likely ________. A) receive a stern warning B) close its facilities immediately C) experience numerous inspections D) downsize its staff and hire contractors Answer: C Explanation: C) OSHA implemented the Severe Violator Enforcement Program that will increase inspections at worksites where "recalcitrant employers" have repeatedly violated safety regulations and endangered workers. The firm would likely already have received citations, but closing the facility and downsizing are less likely to occur. Diff: 3 Page Ref: 295 Chapter: 11 Skill: Application LO: 2

15) Which of the following firms recently received the largest fine in OSHA's history? A) BP B) GM C) Exxon D) Toyota Answer: A Explanation: A) Recently, BP Products North America Inc. received the largest fine in OSHA's history, $87,430,000 for its failure to correct hazards faced by employees at its Texas City refinery. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 16) Most employers only see OSHA inspectors when ________. A) safety engineers quit their jobs B) management conducts safety checks C) employees file safety violation complaints D) human resource managers request inspections Answer: C Explanation: C) The average employer will not likely see an OSHA inspector unless an employee instigates an inspection. About 70 percent of OSHA inspections have resulted from employee complaints. Diff: 2 Page Ref: 296-297 Chapter: 11 Skill: Concept LO: 2 17) Roughly what percentage of OSHA inspections have resulted from employee complaints? A) 20% B) 50% C) 70% D) 90% Answer: C Explanation: C) The average employer will not likely see an OSHA inspector unless an employee instigates an inspection. About 70 percent of OSHA inspections have resulted from employee complaints. Diff: 2 Page Ref: 295-296 Chapter: 11 Skill: Concept LO: 2

18) If the employer denies OSHA access to certain documents, what will OSHA most likely do? A) file a lawsuit against the employer B) obtain permission from an OSHA administrator C) obtain an administrative subpoena D) ask the local police to accompany them on the visit Answer: C Explanation: C) When OSHA inspectors come to a site, the employer has the option of denying the inspector access to the worksite. If the employer refuses access to view certain documents, OSHA must obtain an administrative subpoena. Diff: 3 Page Ref: 296 Chapter: 11 Skill: Concept LO: 2 19) Under OSHA, an employee can legally refuse to work under any of the following conditions EXCEPT ________. A) the harm is imminent B) the employee reasonably fears death or serious physical harm C) there is time to file an OSHA complaint and correct the problem D) the worker has notified the employer about the condition and asked that it be corrected but the employer has not taken action. Answer: C Explanation: C) Under the Occupational Safety and Health Act, an employee can legally refuse to work when the following conditions exist: the employee reasonably fears death, disease, or serious physical harm; the harm is imminent; there is too little time to file an OSHA complaint and get the problem corrected; or the worker has notified the employer about the condition and requested correction of the problem, but the employer has not taken action. Diff: 3 Page Ref: 296 Chapter: 11 Skill: Concept LO: 2 20) What is the top leading cause of workplaces injuries and their associated costs? A) overexertion B) truck accidents C) repetitive motion D) struck against object Answer: A Explanation: A) The top leading cause of workplace injuries and their associated costs was overexertion (i.e., lifting, carrying, pushing, pulling, etc.), which accounted for 25.7 percent of direct workers' compensation costs to U.S. businesses. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Concept LO: 3

21) Which of the following is NOT a basic cause of accidents? A) poor management safety decisions B) governmental red tape C) personal factors D) environmental factors Answer: B Explanation: B) Faulty management safety policies and decisions, personal factors, and environmental factors are the basic causes of accidents. These factors result in unsafe working conditions and/or unsafe employee actions. Diff: 1 Page Ref: 296 Chapter: 11 Skill: Concept LO: 3 22) Comprehensive safety programs should primarily focus on unsafe working conditions and on unsafe ________. A) employee actions B) equipment C) management policies D) products Answer: A Explanation: A) Every employer needs to have a comprehensive safety program in place regardless of the degree of danger involved. Safety programs may accomplish their purposes in two primary ways: one focusing on unsafe employee actions and the other on unsafe working conditions. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Concept LO: 3 23) An employee with which of the following qualities would most likely have fewer work injuries? A) high productivity rate B) extensive education C) lengthy work experience D) extensive job knowledge Answer: C Explanation: C) Training and orientation of new employees emphasizing safety is especially important. The early months of employment are often critical because work injuries decrease with length of service. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Application LO: 3

24) According to OSHA, who is primarily responsible for employee safety? A) employee B) OSHA C) employer D) co-workers Answer: C Explanation: C) Although every individual in a firm should be encouraged to come up with solutions to potential safety problems, the firm's managers must take the lead. Management's unique role is clear, since OSHA places primary responsibility for employee safety on the employer. Diff: 2 Page Ref: 296-297 Chapter: 11 Skill: Concept LO: 3 25) Foley Foods is a mid-size food processing facility that has had a significant increase in business lately. The firm needs to hire additional workers and develop a second shift to meet productivity needs. The HR manager at Foley Foods recommends implementing a safety program. Which of the following best supports the implementation of a safety program? A) At the end of each year, high performing employees at Foley Foods are given bonuses. B) As a government contractor, Foley Foods must have an employee assistance program. C) Workers' compensation costs increased significantly in the last year at Foley Foods. D) Foley Foods' main competitor recently received an OSHA penalty and citation. Answer: C Explanation: C) Workers' compensation insurance premiums are based on the employer's history of insurance claims. The potential for savings related to employee safety provides a degree of incentive to establish formal safety programs. Compensation, EAPs, and competitors' safety problems are less relevant to the issue. Diff: 3 Page Ref: 296-298 Chapter: 11 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking

26) Foley Foods is a mid-size food processing facility that has had a significant increase in business lately. The firm needs to hire additional workers and develop a second shift to meet productivity needs. The HR manager at Foley Foods recommends implementing a safety program. Which of the following suggests that a safety program would be beneficial to Foley Foods? A) Foley Foods recently became a smoke-free workplace. B) Foley Foods will be hiring new workers for the night shift. C) Employees at Foley Foods use simulators during training programs. D) Managers at Foley Foods will soon be conducting performance appraisals. Answer: B Explanation: B) Training and orientation of new employees emphasizing safety is especially important. The early months of employment are often critical because work injuries decrease with length of service. If Foley is hiring new workers for the night shift, safety is a primary issue. Diff: 3 Page Ref: 296-298 Chapter: 11 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 27) Foley Foods is a mid-size food processing facility that has had a significant increase in business lately. The firm needs to hire additional workers and develop a second shift to meet productivity needs. The HR manager at Foley Foods recommends implementing a safety program. Which of the following most likely undermines the need for a safety program? A) Foley Foods has a high employee turnover rate. B) All machines at Foley Foods are equipped with safety interlocks. C) Foley Foods' workers' compensation costs are the highest in the industry. D) Employees at Foley Foods have the option of wearing safety goggles and other PPE. Answer: B Explanation: B) Safety devices on machines help protect employees, so if all machines are equipped, then a safety program may not be needed. A high turnover rate means the firm has many inexperienced workers who lack the skills to stay safe. Workers' compensation claims and optional personal protective equipment are indicators that the firm needs a safety program. Diff: 3 Page Ref: 296-298 Chapter: 11 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking

28) Foley Foods is a mid-size food processing facility that has had a significant increase in business lately. The firm needs to hire additional workers and develop a second shift to meet productivity needs. The HR manager at Foley Foods recommends implementing a safety program. Which of the following questions is LEAST relevant to this decision? A) How many OSHA citations has Foley Foods received? B) What engineering controls are used at Foley Foods? C) What is the annual accident rate at Foley Foods? D) How does Foley Foods recruit safety engineers? Answer: D Explanation: D) OSHA citations and the annual accident rate are both indicators of the safety at Foley. Engineering controls prevent accidents, so the question is relevant. Safety engineers are important in coordinating a safety program, but how they are recruited is less relevant to the issue. Diff: 3 Page Ref: 296-298 Chapter: 11 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 29) Which of the following is a multi-step process designed to study and analyze a task and then break down that task into steps that provide a means of eliminating associated dangers? A) job analysis B) job hazard analysis C) workplace analysis D) hazard analysis Answer: B Explanation: B) Job hazard analysis (JHA) is a multistep process designed to study and analyze a task or job and then break down that task into steps that provide a means of eliminating associated hazards. It is an effective and useful tool to isolate and address safety issues and risks. Diff: 1 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 30) What results in a detailed written procedure for safely completing many tasks within a plant? A) job analysis B) workplace analysis C) job hazard analysis D) quantified hazard analysis Answer: C Explanation: C) JHA can have a major impact on safety performance. It results in a detailed written procedure for safely completing many tasks within a plant. A successful JHA program features several key components: management support, supervisor and employee training, written program, and management oversight.

Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 31) Which of the following is NOT a component of a successful JHA program? A) management support B) employee training C) government enforcement D) management oversight Answer: C Explanation: C) A successful JHA program features several key components: management support, supervisor and employee training, written program, and management oversight. Government enforcement is not an element of a successful JHA program. Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 32) What law requires businesses to communicate more openly about the hazards associated with the materials they use and produce and the wastes they generate? A) Occupational Communication in Safety and Health Act B) Safe Communication in Health Act C) Occupational Safety and Health Act D) Superfund Amendments Reauthorization Act Answer: D Explanation: D) SARA requires businesses to communicate more openly about the hazards associated with the materials they use and the produce and the wastes they generate. Although SARA has been around since 1986, some firms do not yet have a satisfactory program for it in place. Diff: 1 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 33) One of the primary tasks of a firm's safety director is to ________. A) request safety inspections B) prepare OSHA reports C) provide safety training D) act as a line manager Answer: C Explanation: C) In many companies, one staff member coordinates the overall safety program. Titles such as safety engineer and safety director are common. One of the safety engineer's primary tasks is to provide safety training for company employees. Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept

34) Which department within a corporation is most likely responsible for anticipating losses associated with safety factors? A) employee relations B) risk management C) health and safety D) human resources Answer: B Explanation: B) Some major corporations have risk management departments that anticipate losses associated with safety factors and prepare legal defenses in the event of lawsuits. Diff: 1 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 35) Which term refers to a group of conditions caused by placing too much stress on a joint when the same action is performed repeatedly? A) carpal tunnel injuries B) stress trauma injuries C) flexible ligament injuries D) repetitive stress injuries Answer: D Explanation: D) Repetitive stress injuries (RSIs) refer to a group of conditions caused by placing too much stress on a joint when the same action is performed repeatedly. Carpal tunnel syndrome is a type of RSI. Diff: 1 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4 36) The U.S. Bureau of Labor Statistics reports that disorders associated with repetitive stress account for nearly ________ percent of all work-related illness. A) 20 B) 40 C) 60 D) 80 Answer: C Explanation: C) The U.S. Bureau of Labor Statistics reports that repetitive stress injuries account for 25 percent of cases involving days away from work and that disorders associated with repetitive stress are responsible for nearly 60 percent of all work-related illness. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4

37) Repetitive stress injuries represent what percentage of all North American workers' compensation claims? A) 22% B) 42% C) 62% D) 82% Answer: C Explanation: C) Statistics reports that repetitive stress injuries account for 25 percent of cases involving days away from work and that disorders associated with repetitive stress are responsible for nearly 60 percent of all work-related illness. Further, RSI represents 62 percent of all North American workers' compensation claims and results in between $15 billion and $20 billion in lost work time and compensation claims each year. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4 38) Which of the following is caused by pressure on the median nerve that occurs as a result of a narrowing of the passageway that houses the nerve? A) carpal isometrics B) carpal tunnel syndrome C) ergotism syndrome D) isometrics syndrome Answer: B Explanation: B) A serious repetitive stress injury is carpal tunnel syndrome (CTS), caused by pressure on the median nerve that occurs as a result of a narrowing of the passageway that houses the nerve. People who have CTS may experience pain, numbness, or tingling in the hands or wrist, a weak grip, the tendency to drop objects, sensitivity to cold, and in later stages, muscle deterioration, especially in the thumb. Diff: 1 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4 39) Individuals in which of the following jobs are LEAST likely to develop carpal tunnel syndrome? A) assembly line workers B) illustrators C) teachers D) carpenters Answer: C Explanation: C) CTS tends to develop in people who use their hands and wrists repeatedly in the same way. Illustrators, carpenters, assembly-line workers, and people whose jobs involve work on personal computers are the ones most commonly affected. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Application

LO: 4 40) Which of the following is most likely to reduce the risk of developing carpal tunnel syndrome? A) resting the hand and wrist in a neutral position B) performing similar activities regularly each day C) positioning computer monitors above eye level D) keeping keyboards below elbow level Answer: A Explanation: A) The severity of CTS can be reduced by resting the hand in a neutral position. Employees should avoid performing the exact activities that cause the syndrome. Managers can ensure that computer monitors are positioned at eye level and keyboards at elbow level. Diff: 3 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4 41) Tanya is a data entry specialist who spends most of her day at a computer workstation. She has recently experienced a weak grip, wrist numbness, and sensitivity to cold. Which of the following recommendations is LEAST likely to benefit Tanya? A) placing the monitor above eye level B) taking periodic exercise breaks C) alternating tasks during the day D) adjusting her chair height Answer: A Explanation: A) The severity of CTS can be reduced by taking breaks, alternating tasks, and adjusting the chair height. Monitors should be positioned at eye level to avoid neck strain. Diff: 3 Page Ref: 300 Chapter: 11 Skill: Application LO: 4 42) The study of human interaction with tasks, equipment, tools and the physical environment is known as ________. A) HR metrics B) biomechanics C) ergonomics D) isometrics Answer: C Explanation: C) A specific approach to dealing with health problems such as repetitive stress injuries and enhancing performance is ergonomics. Ergonomics is the process of designing the workplace to support the capabilities of people and job/task demands. Diff: 1 Page Ref: 300 Chapter: 11 Skill: Concept LO: 5

43) In what approach is it the goal to fit the machine and work environment to the person, rather than require the person to make the adjustment? A) biomechanics B) ergonomics C) HR metrics D) isometrics Answer: B Explanation: B) Ergonomics is the process of designing the workplace to support the capabilities of people and job/task demands. Through ergonomics, the goal is to fit the machine and work environment to the person, rather than require the person to make the adjustment. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Concept LO: 5 44) Which of the following best describes the primary purpose of ergonomics? A) encouraging ethical work behavior B) monitoring worker productivity C) promoting good posture D) studying fatigue issues Answer: C Explanation: C) Ergonomics includes all attempts to structure work conditions so that they maximize energy conservation, promote good posture, and allow workers to function without pain or impairment. Failure to address ergonomics issues results in fatigue, poor performance, and repetitive stress injuries. Diff: 3 Page Ref: 300 Chapter: 11 Skill: Concept LO: 5 45) According to research, which of the following most likely occurs from using ergonomics? A) improved workplace security B) lowered selection costs C) improved recruitment D) lowered injury rate Answer: D Explanation: D) Firms have discovered that improving the work environment boosts morale, lowers injury rates, and yields a positive return on investment. Ergonomics does not relate to workplace safety, recruitment, or selection. Diff: 3 Page Ref: 300-301 Chapter: 11 Skill: Concept LO: 5

46) Elway Transportation provides delivery services to businesses and individuals. Elway drivers frequently complain of back injuries, fatigue, and driving discomfort. Which of the following would most likely benefit Elway Transportation? A) ergonomics B) gainsharing C) broadbanding D) HR metrics Answer: A Explanation: A) Ergonomics is the process of designing the workplace to support the capabilities of people and job/task demands. Firms have discovered that using ergonomics lowers injury rates and prevents stress and discomfort. Diff: 2 Page Ref: 300-301 Chapter: 11 Skill: Application LO: 5 47) Which term refers to physical assault, verbal abuse, or hostility directed toward employees at work? A) misdemeanor B) negligent hiring C) sexual harassment D) workplace violence Answer: D Explanation: D) OSHA defines workplace violence as physical assault, threatening behavior, verbal abuse, hostility, or harassment directed toward employees at work or on duty. ASIS International, an organization for security professionals, found that workplace violence affects more than 2 million workers each year. Diff: 1 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6 48) What is the second leading cause of death in the workplace after auto accidents? A) falls B) assaults C) explosions D) homicides Answer: D Explanation: D) According to a National Institute for Occupational Safety and Health publication, on average, 1.7 million workers are injured each year, and more than 800 die as a result of workplace violence. Sadly, homicide is the second leading cause of death on the job, second only to motor vehicle crashes. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6

49) What is the LEAST common type of workplace violence that occurs? A) fistfights B) homicide C) intimidation D) verbal threats Answer: B Explanation: B) Homicide, as terrible as it is, accounts for only a small percentage of the overall incidence of workplace violence. Although employers must take steps to reduce the potential for employee homicides, they must also take action against more pervasive problems that can inflict havoc day in and day out. These include bullying, verbal threats, harassment, intimidation, pushing, shoving, slapping, kicking, and fistfights. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6 50) Which of the following workers most likely faces the greatest danger from workplace violence? A) Terry, an administrative assistant at a law firm B) Robert, a night-shift convenience store clerk C) John, a foreman at a construction company D) Holly, an inner-city high school teacher Answer: B Explanation: B) Employees at gas stations and liquor stores, taxi drivers, police officers, and convenience store managers working night shifts face the greatest danger from workplace violence. The National Census of Fatal Occupational Injuries reported that 35 deaths occurred in convenience stores in 2006. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6

51) ABC Manufacturing employs a man who frequently exhibits aggressive behavior towards both co-workers and customers. Managers at ABC realize that the employee has a potential for violence, yet they continue to keep him on the payroll. If the employee harms a co-worker, then ABC Manufacturing could be held liable for ________. A) hazardous employment B) negligent retention C) civil disturbance D) negligent hiring Answer: B Explanation: B) Negligent retention is the liability an employer may incur when a company keeps persons on the payroll whose records indicate a strong potential for wrongdoing and fails to take steps to defuse a possibly violent situation. If an employer ignores warning signs leading up to a violent incident, it could be held legally liable. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Application LO: 6 52) Which term refers to the liability an employer may incur when a firm keeps individuals on the payroll whose records indicate a strong potential for wrongdoing? A) faulty metrics B) negligent hiring C) erroneous selection D) negligent retention Answer: D Explanation: D) Negligent retention is the liability an employer may incur when a company keeps persons on the payroll whose records indicate a strong potential for wrongdoing and fails to take steps to defuse a possibly violent situation. If an employer ignores warning signs leading up to a violent incident, it could be held legally liable. Diff: 1 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6

53) Which OSHA clause requires employers to provide a workplace free from recognizable hazards that are causing, or likely to cause, death or serious harm to the employee? A) specific duty B) general duty C) negligent retention D) negligent hiring Answer: B Explanation: B) Perhaps many of the previously discussed forms of workplace violence could have been prevented if managers had paid more attention to potential problem employees. Under OSHA's general duty clause, employers are required to furnish, to each employee, a place of employment that is free from recognizable hazards that are causing, or likely to cause, death or serious harm to the employee. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6 54) Some warning signs of employees that might engage in violent behavior include any of the following behaviors EXCEPT ________. A) poor time management skills B) erratic behavior C) hyperactivity D) absenteeism Answer: C Explanation: C) While there are no sure signs an employee will commit an act of violence, certain behaviors can signal a problem such as: erratic behavior, increased irritability or hostility, reduced quality of work, poor organizational and time management skills, absenteeism, and a look of physical exhaustion. Hyperactivity is a less likely indicator of a problem. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6

55) Which of the following would be the best method for an employer trying to minimize violent acts and avoid lawsuits? A) implement policies that ban employees from owning weapons B) require employees to submit to weapons searches each day C) establish policies that encourage employees to report suspicious activities D) employ a full-time psychologist to test employees regularly Answer: C Explanation: C) Setting policies that encourage workers to report suspicious or violent activities is the best manner for minimizing workplace violence. Employees have the right to own weapons, although a policy to ban them on company property would be acceptable. Daily weapons searches and a full-time psychologist would be time consuming and costly. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6 56) Ryan, an HR manager at a computer firm, has been asked to develop policies for preventing workplace violence. Which of the following policies would most likely be LEAST beneficial? A) banning weapons on company property B) requiring workers to be searched daily C) providing receptionists with panic buttons D) encouraging workers to report violent acts Answer: B Explanation: B) Banning weapons at work, giving receptionists panic buttons to alert security, and encouraging employees to report suspicious behavior are effective policies. Although suspicious employees should be searched, daily searches of all employees would be costly and time consuming. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Application LO: 6 57) Individuals who are not prone to violence are more likely to be ________. A) recovering from substance abuse B) married with children C) outwardly focused D) highly educated Answer: C Explanation: C) The profiles of individuals not prone to violence tend to have certain things in common. The most important markers for these people include no substance abuse (one of the highest correlating factors); being outwardly focused; having outside interests and friendships rather than being mainly self-involved; and having a good work history. Being married and educated do not necessarily indicate a person will not be violent. Diff: 2 Page Ref: 303

Chapter: 11 Skill: Concept LO: 6 58) According to research, which of the following is the most likely cause for the decline in workplace homicides? A) providing workplace violence training to all employees B) increasing workplace security by hiring private guards C) training managers to recognize the signs of workplace violence D) hiring only employees who have been given co-worker referrals Answer: A Explanation: A) Research shows that providing workplace violence training to all employees, not just supervisors, may make a difference. Perhaps because of increased vigilance by organizations the number of homicides has declined from 1,080 in 1994 to 516 in 2008. Diff: 3 Page Ref: 303 Chapter: 11 Skill: Concept LO: 6 59) All of the following are areas that an employer is financially affected by domestic violence EXCEPT ________. A) absenteeism B) productivity C) selection D) turnover Answer: C Explanation: C) Domestic violence can have an impact on firms' bottom lines, costing about $5.8 billion each year in absenteeism, lower productivity, and turnover. Employee selection is less likely to be affected by domestic violence. Diff: 2 Page Ref: 303 Chapter: 11 Skill: Concept LO: 6 60) What Act was passed to help prevent domestic violence and provide shelter and related assistance for victims? A) Family Violence Prevention and Services Act B) Violence Against Women Act C) DOJ Reauthorization Act D) Workplace Violence Act Answer: A Explanation: A) In 1984, the Family Violence Prevention and Services Act was passed to help prevent domestic violence and provide shelter and related assistance for victims. The Violence Against Women Act was passed in 1994, creating new federal criminal laws and establishing additional grant programs within the Department of Health and Human Services and the Department of Justice.

61) How many states have laws that allow people who leave jobs because of domestic violence to become eligible for unemployment benefits? A) 10 B) 29 C) 37 D) 50 Answer: B Explanation: B) At least 29 states plus the District of Columbia have laws that allow people who leave jobs because of domestic violence to become eligible for unemployment benefits. Also, some states such as Florida, California, Colorado, Hawaii, Illinois, Kansas, and Maine give domestic violence victims the right to take time off. Diff: 2 Page Ref: 303 Chapter: 11 Skill: Concept LO: 6 62) What state has a law that permits employees to take up to three days leave from work in any 12-month period for a variety of activities connected with domestic violence issues? A) Florida B) California C) Michigan D) Louisiana Answer: A Explanation: A) Some states such as Florida, California, Colorado, Hawaii, Illinois, Kansas, and Maine give domestic violence victims the right to take time off. Florida law permits employees to take up to three days leave from work in any 12-month period for a variety of activities connected with domestic violence issues. Diff: 2 Page Ref: 303 Chapter: 11 Skill: Concept LO: 6 63) The body's nonspecific reaction to any demand made on it is referred to as ________. A) burnout B) stress C) carpel tunnel syndrome D) substance abuse Answer: B Explanation: B) Stress is the body's nonspecific reaction to any demand made on it. It affects people in different ways and is therefore a highly individualized condition. Diff: 1 Page Ref: 303 Chapter: 11 Skill: Concept LO: 7

64) Melanie, a sales representative at a pharmaceutical firm, periodically experiences mild stress associated with her job. Which of the following is the most likely result of this stress? A) improved productivity B) poor work attendance C) decreased job performance D) increased depression Answer: A Explanation: A) Mild stress actually improves productivity, and it can be helpful in developing creative ideas. More severe stress leads to absenteeism, poor work performance, and depression. Diff: 2 Page Ref: 303-304 Chapter: 11 Skill: Application LO: 7 65) Which of the following accounts for the rise in workplace stress? A) increased workloads B) corporate scandals C) economic conditions D) all of the above Answer: D Explanation: D) A study found that one-third of Americans are living with extreme stress, and 48 percent believe their stress has increased over the past five years. Several factors account for this rise, including increased workloads, terrorism, corporate scandals, and economic conditions. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Concept LO: 7 66) Poor attendance, excessive use of alcohol, poor performance on the job, and overall poor health are common results of ________. A) burnout B) stress C) heart failure D) arteriosclerosis Answer: B Explanation: B) Stress can result in poor attendance, excessive use of alcohol or other drugs, poor job performance, or even overall poor health. There is increasing evidence indicating that severe, prolonged stress is related to the diseases that are the leading causes of deathincluding cardiovascular disease, depression, immune system disorders, alcoholism, and drug addictionplus the everyday headaches, back spasms, overeating, and other annoying ailments the body has developed in response to stress. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Concept

67) Laura is experiencing significant levels of stress associated with her position as vice president of production at ELM Enterprises. Which of the following is LEAST likely to be a consequence of Laura's stress? A) cancer B) depression C) migraine headaches D) cardiovascular disease Answer: A Explanation: A) There is increasing evidence indicating that severe, prolonged stress is related to the diseases that are the leading causes of deathincluding cardiovascular disease, depression, immune system disorders, alcoholism, and drug addictionplus the everyday headaches, back spasms, overeating, and other annoying ailments the body has developed in response to stress. Stress has not been linked to cancer. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Application LO: 7 68) Which of the following is highest on the list of changeable health risks that contribute to health-care costs? A) smoking B) stress C) obesity D) depression Answer: B Explanation: B) Stress tops the list of changeable health risks that contribute to health care costs, ahead of other top risks such as current and past tobacco use, obesity, lack of exercise, high blood-glucose levels, depression, and high blood pressure. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Concept LO: 7 69) The common factor that tends to exist in the most stressful jobs is ________. A) high degree of flexibility B) lack of control over work C) high degree of monotony D) lack of training opportunities Answer: B Explanation: B) The common factor among stressful jobs is lack of employee control over work. Workers in such jobs may feel that they are trapped, treated more like machines than people. Workers who have more control over their jobs, such as college professors and master craftpersons, hold some of the less stressful jobs. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Concept LO: 7

70) An individual in which of the following jobs is most likely the LEAST stressed? A) administrative assistant B) machine operator C) college professor D) office manager Answer: C Explanation: C) Workers who have more control over their jobs, such as college professors and master craftpersons, hold some of the less stressful jobs. Administrative assistants, machine operators, and office managers deal with high levels of stress. Diff: 2 Page Ref: 305 Chapter: 11 Skill: Application LO: 7 71) Surveys indicate that ________ is the single largest stress factor affecting on-the-job productivity. A) work overload B) safety conditions C) mandated training D) unpleasant co-workers Answer: A Explanation: A) In one survey, the single largest stress factor affecting on-the-job productivity was work overloaded. Safety, training, and co-workers have less effect on productivity. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Concept LO: 7 72) Raj, a software designer, has been frequently absent from work lately. In addition, his quality of work has declined as well as his ability to manage tasks in a timely manner. These symptoms are most likely indicative of ________. A) unsafe work conditions B) occupational illness C) social anxiety D) stress Answer: D Explanation: D) Telling signs of stress may include a reduction in the quantity and quality of work, frequent short periods of absence, increased alcohol consumption, poor time keeping, or becoming tearful or withdrawn. Diff: 2 Page Ref: 304 Chapter: 11 Skill: Application LO: 7

73) Kelly is extremely stressed about work, and her productivity is declining. What is the best way for Kelly to manage her stress? A) exercising regularly B) starting a diet plan C) working on the weekend D) requesting new assignments Answer: A Explanation: A) One of the most effective means of dealing with stress is physical exercise. Stress results in chemical changes in the body, and exercise provides a means of returning the body to its normal state. Although good diet is beneficial, Kelly may not need to lose weight. Working more or requesting more work would most likely increase Kelly's stress. Diff: 2 Page Ref: 305 Chapter: 11 Skill: Application LO: 7 74) George, a project manager at a publishing firm, is experiencing many stress-related symptoms. Which of the following is the best advice an HR manager could give George? A) Focus on making work a priority. B) Recognize your own limitations. C) Keep your problems to yourself. D) Handle work issues immediately. Answer: B Explanation: B) Probably among the most stressful conditions you can encounter is being placed in a situation where your limitations and inability to cope become quickly evident, so George should realize his own limitations to reduce stress. Balancing work and life, sharing problems, and scheduling work can all relieve stress. Diff: 3 Page Ref: 305-306 Chapter: 11 Skill: Application LO: 7 75) What has emerged as the dominant crime of the 21st century? A) stalking B) assaults C) homicides D) identity theft Answer: D Explanation: D) Identity theft is the mishandling or deceptive use of an individual's personal information. It has become a harsh reality for today's employers, especially human resources professionals, since employment records contain just about everything an identity thief could want to know about an individual. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Concept LO: 7

76) What law makes it a federal crime when anyone knowingly transfers or uses, without lawful authority, another person's identification with the intent to commit any unlawful activity that constitutes a violation of federal law? A) Identity Theft Protection Act B) Identity Theft Deterrence Act C) Identity Theft and Assumption Deterrence Act D) Fair and Accurate Credit Transactions Act Answer: C Explanation: C) Congress passed the Identity Theft and Assumption Deterrence Act in 1988 that makes it a federal crime when anyone knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law. The Fair and Accurate Credit Transaction Act passed in 2003, but did not go into effect until 2010, required federal agencies to adopt regulations for financial institutions and creditors to address the act's "identity theft red flag" provision. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Concept LO: 7 77) What law fines employers that negligently or purposely allow employees' personally identifiable data to fall into the wrong hands? A) Identity Theft Protection Act B) Identity Theft Deterrence Act C) Identity Theft and Assumption Deterrence Act D) Fair and Accurate Credit Transactions Act Answer: D Explanation: D) The Fair and Accurate Credit Transaction Act says employers that negligently or purposely let employees' personally identifiable data fall into the wrong hands can face fines of up to $2,500 per infraction. Congress passed the Identity Theft and Assumption Deterrence Act in 1988 that makes it a federal crime when anyone knowingly transfers or uses, without lawful authority, a means of identification of another person with the intent to commit, or to aid or abet, any unlawful activity that constitutes a violation of federal law. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Concept LO: 7

78) Kyra, an HR manager, is concerned about the rise of identity theft. What employee data is LEAST important to protect? A) job level B) date of birth C) banking information D) Social Security number Answer: A Explanation: A) Employers have a duty to protect their employees from identity theft. That means making sure no unauthorized party can gain access to employees' Social Security numbers, banking information (that might show up on direct-deposit authorizations, for example), dates of birth, or any other data criminals could use to steal their money or compromise their privacy. Job level is less critical. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Application LO: 7 79) An incapacitating condition where individuals lose a sense of the basic purpose and fulfillment of their work is referred to as ________. A) stress B) burnout C) heart failure D) arteriosclerosis Answer: B Explanation: B) Burnout, while rarely fatal, is an incapacitating condition in which individuals lose a sense of the basic purpose and fulfillment of their work. Stress is the body's nonspecific reaction to any demand made on it. Diff: 1 Page Ref: 307 Chapter: 11 Skill: Concept LO: 8 80) As an HR manager, it is important that you are aware of the symptoms of burnout so that you can assist employees. Which of the following is most likely NOT a sign of employee burnout? A) procrastination B) disorganization C) mood swings D) absenteeism Answer: D Explanation: D) Although some employees try to hide their problems, shifts in their behavior may indicate dissatisfaction. They may start procrastinating and become increasingly disorganized. Taking time off from work would benefit a burned out employee, so absenteeism is not an indicator. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Application

LO: 8 81) Ellen, a manager at a marketing firm, noticed that one of her subordinates, who is usually good-natured, has been moody, irritable, and disorganized lately. The subordinate has refused Ellen's suggestions to take a few personal days. Such symptoms are most likely an indication that the subordinate is experiencing ________. A) depression B) burnout C) insomnia D) occupational disease Answer: B Explanation: B) Although some employees try to hide their problems, shifts in their behavior may indicate dissatisfaction. They may start procrastinating and become increasingly disorganized. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Application LO: 8 82) One of the most dangerous aspects of burnout is that it ________. A) spreads rapidly among co-workers B) affects most top executives C) cannot be treated D) causes strokes Answer: A Explanation: A) The dangerous part of burnout is that it is contagious. A highly cynical and pessimistic burnout victim can quickly transform an entire group into burnouts. Burnout can affect anyone, but it is treatable and not fatal. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 8 83) The traditional view that health is dependent on ________ and is simply the absence of disease is changing. A) safety B) exercise C) medical care D) healthy eating Answer: C Explanation: C) The traditional view that health is dependent on medical care and is the absence of disease is changing. Today, it is clear that optimal well-being is often achieved through environmental safety, organizational changes, and healthy lifestyles. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 9

84) What are the top two causes of death in the world? A) obesity and heart disease B) stroke and heart disease C) cancer and stroke D) cancer and stroke Answer: B Explanation: B) Today, heart disease and stroke are the top two killers worldwide. Chronic obstructive pulmonary disease and lung cancer are also growing threats to life. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 9 85) Numerous employees at McLaren Manufacturing have chronic lifestyle diseases, such as obesity, alcohol abuse, and smoking. Which of the following should most likely be implemented by McLaren? A) occupational safety program B) succession planning program C) organizational fit program D) corporate wellness program Answer: D Explanation: D) Chronic lifestyle diseases are much more prevalent today than ever before. These are diseases related to smoking, excessive stress, lack of exercise, obesity, and alcohol and drug abuse. Increased recognition of this has prompted employers to become actively involved with their employees' health and to establish wellness programs. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Application LO: 9 86) The National Auto Group is going to develop a wellness program. What is the first step in the process? A) conducting a health-risk assessment of employees B) developing incentives for employee participation C) establishing an on-site health clinic D) requiring substance abuse tests Answer: A Explanation: A) In developing a wellness program, firms should first conduct a healthrisk assessment (HRA) by surveying their employees to determining which workers could benefit from lifestyle change. Then, the firm would develop incentives to encourage employees to participate in the program. Diff: 3 Page Ref: 308 Chapter: 11 Skill: Application LO: 9

87) What is the most commonly offered in-house corporate wellness program? A) physical fitness program B) healthy eating program C) substance abuse program D) stress management program Answer: A Explanation: A) Physical fitness appears to be critical to career success and employers should be involved in promoting it. The most commonly offered in-house corporate wellness programs involve efforts to promote exercise and fitness. Diff: 2 Page Ref: 308 Chapter: 11 Skill: Concept LO: 10 88) Which of the following is the LEAST likely result of a corporate physical fitness program? A) reduced training costs B) reduced absenteeism C) lower accident rates D) lower health costs Answer: A Explanation: A) Company-sponsored fitness programs often reduce absenteeism, accidents, and sick pay. There is increasing evidence that if employees stick to company fitness programs, they will experience better health, and the firm will have lower health costs. Training costs are less likely to be affected. Diff: 2 Page Ref: 308 Chapter: 11 Skill: Concept LO: 10 89) The use of illegal drugs or the misuse of alcohol is best known as ________. A) alcoholism B) burnout C) substance abuse D) personality disorder Answer: C Explanation: C) Substance abuse involves the use of illegal substances or the misuse of controlled substances such as alcohol and drugs. Alcoholism is a medical disease characterized by uncontrolled and compulsive drinking that interferes with normal living patterns. Diff: 1 Page Ref: 309 Chapter: 11 Skill: Concept LO: 11

90) Alcoholism is currently defined as a (n) ________. A) hereditary problem that cannot be medically treated B) stress-related condition characterized by social drinking C) psychological problem that causes frequent binge drinking D) medical disease characterized by uncontrolled and compulsive drinking Answer: D Explanation: D) Although our society attaches a stigma to alcoholism, in 1956, the American Medical Association described it as a treatable disease. Alcoholism is a medical disease characterized by uncontrolled and compulsive drinking that interferes with normal living patterns. Diff: 2 Page Ref: 309 Chapter: 11 Skill: Concept LO: 11 91) According to the Substance Abuse & Mental Health Services Administration, more than 1 in ________ American workers report abusing drugs regularly. A) 5 B) 9 C) 12 D) 25 Answer: C Explanation: C) According to the Substance Abuse & Mental Health Services Administration, more than 1 in 12 American workers report abusing drugs regularly. In industries such as food service and construction, nearly one in five employees admits to illegal drug use. Diff: 2 Page Ref: 309 Chapter: 11 Skill: Concept LO: 11 92) What law requires some federal contractors and all federal grantees to agree that they will provide drug-free workplaces as a condition of receiving a contract or grant from a federal agency? A) Rehabilitation Act B) Drug-Free Workplace Act C) Americans with Disabilities Act D) Fair Labor Standards Act Answer: B Explanation: B) The Drug-Free Workplace Act of 1988 requires some federal contractors and all federal grantees to agree that they will provide drug-free workplaces as a condition of receiving a contract or grant from a federal agency. Diff: 1 Page Ref: 309-310 Chapter: 11 Skill: Concept LO: 11

93) Which of the following is LEAST likely to be a component for developing a drugand alcohol-free workplace program? A) establishing a drug- and alcohol-free policy B) providing education and training courses C) implementing a drug-testing program D) developing a corporate mission statement Answer: D Explanation: D) Corporate mission statements are less relevant to a drug-free workplace program. Firms should establish a zero-tolerance policy, educate workers, and start a drug-testing program. Diff: 2 Page Ref: 311 Chapter: 11 Skill: Concept LO: 11 94) Nelson Computers is going to establish a substance abuse free workplace. What is the first step that should be taken in the process? A) establishing a drug and alcohol free policy B) educating and training workers C) educating and training supervisors D) conducting random drug tests Answer: A Explanation: A) Firms should first establish a zero-tolerance policy. Then the firm should educate workers and supervisors and conduct drug testing. Diff: 2 Page Ref: 311 Chapter: 11 Skill: Application LO: 11 95) Which type of drug testing is considered the most reliable by most experts? A) urine B) blood C) hair D) oral fluid Answer: B Explanation: B) Urine, blood, oral fluids, or hair samples are possible drug testing methods, with most employers relying on urine testing. However, the majority regard blood tests as the forensic benchmark against which to compare others. Diff: 2 Page Ref: 312 Chapter: 11 Skill: Concept LO: 11

96) According to experts, what form of drug testing detects drug use up to three months after drug consumption? A) hair B) blood C) urine D) oral fluid Answer: A Explanation: A) Although urine and blood testing can detect only current drug use, advocates of hair sample analysis claim it can detect drug use from 3 days to 90 days after drug consumption. This would prohibit an applicant from beating the test by short term abstinence. Diff: 2 Page Ref: 312 Chapter: 11 Skill: Concept LO: 11 97) What form of drug testing can be done immediately in the workplace and is effective in cases of reasonable suspicion? A) hair B) blood C) oral fluid D) urine Answer: C Explanation: C) Oral fluid testing is especially well-suited to cases of reasonable suspicion and post-accident testing. Oral fluid is a great deterrent because it can be done immediately in the workplace and it does not give an individual an opportunity to adulterate or substitute a urine specimen. Diff: 2 Page Ref: 312 Chapter: 11 Skill: Concept LO: 11 98) Which of the following is a comprehensive approach used by firms to deal with numerous problem areas such as burnout, alcohol and drug abuse, and other emotional disturbances? A) stress reduction program B) health and wellness program C) substance abuse program D) employee assistance program Answer: D Explanation: D) An employee assistance program (EAP) is a comprehensive approach that many organizations have taken to deal with numerous problem areas such as burnout, alcohol and drug abuse, and other emotional disturbances. The Drug-Free Workplace Act also requires federal employees and employees of firms under government contract to have access to employee assistance program services. Diff: 1 Page Ref: 312 Chapter: 11

Skill: Concept LO: 12 99) Which law requires certain organizations to provide employee assistance programs? A) Fair Labor Standards Act B) Americans with Disabilities Act C) Drug-Free Workplace Act D) Rehabilitation Act Answer: C Explanation: C) An employee assistance program (EAP) is a comprehensive approach that many organizations have taken to deal with numerous problem areas such as burnout, alcohol and drug abuse, and other emotional disturbances. The Drug-Free Workplace Act also requires federal employees and employees of firms under government contract to have access to employee assistance program services. Diff: 2 Page Ref: 312 Chapter: 11 Skill: Concept LO: 12 100) Why is health care coverage tailored to a specific region an increasingly popular benefit for expatriates? A) American insurance carriers refuse to provide coverage in risky markets. B) The rising cost of health insurance has forced firms to use cheaper options. C) American healthcare legislation conflicts with foreign insurance firms. D) Healthcare systems in emerging markets vary in cost and quality. Answer: D Explanation: D) Although expats are usually covered by group international health plans, there is a trend to offer coverage tailored for specific destinations. As international markets develop, the need has grown for coverage that is more appropriate for the market expats are working in. European healthcare systems vary in cost and quality, and a lot can depend on the exact location of the expat within a country. Diff: 3 Page Ref: 313 Chapter: 11 Skill: Concept LO: 12 True/False and Essay Questions 1) Identity theft involves the deceptive use of an individual's personal information. Answer: TRUE Explanation: Identity theft is the mishandling or deceptive use of an individual's personal information. It has become a harsh reality for today's employers, especially human resources professionals, since employment records contain just about everything an identity thief could want to know about an individual. Diff: 1 Page Ref: 306 Chapter: 11 Skill: Concept

2) HR professionals and employers are responsible for protecting employment records from identity thieves. Answer: TRUE Explanation: Identity theft is the mishandling or deceptive use of an individual's personal information. It has become a harsh reality for today's employers, especially human resources professionals, since employment records contain just about everything an identity thief could want to know about an individual. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Concept LO: 1 3) Since Congress passed the Identity Theft and Assumption Deterrence Act in 1988, identity theft has declined sharply. Answer: FALSE Explanation: The number of identity fraud adult victims in the U.S. grew to 11.1 million in 2009, a 12 percent increase and the total annual fraud amount rose to 54 billion U.S. dollars, a 12.5 percent increase. Although Congress passed the Identity Theft and Assumption Deterrence Act in 1988 to make identity theft a federal crime, the problem remains on the rise. Diff: 2 Page Ref: 306 Chapter: 11 Skill: Concept LO: 1 4) In regards to OSHA, health involves protecting employees from injuries caused by work-related accidents. Answer: FALSE Explanation: Safety involves protecting employees from injuries caused by work-related accidents. Health refers to employees' freedom from physical or emotional illness. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 1 5) The Occupational Safety and Health Act of 1970 created the Occupational Safety and Health Administration (OSHA), which attempts to ensure worker safety. Answer: TRUE Explanation: The Occupational Safety and Health Act of 1970 created the Occupational Safety and Health Administration (OSHA). OSHA aims to ensure worker safety and health in the United States by working with employers and employees to create better working environments. Diff: 1 Page Ref: 294 Chapter: 11 Skill: Concept LO: 1

6) Although OSHA has helped to significantly reduce the number of workplace fatalities, the number of workers contracting occupational illnesses has remained the same. Answer: FALSE Explanation: Since its inception, OSHA has helped to cut workplace fatalities by more than 60 percent and occupational injury and illness by 40 percent. At the same time, U.S. employment has more than doubled from 56 million workers at 3.5 million worksites to 147 million workers at 7.2 million sites. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 7) OSHA has the power to issue citations, but financial penalties must be issued by the Department of Justice. Answer: FALSE Explanation: Even though OSHA would like a successful partnership relationship to exist, at times penalties must be given. Financial penalties serve as reminders to industry of the benefits of maintaining safe and healthy working conditions. Criminal referrals for safety and health violations would be sent to the DOJ. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 8) The Severe Violator Enforcement Program focuses on employers that have repeatedly violated safety regulations. Answer: TRUE Explanation: In 2010, OSHA implemented the Severe Violator Enforcement Program that will increase inspections at worksites where "recalcitrant employers" have repeatedly violated safety regulations and endangered workers. It also requires a mandatory followup inspection to make sure the required changes were made. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2 9) OSHA has authorized stricter enforcement measures for manufacturers and other employers that repeatedly violate health and safety standards. Answer: TRUE Explanation: In 2010, OSHA implemented the Severe Violator Enforcement Program that will increase inspections at worksites where "recalcitrant employers" have repeatedly violated safety regulations and endangered workers. It also requires a mandatory followup inspection to make sure the required changes were made. Diff: 2 Page Ref: 295 Chapter: 11 Skill: Concept LO: 2

10) Most OSHA inspections are initiated by employer complaints. Answer: FALSE Explanation: The average employer will not likely see an OSHA inspector unless an employee instigates an inspection. About 70 percent of OSHA inspections have resulted from employee complaints. Diff: 2 Page Ref: 295-296 Chapter: 11 Skill: Concept LO: 2 11) An employer is legally required to provide an OSHA inspector access to a worksite when an inspection is requested. Answer: FALSE Explanation: When OSHA inspectors come to a site, the employer has the option of denying the inspector access to the worksite. If the employer refuses access to view certain documents, OSHA must obtain an administrative subpoena. Diff: 2 Page Ref: 295-296 Chapter: 11 Skill: Concept LO: 2 12) Employees can legally refuse to work if they fear disease or serious physical harm. Answer: TRUE Explanation: Under the Occupational Safety and Health Act, an employee can legally refuse to work when the employee reasonably fears death, disease, or serious physical harm or the harm is imminent. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Concept LO: 2 13) Job-related deaths and injuries are costly to employers in terms of workers' compensation claims, OSHA fines, and lost productivity. Answer: TRUE Explanation: In addition to workers' compensation costs, OSHA can levy major fines for safety violations. Indirect costs related to turnover and lost productivity add to the expense. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Concept LO: 3

14) The leading cause of workplace injuries was overexertion, such as lifting, carrying, pushing, and pulling. Answer: TRUE Explanation: The top leading cause of workplace injuries and their associated costs was overexertion (i.e., lifting, carrying, pushing, pulling, etc.), which accounted for 25.7 percent of direct workers' compensation costs to U.S. businesses. Diff: 2 Page Ref: 296 Chapter: 11 Skill: Concept LO: 3 15) When the employer provides necessary safety equipment, OSHA places primary responsibility for employee safety on the employee. Answer: FALSE Explanation: Although every individual in a firm should be encouraged to come up with solutions to potential safety problems, the firm's managers must take the lead. Management's unique role is clear, since OSHA places primary responsibility for employee safety on the employer even when the employee makes poor choices. Diff: 2 Page Ref: 296-297 Chapter: 11 Skill: Concept LO: 3 16) Worker safety affects recruitment, retention, and benefits. Answer: TRUE Explanation: Every phase of human resource management is involved with safety. For instance, the firm may have difficulty in recruitment if it gains a reputation for being an unsafe place to work. Firms will see an increase in compensation costs when they must pay a premium to attract and retain qualified applicants. Maintaining a stable workforce may become very difficult if employees perceive their workplace as hazardous. Diff: 2 Page Ref: 297 Chapter: 11 Skill: Concept LO: 3 17) Job analysis is a multi-step process designed to study a task for the purpose of isolating and addressing safety issues. Answer: TRUE Explanation: Job hazard analysis (JHA) is a multistep process designed to study and analyze a task or job and then break down that task into steps that provide a means of eliminating associated hazards. It is an effective and useful tool to isolate and address safety issues and risks. Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3

18) The EEOC requires businesses to communicate more openly about the hazards associated with the materials they use and produce and the wastes they generate. Answer: FALSE Explanation: The Superfund Amendments Reauthorization Act (SARA) requires businesses to communicate more openly about the hazards associated with the materials they use and produce and the wastes they generate. Although SARA has been around since 1986, some firms do not yet have a satisfactory program for it in place. Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 19) When evaluating the effectiveness of a safety program, OSHA primarily focuses on the frequency and severity of injuries and illnesses at a firm. Answer: TRUE Explanation: Perhaps the best indicator of a successful safety program is a reduction in the frequency and severity of injuries and illnesses. Therefore, statistics including the number of injuries and illnesses (frequency rate) and the amount of work time lost (severity rate) are often used in program evaluation by OSHA. Diff: 2 Page Ref: 298 Chapter: 11 Skill: Concept LO: 3 20) BLS reports indicate that disorders associated with repetitive stress injuries account for more than half of all work-related illness. Answer: TRUE Explanation: Repetitive stress injuries (RSIs) refer to a group of conditions caused by placing too much stress on a joint when the same action is performed repeatedly. The U.S. Bureau of Labor Statistics reports that repetitive stress injuries account for 25 percent of cases involving days away from work and that disorders associated with repetitive stress are responsible for nearly 60 percent of all work-related illness. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Concept LO: 4 21) People who use their hands and wrists repeatedly in the same way tend to develop carpal tunnel syndrome. Answer: TRUE Explanation: CTS tends to develop in people who use their hands and wrists repeatedly in the same way. Illustrators, carpenters, assembly-line workers, and people whose jobs involve work on personal computers are the ones most commonly affected. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Concept

LO: 4 22) The severity of carpal tunnel syndrome can be reduced with an ergonomic work environment. Answer: TRUE Explanation: Ergonomins is a method for handling repetitive stress injuries, such as CTS. Ergonomics involvesdesigning the workplace so that workers can perform without pain. Diff: 2 Page Ref: 300 Chapter: 11 Skill: Synthesis LO: 4, 5 23) Human resource metrics is the study of human interaction with tasks, equipment, tools, and the physical environment. Answer: FALSE Explanation: A specific approach to dealing with health problems such as repetitive stress injuries and enhancing performance is ergonomics. Ergonomics is the process of designing the workplace to support the capabilities of people and job/task demands. Diff: 1 Page Ref: 300 Chapter: 11 Skill: Concept LO: 5 24) According to OSHA, workplace violence refers to any physical assault, threatening behavior, verbal abuse, hostility, or harassment directed toward employees at work or on duty. Answer: TRUE Explanation: OSHA defines workplace violence as physical assault, threatening behavior, verbal abuse, hostility, or harassment directed toward employees at work or on duty. Diff: 1 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6 25) In the U.S., the majority of all violent crimes occur in the workplace, which is why OSHA encourages employers to take the proper precautions. Answer: FALSE Explanation: ASIS International, an organization for security professionals, found that workplace violence affects more than 2 million workers each year. In the United States, 20 percent of all violent crimes occur in the workplace. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6

26) The majority of workplace incidents involving harassment, intimidation, shoving, and slapping are reported to employers and OSHA for statistical purposes. Answer: FALSE Explanation: Most incidents of workplace violence involve bullying, verbal threats, harassment, intimidation, pushing, shoving, slapping, kicking, and fistfights. The vast majority of these types of assaults and other forms of aggression do not show up in the statistics, as they go unreported. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6 27) While convenience stores experience significant incidents of violence, other workplaces, such as hospitals, are considered safe from such problems. Answer: TRUE Explanation: No workplace is immune from violence. Hospital managers overwhelmingly say the biggest threat that emergency room workers face is patient violence. Most hospitals now have security guards stationed in their emergency rooms, particularly at times such as Saturday nights, when violence seems to escalate. Diff: 2 Page Ref: 301 Chapter: 11 Skill: Concept LO: 6 28) Negligent retention may occur when a company keeps persons on the payroll whose records indicate a strong potential for wrongdoing. Answer: TRUE Explanation: Negligent retention is the liability an employer may incur when a company keeps persons on the payroll whose records indicate a strong potential for wrongdoing and fails to take steps to defuse a possibly violent situation. If an employer ignores warning signs leading up to a violent incident, it could be held legally liable. Diff: 1 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6 29) Under OSHA's general duty use clause, employers are required to conduct background investigations and drug tests on each employee to ensure workplace safety. Answer: FALSE Explanation: Under OSHA's general duty clause, employers are required to furnish, to each employee, a place of employment that is free from recognizable hazards that are causing, or likely to cause, death or serious harm to the employee. Firms do not necessarily have to conduct drug testing. Diff: 2 Page Ref: 302 Chapter: 11 Skill: Concept LO: 6

30) Although domestic violence affects employees psychologically, employers rarely experience any consequences of an employees' abusive relationships. Answer: FALSE Explanation: Spillover from domestic violence is a threat to both women and their companies because after an abusive relationship is over, one of the easiest places to find them is at their workplace. Domestic violence can have an impact on firms' bottom lines, costing about $5.8 billion each year in absenteeism, lower productivity, and turnover. Diff: 2 Page Ref: 303 Chapter: 11 Skill: Concept LO: 6 31) Stress is the body's nonspecific reaction to any demand made on it. Answer: TRUE Explanation: Stress is the body's nonspecific reaction to any demand made on it. It affects people in different ways and is therefore a highly individualized condition. Diff: 1 Page Ref: 303 Chapter: 11 Skill: Concept LO: 7 32) While obesity and high blood pressure can be corrected, stress is a health problem that cannot be relieved as long as an individual holds a job. Answer: FALSE Explanation: Stress tops the list of changeable health risks that contribute to health care costs, ahead of other top risks such as current and past tobacco use, obesity, lack of exercise, high blood-glucose levels, depression, and high blood pressure. Diff: 1 Page Ref: 304 Chapter: 11 Skill: Concept LO: 7 33) Higher level supervisory positions, such as office manager, are considered highly stressful, while lower level positions, such as secretary, are not. Answer: FALSE Explanation: Supervisors, managers, secretaries, and machine operators are all listed as highly stressful jobs. These jobs typically involve work overload and little flexibility. Diff: 2 Page Ref: 304-305 Chapter: 11 Skill: Concept LO: 7

34) Establishing structure has been shown to reduce stress levels. Answer: TRUE Explanation: Stress often occurs when a person does not have control over a situation. In many instances, planning ahead is all that is needed to keep a person out of a stressful situation. Establishing structure may also mean leaving the job at the office. Most people need time away from the job to reduce stress levels. Diff: 2 Page Ref: 305-306 Chapter: 11 Skill: Concept LO: 7 35) Burnout causes individuals to lose a sense of the basic purpose and fulfillment of their work and results in exhaustion. Answer: TRUE Explanation: Burnout, while rarely fatal, is an incapacitating condition in which individuals lose a sense of the basic purpose and fulfillment of their work. Individuals become exhausted either physically or mentally or both when burnout occurs. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 8 36) Burnout and stress are synonymous terms for employee exhaustion and disillusionment. Answer: FALSE Explanation: Burnout differs from stress in that it causes people who have previously been highly committed to their work to become disillusioned and lose interest and motivation. Burnout is often associated with a midlife or midcareer crisis, but it can happen at different times to different people. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 8 37) During the recession of 2008/2010, most employers eliminated their wellness programs due to their high cost and questionable impact on employee performance. Answer: FALSE Explanation: Wellness programs are becoming more widespread as more employers become conscious of the impact employee health has on performance. Despite the recession of 2008/10, more employers created and expanded wellness programs. Diff: 2 Page Ref: 307 Chapter: 11 Skill: Concept LO: 9

38) According to surveys, the majority of firms that offer wellness programs use financial incentives to encourage employee participation. Answer: TRUE Explanation: According to one survey of members of the ERISA Industry Council and the National Association of Manufacturers, approximately two-thirds of the employers currently offering wellness programs are using financial incentives to encourage participation. The most common incentive is health insurance premium reductions (40 percent) followed by cash or bonuses (30 percent). Diff: 2 Page Ref: 308 Chapter: 11 Skill: Concept LO: 9 39) Physical fitness programs are the most commonly offered wellness program provided by employers. Answer: TRUE Explanation: Physical fitness appears to be critical to career success and employers should be involved in promoting it. The most commonly offered in-house corporate wellness programs involve efforts to promote exercise and fitness. Diff: 2 Page Ref: 308 Chapter: 11 Skill: Concept LO: 10 40) Substance abuse is an HR concern because substance abusers have high rates of absenteeism and turnover. Answer: TRUE Explanation: Substance abuse involves the use of illegal substances or the misuse of controlled substances such as alcohol and drugs. Safety consultant Craig Rapp of Utilicom Safety said that substance abusers have higher rates of absenteeism and employee turnover, creating management problems for their employers. Diff: 2 Page Ref: 309 Chapter: 11 Skill: Concept LO: 11 Human Resource Management, 12e (Mondy) Appendix Chapter 12: History of Unions in the United States Multiple-Choice Questions 1) When did the earliest American unions originate? A) after the Civil War B) around the turn of the century C) at the end of the 18th century D) at the end of the 17th century Answer: C

Page Ref: 405 2) The labor movement history has A) resembled the swinging of a pendulum. B) had a straightforward line of development. C) included few failures. D) reflected steady decline. Answer: A Page Ref: 405 3) Two or more persons who band together to prejudice the rights of others or of society (such as by refusing to work or demanding higher wages) is A) an injunction. B) a yellow-dog contract. C) a conspiracy. D) the English common law contract. Answer: C Page Ref: 405 4) In what year was the conspiracy doctrine first applied to labor unions? A) 1905 B) 1806 C) 1896 D) 1926 Answer: B Page Ref: 405 5) The conspiracy doctrine was considerably softened in which landmark case? A) Washington v Jones B) Commonwealth v Hunt C) Griggs v Duke Power Co. D) Albermarle Paper Co. v Moody Answer: B Page Ref: 405

6) A prohibiting legal procedure that was used by employers to prevent certain union activities such as strikes and unionization attempts is called A) yellow-dog contract. B) conspiracy. C) injunction. D) collusion. Answer: C Page Ref: 405 7) A written agreement between the employee and the company prohibiting the worker from joining a union is known as a(n) A) nonunion agreement. B) nonparticipation contract. C) anti-union contract. D) yellow-dog contract. Answer: D Page Ref: 405 8) In 1869, which substantial labor organization appeared in the United States? A) Noble Order of the Knights of Labor B) American Federal of Labor C) Congress of Industrial Organizations D) Philadelphia Cordwainers Answer: A Page Ref: 405-406 9) The first president of the American Federation of Labor was A) John L. Lewis. B) Walter Reuther. C) Samuel Gompers. D) James Hoffa. Answer: C Page Ref: 406 10) The Clayton Act removed labor from the purview of the A) Sherman Act. B) Norris-LaGuardia Act. C) Wagner Act. D) Taft-Hartley Act. Answer: A Page Ref: 406

11) The first federal Act to contain provisions in collective bargaining was the A) Railway Labor Act. B) Davis-Bacon Act. C) National Labor Relations Act. D) Walsh-Healey Act. Answer: A Page Ref: 406 12) Which law severely restricted the authority of the federal courts to issue injunctions in labor disputes? A) Sherman Act B) Norris-LaGuardia Act C) Wagner Act D) Clayton Act Answer: B Page Ref: 406 13) The Anti-Injunction Act is also known as the A) Davis-Bacon Act. B) Norris-LaGuardia Act. C) Walsh-Healey Act. D) Labor-Management Relations Act. Answer: B Page Ref: 406 14) Which Act made the yellow-dog contract legally unenforceable? A) Anti-Injunction Act B) National-Labor Relations Act C) Walsh-Healey Act D) Labor-Management Relations Act Answer: A Page Ref: 406 15) Which piece of legislation is one of the most significant labor management relations statutes ever enacted? A) Labor-Management Relations Act B) Walsh-Healey Act C) Davis-Bacon Act D) National Labor Relations Act Answer: D Page Ref: 407

16) According to your text, legislative support was declared for the right of employees to organize, and engage in collective bargaining with passage of which act? A) Norris-LaGuardia Act B) Wagner Act C) Sherman Act D) Taft-Hartley Act Answer: B Page Ref: 407 17) The requirement for management to recognize unions and bargain with them was contained in the A) Wagner Act. B) Sherman Act. C) Labor-Management Relations Act. D) Taft-Hartley Act. Answer: A Page Ref: 407 18) A list of unfair labor practices by management was identified by the A) National Labor Relations Act. B) Norris-LaGuardia Act. C) Landrum-Griffin Act. D) Sherman Act. Answer: A Page Ref: 407 19) The National Labor Relations Board was created by the A) Wagner Act. B) Taft-Hartley Act. C) Landrum-Griffin Act. D) Labor-Management Relations Act. Answer: A Page Ref: 407 20) The purpose of the NLRB includes all of the following EXCEPT A) establish procedures for bargaining unit elections. B) monitor bargaining unit elections. C) investigate complaints involving unfair labor practices. D) serve as mediators in the collective bargaining process. Answer: D Page Ref: 407

21) Following passage of the Wagner Act, union membership increased from approximately 3 million to ________ million between 1935 and 1947. A) 15 B) 10 C) 25 D) 35 Answer: A Page Ref: 407 22) After passage of the Wagner Act, the rapid growth of unions came from workers in which industries? A) utilities B) home building C) transportation D) mass production Answer: D Page Ref: 407 23) Which significant piece of labor legislation did President Truman veto? A) National Labor Relations Act B) Landrum-Griffin Act C) Norris-LaGuardia Act D) Labor-Management Relations Act Answer: D Page Ref: 408 24) Congress attempted to provide a more balanced position between labor and management by passing the A) Social Security Act. B) Walsh-Healey Act. C) Fair Labor Standards Act. D) Labor-Management Relations Act. Answer: D Page Ref: 408 25) Which Act gave employees the right to refrain from union activity? A) Fair Labor Standards Act B) Railway Labor Act C) Wagner Act D) Taft-Hartley Act Answer: D Page Ref: 408

26) Which Act said that employers need not recognize or bargain with unions formed by supervisors? A) Walsh-Healey Act B) Fair Labor Standards Act C) Labor-Management Relations Act D) Labor-Management Reporting and Disclosure Act Answer: C Page Ref: 408 27) Unfair labor practices by unions were identified by the A) Wagner Act. B) Landrum-Griffin Act. C) National Labor Relations Act. D) Taft-Hartley Act. Answer: D Page Ref: 408 28) Prohibiting certain strikes and boycotts was a provision of the A) Wagner Act. B) Taft-Hartley Act. C) Landrum-Griffin Act. D) Davis-Bacon Act. Answer: B Page Ref: 408 29) Featherbedding, (requiring that an employer pay for services not performed) became an unfair labor practice for unions as a result of the A) National Labor Relations Act. B) Landrum-Griffin Act. C) Norris-LaGuardia Act. Act. D) Labor-Management Relations Act. Answer: D Page Ref: 408 30) Laws that prohibit management and unions from entering into agreements requiring union membership as a condition of employment are referred to as A) anti-injunction. B) right-to-work. C) featherbedding. D) separate but equal. Answer: B Page Ref: 408

31) How many states have adopted right-to-work laws? A) 26 B) 18 C) 22 D) 31 Answer: C Page Ref: 408 32) States are permitted to enact right-to-work legislation as a result of the A) Taft-Hartley Act. B) Wagner Act. C) Landrum-Griffin Act. D) Davis-Bacon Act. Answer: A Page Ref: 408 33) Which Act marked a significant turning point in the involvement of the federal government in internal union affairs? A) Landrum-Griffin Act. B) Taft-Hartley Act. C) Wagner Act. D) Anti-Injunction Act of 1932. Answer: A Page Ref: 409 34) Which Act uncovered evidence of racketeering, crime and violence, and corruption by labor organizations and employees? A) Walsh-Healey Act B) Fair Labor Standards Act C) Labor-Management Relations Act D) Labor-Management Reporting and Disclosure Act Answer: D Page Ref: 409 35) In 1957, the AFL expelled three unions, including the A) Teamsters. B) IAM. C) UAW. D) CWA. Answer: A Page Ref: 409

36) What Act spelled out a Bill of Rights of Members of Labor Organizations designed to protect certain rights of individuals in their relationships with unions? A) National Labor Relations Act B) Taft-Hartley C) Labor-Management Reporting and Disclosure Act D) Labor-Management Relations Act Answer: C Page Ref: 409 Human Resource Management, 12e (Mondy) Chapter 12: Labor Unions and Collective Bargaining Multiple-Choice Questions 1) Which term refers to a wage structure where newly hired workers are paid less than current employees for performing the same or similar jobs? A) two-tier B) bilateral C) incremental D) multi-level Answer: A Explanation: A) A two-tier wage system is "a wage structure where newly hired workers are paid less than current employees for performing the same or similar jobs." UAW and General Motors negotiated a contract that included provisions for a two-tier wage system. Diff: 1 Page Ref: 320 Chapter: 12 Skill: Concept LO: 1 2) Kyle is employed as a non-core employee at General Motors. According to a contract negotiated by the UAW and General Motors, Kyle will receive ________. A) double the hourly wage of a typical worker B) half of the hourly wage of a typical worker C) the same hourly wage as a typical worker plus benefits D) the same hourly wage as a typical worker but without benefits Answer: B Explanation: B) UAW and General Motors negotiated a contract that included provisions for a two-tier wage system. The negotiated wage scale for any new noncore employees was $14 per hour which is half of what a typical worker would earn. This category of workers will, however, receive traditional health care benefits and has the possibility to ultimately convert to a traditional job. Diff: 3 Page Ref: 320 Chapter: 12 Skill: Application LO: 1

3) Which of the following is NOT a broad objective of the labor movement as a whole? A) improving the living standards and economic status of union members B) enhancing individual security against threats from technological change C) influencing power relations in the social system in ways that favor union goals D) implementing a two-tier wage system in all industries that face outsourcing threats Answer: D Explanation: D) Although each union is a unique organization seeking its own objectives, several broad objectives characterize the labor movement as a whole: 1. To secure and, if possible, improve the living standards and economic status of its members. 2. To enhance and, if possible, guarantee individual security against threats and contingencies that might result from market fluctuations, technological change, or management decisions. 3. To influence power relations in the social system in ways that favor and do not threaten union gains and goals. A two-tier wage system is not advocated by all unions. Diff: 3 Page Ref: 322 Chapter: 12 Skill: Concept LO: 2 4) Major reasons employees join unions include all of the following EXCEPT ________. A) dissatisfaction with management B) need for avenues of leadership C) desire for a social outlet D) pressure from managers Answer: D Explanation: D) Being unhappy with management, aspiring to a leadership role, and wanting a social outlet are main reasons that employees join unions. Managers typically do not want employees to join unions so would not pressure them to do so. Diff: 2 Page Ref: 322-323 Chapter: 12 Skill: Concept LO: 2 5) In how many states is it legal for an employer to agree with the union that a new employee must join the union after a certain period of time or be terminated? A) 19 B) 28 C) 44 D) 50 Answer: B Explanation: B) In the 28 states without right-to-work laws, it is legal for an employer to agree with the union that a new employee must join the union after a certain period of time (generally 30 days) or be terminated. This is referred to as a "union shop agreement." Diff: 2 Page Ref: 323 Chapter: 12

6) Which of the following prohibits employers and unions from entering into agreements requiring union membership as a condition of employment? A) right-to-work laws B) fair labor agreements C) union shop contracts D) employment-at-will laws Answer: A Explanation: A) Right-to-work laws prohibit management and unions from entering into agreements requiring union membership as a condition of employment. These laws are state statutes or constitutional provisions that ban the practice of requiring union membership or financial support as a condition of employment. Diff: 1 Page Ref: 323 Chapter: 12 Skill: Concept LO: 2 7) Unionized machinists who perform essential jobs at a boat manufacturing plant decide to strike for higher wages. As a result, the plant is forced to shut down until an agreement can be reached. The labor union is most likely using a strategy of ________. A) union salting B) pulling the union through C) public awareness campaigns D) strategically located union members Answer: D Explanation: D) The importance of the jobs held by union members significantly affects union power. In this case, an entire plant has to shut down when unionized machinists performing critical jobs decide to strike. Thus, a few strategically located union members have exerted a disproportionate amount of power. Union salting is the process of training union organizers to apply for jobs at a company and, once hired, working to unionize employees. Diff: 3 Page Ref: 324 Chapter: 12 Skill: Application LO: 3

8) What is a union tactic called that puts pressure on the end user of a company's product in order to have a successful organizing attempt? A) flooding the community B) pulling the union through C) political involvement D) building public awareness Answer: B Explanation: B) One union tactic that has worked effectively at times is to put pressure on the end user of a company's product in order to have a successful organizing attempt, which is a strategy known as pulling the union through. Flooding the community is the process of the union inundating communities with organizers to target a particular business in an organizing attempt. Diff: 2 Page Ref: 324 Chapter: 12 Skill: Concept LO: 3 9) Which of the following is the political arm of the AFL-CIO? A) ACTION B) COPE C) NLRB D) PATCO Answer: B Explanation: B) The political arm of the AFL-CIO is the Committee on Political Education (COPE). Founded in 1955, its purpose is to support politicians who are friendly to the cause of organized labor. Diff: 2 Page Ref: 324 Chapter: 12 Skill: Concept LO: 3 10) A restaurant worker labor union is training union organizers to apply for jobs at fast food restaurants in the Chicago area. Once hired, the union organizers will actively work to unionize employees at the restaurant. This strategy is best described as ________. A) broadbanding B) union salting C) flooding the community D) raising public awareness Answer: B Explanation: B) Union salting is the process of training union organizers to apply for jobs at a company and, once hired, working to unionize employees. Although traditionally used by blue-collar labor unions within the construction and building industries, it is a strategy labor unions are also using in other sectors, such as the hotel and restaurant industries. Diff: 3 Page Ref: 325 Chapter: 12 Skill: Application

11) In which case did the Supreme Court rule that employers cannot discriminate against union salts? A) Firefighters Local Union #1984 v Carl W. Stotts B) Espinoza v Farah Manufacturing Company C) NLRB v Town & Electric Inc. D) American Tobacco Company v Patterson Answer: C Explanation: C) The U.S. Supreme Court has ruled that employers cannot discriminate against "union salts" (NLRB v Town & Electric Inc.). Therefore, a company cannot terminate these employees solely because they also work for a union. However, if productivity suffers, the worker can be terminated. Diff: 2 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3 12) The process of the union inundating communities with organizers to target a particular business is known as ________. A) building corporate labor campaigns B) flooding the community C) organizing funds D) union salting Answer: B Explanation: B) Flooding the community is the process of the union inundating communities with organizers to target a particular business in an organizing attempt. With their flooding campaigns, unions typically choose companies in which nonunionized employees have asked for help in organizing. Diff: 1 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3 13) As a union growth strategy, what is the term which involves labor maneuvers which do not coincide with a strike or organizing campaign to pressure an employer for better wages, benefits, and the like? A) union salting B) political involvement C) public awareness campaigns D) flooding communities with organizers Answer: C Explanation: C) Public awareness campaigns involve labor maneuvers that do not coincide with a strike or an organizing campaign to pressure an employer for better wages, benefits, and the like. Increasingly, these campaigns are used as an alternative to strikes because more employers are willing to replace their striking employees. Diff: 2 Page Ref: 325 Chapter: 12 Skill: Concept

LO: 3 14) What is an organizing approach used by labor where employees sign a card of support if they want unionization, and if 50 percent of the work force plus one worker sign a card, the union considers it a victory? A) union salting B) card check C) public awareness campaign D) flooding the community Answer: B Explanation: B) The card check is an organizing approach by labor in which employees sign a nonsecret card of support if they want unionization, and if 50 percent of the workforce plus one worker sign a card, the union is formed. It permits workers to decide in a nonsecret election their union status. Diff: 1 Page Ref: 326 Chapter: 12 Skill: Concept LO: 3 15) What is the basic element in the structure of the American labor movement? A) craft union B) industrial union C) national union D) local union Answer: D Explanation: D) The basic element in the structure of the American labor movement is the local union (or, the local). There are two basic kinds of local unions: craft and industrial. Diff: 2 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3 16) What union is typically composed of members of a particular trade or skill in a specific locality? A) specialty B) craft C) trade D) industrial Answer: B Explanation: B) A craft union, such as the Carpenters and Joiners union, is typically composed of members of a particular trade or skill in a specific locality. An industrial union generally consists of all the workers in a particular plant or group of plants. Diff: 1 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3

17) The United Auto Workers is an example of which type of union? A) industrial B) craft C) local D) service Answer: A Explanation: A) An industrial union generally consists of all the workers in a particular plant or group of plants. The type of work they do and the level of skill they possess are not a condition for membership in the union. An example of an industrial union is the United Auto Workers. Diff: 2 Page Ref: 327-328 Chapter: 12 Skill: Application LO: 3 18) Unions consisting of all the workers in a particular plant or group of plants are ________. A) craft B) commercial C) industrial D) global Answer: C Explanation: C) An industrial union generally consists of all the workers in a particular plant or group of plants. The type of work they do and the level of skill they possess are not a condition for membership in the union. A craft union, such as the Carpenters and Joiners union, is typically composed of members of a particular trade or skill in a specific locality. Diff: 1 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 19) The local union is primarily responsible for ________. A) representing the membership in Washington B) keeping the national union out of their affairs C) administering the collective bargaining agreement D) engaging in collective bargaining at the national level Answer: C Explanation: C) The local union's functions are many and varied. Administering the collective bargaining agreement and representing workers in handling grievances are two very important activities. Diff: 3 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3

20) What is the most powerful level in the union structure? A) industrial union B) commercial union C) national union D) craft union Answer: C Explanation: C) The most powerful level in the union structure is the national union. As stated previously, most locals are affiliated with national unions. A national union is composed of local unions, which it charters. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 21) Which of the following is the parent organization of local unions? A) industrial union B) commercial union C) national union D) craft union Answer: C Explanation: C) A national union is composed of local unions, which it charters. As such, it is the parent organization to local unions. A craft union is typically composed of members of a particular trade or skill in a specific locality. An industrial union generally consists of all the workers in a particular plant or group of plants. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 22) Which of the following holds membership in the national union? A) managers B) local unions C) individual workers D) craft union officers Answer: B Explanation: B) The local union, not the individual worker, holds membership in the national union. Each local union provides financial support to the national union based on its membership size. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3

23) What is the largest and fastest growing national union in the United States? A) United Auto Workers B) United Steel Workers C) Service Employees International D) International Brotherhood of Teamsters Answer: C Explanation: C) The Service Employees International Union (SEIU) is the largest and fastest-growing national union in North America, with 2.2 million members in the United States, Canada, and Puerto Rico. The International Brotherhood of Teamsters has about 1.4 million members. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 24) Which of the following is the central trade union federation in the U.S.? A) Service Employees International Union B) International Brotherhood of Teamsters C) Change to Win Coalition D) AFL-CIO Answer: D Explanation: D) The AFL-CIO is the central trade union federation in the United States. The Change to Win Coalition is a union federation consisting of unions that broke from the AFL-CIO and formally launched a rival labor federation representing about 6 million workers in 2005. The Teamsters and the United Farm Workers are members of the coalition. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 25) The AFL-CIO's major activities include all of the following EXCEPT ________. A) improving the image of organized labor B) lobbying on behalf of labor interests C) resolving disputes between local unions D) policing internal affairs of member unions Answer: C Explanation: C) The federation's major activities include the following: 1. Improving the image of organized labor. 2. Extensive lobbying on behalf of labor interests. 3. Politically educating constituencies and others through COPE. 4. Resolving disputes between national unions. 5. Policing internal affairs of member unions. The AFL-CIO is less likely to become involved in disputes between local unions. Diff: 3 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3

26) Which of the following is a union federation consisting of the seven unions that broke from the AFL-CIO? A) United We Stand Coalition B) United Farm Workers C) International Teamsters D) Change to Win Coalition Answer: D Explanation: D) The Change to Win Coalition is a union federation consisting of unions that broke from the AFL-CIO and formally launched a rival labor federation representing about 6 million workers in 2005. The Teamsters and the United Farm Workers are members of the coalition. Diff: 2 Page Ref: 328-329 Chapter: 12 Skill: Concept LO: 3 27) What is the primary law governing the relationship of companies and unions? A) National Labor Relations Act B) Norris-LaGuardia Act C) Landrum-Griffin Act D) Sherman Act Answer: A Explanation: A) The primary law governing the relationship of companies and unions is the National Labor Relations Act, as amended. Collective bargaining is one of the key parts of the Act. Diff: 2 Page Ref: 329 Chapter: 12 Skill: Concept LO: 4 28) A group of employees recognized by an employer as appropriate for representation by a labor organization for purposes of collective bargaining is (are) called a ________. A) representative group B) bargaining unit C) closed shop D) trade union Answer: B Explanation: B) A bargaining unit consists of a group of employees, not necessarily union members, recognized by an employer or certified by an administrative agency as appropriate for representation by a labor organization for purposes of collective bargaining. A unit may cover the employees in one plant of an employer, or it may cover employees in two or more plants of the same employer. Diff: 1 Page Ref: 329 Chapter: 12 Skill: Concept LO: 4

29) Frank and two other machinists want to form a bargaining unit at Nelson Manufacturing. What is the first step Frank and his co-workers need to take? A) collecting authorization card signatures B) campaigning for election C) petitioning for election D) becoming certified Answer: A Explanation: A) A prerequisite to becoming a recognized bargaining unit is to determine whether there is sufficient interest on the part of employees to justify the unit. Evidence of this interest is expressed when at least 30 percent of the employees in a work group sign an authorization card. After this step, there would be a petition for election. Diff: 2 Page Ref: 330 Chapter: 12 Skill: Application LO: 4 30) An authorization card indicates that an employee wants ________. A) personal representation by a labor attorney B) additional benefits included in a contract C) exclusion from labor union bargaining terms D) union representation in collective bargaining Answer: D Explanation: D) The authorization card is a document indicating that an employee wants to be represented by a labor organization in collective bargaining. Most union organizers will not proceed unless at least 50 percent of the workers in the group sign cards. Diff: 2 Page Ref: 330 Chapter: 12 Skill: Concept LO: 4 31) Most union organizers will NOT continue their organizing efforts unless at least ________ percent of the workers in the workgroup sign authorization cards. A) 30 B) 50 C) 70 D) 100 Answer: B Explanation: B) A prerequisite to becoming a recognized bargaining unit is to determine whether there is sufficient interest on the part of employees to justify the unit. Evidence of this interest is expressed when at least 30 percent of the employees in a work group sign an authorization card. However, most union organizers will not proceed unless at least 50 percent of the workers in the group sign cards. Diff: 2 Page Ref: 330 Chapter: 12 Skill: Concept LO: 4

32) In conducting a legal campaign to discourage employees from voting for the union, management would most likely ________. A) tell workers the benefits of remaining union-free B) threaten workers with loss of their jobs to influence the votes C) incite racial or religious prejudice by making inflammatory campaign appeals D) make speeches to assembled employees on company time within 24 hours before an election Answer: A Explanation: A) Managers who share the benefits of remaining union-free are within their legal rights. However, threatening workers, inciting racial prejudice, or making speeches during business hours would be interfering with employees' freedom of choice, and such actions could make election results invalid. Diff: 3 Page Ref: 330 Chapter: 12 Skill: Application LO: 4 33) Which of the following is LEAST likely to lead to the NLRB declaring an election campaign invalid? A) a union threatens loss of jobs or benefits to influence employees' votes or union activities B) an employer misstates campaign facts when the other party does not have a chance to reply C) a union incites religious prejudice with inflammatory campaign appeals D) an employer discusses with workers the negative aspects of unionization Answer: D Explanation: D) Managers who share the benefits of remaining union-free are within their legal rights. Threatening workers, misstating facts without giving the other side a chance to respond, and inciting religious prejudice would be interfering with employees' freedom of choice, and such actions could make election results invalid. Diff: 3 Page Ref: 330 Chapter: 12 Skill: Application LO: 4 34) Which of the following is the most fundamental to union and management relations in the United States? A) minimum wage B) legislative rulings C) controlling political party D) collective bargaining process Answer: D Explanation: D) The collective bargaining process is fundamental to union and management relations in the United States. Wage rates, legislative rulings, and the majority political party are less relevant. Diff: 2 Page Ref: 331 Chapter: 12

35) What is the duration of a typical labor/management agreement? A) one year B) two years C) three years D) four years Answer: C Explanation: C) The collective bargaining process is fundamental to union and management relations in the United States. Most union/management agreements in the United States are for a three-year period. Diff: 2 Page Ref: 331 Chapter: 12 Skill: Concept LO: 4 36) Which of the following is NOT one of the four major bargaining structures? A) one company dealing with a single union B) several companies dealing with a single union C) several unions dealing with a single company D) one bargaining unit dealing with several unions Answer: D Explanation: D) The bargaining structure can affect the conduct of collective bargaining. The four major structures are: one company dealing with a single union, several companies dealing with a single union, several unions dealing with a single company, and several companies dealing with several unions. Diff: 3 Page Ref: 331 Chapter: 12 Skill: Concept LO: 4 37) Most contract bargaining is carried out under what type of structure? A) one company dealing with a single union B) several companies dealing with a single union C) several unions dealing with a single company D) several companies dealing with several unions Answer: A Explanation: A) The four major structures are: one company dealing with a single union, several companies dealing with a single union, several unions dealing with a single company, and several companies dealing with several unions. Most contract bargaining occurs between one company and a single union. Diff: 3 Page Ref: 331 Chapter: 12 Skill: Concept LO: 4

38) What is the first step in the collective bargaining process? A) ratifying an agreement B) preparing for negotiations C) negotiating an agreement D) choosing a bargaining unit Answer: B Explanation: B) The first step in the collective bargaining process is preparing for negotiations by determining the issues to be negotiated. The next steps include negotiating the agreement, overcoming any breakdowns, and ratifying an agreement. The bargaining unit would have been determined prior to collective bargaining. Diff: 3 Page Ref: 331 Chapter: 12 Skill: Concept LO: 5 39) A machinists union and an employer are involved in collective bargaining. The bargaining issues have already been determined. What is the most likely next step in the process? A) ratifying an agreement B) preparing for negotiations C) negotiating an agreement D) overcoming breakdowns Answer: C Explanation: C) The first step in the collective bargaining process is preparing for negotiations by determining the issues to be negotiated. The next step is to negotiate an agreement, which is followed by overcoming any breakdowns and ratifying an agreement. Diff: 3 Page Ref: 331 Chapter: 12 Skill: Application LO: 5 40) Before negotiating an agreement, it is most important that both negotiators understand which of the following? A) recruitment techniques of the firm B) benefits structure of the organization C) requirements of each position at the firm D) organizational hierarchy at the company Answer: B Explanation: B) Prior to meeting at the bargaining table, the negotiators should thoroughly know the culture, climate, history, present economic state, and wage and benefits structure of both the organization and similar organizations. Recruiting, job requirements, and organizational hierarchy are less relevant in the negotiation process. Diff: 3 Page Ref: 331 Chapter: 12 Skill: Concept LO: 5

41) Bargaining issues can be divided into three categories. Which of the following is NOT one of those categories? A) mandatory B) concession C) permissive D) prohibited Answer: B Explanation: B) Bargaining issues can be divided into three categories: mandatory, permissive, and prohibited. Concession is not one of the categories. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5 42) Mandatory bargaining issues are those which ________. A) fall within the definition of wages, hours, and other terms and conditions of employment B) may be raised, but neither side may insist that they bargained over C) are outlawed, such as the closed shop D) involve company goals and strategies Answer: A Explanation: A) Mandatory bargaining issues fall within the definition of wages, hours, and other terms and conditions of employment. Permissive bargaining issues may be raised, but neither side may insist that they be bargained over. Prohibited bargaining issues, such as the issue of the closed shop, are statutorily outlawed. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5 43) What type of bargaining issues may be raised, but neither side may insist that the issues be bargained over? A) prohibited B) arbitrary C) mandatory D) permissive Answer: D Explanation: D) Permissive bargaining issues may be raised, but neither side may insist that they be bargained over. Prohibited bargaining issues, such as the issue of the closed shop, are statutorily outlawed. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5

44) Johnson Enterprises refuses to bargain on all of the following issues. The firm's refusal to bargain on which of the following issues would most likely result in a charge of unfair labor practices? A) hourly wages B) child care benefits C) retiree health benefits D) job recruiting techniques Answer: A Explanation: A) Mandatory bargaining issues fall within the definition of wages, hours, and other terms and conditions of employment, and a refusal to bargain in these areas is grounds for an unfair labor practice charge. Child care benefits, retiree health benefits, and recruiting methods are permissive bargaining issues that can be raised but do not have to be bargained over. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Application LO: 5 45) Tom works at a company that has a closed shop arrangement. In which industry does Tom most likely work? A) steel B) aerospace C) construction D) mining Answer: C Explanation: C) The TaftHartley Act made the closed shop illegal. However, the Act was modified 12 years later by the LandrumGriffin Act to permit a closed shop in the construction industry. This is the only exception allowed. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Application LO: 5 46) Which of the following made the closed shop illegal? A) Norris-LaGuardia Act B) Wagner Act C) Sherman Act D) Taft-Hartley Act Answer: D Explanation: D) The TaftHartley Act made the closed shop illegal. However, the Act was modified 12 years later by the LandrumGriffin Act to permit a closed shop in the construction industry. This is the only exception allowed. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5

47) Which of the following acts permitted a closed shop in the construction industry? A) National Labor Relations Act B) Norris-LaGuardia Act C) Landrum-Griffin Act D) Taft-Hartley Act Answer: C Explanation: C) The TaftHartley Act made the closed shop illegal. However, the Act was modified 12 years later by the LandrumGriffin Act to permit a closed shop in the construction industry. This is the only exception allowed. Diff: 2 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5 48) Which section of the labor agreement usually appears at the beginning? A) compensation B) recognition C) management rights D) union security Answer: B Explanation: B) The recognition section usually appears at the beginning of the labor agreement. Its purpose is to identify the union that is recognized as the bargaining representative and to describe the bargaining unitthat is, the employees for whom the union speaks. Compensation, management rights, and union security are addressed later in the labor agreement. Diff: 2 Page Ref: 332-333 Chapter: 12 Skill: Concept LO: 5 49) Which section of the labor agreement identifies the union that is recognized as the bargaining representative and describes the bargaining unit? A) grievance procedure B) union security C) compensation D) recognition Answer: D Explanation: D) The recognition section usually appears at the beginning of the labor agreement. Its purpose is to identify the union that is recognized as the bargaining representative and to describe the bargaining unitthat is, the employees for whom the union speaks. Diff: 2 Page Ref: 332-333 Chapter: 12 Skill: Concept LO: 5

50) Which of the following is LEAST likely to appear in a management rights section of a labor agreement? A) power to discipline for cause B) freedom to select company objectives C) power to choose a closed or agency shop D) freedom to determine how to use the firm's material assets Answer: C Explanation: C) When included, management rights generally involve three areas: 1. Freedom to select the business objectives of the company. 2. Freedom to determine the uses to which the material assets of the enterprise will be devoted. 3. Power to take disciplinary action for cause. Union security would not be addressed in the management rights section. Diff: 3 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5 51) Which of the following is usually one of the first items negotiated in a collective bargaining agreement? A) management rights B) recognition C) union security D) compensation Answer: C Explanation: C) Union security is typically one of the first items negotiated in a collective bargaining agreement. The objective of union security provisions is to ensure that the union continues to exist and perform its functions. A strong union security provision makes it easier for the union to enroll and retain members. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5 52) What is the main purpose of union security provisions in a collective bargaining agreement? A) addressing compensation issues that are usually problematic B) ensuring that the union continues to perform its functions C) identifying the union's bargaining representatives D) establishing management's rights in negotiations Answer: B Explanation: B) Union security is typically one of the first items negotiated in a collective bargaining agreement. The objective of union security provisions is to ensure that the union continues to exist and perform its functions. Diff: 3 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5

53) At Benson Enterprises, union membership is a prerequisite for employment. Which type of union security is most likely in place at Benson Enterprises? A) closed shop B) agency shop C) union shop D) open shop Answer: A Explanation: A) A closed shop is an arrangement whereby union membership is a prerequisite for employment. A union shop arrangement requires that all employees become members of the union after a specified period of employment. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Application LO: 5 54) At Coffman Manufacturing, all employees are required to become members of the union after 60 days of employment. Which type of union security most likely exists at Coffman Manufacturing? A) closed shop B) union shop C) agency shop D) open shop Answer: B Explanation: B) A union shop arrangement requires that all employees become members of the union after a specified period of employment. A closed shop is an arrangement whereby union membership is a prerequisite for employment. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Application LO: 5

55) At H&R Enterprises, employees are not required to join the union. However, nonunion members of the bargaining unit must pay a service charge to the union. Which type of union security is most likely in place at H&R Enterprises? A) union shop B) agency shop C) closed shop D) open shop Answer: B Explanation: B) An agency shop provision does not require employees to join the union; however, the labor agreement requires that, as a condition of employment, each nonunion member of the bargaining unit pay the union the equivalent of membership dues as a kind of tax, or service charge, in return for the union acting as the bargaining agent. A union shop arrangement requires that all employees become members of the union after a specified period of employment. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Application LO: 5 56) Joe and Pete have both been employed as electricians at Top Notch Manufacturing for two years. Joe belongs to a union and pays dues. Pete neither belongs to a union nor pays union dues. Which of the following most likely describes the union arrangement at Top Notch Manufacturing? A) closed shop B) agency shop C) open shop D) union shop Answer: C Explanation: C) Under the open shop arrangement, no employee is required to join or contribute to the union financially. A union shop arrangement requires that all employees become members of the union after a specified period of employment. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Application LO: 5

57) Under which of the following arrangements is an employee not required to join or financially contribute to a union? A) closed shop B) agency shop C) union shop D) open shop Answer: D Explanation: D) An open shop describes the absence of union security, rather than its presence. The open shop, strictly defined, is employment on equal terms to union members and nonmembers alike. Under this arrangement, no employee is required to join or contribute to the union financially. The other forms of security require workers to either join the union or pay dues to the union. Diff: 1 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5 58) In which section of the labor agreement would a checkoff of dues provision be included? A) recognition B) union security C) employee security D) management rights Answer: B Explanation: B) Dues checkoff is a type of union security. Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Diff: 2 Page Ref: 333-334 Chapter: 12 Skill: Concept LO: 5 59) When the dues checkoff is in effect, management agrees to ________. A) pay dues for members who cannot afford them B) send a portion of members' dues to charities C) forward members' dues to the union D) audit union members' dues Answer: C Explanation: C) Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Dues checkoff is important to the union because it eliminates much of the expense, time, and hassle of collecting dues from each member every pay period or once a month. Diff: 2 Page Ref: 333-334 Chapter: 12 Skill: Concept LO: 5

60) Davis Manufacturing deducts union dues from members' paychecks and forwards the money to the union. Which of the following is most likely included in the labor agreement? A) maintenance of membership B) permissive bargaining C) collective bargaining D) dues checkoff Answer: D Explanation: D) Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Dues checkoff is important to the union because it eliminates much of the expense, time, and hassle of collecting dues from each member every pay period or once a month. Diff: 2 Page Ref: 333-334 Chapter: 12 Skill: Application LO: 5 61) Which law requires each union member to voluntarily sign a statement authorizing a deduction when the dues checkoff is used? A) Landrum-Griffin Act B) Norris-LaGuardia Act C) Taft-Hartley Act D) Sherman Act Answer: C Explanation: C) Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Because of provisions in the TaftHartley Act, each union member must voluntarily sign a statement authorizing this deduction. Diff: 2 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 62) An escalator clause in a labor agreement ________. A) guarantees annual wage increases B) widens the scope of the contract C) compensates for cost of living increases D) protects management's authority Answer: C Explanation: C) The base rates to be paid each year of the contract for each job are included in the compensation section of the labor agreement. At times, unions are able to obtain a cost-of-living allowance (COLA), or escalator clause, in the contract in order to protect the purchasing power of employees' earnings. Diff: 2 Page Ref: 334 Chapter: 12 Skill: Concept

63) Which of the following is NOT likely to be included in the compensation section of a labor agreement? A) vacation B) premium pay C) family care D) dues checkoff Answer: D Explanation: D) Dues checkoff is included in the union security section of a labor agreement. Vacation, premium pay, and family care are elements of the compensation section. Diff: 2 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 64) The amount of vacation an employee may take is usually stated in the ________ section of the labor agreement. A) union security B) compensation C) employee security D) recognition Answer: B Explanation: B) Vacation, premium pay, and family care are elements of the compensation section. The employee security section of the labor agreement establishes the procedures that cover job security for individual employees. Diff: 1 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 65) A formal, systematic process that permits employees to express complaints without jeopardizing their jobs is known as a ________. A) grievance procedure B) union security C) employee security D) management Answer: A Explanation: A) A grievance can be broadly defined as an employee's dissatisfaction or feeling of personal injustice relating to his or her employment. A grievance procedure is a formal, systematic process that permits employees to express complaints without jeopardizing their jobs. Diff: 1 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5

66) Which term refers to an employee's dissatisfaction or feeling of personal injustice relating to his or her employment? A) arbitration B) ratification C) severance D) grievance Answer: D Explanation: D) A grievance can be broadly defined as an employee's dissatisfaction or feeling of personal injustice relating to his or her employment. A grievance procedure is a formal, systematic process that permits employees to express complaints without jeopardizing their jobs. Diff: 1 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 67) Which section of the labor agreement contains seniority provisions? A) grievance procedure B) union security C) employee security D) management rights Answer: C Explanation: C) This section of the labor agreement establishes the procedures that cover job security for individual employees. Seniority is a key topic related to employee security. Diff: 2 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 68) Seniority may be granted employees on the basis of all of the following EXCEPT ________. A) department B) division C) job D) age Answer: D Explanation: D) Seniority is the length of time an employee has been associated with the company, division, department, or job. Seniority may be determined company-wide, by division, by department, or by job. It would be illegal to use age as the basis for promotions or lay-off decisions. Diff: 2 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5

69) In labor agreements, seniority is an important issue because it ________. A) addresses family and child-care problems B) establishes the process for filing grievances C) provides the basis of promotion decisions D) determines the need for retirement plans Answer: C Explanation: C) Agreement on seniority is important because the person with the most seniority, as defined in the labor agreement, is typically the last to be laid off and the first to be recalled. The seniority system also provides a basis for promotion decisions. Diff: 3 Page Ref: 334 Chapter: 12 Skill: Concept LO: 5 70) During negotiation preparations, which of the following is typically the best choice for gathering information regarding union members' attitudes? A) executives B) union stewards C) business managers D) local union presidents Answer: B Explanation: B) The union must continuously gather information regarding membership needs to isolate areas of dissatisfaction. The union steward is normally in the best position to collect such data because they are usually elected by their peers. The union steward constantly funnels information up through the union's chain of command, where the data are compiled and analyzed. Diff: 2 Page Ref: 335 Chapter: 12 Skill: Concept LO: 6 71) Martin Engineering is a large corporation that is preparing for collective bargaining negotiations with the machinists' union. Which of the following is LEAST likely to be on the bargaining team for Martin Engineering? A) HR manager B) production manager C) union officer D) labor attorney Answer: C Explanation: C) The makeup of the management team usually depends on the type of organization and its size, and with larger firms, HR managers, managers of principal operating divisions, and labor attorneys will most likely participate. Union officers would be on the other side of the table. Diff: 2 Page Ref: 335 Chapter: 12 Skill: Application

LO: 6 72) At the local level, the bargaining committee will normally include ________. A) elected rank-and-file members B) industrial relations representatives C) stewards from the national union D) AFL-CIO representatives Answer: A Explanation: A) The responsibility for conducting negotiations for the union is usually entrusted to union officers. At the local level, rank-and-file members who are elected specifically for this purpose will normally supplement the bargaining committee. It is less likely that national level union stewards and AFL-CIO representatives would be on the bargaining committee. Diff: 2 Page Ref: 335 Chapter: 12 Skill: Concept LO: 6 73) Where do the two negotiating teams usually meet? A) company premises B) local union hall C) neutral location D) federal courtroom Answer: C Explanation: C) The two negotiating teams usually meet at an agreed-on neutral site, such as a hotel. Meeting at the company or at a union hall would probably not lead to acceptable results. Diff: 2 Page Ref: 335 Chapter: 12 Skill: Concept LO: 6 74) Which of the following is typically LEAST useful during the negotiating phase of collective bargaining? A) give-and-take attitude B) neutral meeting location C) clear communication D) media involvement Answer: D Explanation: D) The term negotiating suggests a certain amount of give-and-take, the purpose of which is to lower the other side's expectations. Negotiations should be conducted in the privacy of a neutral location, not in the news media. It is equally important for union and management negotiators to strive to develop and maintain clear and open lines of communication. Diff: 3 Page Ref: 335-336 Chapter: 12 Skill: Concept

75) During the first round of negotiations with Olsen Automotive, the machinists union demands that management raise the wages of all employees by 15%. The union does not expect management to agree to this demand initially. Which term best describes the demand made by the union? A) beachhead B) arbitrary C) secondary D) tactical Answer: A Explanation: A) Demands for benefits that the union does not expect to receive when they are first made are known as beachhead demands. Diff: 2 Page Ref: 336 Chapter: 12 Skill: Application LO: 6 76) What is the process called when a neutral third party enters and attempts to resolve a labor dispute when a bargaining impasse has occurred? A) delegation B) interest arbitration C) mediation D) rights arbitration Answer: C Explanation: C) In mediation, a neutral third party enters the negotiations and attempts to facilitate a resolution to a labor dispute when a bargaining impasse has occurred. In arbitration, a dispute is submitted to an impartial third party for a binding decision; an arbitrator basically acts as a judge and jury. Diff: 1 Page Ref: 337 Chapter: 12 Skill: Concept LO: 6 77) Which law established the Federal Mediation and Conciliation Service (FMCS)? A) Taft-Hartley Act B) Davis-Bacon Act C) Landrum-Griffin Act D) Norris-LaGuardia Act Answer: A Explanation: A) The principal organization involved in mediation efforts, other than some state and local agencies, is the Federal Mediation and Conciliation Service (FMCS). In 1947, the Taft-Hartley Act established the FMCS as an independent agency. Diff: 2 Page Ref: 337 Chapter: 12 Skill: Concept LO: 6

78) Carlson Machines and the local labor union have a contract dispute over wages. The two sides have agreed to submit the dispute to an impartial third party for a binding decision. Which of the following will most likely serve as the judge and jury in this situation? A) arbitrator B) mediator C) HR manager D) union steward Answer: A Explanation: A) In arbitration, a dispute is submitted to an impartial third party for a binding decision; an arbitrator basically acts as a judge and jury. A mediator has no power to force a settlement but can help in the search for solutions, make recommendations, and work to open blocked channels of communication. Diff: 2 Page Ref: 337 Chapter: 12 Skill: Application LO: 6 79) The unionized machinists at Larson Aeronautics have refused to work and have halted production as a result of a breakdown in negotiations. Which of the following terms best describes the actions of the machinists? A) boycott B) strike C) beachhead D) lockout Answer: B Explanation: B) When union members refuse to work in order to exert pressure on management in negotiations, their action is referred to as a strike. A boycott involves an agreement by union members to refuse to use or buy the firm's products. Diff: 2 Page Ref: 338 Chapter: 12 Skill: Application LO: 6

80) Ben is a member of the electricians' union, which is currently striking against Rawlings Manufacturing. However, Ben does not support the strike and does not want to participate, so he is continuing to work at Rawlings. As a result, Ben could be fined as high as ________ percent of his wages. A) 25 B) 50 C) 75 D) 100 Answer: D Explanation: D) Virtually every national union's constitution contains a clause requiring the members to support and participate in a strike if one is called. If a union member fails to comply with this requirement, he or she can be fined be as high as 100 percent of wages for as long as union pickets remain. Diff: 2 Page Ref: 338-339 Chapter: 12 Skill: Application LO: 6 81) A boycott involves an agreement by union members to ________. A) stay off the job indefinitely B) refuse to use or buy the firm's products C) refuse to use or buy competing firms' products D) persuade third parties to refuse to use or buy the firm's products Answer: B Explanation: B) A boycott involves an agreement by union members to refuse to use or buy the firm's products. The practice of a union attempting to encourage third parties (such as suppliers and customers) to stop doing business with the company is known as a secondary boycott. Diff: 2 Page Ref: 339 Chapter: 12 Skill: Concept LO: 6 82) Boycotts are especially effective when the firm has ________. A) low inventory B) high inventory C) low brand recognition D) high brand recognition Answer: D Explanation: D) A boycott exerts economic pressure on management, and the effect often lasts much longer than that of a strike. This approach is especially effective when the products are sold at retail outlets and are easily identifiable by brand name. Inventory is less relevant. Diff: 2 Page Ref: 339 Chapter: 12 Skill: Concept LO: 6

83) During negotiation breakdowns between the steelworkers' union and Capital Aeronautics, the union encouraged suppliers and customers to stop doing business with the firm. Which type of strategy was the union most likely implementing? A) strike B) boycott C) lockout D) secondary boycott Answer: D Explanation: D) The practice of a union attempting to encourage third parties (such as suppliers and customers) to stop doing business with the company is known as a secondary boycott. A boycott involves an agreement by union members to refuse to use or buy the firm's products. Diff: 2 Page Ref: 339 Chapter: 12 Skill: Application LO: 6 84) Peterson Manufacturing and the local steelworkers' union are having a negotiation breakdown. Peterson's management is keeping employees out of the workplace and running the operation with temporary replacements. Which type of strategy is most likely being used to overcome the negotiation breakdown? A) boycott B) lockout C) layoff D) strike Answer: B Explanation: B) In a lockout, management keeps employees out of the workplace and runs the operation with management personnel and/or replacements. A boycott involves an agreement by union members to refuse to use or buy the firm's products. Diff: 2 Page Ref: 339 Chapter: 12 Skill: Application LO: 6 85) A lockout is particularly effective in all of the following cases EXCEPT when the ________. A) union is weak B) union treasury is low C) business relies on global sales D) business has excessive inventories Answer: C Explanation: C) A lockout is particularly effective when management is dealing with a weak union, when the union treasury is depleted, and when the business has excessive inventories. The lockout is also used to inform the union that management is serious regarding certain bargaining issues. Global sales are less relevant. Diff: 3 Page Ref: 338 Chapter: 12

Skill: Concept LO: 6 86) Continuation of plant operations during a strike using management and nonunion personnel is most effective when the ________. A) union is boycotting and picketing B) union is not attempting a boycott C) business is a federal contractor D) business is not labor intensive Answer: D Explanation: D) The type of industry involved has considerable effect on the impact of continuing plant operations with nonunion personnel. If the firm is not labor-intensive and if maintenance demands are not high this practice may be quite effective. Whether or not the union is boycotting and striking is less relevant. Diff: 3 Page Ref: 339 Chapter: 12 Skill: Concept LO: 6 87) Which of the following is the final product of the collective bargaining process? A) employment contract B) labor agreement C) mediation contract D) arbitration guidelines Answer: B Explanation: B) The document that emerges from the collective bargaining process is known as a "labor agreement" or "contract." It regulates the relationship between employer and employees for a specified period of time. It is still an essential but difficult task because each agreement is unique, and there is no standard or universal model. Diff: 2 Page Ref: 340 Chapter: 12 Skill: Concept LO: 7 88) What document regulates the relationship between employer and employees for a specified period of time? A) labor agreement B) employment contract C) mediation guidelines D) arbitration agreement Answer: A Explanation: A) The document that emerges from the collective bargaining process is known as a "labor agreement" or "contract." It regulates the relationship between employer and employees for a specified period of time. Diff: 2 Page Ref: 340 Chapter: 12

89) If union members should reject the proposed labor agreement ________. A) the labor contract is void B) the union's status is in jeopardy C) it is a clear sign of management victory D) a new round of negotiations must begin Answer: D Explanation: D) Until a majority of members voting in a ratification election approve it, the proposed agreement is not final. At times, union members reject the proposal and a new round of negotiations must begin. Many of these rejections might not occur if union negotiators were better informed about members' desires. Diff: 3 Page Ref: 340 Chapter: 12 Skill: Concept LO: 7 90) Todd, a manager at Dexter Manufacturing, has received a grievance filed by a group of his subordinates who are union members. Which of the following most likely indicates that filing a grievance is appropriate in this situation? A) Dexter has recently downsized its workforce and outsourced many jobs overseas to save money. B) The employees assert that Dexter failed to provide them with adequate personal protection equipment. C) Each of the Dexter employees has recently received a warning for participating in unsafe acts while on the job. D) The employees argue that the local union should not have used an arbitrator during contract negotiations with Dexter. Answer: B Explanation: B) A grievance procedure is a formal, systematic process that permits employees to express complaints without jeopardizing their jobs. A grievance procedure is usually restricted to violations of the terms and conditions of the labor agreement. There are other conditions that may give rise to a grievance, including violations of health and safety standards, such as failing to provide adequate PPE. Diff: 3 Page Ref: 340-341 Chapter: 12 Skill: Critical Thinking LO: 8 AACSB: Reflective Thinking

91) Todd, a manager at Dexter Manufacturing, has received a grievance filed by a group of his subordinates who are union members. Which of the following most likely indicates that a multi-step grievance procedure has been initiated appropriately? A) The employees collect petition signatures and present the document to Todd. B) The employees contact the labor union arbitrator, who then sends an e-mail to Todd. C) The employees send a memo to the union steward, Todd, and vice president of Dexter. D) The employees orally present the grievance in the presence of Todd and the union steward. Answer: D Explanation: D) The multistep grievance procedure is the most common way to handle grievances. In the first step, the employee usually presents the grievance orally and informally to the immediate supervisor in the presence of the union steward. This step offers the greatest potential for improved labor relations, and a large majority of grievances are settled here. Arbitrators and top executives would not likely become involved in the first step of the process. Diff: 3 Page Ref: 341 Chapter: 12 Skill: Critical Thinking LO: 8 AACSB: Reflective Thinking 92) Todd, a manager at Dexter Manufacturing, received a grievance filed by a group of his subordinates who are union members. Which of the following most likely indicates that the grievance could NOT be settled informally? A) A signed copy of the grievance is discussed during a meeting between the HR manager and union officials. B) The employees and their union steward discuss the grievance with Todd in his office. C) Todd gathers his subordinates for an open discussion about their concerns. D) The employees decide to withdraw their grievance. Answer: A Explanation: A) In the first step of the multistep grievance procedure, the employee usually presents the grievance orally and informally to the immediate supervisor in the presence of the union steward. If Todd, the union steward, and the employees were able to work the problem out at this point, then the grievance would be resolved informally. If the grievance remains unresolved, the next step involves a meeting between the plant manager or human resource manager and higher union officials. Prior to this meeting, the grievance is written out, dated, and signed by the employee and the union steward. Diff: 3 Page Ref: 341 Chapter: 12 Skill: Critical Thinking LO: 8 AACSB: Reflective Thinking

93) Todd, a manager at Dexter Manufacturing, received a grievance filed by a group of his subordinates who are union members. Unable to settle the grievance, both sides agree to enter into arbitration. Which of the following questions is LEAST relevant for the arbitrator to ask when establishing the fairness of management's actions? A) What is the past record of the grievants? B) Has there been lax enforcement of the rule? C) What are the right-to-work guidelines involved? D) Were the grievants knowledgeable about the rules? Answer: C Explanation: C) When evaluating the fairness of management actions, an arbitrator will most likely assess the record of the grievants, rule enforcement, and the grievants' knowledge. Right-to-work is not an issue that is relevant in this situation. Diff: 3 Page Ref: 341 Chapter: 12 Skill: Critical Thinking LO: 8 AACSB: Reflective Thinking 94) Which of the following established the basic framework for collective bargaining in federal government agencies? A) Executive Order 13494 B) Executive Order 10988 C) Taft-Hartley Act D) Title VII of the Civil Service Reform Act Answer: B Explanation: B) Executive Order 10988 established the basic framework for collective bargaining in federal government agencies. Title VII of the Civil Service Reform Act of 1978 regulates most of the labor management relations in the federal service. Diff: 2 Page Ref: 343 Chapter: 12 Skill: Concept LO: 9 95) Which Act established the Federal Labor Relations Authority? A) Norris-LaGuardia Act B) Taft-Hartley Act C) Civil Service Reform Act D) Landrum-Griffin Act Answer: C Explanation: C) Title VII of the Civil Service Reform Act of 1978 regulates most of the labor management relations in the federal service. It establishes the Federal Labor Relations Authority (FLRA), which is modeled after the National Labor Relations Board. Diff: 2 Page Ref: 343 Chapter: 12 Skill: Concept LO: 9

96) Why has collective bargaining for federal unions traditionally been quite different from private sector bargaining? A) mandated pension plans B) non-negotiable wages C) two-tier wage system D) required arbitration Answer: B Explanation: B) Collective bargaining for federal unions has traditionally been quite different from private sector bargaining because wages were off the table. Title V of the U.S. Code, the law that dictates rules for federal employees, did not allow bargaining over wage issues, except for the U.S. Postal Service. Diff: 3 Page Ref: 343 Chapter: 12 Skill: Concept LO: 9 97) Which of the following made it possible to decertify a union? A) Taft-Hartley Act B) Norris-LaGuardia Act C) Landrum-Griffin Act D) Executive Order 10988 Answer: A Explanation: A) Until 1947, once a union was certified, it was certified forever. However, the Taft-Hartley Act made it possible for employees to decertify a union. Decertification is the reverse of the process that employees must follow to be recognized as an official bargaining unit. Diff: 2 Page Ref: 344 Chapter: 12 Skill: Concept LO: 10 98) When a union loses its right to act as the exclusive bargaining representative of a group of employees, the process is referred to as ________. A) decertification B) deauthorization C) interest arbitration D) rights arbitration Answer: A Explanation: A) Decertification is the reverse of the process that employees must follow to be recognized as an official bargaining unit. It results in a union losing its right to act as the exclusive bargaining representative of a group of employees. Diff: 1 Page Ref: 344 Chapter: 12 Skill: Concept LO: 10

99) Which of the following is a requirement for filing a decertification petition? A) At least 50% of the bargaining unit members must petition for an election. B) Signatures on the petition must be publicized to ensure authenticity. C) The petition must be submitted 60 to 90 days before the current contract expires. D) Union members must submit their dues on or before the date of the contract's renewal. Answer: C Explanation: C) The rules established by the NLRB spell out the conditions for filing a decertification petition. At least 30 percent of the bargaining unit members must petition for an election. Petitioners' names are supposed to remain confidential. The petition must be submitted between 60 and 90 days prior to the expiration of the current contract. When all these conditions have been met, the NLRB regional director will schedule a decertification election by secret ballot. Diff: 3 Page Ref: 344 Chapter: 12 Skill: Concept LO: 10 100) Which of the following was determined by a study of the International Confederation of Free Trade Unions? A) Trade union members around the world are abused and intimidated. B) The NLRB oversees collective bargaining negotiations for foreign firms. C) Membership in labor unions is increasing because of a weak global economy. D) Central American trade union members are respected within the textile industry. Answer: A Explanation: A) According to a study by the International Confederation of Free Trade Unions (now the ITUC), thousands of trade unionists were arrested, jailed, tortured, fired, or intimidated, and 223 were murdered or disappeared, across the world. Labor union membership is declining. With regard to the Americas, the report shows that hostility toward trade unions is a recurrent problem in many Central and South American countries. Diff: 3 Page Ref: 345 Chapter: 12 Skill: Concept LO: 11 AACSB: Multicultural and Diversity True/False and Essay Questions 1) In a two-tier wage system, young employees receive less pay and benefits than older employees. Answer: FALSE Explanation: A two-tier wage system is a wage structure where newly hired workers are paid less than current employees for performing the same or similar jobs. The wage difference is not necessarily based on age. Diff: 2 Page Ref: 320 Chapter: 12 Skill: Concept

LO: 1 2) U.S. automobile manufacturers are currently the only organizations that use a two-tier wage system. Answer: FALSE Explanation: The automobile manufacturers are not the only U.S. companies to implement the two-tier wage system. Goodyear's contract with the United Steelworkers, covering 16 U.S. and Canadian sites, has a two-tier structure. Diff: 2 Page Ref: 320 Chapter: 12 Skill: Concept LO: 1 3) Improving the living standards of its members is one of the broad objectives of the labor movement in the U.S. Answer: TRUE Explanation: The labor movement has a long history in the United States. Although each union is a unique organization seeking its own objectives, several broad objectives characterize the labor movement as a whole including to secure and, if possible, improve the living standards and economic status of its members. Diff: 2 Page Ref: 322 Chapter: 12 Skill: Concept LO: 2 4) Job security and fair compensation are common reasons that individuals join unions. Answer: TRUE Explanation: Individuals join unions for many different reasons, which tend to change over time, and may involve job, personal, social, or political considerations. Job security and compensation are two of the many common reasons for unionization. Diff: 2 Page Ref: 322-323 Chapter: 12 Skill: Concept LO: 2 5) In the 10 states without right-to-work laws, it is legal for an employer to agree with the union that a new employee must join the union after a certain period of time or be terminated. Answer: FALSE Explanation: In the 28 states without right-to-work laws, it is legal for an employer to agree with the union that a new employee must join the union after a certain period of time (generally 30 days) or be terminated. This is referred to as a "union shop agreement." Diff: 2 Page Ref: 323 Chapter: 12 Skill: Concept LO: 2

6) Right-to-work laws prohibit management and unions from entering into agreements requiring union membership as a condition of employment. Answer: TRUE Explanation: Right-to-work laws prohibit management and unions from entering into agreements requiring union membership as a condition of employment. These laws are state statutes or constitutional provisions that ban the practice of requiring union membership or financial support as a condition of employment. Diff: 1 Page Ref: 323 Chapter: 12 Skill: Concept LO: 2 7) Most right-to-work states are located in the North and East. Answer: FALSE Explanation: Right-to-work laws prohibit management and unions from entering into agreements requiring union membership as a condition of employment. Twenty-two states, located primarily in the South and West, have adopted such laws, which are a continuing source of irritation between labor and management. Diff: 2 Page Ref: 323 Chapter: 12 Skill: Concept LO: 2 8) The purpose of the Committee on Political Education (COPE) is to support politicians who favor organized labor. Answer: TRUE Explanation: The political arm of the AFL-CIO is the Committee on Political Education (COPE). Founded in 1955, its purpose is to support politicians who are friendly to the cause of organized labor. Diff: 2 Page Ref: 324 Chapter: 12 Skill: Concept LO: 3 9) The U.S. Supreme Court has ruled that employers can terminate union salts even if their productivity is high. Answer: FALSE Explanation: The U.S. Supreme Court has ruled that employers cannot discriminate against "union salts" (NLRB v Town & Electric Inc.). Therefore, a company cannot terminate these employees solely because they also work for a union. However, if productivity suffers, the worker can be terminated. Diff: 2 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3

10) Union salting is the process of unions inundating communities with organizers to boycott a particular business. Answer: FALSE Explanation: Union salting is the process of training union organizers to apply for jobs at a company and, once hired, working to unionize employees. Although traditionally used by blue-collar labor unions within the construction and building industries, it is a strategy labor unions are also using in other sectors, such as the hotel and restaurant industries. Diff: 1 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3 11) Public awareness campaigns involve labor maneuvers that coincide with a strike to pressure an employer for better wages and benefits. Answer: FALSE Explanation: Public awareness campaigns involve labor maneuvers that do not coincide with a strike or an organizing campaign to pressure an employer for better wages, benefits, and the like. Increasingly, these campaigns are used as an alternative to strikes because more employers are willing to replace their striking employees. Diff: 1 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3 12) Public awareness campaigns by labor unions are increasingly being used in lieu of strikes. Answer: TRUE Explanation: Public awareness campaigns involve labor maneuvers that do not coincide with a strike or an organizing campaign to pressure an employer for better wages, benefits, and the like. Increasingly, these campaigns are used as an alternative to strikes because more employers are willing to replace their striking employees. Diff: 2 Page Ref: 325 Chapter: 12 Skill: Concept LO: 3 13) The lowest union membership rate exists among workers between the ages of 16 and 24, which is why labor unions are attempting to recruit younger workers. Answer: TRUE Explanation: A major strategy now being pursued by union organizers is to recruit younger workers and it may be coming at the right time since the lowest union membership rate is occurring among those ages 16 to 24 (4.7 percent). Diff: 1 Page Ref: 326 Chapter: 12 Skill: Concept LO: 3

14) When organizing through the card check method, a collection of signed cards from 30 percent of the workforce will establish a union. Answer: FALSE Explanation: The card check is an organizing approach by labor in which employees sign a nonsecret card of support if they want unionization, and if 50 percent of the workforce plus one worker sign a card, the union is formed. Diff: 1 Page Ref: 326 Chapter: 12 Skill: Concept LO: 3 15) Card checks are expedited ways of polling workers on union representation without initiating a secret-ballot election. Answer: TRUE Explanation: The card check is an organizing approach by labor in which employees sign a nonsecret card of support if they want unionization, and if 50 percent of the workforce plus one worker sign a card, the union is formed. It permits workers to decide in a nonsecret election their union status. Diff: 2 Page Ref: 326 Chapter: 12 Skill: Concept LO: 3 16) If enacted, the Employee Free Choice Act would mandate binding interest arbitration if a firm and a union are unable to reach an agreement on a first contract after 120 days of good-faith bargaining. Answer: TRUE Explanation: The Employee Free Choice Act (EFCA) proposes three major changes to the National Labor Relations Act. One of the provisions is that it would mandate binding interest arbitration if an employer and a union cannot reach an agreement on a first contract within 120 days of good-faith bargaining. Diff: 2 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3 17) The basic element in the structure of the American labor movement is the national union. Answer: FALSE Explanation: The labor movement has developed a multilevel organizational structure. This complex of organizations ranges from local unions to the two principal federationsthe AFL-CIO and the Change to Win Coalition. The basic element in the structure of the American labor movement is the local union (or, the local). Diff: 1 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3

18) Craft unions are local unions, while industrial unions are national unions. Answer: FALSE Explanation: There are two basic kinds of local unions: craft and industrial. Diff: 2 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3 19) A craft union is typically composed of members of a particular trade or skill in a specific locality who go through apprenticeship-training programs. Answer: TRUE Explanation: A craft union, such as the Carpenters and Joiners union, is typically composed of members of a particular trade or skill in a specific locality. Members usually acquire their job skills through apprenticeship-training programs. Diff: 1 Page Ref: 327 Chapter: 12 Skill: Concept LO: 3 20) A craft union generally consists of all the workers in a particular plant or group of plants. Answer: FALSE Explanation: An industrial union generally consists of all the workers in a particular plant or group of plants. A craft union, such as the Carpenters and Joiners union, is typically composed of members of a particular trade or skill in a specific locality. Diff: 1 Page Ref: 327-328 Chapter: 12 Skill: Concept LO: 3 21) National unions, such as SEIU and the Teamsters, are the most powerful level in the union structure. Answer: TRUE Explanation: The most powerful level in the union structure is the national union. Most locals are affiliated with national unions. A national union is composed of local unions, which it charters. SEIU and the International Brotherhood of Teamsters are national unions. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 22) Local unions are not affiliated with national unions; each works independently of the other. Answer: FALSE Explanation: The most powerful level in the union structure is the national union. Most locals are affiliated with national unions.

Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 23) The International Brotherhood of Teamsters is the largest and fastest growing national union in North America. Answer: FALSE Explanation: The Service Employees International Union (SEIU) is the largest and fastest-growing national union in North America, with 2.2 million members in the United States, Canada, and Puerto Rico. The International Brotherhood of Teamsters has about 1.4 million members. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 24) The Change to Win Coalition broke away from the AFL-CIO and serves as a rival organization. Answer: TRUE Explanation: The Change to Win Coalition is a union federation consisting of unions that broke from the AFL-CIO and formally launched a rival labor federation representing about 6 million workers in 2005. Diff: 2 Page Ref: 328 Chapter: 12 Skill: Concept LO: 3 25) A bargaining unit consists of a group of union employees who have been recognized by an employer as appropriate representatives to participate in the arbitration of a labor agreement. Answer: FALSE Explanation: A bargaining unit consists of a group of employees, not necessarily union members, recognized by an employer or certified by an administrative agency as appropriate for representation by a labor organization for purposes of collective bargaining. Diff: 1 Page Ref: 329 Chapter: 12 Skill: Concept LO: 4 26) Evidence of interest in becoming a bargaining unit is expressed when at least 10 percent of the employees in a workgroup sign an authorization card. Answer: FALSE Explanation: A prerequisite to becoming a recognized bargaining unit is to determine whether there is sufficient interest on the part of employees to justify the unit. Evidence of this interest is expressed when at least 30 percent of the employees in a work group sign an authorization card.

27) The authorization card is a document indicating that an employee wants to be represented by a labor organization in collective bargaining. Answer: TRUE Explanation: The authorization card is a document indicating that an employee wants to be represented by a labor organization in collective bargaining. Most union organizers will not proceed unless at least 50 percent of the workers in the group sign cards. Diff: 1 Page Ref: 330 Chapter: 12 Skill: Concept LO: 4 28) Most union organizers will not proceed unless at least 50 percent of the workers in the group sign authorization cards. Answer: TRUE Explanation: A prerequisite to becoming a recognized bargaining unit is to determine whether there is sufficient interest on the part of employees to justify the unit. Evidence of this interest is expressed when at least 30 percent of the employees in a work group sign an authorization card. However, most union organizers will not proceed unless at least 50 percent of the workers in the group sign cards. Diff: 2 Page Ref: 330 Chapter: 12 Skill: Concept LO: 4 29) Permissive bargaining issues fall within the definition of wages, hours, and other terms and conditions of employment. Answer: FALSE Explanation: Mandatory bargaining issues fall within the definition of wages, hours, and other terms and conditions of employment. Permissive bargaining issues may be raised, but neither side may insist that they be bargained over. Diff: 1 Page Ref: 332 Chapter: 12 Skill: Concept LO: 5 30) A union shop is an arrangement whereby union membership is a prerequisite for employment. Answer: FALSE Explanation: A closed shop is an arrangement whereby union membership is a prerequisite for employment. A union shop arrangement requires that all employees become members of the union after a specified period of employment (the legal minimum is 30 days) or after a union shop provision has been negotiated. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5

31) An agency shop arrangement requires that all employees become members of the union after a specified period of employment. Answer: FALSE Explanation: An agency shop provision does not require employees to join the union; however, the labor agreement requires that, as a condition of employment, each nonunion member of the bargaining unit pay the union the equivalent of membership dues as a kind of tax, or service charge, in return for the union acting as the bargaining agent. A union shop arrangement requires that all employees become members of the union after a specified period of employment (the legal minimum is 30 days) or after a union shop provision has been negotiated. Diff: 2 Page Ref: 333 Chapter: 12 Skill: Concept LO: 5 32) Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Answer: TRUE Explanation: Under the checkoff of dues provision, the company agrees to withhold union dues from members' paychecks and to forward the money directly to the union. Because of provisions in the TaftHartley Act, each union member must voluntarily sign a statement authorizing this deduction. Diff: 1 Page Ref: 333-334 Chapter: 12 Skill: Concept LO: 5 33) When preparing for negotiations, the union relies on the union steward to provide information about members' attitudes. Answer: TRUE Explanation: The union steward is normally in the best position to collect such data. Because they are usually elected by their peers, stewards should be well informed regarding union members' attitudes. The union steward constantly funnels information up through the union's chain of command, where the data are compiled and analyzed. Diff: 2 Page Ref: 335 Chapter: 12 Skill: Concept LO: 6

34) Beachhead demands are ones that the union anticipates receiving from management during initial negotiations. Answer: FALSE Explanation: Each side usually does not expect to obtain all the demands presented in its first proposal. Labor can lose a demand and continue to bring it up in the future. Demands for benefits that the union does not expect to receive when they are first made are known as beachhead demands. Diff: 1 Page Ref: 336 Chapter: 12 Skill: Concept LO: 6 35) In mediation, a dispute is submitted to an impartial third party for a binding decision from a mediator who serves as a formal judge. Answer: FALSE Explanation: In mediation, a neutral third party enters the negotiations and attempts to facilitate a resolution to a labor dispute when a bargaining impasse has occurred. A mediator basically acts like a facilitator. In arbitration, a dispute is submitted to an impartial third party for a binding decision; an arbitrator basically acts as a judge and jury. Diff: 1 Page Ref: 337 Chapter: 12 Skill: Concept LO: 6 36) Interest arbitration is commonly used in the private sector to settle wage disputes between employers and unions. Answer: FALSE Explanation: Interest arbitration involves disputes over the terms of proposed collective bargaining agreements. In the private sector, the use of interest arbitration as an alternative for impasse resolution has not been a common practice. Unions and employers rarely agree to submit the basic terms of a contract (such as wages, hours, and working conditions) to a neutral party for disposition. Diff: 2 Page Ref: 337 Chapter: 12 Skill: Concept LO: 6 37) The most effective time to implement a strike is when demand for an employer's product is expanding. Answer: TRUE Explanation: The timing of a strike is important in determining its effectiveness. An excellent time is when business is thriving and the demand for the firm's goods or services is expanding. Diff: 2 Page Ref: 338 Chapter: 12 Skill: Concept

38) A lockout is an effective union strategy, especially when a business has low inventory. Answer: FALSE Explanation: In a lockout, management keeps employees out of the workplace and runs the operation with management personnel and/or replacements. A lockout is a management strategy for dealing with unions. Diff: 2 Page Ref: 339 Chapter: 12 Skill: Concept LO: 6 39) HR managers typically play important roles in daily administration of a labor contract by resolving grievances and providing advice on disciplinary issues. Answer: TRUE Explanation: The human resource manager or industrial relations manager plays a key role in the day-to-day administration of the contract. He or she gives advice on matters of discipline, works to resolve grievances, and helps first-line supervisors establish good working relationships within the terms of the agreement. Diff: 2 Page Ref: 340 Chapter: 12 Skill: Concept LO: 7 40) Executive Order 13494, which was signed by President Obama, mandates that costs associated with persuader activities may be reimbursed by the federal government. Answer: FALSE Explanation: EO 13494 impacts all federal contractors and mandates that costs associated with so called "persuader activities" designed to influence employees to join or not join a union are not reimbursable by the federal government under the government's contract with the employer. Diff: 2 Page Ref: 343 Chapter: 12 Skill: Concept LO: 9 Human Resource Management, 12e (Mondy) Chapter 13: Internal Employee Relations Multiple-Choice Questions 1) According to the text, what is the most effective way to improve a firm's financial position during difficult periods? A) conduct performance appraisals B) retain employees C) compensate top executives D) train new hires Answer: B

Explanation: B) Surveys indicate that even employed individuals look for new jobs during recessions. Therefore, companies must show employees that they are valued because keeping the best employees productive, focused, and fully engaged is critical; top performers can usually find employment in any economy. In fact, one of the best ways to improve a firm's financial position in difficult times is to retain their most valued employees. Diff: 2 Page Ref: 358 Chapter: 13 Skill: Concept LO: 1 2) According to your author, which of the following is LEAST likely to affect employee retention? A) recruiting through job boards B) encouraging workplace diversity C) accurately assessing employee performance D) providing a safe and healthy work environment Answer: A Explanation: A) Organizations that encourage workplace diversity, fairly assess performance, and provide a safe work environment are more likely to retain quality employees. Although recruiting is important, doing so through job boards is less relevant to retention rates. Diff: 3 Page Ref: 359-360 Chapter: 13 Skill: Concept LO: 1

3) What did your author identify as the most important metric in HR today? A) performance rate of all employees B) turnover rate of high-level managers C) acceptance rate of new college graduates D) retention rate of most qualified employees Answer: D Explanation: D) According to the author, the most important metric in HR today is the retention rate of a firm's most qualified employees, the individuals who are capable of taking an organization to new heights. Diff: 3 Page Ref: 360 Chapter: 13 Skill: Concept LO: 1 4) Which term refers to HR management activities associated with the movement of employees within the organization? A) succession planning B) internal recruitment C) career development D) internal employee relations Answer: D Explanation: D) Internal employee relations comprise the human resource management activities associated with the movement of employees within the organization. Some topics related to internal employee relations include terminations, demotions, downsizing, transfers, promotions, and resignations. Diff: 1 Page Ref: 360 Chapter: 13 Skill: Concept LO: 1 5) Which of the following is NOT an activity included in internal employee relations? A) promotion B) transfer C) demotion D) selection Answer: D Explanation: D) Internal employee relations comprise the human resource management activities associated with the movement of employees within the organization. Some topics related to internal employee relations include terminations, demotions, downsizing, transfers, promotions, and resignations. Selection occurs in the hiring process, so it is not an aspect of internal employee relations. Diff: 2 Page Ref: 360 Chapter: 13 Skill: Concept LO: 1

6) Which term refers to an unwritten contract that is created when an employee agrees to work for an employer but no agreement exists as to how long the parties expect the employment to last? A) temporary assignment B) contract employment C) employment at will D) right-to-work law Answer: C Explanation: C) Employment at will is an unwritten contract created when an employee agrees to work for an employer but no agreement exists as to how long the parties expect the employment to last. Generally, much of the U.S. legal system presumes that the jobs of such employees may be terminated at the will of the employer and that these employees have a similar right to leave their jobs at any time. Diff: 1 Page Ref: 360-361 Chapter: 13 Skill: Concept LO: 2 7) Which of the following is an exception made by courts regarding the employment-atwill doctrine? A) prohibiting terminations in violation of public policy B) permitting claims based on the common-law doctrine of good faith and fair dealing C) permitting employees to bring claims based on representations made in employment handbooks D) all of the above Answer: D Explanation: D) The courts have made certain exceptions to the employment-at-will doctrine. Some of these include prohibiting terminations in violation of public policy, permitting employees to bring claims based on representations made in employment handbooks, and permitting claims based on the common-law doctrine of good faith and fair dealing. Diff: 3 Page Ref: 361 Chapter: 13 Skill: Concept LO: 2

8) During a job interview, John, an HR manager, tells an applicant, "You can expect to hold this job as long as you want." John's statement could be considered a(n) ________ and grounds for a lawsuit. A) ethical breach B) fundamental breach C) contractual agreement D) responsibility agreement Answer: C Explanation: C) Telling a person during a job interview that he or she can expect to hold the job as long as they want could be considered a contractual agreement and grounds for a lawsuit. A person should not be employed without a signed acknowledgment of the employment-at-will disclaimer. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Application LO: 2 9) Peterson Productions wants to protect itself from wrongful discharge litigation, so the firm has eliminated from its job application any statements that suggest ________. A) background investigations B) permanent employment C) union membership D) merit performance Answer: B Explanation: B) Employers can do certain things to help protect themselves against litigation for wrongful discharge based on a breach of implied employment contract. Statements in documents such as employment applications and policy manuals that suggest job security or permanent employment should be avoided if employers want to minimize charges of wrongful discharge. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Application LO: 2 10) The state of employee self-control and orderly conduct that indicates the extent of genuine teamwork within an organization is referred to as ________. A) ethics B) discipline C) punishment D) internal employee relations Answer: B Explanation: B) Discipline is the state of employee self-control and orderly conduct that indicates the extent of genuine teamwork within an organization. A necessary but often trying aspect of internal employee relations is the application of disciplinary action. Diff: 1 Page Ref: 361 Chapter: 13 Skill: Concept

LO: 3 11) Discipline refers to the ________. A) punishment provided by an organization B) conditions which exist only in the military C) threat of punishment made by managers D) state of employee self-control present in an organization Answer: D Explanation: D) Discipline is the state of employee self-control and orderly conduct that indicates the extent of genuine teamwork within an organization. A necessary but often trying aspect of internal employee relations is the application of disciplinary action. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 3 12) What involves invoking a penalty against an employee who fails to meet established standards? A) metrics B) probation C) disciplinary action D) internal employee relations Answer: C Explanation: C) A necessary but often trying aspect of internal employee relations is the application of disciplinary action. Disciplinary action invokes a penalty against an employee who fails to meet established standards. Diff: 1 Page Ref: 361 Chapter: 13 Skill: Concept LO: 3 13) The most effective disciplinary action addresses the employee's ________. A) attitude B) behavior C) personality D) conscience Answer: B Explanation: B) Effective disciplinary action addresses the employee's wrongful behavior, not the employee as a person. Incorrectly administered disciplinary action is destructive to both the employee and the organization. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 3

14) The disciplinary action process deals largely with ________. A) rule infractions B) industry standards C) strategic planning D) procedural misunderstandings Answer: A Explanation: A) The disciplinary action process deals largely with infractions of rules. Rules are established to better facilitate the accomplishment of organizational goals and are specific guides to behavior on the job. Diff: 2 Page Ref: 362 Chapter: 13 Skill: Concept LO: 4 15) What are specific guides to behavior on the job? A) rules B) ethics C) morals D) standards Answer: A Explanation: A) The disciplinary action process deals largely with infractions of rules. Rules are established to better facilitate the accomplishment of organizational goals and are specific guides to behavior on the job. Diff: 2 Page Ref: 362 Chapter: 13 Skill: Concept LO: 4 16) In the disciplinary action process, what must occur immediately after management establishes rules? A) observe performance B) set organizational goals C) compare performance with rules D) communicate rules to employees Answer: D Explanation: D) After management has established rules, it must communicate these rules to employees. All employees must know the standards in order to be disciplined persons. Individuals cannot obey a rule if they do not know it exists. Observing performance and comparing performance with rules occurs later in the process, while setting organizational goals is the first step of the disciplinary action process. Diff: 2 Page Ref: 362-363 Chapter: 13 Skill: Concept LO: 4

17) The primary purpose of disciplinary action is to ________. A) chastise employees for breaking rules B) prevent unionized employees from striking C) alter behavior that hinders organizational goals D) initiate useful discussion and feedback from managers Answer: C Explanation: C) The purpose of disciplinary action is to alter behavior that can have a negative impact on achievement of organizational objectives, not to chastise the violator. Thus, the intent of disciplinary action should be to ensure that the recipient sees disciplinary action as a learning process rather than as something that inflicts pain. Diff: 3 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 18) The word discipline comes from the word disciple, and when translated from Latin, what does it mean? A) "to punish" B) "to control" C) "to teach" D) "to restrain" Answer: C Explanation: C) The word discipline comes from the word disciple, and when translated from Latin, it means to teach. Thus, the intent of disciplinary action should be to ensure that the recipient sees disciplinary action as a learning process rather than as something that inflicts pain. Diff: 1 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 19) In order to be most effective, disciplinary action should be a ________ process. A) learning B) subjective C) negative D) painful Answer: A Explanation: A) The purpose of disciplinary action is to alter behavior that can have a negative impact on achievement of organizational objectives, not to chastise the violator. Thus, the intent of disciplinary action should be to ensure that the recipient sees disciplinary action as a learning process rather than as something that inflicts pain. Diff: 1 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4

20) Parker Pharmaceuticals is a corporation that employs over 400 workers. As the firm continues to grow, the need for discipline among employees has become more critical. The HR department and top executives are planning to revamp the disciplinary action process that is currently in place at Parker. Which of the following most likely undermines a decision to use the hot stove rule approach to discipline? A) Parker supervisors desire flexibility in any disciplinary system. B) Some Parker employees belong to labor unions while other do not. C) The Parker ombudsperson handles most grievance procedures. D) Most disciplinary issues at Parker are related to insubordination. Answer: A Explanation: A) If the circumstances surrounding all disciplinary action were the same, there would be no problem with the hot stove approach. However, situations are often quite different, and many variables may be present in each disciplinary action case. Supervisors often find that they cannot be completely consistent and impersonal in taking disciplinary action and they need a certain degree of flexibility, which is not an aspect of the hot stove approach. Diff: 3 Page Ref: 363 Chapter: 13 Skill: Critical Thinking LO: 4 AACSB: Reflective Thinking 21) Parker Pharmaceuticals is a corporation that employs over 400 workers. As the firm continues to grow, the need for discipline among employees has become more critical. The HR department and top executives are planning to revamp the disciplinary action process that is currently in place at Parker. Which of the following best supports a decision to use the progressive disciplinary action approach? A) Major violations and terminations rarely occur at Parker. B) Parker wants an informal procedure for disciplining employees. C) Managers at Parker have been inconsistent with disciplining employees. D) Chronic tardiness is the primary disciplinary issue among Parker employees. Answer: C Explanation: C) The goal of progressive disciplinary action is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. The manager follows the same procedure for each level of offense in the progressive disciplinary process, which ensures consistency. It is less relevant that terminations are rare or that tardiness is the main problem at the firm. Diff: 3 Page Ref: 363-364 Chapter: 13 Skill: Critical Thinking LO: 4 AACSB: Reflective Thinking

22) Parker Pharmaceuticals is a corporation that employs over 400 workers. As the firm continues to grow, the need for discipline among employees has become more critical. The HR department and top executives are planning to revamp the disciplinary action process that is currently in place at Parker. Which of the following questions is LEAST relevant to selecting a new disciplinary action process for Parker? A) Are managers applying discipline consistently and fairly? B) Are managers able to apply discipline impersonally to all employees? C) Does Parker want to use punishment or encouragement to create discipline? D) Does Parker have similar discipline problems as other pharmaceutical firms? Answer: D Explanation: D) Consistency and fairness are important to consider with discipline. If managers are not being consistent and impersonal then perhaps the progressive disciplinary approach would be best. Whether the firm wants to use punishment or not is another consideration. The disciplinary problems at other firms is less relevant to the decision. Diff: 3 Page Ref: 363-365 Chapter: 13 Skill: Critical Thinking LO: 4 AACSB: Reflective Thinking 23) According to the hot stove rule, disciplinary action should ________. A) occur immediately and without warning B) consider extended circumstances C) provide consistent punishment D) include personal comments Answer: C Explanation: C) Disciplinary action should be consistent in that everyone who performs the same act will be punished accordingly. Disciplinary action should occur immediately but with advance warning and should be impersonal. Diff: 3 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 24) Which of the following is NOT a characteristic of the hot stove approach to disciplinary action? A) provides advance warnings B) indicates favoritism C) offers consistency D) occurs immediately Answer: B Explanation: B) Disciplinary action should be consistent in that everyone who performs the same act will be punished accordingly. Disciplinary action should occur immediately and with advance warning. Disciplinary action should be impersonal and without favoritism. Diff: 2 Page Ref: 363

Chapter: 13 Skill: Concept LO: 4 25) Disciplinary action should most likely occur immediately, so that the individual will ________. A) receive appropriate training opportunities B) have time to contact an HR manager C) share the experience with co-workers D) understand the reason for it Answer: D Explanation: D) If disciplinary action is to be taken, it must occur immediately so that the individual will understand the reason for it. Diff: 3 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 26) Which of the following is a drawback to the hot stove approach? A) lacks timeliness B) too impersonal C) lacks flexibility D) too subjective Answer: C Explanation: C) If the circumstances surrounding all disciplinary action were the same, there would be no problem with the hot stove approach. However, situations are often quite different, and many variables may be present in each disciplinary action case. Supervisors often find that they cannot be completely consistent and impersonal in taking disciplinary action and they need a certain degree of flexibility. Diff: 3 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 27) What disciplinary action approach is intended to ensure that the minimum penalty appropriate to the offense is imposed? A) hot stove approach B) performance discipline method C) progressive disciplinary action D) disciplinary action without punishment Answer: C Explanation: C) Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. Diff: 1 Page Ref: 363-364 Chapter: 13 Skill: Concept

28) The progressive disciplinary action model was developed in the 1930s in response to the ________. A) Railway Labor Act B) Davis-Bacon Act C) Walsh-Healey Act D) National Labor Relations Act Answer: D Explanation: D) Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The progressive disciplinary model was developed in response to the National Labor Relations Act. Diff: 2 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 29) The goal of ________ is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. A) progressive disciplinary action B) performance appraisals C) succession planning D) broadbanding Answer: A Explanation: A) Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The goal of progressive disciplinary action is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. Diff: 2 Page Ref: 363-364 Chapter: 13 Skill: Concept LO: 4 30) In which of the following does the manager ask a series of questions in sequence to determine the best disciplinary action? A) hot stove approach B) progressive disciplinary action C) disciplinary questionnaire approach D) disciplinary action without punishment approach Answer: B Explanation: B) The progressive disciplinary approach involves answering a series of questions about the severity of the offense. The manager must ask these questions, in sequence, to determine the proper disciplinary action. Diff: 2 Page Ref: 364 Chapter: 13 Skill: Concept LO: 4

31) Which of the following is NOT a question that would likely be asked when a manager uses progressive disciplinary action? A) Does this violation warrant more than a written warning? B) Does this violation warrant more than an oral warning? C) Does this violation warrant disciplinary action? D) Does this violation warrant termination? Answer: D Explanation: D) According to the progressive disciplinary action approach, the manager would ask if the violation deserved a written warning, an oral warning, and/or disciplinary action. Termination may be a result of the process, but the manager would not specifically ask that question. Diff: 3 Page Ref: 364 Chapter: 13 Skill: Application LO: 4 32) Mike, a manager at a distribution center, has learned that one of his subordinates assaulted a co-worker. Mike uses the progressive disciplinary action approach when dealing with employee violations. Which of the following punishments will the subordinate most likely receive? A) oral warning B) written warning C) suspension D) termination Answer: D Explanation: D) With the progressive disciplinary action approach, warnings and suspensions typically occur prior to termination. However, major violations, such as assaulting another worker, may justify immediate termination of the employee. Diff: 2 Page Ref: 364 Chapter: 13 Skill: Application LO: 4

33) Maria is chronically tardy to work. In response, Maria's manager has given Maria time off with pay to think about whether she wants to follow the rules and continue working for the company. Which disciplinary method is Maria's manager most likely using? A) progressive disciplinary action B) hot stove approach C) disciplinary action without punishment D) punitive disciplinary action Answer: C Explanation: C) The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. The approach is to throw out formal punitive disciplinary action policies for situations such as chronic tardiness in favor of affirming procedures that make employees want to take personal responsibility for their actions and be models for the corporate mission. Diff: 2 Page Ref: 364 Chapter: 13 Skill: Application LO: 4 34) Which of the following terms refers to a process in which a worker is given time off with pay to consider whether he or she wants to follow the rules and continue working for the company? A) disciplinary action without punishment B) progressive disciplinary action C) punitive discipline method D) hot stove approach Answer: A Explanation: A) The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. The approach is to throw out formal punitive disciplinary action policies for situations such as chronic tardiness in favor of affirming procedures that make employees want to take personal responsibility for their actions and be models for the corporate mission. Diff: 2 Page Ref: 364 Chapter: 13 Skill: Concept LO: 4

35) Consider the following situation: When an employee violates a rule, the manager issues an oral reminder. Repetition brings a written reminder, and the third violation results in the worker having to take one, two, or three days off (with pay) to think about the situation. During the first two steps, the manager tries to encourage the employee to solve the problem. If the third step is taken, upon the worker's return, the worker and the supervisor meet to agree that the employee will not violate a rule again or the employee will leave the firm. What form of disciplinary action is being taken? A) disciplinary action without punishment B) hot stove approach C) progressive disciplinary action D) progressive discipline Answer: A Explanation: A) The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. The approach involves issuing oral reminders, written reminders, and discussions between the manager and employee. Diff: 3 Page Ref: 364-365 Chapter: 13 Skill: Application LO: 4 36) Renee was recently hired at Emerson Enterprises. During employee orientation, Renee was told that repeated violations of different rules will be viewed in the same way as several violations of the same rule. What type of disciplinary method is most likely used at Emerson? A) progressive discipline B) hot stove approach C) disciplinary action without punishment D) progressive disciplinary action Answer: C Explanation: C) When disciplinary action without punishment is used, it is especially important that all rules be explicitly stated in writing. At the time of orientation, new workers should be told that repeated violations of different rules will be viewed in the same way as several violations of the same rule. This approach keeps workers from taking undue advantage of the process. Diff: 3 Page Ref: 365 Chapter: 13 Skill: Application LO: 4

37) Which of the following is LEAST likely to help a firm protect itself against suits claiming discriminatory disciplinary actions? A) basing decisions solely on performance B) disciplining in the presence of co-workers C) training managers how to avoid bias claims D) developing written policies barring unfair treatment Answer: B Explanation: B) One of the best ways for a company to protect itself against suits claiming discrimination or harassment is to ensure that it has proper, written policies barring unfair treatment of its staff, and a system for ensuring that the policies are followed. Disciplinary actions should be fully documented, and managers should be trained in how to avid bias claims. Also, although discrimination laws prohibit employers from making employment decisions based on an employee's membership in a protected class, basing decisions solely on performance helps prevent violation of these laws. Discipline should be handled privately to avoid embarrassment. Diff: 3 Page Ref: 365 Chapter: 13 Skill: Concept LO: 4 38) Disciplinary action should never be administered ________. A) at the beginning of a shift B) immediately before a lunch break C) in the presence of others D) immediately after the violation occurs Answer: C Explanation: C) Taking disciplinary action against a worker in the presence of others may embarrass the individual and actually defeat the purpose of the action. Even when they are wrong, employees resent disciplinary action administered in public. By disciplining employees in private, supervisors prevent them from losing face with their peers. Diff: 2 Page Ref: 365 Chapter: 13 Skill: Concept LO: 4 39) What is the most severe penalty an organization can give to an employee? A) suspension B) transfer C) termination D) demotion Answer: C Explanation: C) Termination is the most severe penalty that an organization can impose on an employee; therefore, it should be the most carefully considered form of disciplinary action. Suspensions, transfers, and demotions are less severe since the worker remains employed. Diff: 2 Page Ref: 366

Chapter: 13 Skill: Concept LO: 5 40) As an HR manager, you may be required to fire employees. According to experts, what is the best time for you to fire an employee? A) Monday morning B) Monday afternoon C) Friday morning D) Friday afternoon Answer: B Explanation: B) Experts suggest that firings should be on Mondays because it lets the dismissed workers start looking for a job right away. Further, firing a worker at the end of the day leaves little chance for discussion among the remaining staff that may interrupt the workplace. Diff: 2 Page Ref: 366 Chapter: 13 Skill: Application LO: 5 41) Nora, a line manager at an electronics firm, needs to fire one of her subordinates for repeatedly failing to report to work. The subordinate previously received both oral and written warnings about the violation. Which of the following would most likely help the termination process proceed smoothly? A) Nora answers questions about the decision. B) Nora and the subordinate gather in her office. C) Nora gives the subordinate the final paycheck. D) Nora meets with the subordinate privately. Answer: C Explanation: C) Managers should avoid discussing the termination decision and should simply have the final paycheck available. Managers should use a conference room for privacy, but a witness should be at the meeting in case of problems. Diff: 3 Page Ref: 366-367 Chapter: 13 Skill: Application LO: 5 42) The ability to recognize and manage emotions is best known as ________. A) emotional analysis B) behavioral management C) emotional intelligence D) interpersonal communication Answer: C Explanation: C) Emotional intelligence is the ability to recognize and manage emotions. Daniel Goleman, psychologist and author of the book Working with Emotional Intelligence, describes emotional intelligence as the capacity for recognizing our own feelings and those of others, for motivating ourselves, and for managing emotions well in ourselves and in our relationships.

43) Organizations such as Coca-Cola and T-Mobile assert that increased productivity stems from ________. A) emotional intelligence B) benchmarking methods C) intellectual intelligence D) management metrics Answer: A Explanation: A) Some organizations have credited emotional intelligence with increasing productivity. Coca-Cola, for instance, found that EQ had a major impact on productivity. Emotional intelligence is the ability to recognize and manage emotions. Diff: 2 Page Ref: 367 Chapter: 13 Skill: Concept LO: 4 44) The termination procedure is usually the most well defined for ________. A) executives B) managers C) hourly workers D) union workers Answer: D Explanation: D) If the firm is unionized, the termination procedure is typically well defined in the labor-management agreement. When the firm is union-free, workers can generally be terminated more easily since the worker is most likely an at-will employee. In most union-free organizations, violations justifying termination are often included in the firm's employee handbook. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 45) In organizations of any size, management should ________. A) use outside consultants for termination procedures B) explain what actions warrant termination C) avoid terminating union workers D) handle terminations formally Answer: B Explanation: B) In smaller organizations, the termination process is informal with the first-line supervisor telling workers what actions warrant termination. However, regardless of the size of the organization, management should inform employees of the actions that warrant termination. Diff: 3 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5

46) Who is usually responsible for hiring and firing the CEO? A) stockholders B) top management C) board of directors D) executive search firms Answer: C Explanation: C) Unlike workers at lower level positions, CEOs do not have to worry about their positions being eliminated. Their main concern is pleasing the board of directors, because hiring and firing the CEO is a board's main responsibility. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 47) Which of the following is the LEAST likely reason for firing a top-level executive? A) economic downturn B) reorganization C) marketing image D) productivity decline Answer: C Explanation: C) A recession, the reorganization of the firm, and a decline in productivity are common reasons that boards fire top executives. Although differing philosophies in management may lead to a firing, marketing image is a less likely reason. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 48) What is the most common reason that a CEO is terminated? A) stock and bond markets fluctuate B) board of directors lacks confidence C) consumers have different philosophy D) law enforcement discovers insider trading Answer: B Explanation: B) Often the reason for terminating a CEO is because the board of directors lost confidence in him or her. Tenure has become increasingly shaky for new CEOs, as the turnover in the Fortune 1000 companies is high. Economic downturns and philosophical differences between the CEO and the Board are other reasons. Diff: 3 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5

49) Which group is typically the most vulnerable to termination? A) unskilled operatives B) high level executives C) lower level managers D) unionized employees Answer: C Explanation: C) Typically, the most vulnerable and perhaps the most neglected groups of employees with regard to termination have been middle and lower-level managers and professionals. Employees in these jobs may lack the political clout that a terminated executive has. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 50) Which term refers to the process of moving a worker to a lower level of duties and responsibilities with a reduction in pay? A) transfer B) discipline C) demotion D) outplacement Answer: C Explanation: C) Demotion is the process of moving a worker to a lower level of duties and responsibilities, which typically involves a reduction in pay. In outplacement, laid-off employees are given assistance in finding employment elsewhere. Diff: 1 Page Ref: 369 Chapter: 13 Skill: Concept LO: 5 51) Parson Enterprises is a unionized organization. An employee at Parson would most likely learn how demotions are handled by ________. A) reviewing the firm's mission statement B) contacting the local EEOC office C) attending a training program D) reading the labor agreement Answer: D Explanation: D) The handling of demotions in a unionized organization is usually spelled out clearly in the labormanagement agreement. Should a decision be made to demote a worker for unsatisfactory performance, the union should be notified of this intent and given the specific reasons for the demotion. Diff: 3 Page Ref: 369 Chapter: 13 Skill: Application LO: 5

52) Which term suggests a one-time change in the organization and the number of people employed? A) demoting B) downsizing C) bankrupting D) outplacing Answer: B Explanation: B) Downsizing, also known as restructuring or rightsizing, is essentially the reverse of a company growing; it suggests a one-time change in the organization and the number of people employed. Typically, both the organizational structure and the number of people in the organization shrink for the purpose of improving organizational performance. Diff: 1 Page Ref: 369 Chapter: 13 Skill: Concept LO: 6 53) What is the primary purpose of downsizing? A) hiring new employees B) meeting EEOC requirements C) changing the corporate philosophy D) improving organizational performance Answer: D Explanation: D) Downsizing, also known as restructuring or rightsizing, is essentially the reverse of a company growing; it suggests a one-time change in the organization and the number of people employed. Typically, both the organizational structure and the number of people in the organization shrink for the purpose of improving organizational performance. Diff: 2 Page Ref: 369 Chapter: 13 Skill: Concept LO: 6 54) According to research, when a firm delays downsizing as long as possible, the firm will most likely ________. A) recover more quickly when the economy improves B) implement a formal grievance procedure C) force senior employees into retirement D) file for bankruptcy within one year Answer: A Explanation: A) One big lesson from research on downsizing is that when organizations resist or delay layoffs as long as possible, they tend to bounce back faster when the upturn hits. This happens, in part, because these organizations save on recruiting and training costs when the demand for their people returns, and by keeping their experienced workforce around, they can move more effectively than their competitors that are scrambling to hire and train new employees with the right skills. Diff: 3 Page Ref: 369

Chapter: 13 Skill: Concept LO: 6 55) Lisa, an HR manager, has been informed that her employer will be downsizing. Lisa's responsibility is to help the company prepare for downsizing by determining which workers should be laid off. All of the following are important for Lisa to do EXCEPT ________. A) targeting older workers who earn high salaries to save the firm money B) ensuring that protected workers are not disproportionately affected C) utilizing objective, job-related criteria to make layoff decisions D) preparing to deal with COBRA and ERISA requirements Answer: A Explanation: A) If older workers with higher salaries than their younger counterparts become targets for cost cutting measures, age discrimination claims may occur. It is important to analyze the breakdown of downsized workers to ensure that all protected groups of workers are not disproportionately affected. It is equally imperative that an employer use objective, job-related criteria to decide which positions will be affected. Also, the downsizing organization should be prepared to deal with government requirements such as COBRA and ERISA. Diff: 3 Page Ref: 369 Chapter: 13 Skill: Application LO: 6 56) Dixon Enterprises is a unionized organization. An employee at Dixon would most likely learn how demotions and layoffs are handled by ________. A) reviewing the firm's corporate history B) contacting an outside consultant C) attending an orientation session D) reading the labor agreement Answer: D Explanation: D) The handling of demotions and layoffs in a unionized organization should be spelled out clearly in the labormanagement agreement. Should a decision be made to demote a worker for unsatisfactory performance, the union should be notified of this intent and given the specific reasons for the demotion. When a firm is unionized, the layoff procedures are also usually stated clearly in the labormanagement agreement. Diff: 3 Page Ref: 369 Chapter: 13 Skill: Synthesis LO: 5, 6

57) When a unionized firm is downsizing, what is the most likely basis for layoffs? A) potential B) seniority C) compensation D) education level Answer: B Explanation: B) Seniority usually is the basis for layoffs, with the least senior employees laid off first. Potential, salary, and education are less important factors in unionized firms. Diff: 2 Page Ref: 369 Chapter: 13 Skill: Concept LO: 6 58) Louden Manufacturing, a unionized firm, is in the process of downsizing. Mark is employed as a senior-level engineer at the firm, and his position has been eliminated. Mark's manager has indicated that Mark has the right to force a lower-level engineer out of a position. Which term best describes this activity? A) bumping B) rightsizing C) restructuring D) gainsharing Answer: A Explanation: A) Most labor agreements have a clearly spelled-out bumping procedure. When senior-level positions are eliminated, the people occupying them have the right to bump workers from lower-level positions, assuming that they have the proper qualifications for the lower-level job. Rightsizing and restructuring are synonyms for downsizing. Diff: 2 Page Ref: 369 Chapter: 13 Skill: Application LO: 6 59) Jackie is an HR manager at a union-free firm that is in the process of downsizing. As Jackie helps determine which employees will be laid off, what will she most likely give the greatest consideration? A) organizational needs B) industry specifications C) compensation level D) seniority Answer: A Explanation: A) In union-free firms, productivity and the needs of the organization are typically key considerations. Seniority is the most significant factor in unionized firms. Diff: 2 Page Ref: 369-370 Chapter: 13 Skill: Application LO: 6

60) Which of the following is most likely a negative outcome of downsizing? A) loss of corporate culture B) outsourcing of technical jobs C) elimination of senior positions D) less work for remaining employees Answer: A Explanation: A) Institutional memory or corporate culture is lost during downsizing. Outsourcing jobs is not a likely outcome of downsizing. In unionized firms, senior level workers remain. Workers who remain after downsizing are often faced with the realization of having to do additional work rather than less work. Diff: 2 Page Ref: 370 Chapter: 13 Skill: Concept LO: 6 61) Downsizing software most likely enables employers to ________. A) base layoff decisions on performance and potential ratings B) implement employment-at-will procedures and policies C) initiate health benefit payments to and from COBRA D) comply with workers' compensation requirements Answer: A Explanation: A) Downsizing software is designed to help organizations assess employees according to factors such as skills and performance level. It facilitates involuntary job cuts as well as voluntary separations, such as early retirement.e and potential ratings. Such software is less relevant to job security, COBRA, and workers' compensation. Diff: 3 Page Ref: 370 Chapter: 13 Skill: Concept LO: 6 AACSB: Use of IT 62) According to the WARN Act, covered employers are required to give ________ days advance notice before a mass layoff. A) 30 B) 60 C) 90 D) 120 Answer: B Explanation: B) The WARN Act requires covered employers to give 60 days advance notice before a plant closing or mass layoff that will affect a substantial number of workers. Covered employers generally include those with at least 100 full-time employees. Diff: 2 Page Ref: 370-371 Chapter: 13 Skill: Concept LO: 6

63) Which of the following would most likely be considered a covered employer under the WARN Act? A) Barton Consulting, 55 full-time employees B) Haley Publishing, 85 full-time employees C) Tyro Aluminum, 145 full-time employees D) all of the above Answer: C Explanation: C) The WARN Act requires covered employers to give 60 days advance notice before a plant closing or mass layoff that will affect a substantial number of workers. Covered employers generally include those with at least 100 full-time employees. Diff: 3 Page Ref: 371 Chapter: 13 Skill: Application LO: 6 64) Which term refers to a procedure whereby laid-off employees are given assistance in finding employment elsewhere? A) mediation B) outplacement C) arbitration D) development Answer: B Explanation: B) As a result of downsizing, some organizations are assisting laid-off employees in locating jobs. The use of outplacement began at the executive level, but it has also been used at other organizational levels. In outplacement, laid-off employees are given assistance in finding employment elsewhere. Diff: 2 Page Ref: 371 Chapter: 13 Skill: Concept LO: 6 65) As a result of downsizing, Heather has lost her job. Heather's employer is helping Heather find a job elsewhere. Which of the following best describes what this employer is providing? A) outplacement B) development C) outsourcing D) contracting Answer: A Explanation: A) As a result of downsizing, some organizations are assisting laid-off employees in locating jobs. The use of outplacement began at the executive level, but it has also been used at other organizational levels. In outplacement, laid-off employees are given assistance in finding employment elsewhere. Diff: 2 Page Ref: 371 Chapter: 13 Skill: Application

LO: 6 66) Kelly, an HR manager, is employed by a firm that is downsizing. Kelly's employer wants the HR department to provide outplacement services to laid-off employees. Which of the following is LEAST likely to be an outplacement activity? A) paying interview expenses B) paying federal income taxes C) providing interview techniques D) giving aptitude and personality tests Answer: B Explanation: B) In outplacement, laid-off employees are given assistance in finding employment elsewhere. Typical assistance involves paying interview costs, providing workers with interviewing tips, and giving skills tests. Outplacement is less likely to involve paying income taxes. Diff: 2 Page Ref: 371 Chapter: 13 Skill: Application LO: 6 67) How do employers benefit from providing outplacement services? A) minimizing the need for severance pay B) lowering unemployment insurance costs C) complying with the WARN Act D) improving employee good will Answer: D Explanation: D) More employers are offering outplacement help to preserve their employer brand and increase good will with just-released employees by offering to help them find alternative work. Outplacement does not necessarily relate to severance pay, and it is not required under the WARN Act. Diff: 3 Page Ref: 371 Chapter: 13 Skill: Concept LO: 6 68) Compensation designed to assist laid-off employees as they search for new employment is known as ________. A) COBRA B) premium pay C) severance pay D) workers' compensation Answer: C Explanation: C) Severance pay is compensation designed to assist laid-off employees as they search for new employment. Unemployed workers may be eligible for extended health benefits through COBRA, but they are required to pay for it. Diff: 1 Page Ref: 371 Chapter: 13 Skill: Concept

69) What is the primary reason that firms provide severance pay to employees who are involuntarily terminated? A) ensuring that current employees remain with the firm B) preventing terminated employees from suing the firm C) complying with federal laws that require severance pay D) expressing concern and support for terminated employees Answer: B Explanation: B) A major reason employers offer severance today is that the departing worker must waive all rights to sue the company. Mass layoffs in particular put companies at risk for age discrimination suits because cutbacks often target higher-paid workers, who tend to be older. From the employee's viewpoint, severance is paid so that they will not sue the organization. Diff: 3 Page Ref: 371-372 Chapter: 13 Skill: Concept LO: 6 70) Which of the following is the LEAST likely reason that an increasing number of firms are using redeployment instead of termination? A) avoiding costly grievance procedures B) improving overall retention rates C) reducing long-term turnover costs D) keeping highly trained workers Answer: A Explanation: A) Redeployment is increasingly being used because of the pressure to improve retention, keep highly trained employees, and reduce turnover costs in the long run. Grievance procedures are not a likely reason to use redeployment. Diff: 3 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6 71) Which of the following is a complaint officer with access to top management who hears employee complaints, investigates, and recommends appropriate action? A) line manager B) HR manager C) ombudsperson D) union steward Answer: C Explanation: C) An ombudsperson is a complaint officer who has access to top management and who hears employee complaints, investigates, and recommends appropriate action. Employers use ombudspersons in their organizations to help defuse problems before they become lawsuits or scandals. Diff: 1 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6

72) Johnson Enterprises is recruiting candidates to fill the new position of ombudsperson. Johnson is most likely adding this position to ________. A) handle internal problems before they become lawsuits B) negotiate with local and national labor unions C) monitor the firm's retention and turnover rates D) assist HR with compensation decisions Answer: A Explanation: A) An ombudsperson is a complaint officer who has access to top management and who hears employee complaints, investigates, and recommends appropriate action. Employers use ombudspersons in their organizations to help defuse problems before they become lawsuits or scandals. Diff: 3 Page Ref: 372 Chapter: 13 Skill: Application LO: 6 73) Naomi, a data analyst at a consulting firm, has an abusive manager. To which of the following should Naomi most likely turn for confidential, informal advice? A) mediator B) attorney C) arbitrator D) ombudsperson Answer: D Explanation: D) Ombudspersons are impartial, neutral counselors who can give employees confidential advice about problems such as abusive managers. Ombudspersons are used so that all workers may seek informal, confidential assistance to work through problems without losing control over how their concerns will be addressed. Mediators, attorneys, and arbitrators would involve more formal involvement. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Application LO: 6

74) Miles, a software designer, received a performance review that he feels is incorrect. Miles would like to discuss his concerns with an impartial individual at his firm. What are the best two individuals for Miles to contact in this situation? A) mediator and ombudsperson B) HR manager and arbitrator C) ombudsperson and HR manager D) arbitrator and union steward Answer: C Explanation: C) Ombudspersons are impartial, neutral counselors who can give employees confidential advice about problems such as abusive managers. Ombudsperson serve as impartial individuals at a firm in addition to HR representatives. Mediators, arbitrators, and union stewards are used during formal grievances. Diff: 3 Page Ref: 372 Chapter: 13 Skill: Application LO: 6 75) A procedure whereby the employee and the company agree ahead of time that any problems will be addressed by agreed upon means is known as ________. A) progressive disciplinary action B) scheduled grievance procedure C) alternative dispute resolution D) neutral arbitration Answer: C Explanation: C) As the number of employment-related lawsuits increases, companies have looked for ways to protect themselves against the costs and uncertainties of the judicial system. Alternative dispute resolution (ADR) is a procedure whereby the employee and the company agree ahead of time that any problems will be addressed by agreed-upon means. Diff: 1 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6 76) Which of the following is NOT a method used in alternative dispute resolution? A) arbitration B) mediation C) mini-trials D) work sampling Answer: D Explanation: D) Alternative dispute resolution is a procedure whereby the employee and the company agree ahead of time that any problems will be addressed by agreed-upon means. Some of these include arbitration, mediation, mini-trials, and ombudspersons. Work sampling is a selection tool. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Concept

LO: 6 77) Devon Manufacturing wants to avoid the time and cost associated with employmentrelated lawsuits. Which of the following would most likely be the best choice for Devon in resolving conflicts with employees? A) collective bargaining B) progressive disciplinary action C) alternative dispute resolution D) mandatory bargaining Answer: C Explanation: C) The idea behind ADR is to resolve conflicts between employer and employee through means less costly and contentious than litigation. A successful program can save a company thousands of dollars in legal costs and hundreds of hours in managers' time. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Application LO: 6 78) Which of the following would be a case where alternative dispute resolution would be used? A) racial discrimination B) age discrimination C) unfair firings D) all of the above Answer: D Explanation: D) ADR cases run the gamut from racial, gender, and age discrimination to unfair firings. The idea behind ADR is to resolve conflicts between employer and employee through means less costly and contentious than litigation. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Application LO: 6 79) Which form of alternative dispute resolution is the preferred method for most people? A) arbitration B) mediation C) mini-trial D) ombudspersons Answer: B Explanation: B) Alternative dispute resolution (ADR) is a procedure whereby the employee and the company agree ahead of time that any problems will be addressed by agreed-upon means. Some of these include arbitration, mediation, mini-trials, and ombudspersons. Mediation is the preferred method for most people. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Concept

80) Unifed Enterprises has implemented an alternative dispute resolution program to resolve conflicts between the firm and its employees. Which of the following is NOT one of the advantages associated with alternative dispute resolution? A) jury trial B) low cost C) efficient D) private Answer: A Explanation: A) The idea behind ADR is to resolve conflicts between employer and employee through means less costly and contentious than litigation. Compared to litigation, ADR processes are less adversarial, faster and more efficient, relatively lower in cost, and private. Juries are not involved with ADR. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Application LO: 6 81) According to research, when two parties agree to participate in mediation, approximately ________ of the cases are settled. A) 35% B) 55% C) 75% D) 95% Answer: D Explanation: D) When parties agree to mediate, they are able to reach a settlement in 96 percent of the cases. Compared to litigation, ADR processes are less adversarial, faster and more efficient, relatively lower in cost, and private. Juries are not involved with ADR. Diff: 2 Page Ref: 373 Chapter: 13 Skill: Concept LO: 6

82) In which Supreme Court decision was it made clear that ADR applied to the vast majority of employees and was available to employers seeking to enforce compulsory arbitration agreements? A) Weingarten v IBM B) Circuit City v Adams C) General Electric v Noe D) Daily News L.P. v Newspaper & Mail Deliverers' of New York and Vicinity Answer: B Explanation: B) The Supreme Court rendered an opinion in Circuit City v Adams that greatly enhanced an employer's ability to enforce compulsory alternative dispute resolution agreements. The Court held that the ADR was valid and enforceable and made clear that ADR applied to the vast majority of employees and was available to employers seeking to enforce compulsory arbitration agreements. Diff: 2 Page Ref: 373 Chapter: 13 Skill: Concept LO: 6 83) Which Supreme Court ruling mandates arbitration for handling employment discrimination claims between employers and unions? A) Circuit City v Adams B) Griggs v Duke Power Company C) 14 Penn Plaza LLC v Pyett D) Faragher v City of Boca Raton Answer: C Explanation: C) The ruling in 14 Penn Plaza LLC v Pyett provides both employers and unions a procedure for how to preclude lawsuits and makes labor arbitration the exclusive remedy for such claims. The Supreme Court rendered an opinion in Circuit City v Adams that greatly enhanced an employer's ability to enforce compulsory alternative dispute resolution agreements, but this ruling was not specifically for unions. Diff: 2 Page Ref: 373 Chapter: 13 Skill: Concept LO: 6

84) Which term refers to a lateral movement of a worker within an organization? A) demotion B) termination C) promotion D) transfer Answer: D Explanation: D) The lateral movement of a worker within an organization is called a transfer. A promotion is the movement of a person to a higher-level position in the organization, while a demotion is the movement of a person to a lower-level position. Diff: 1 Page Ref: 373 Chapter: 13 Skill: Concept LO: 7 85) Through what means may personality clashes between two valued employees be effectively handled? A) promotions B) transfers C) demotions D) layoffs Answer: B Explanation: B) Transfers are an effective means of dealing with personality clashes. Some people just cannot get along with one another. Because each of the individuals may be a valued employee, a transfer may be an appropriate solution to the problem. Promotions, demotions, and layoffs would be less appropriate. Diff: 2 Page Ref: 373 Chapter: 13 Skill: Concept LO: 7 86) Employees are primarily transferred for all of the following reasons EXCEPT to ________. A) deal with personality clashes B) unclog promotional channels C) meet new organization needs D) reward outstanding performance Answer: D Explanation: D) Transfers serve several purposes. First, firms often find it necessary to reorganize. A second reason for transfers is to make positions available in the primary promotion channels. Transfers may also be an effective means of dealing with personality clashes. Promotions rather than transfers are used to reward performance. Diff: 3 Page Ref: 373 Chapter: 13 Skill: Concept LO: 7

87) The movement of a person to a higher-level position in the organization is referred to as a ________. A) promotion B) transfer C) demotion D) termination Answer: A Explanation: A) A promotion is the movement of a person to a higher-level position in the organization, while a demotion is the movement of a person to a lower-level position. The lateral movement of a worker within an organization is called a transfer. Diff: 1 Page Ref: 373 Chapter: 13 Skill: Concept LO: 7 88) Which of the following is a method of revealing the real reasons employees leave their jobs? A) qualitative evaluation B) performance appraisal C) selection interview D) exit interview Answer: D Explanation: D) An exit interview is a means of revealing the real reasons employees leave their jobs; it is conducted before an employee departs the company and provides information on how to correct the causes of discontent and reduce turnover. They provide a company with valuable source of objective feedback. Diff: 1 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7 89) What is the most common reason individuals provide when resigning from a firm? A) unsatisfactory compensation B) few promotion opportunities C) disagreement with supervisor D) discriminatory company policies Answer: A Explanation: A) Although employees will cite pay as the reason they quit their jobs, 60 to 80 percent of the time, research indicates that only 12 to 15 percent of employees leave for this reason alone. Advancement opportunities, management difficulties, and policies may also be responsible, but these reasons are rarely cited. Diff: 3 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7

90) According to research cited in the text, what was the primary reason that topperforming women resigned from their jobs? A) wanting more time with family B) desiring additional compensation C) lacking development options D) failing to fit in with a company Answer: D Explanation: D) A consulting firm was hired to discover why top-performing women were quitting in high numbers, saying in their exit interviews that they wanted to spend more time with their kids. But the employers later learned that these women had returned to work, some starting their own firms and working longer hours. In anonymous interviews, the women who had quit explained the problem. Most said they'd left their jobs because "they could not see a future for themselves there." The "more-time-with kids" story was just cover to maintain good relations with their former bosses. Diff: 3 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7 91) Why do firms most likely outsource exit interviews? A) promoting corporate goodwill B) ensuring honest responses C) saving time and cost D) quantifying results Answer: B Explanation: B) A third party may be used because employees may not be willing to air their problems with their former bosses. Outsourcing the exit interviews may be beneficial because employers believe that the person who is leaving will be more honest when he or she is not speaking to a company employee. Diff: 2 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7

92) All of the following are most likely identified during exit interviews EXCEPT ________. A) management weaknesses B) appropriate corrective action C) effective disciplinary procedures D) training and development needs Answer: C Explanation: C) Over time, properly conducted exit interviews can provide considerable insight into why employees leave. Patterns are often identified that uncover weaknesses in the firm''s management system. Knowledge of the problem permits corrective action to be taken. Also, the exit interview helps to identify training and development needs and identify areas in which changes need to be made. Discipline is less likely to be addressed since resignations are voluntary. Diff: 3 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7 93) Which of the following is sent to former employees several weeks after they leave the organization to determine the real resignation reason? A) attitude survey B) grievance form C) work sample test D) postexit questionnaire Answer: D Explanation: D) A postexit questionnaire is sent to former employees several weeks after they leave the organization to determine the real reason they left. Attitude surveys seek input from employees to determine their feelings about topics such as the work they perform, their supervisor, their work environment, flexibility in the workplace, opportunities for advancement, training and development opportunities, and the firm's compensation system. Diff: 1 Page Ref: 375 Chapter: 13 Skill: Concept LO: 7 94) What is an advantage of postexit questionnaires? A) two-way communication B) in-depth probing opportunities C) employee feels free to respond openly D) good rapport between employee and supervisor Answer: C Explanation: C) A postexit questionnaire is sent to former employees several weeks after they leave the organization to determine the real reason they left. Since the individual is no longer with the firm he or she may respond more freely to the questions. However, a weakness is that the interviewer is not present to interpret and probe for more information.

Diff: 2 Page Ref: 375 Chapter: 13 Skill: Concept LO: 7 95) What instrument seeks input from employees to determine their feelings about topics such as flexibility in the workplace, opportunities for advancement, training and development opportunities, and the firm's compensation system? A) productivity survey B) attitude survey C) selection test D) market analysis Answer: B Explanation: B) Attitude surveys seek input from employees to determine their feelings about topics such as the work they perform, their supervisor, their work environment, flexibility in the workplace, opportunities for advancement, training and development opportunities, and the firm's compensation system. Diff: 1 Page Ref: 375 Chapter: 13 Skill: Concept LO: 7 96) What is the primary goal of distributing attitude surveys? A) enhancing employee morale B) improving management practices C) implementing compensation changes D) preparing for employee resignations Answer: B Explanation: B) Attitude surveys seek input from employees to determine their feelings about topics such as the work they perform, their supervisor, their work environment, flexibility in the workplace, opportunities for advancement, training and development opportunities, and the firm's compensation system. Attitude surveys have the potential to improve management practices. Diff: 2 Page Ref: 375 Chapter: 13 Skill: Concept LO: 7 97) How much notice of resignation would most firms like to have for lower level positions? A) one week B) two weeks C) one month D) two months Answer: B Explanation: B) Most firms would like to have at least a two-week notice of resignation from departing workers. However, a month's notice may be desired from professional and managerial employees who are leaving.

98) Which of the following is LEAST likely to be a topic addressed during offboarding? A) training programs B) company property C) health insurance D) retirement plans Answer: A Explanation: A) Offboarding involves exit interviews, removing access to company property, and other services involved in a former worker leaving the company. Topics such as the worker's 401(k) and COBRA need to be addressed. Training is a less likely topic during termination procedures. Diff: 2 Page Ref: 376 Chapter: 13 Skill: Concept LO: 7 99) Why is phased retirement beneficial to firms? A) outsourcing costs are significantly reduced B) flexible spending accounts assist older workers C) health care benefits are replaced by Medicare D) retained workers share experience with new hires Answer: D Explanation: D) A benefit of phased retirement is that it permits a company to reduce labor costs without hurting morale. It also lets an organization hold on to its experienced workers so they can share their knowledge with a less experienced workforce. Diff: 3 Page Ref: 377 Chapter: 13 Skill: Concept LO: 7 100) Which Act permits limited phased retirement by allowing in-service pension plan withdrawals to begin at age 62 rather than 65? A) Pension Protection Act B) Older Workers Benefit Protection Act C) Employee Retirement Income Security Act D) Consolidated Omnibus Budget Reconciliation Act Answer: A Explanation: A) The Pension Protection Act of 2006 permits limited phased retirement by allowing in-service pension plan withdrawals to begin at age 62 rather than 65. A benefit of phased retirement is that it permits a company to reduce labor costs without hurting morale. Diff: 2 Page Ref: 377 Chapter: 13 Skill: Concept LO: 7

True/False and Essay Questions 1) According to experts, it is more expensive to retain and develop employees than to replace them with new workers who can be trained. Answer: FALSE Explanation: Recruiting and training new employees act as a drag on earnings from three to six months until the new employee is performing at the expected level. However, retained and highly motivated employees contribute to the company at a higher, more consistent and sustained level of performance. It is much less expensive to retain and develop quality employees than it is to replace them. Diff: 2 Page Ref: 358-359 Chapter: 13 Skill: Concept LO: 1 2) External employee relations comprise the human resource management activities associated with the movement of employees within the organization. Answer: FALSE Explanation: Internal employee relations comprise the human resource management activities associated with the movement of employees within the organization. Some topics related to internal employee relations include terminations, demotions, downsizing, transfers, promotions, and resignations. Diff: 1 Page Ref: 360 Chapter: 13 Skill: Concept LO: 1 3) In approximately two of every three U.S. jobs, the worker's continued employment depends almost entirely on the continued goodwill of his or her employer. Answer: TRUE Explanation: Notwithstanding various employment standards to avoid that are based on laws, court decisions, and executive orders, approximately two of every three U.S. workers depend almost entirely on the continued goodwill of their employer. Individuals falling into this category are known as "at-will employees." Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 2

4) Employment at will is a written contract established immediately after an employee accepts a position at a firm. Answer: FALSE Explanation: Employment at will is an unwritten contract created when an employee agrees to work for an employer but no agreement exists as to how long the parties expect the employment to last. Diff: 1 Page Ref: 360 Chapter: 13 Skill: Concept LO: 2 5) Historically, because of a century-old common-law precedent in the United States, employment of indefinite duration could, in general, be terminated at the whim of either party. Answer: TRUE Explanation: Historically, because of a century-old common- law precedent in the United States, employment of indefinite duration could, in general, be terminated at the whim of either party. Employment at will is an unwritten contract created when an employee agrees to work for an employer but no agreement exists as to how long the parties expect the employment to last. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 2 6) The courts have made no exceptions to the employment-at-will doctrine. Answer: FALSE Explanation: The courts have made certain exceptions to the employment-at-will doctrine. Some of these include prohibiting terminations in violation of public policy, permitting employees to bring claims based on representations made in employment handbooks, and permitting claims based on the common-law doctrine of good faith and fair dealing. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 2 7) Disciplinary action is the state of employee self-control and orderly conduct and indicates the extent of genuine teamwork within an organization. Answer: FALSE Explanation: Discipline is the state of employee self-control and orderly conduct that indicates the extent of genuine teamwork within an organization. Disciplinary action invokes a penalty against an employee who fails to meet established standards. Diff: 1 Page Ref: 361 Chapter: 13 Skill: Concept LO: 3

8) Effective disciplinary action addresses the employee's wrongful behavior, not the employee as a person. Answer: TRUE Explanation: Effective disciplinary action addresses the employee's wrongful behavior, not the employee as a person. Incorrectly administered disciplinary action is destructive to both the employee and the organization. Diff: 2 Page Ref: 361 Chapter: 13 Skill: Concept LO: 3 9) The disciplinary action process is relatively static. Answer: FALSE Explanation: The disciplinary action process is dynamic and ongoing. Because one person's actions can affect others in a work group, the proper application of disciplinary action fosters acceptable behavior by other group members. Diff: 2 Page Ref: 362 Chapter: 13 Skill: Concept LO: 4 10) The disciplinary action process deals largely with infractions of rules. Answer: TRUE Explanation: The disciplinary action process deals largely with infractions of rules. Rules are established to better facilitate the accomplishment of organizational goals. Rules are specific guides to behavior on the job. Diff: 2 Page Ref: 362 Chapter: 13 Skill: Concept LO: 4, 10 11) After management has established rules, it must communicate these rules to employees. Answer: TRUE Explanation: After management has established rules, it must communicate these rules to employees. All employees must know the standards in order to be disciplined persons. Individuals cannot obey a rule if they do not know it exists. Diff: 2 Page Ref: 362-363 Chapter: 13 Skill: Concept LO: 4

12) The purpose of an exit interview is to alter behavior that can have a negative impact on achievement of organizational objectives. Answer: FALSE Explanation: The purpose of disciplinary action is to alter behavior that can have a negative impact on achievement of organizational objectives, not to chastise the violator. Exit interviews collect information from employees who are resigning. Diff: 2 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 13) Feedback is an important aspect of the disciplinary action process. Answer: TRUE Explanation: The disciplinary action process includes feedback from the point of taking appropriate disciplinary action to communicating rules to employees. When disciplinary action is taken, all employees should realize that certain behaviors are unacceptable and should not be repeated. Diff: 1 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 14) If the circumstances surrounding all disciplinary action situations were the same, the hot stove approach would be effective at all times. Answer: TRUE Explanation: If the circumstances surrounding all disciplinary action were the same, there would be no problem with this approach. However, situations are often quite different, and many variables may be present in each disciplinary action case. Diff: 2 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 15) Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. Answer: TRUE Explanation: Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The goal of progressive disciplinary action is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. Diff: 2 Page Ref: 363-364 Chapter: 13 Skill: Concept LO: 4

16) The progressive disciplinary action model was developed in response to the TaftHartley Act of 1935. Answer: FALSE Explanation: Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The progressive disciplinary model was developed in response to the National Labor Relations Act. Diff: 2 Page Ref: 363 Chapter: 13 Skill: Concept LO: 4 17) The goal of progressive disciplinary action is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. Answer: TRUE Explanation: Progressive disciplinary action is intended to ensure that the minimum penalty appropriate to the offense is imposed. The goal of progressive disciplinary action is to formally communicate problem issues to employees in a direct and timely manner so that they can improve their performance. Diff: 2 Page Ref: 363-364 Chapter: 13 Skill: Concept LO: 4 18) The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. Answer: TRUE Explanation: The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. The approach is to throw out formal punitive disciplinary action policies for situations such as chronic tardiness or a bad attitude in favor of affirming procedures that make employees want to take personal responsibility for their actions and be models for the corporate mission. Diff: 1 Page Ref: 364 Chapter: 13 Skill: Concept LO: 4

19) The progressive discipline approach focuses on eliminating punitive disciplinary policies and encouraging employees to take personal responsibility for their actions. Answer: FALSE Explanation: The process of giving a worker time off with pay to think about whether he or she wants to follow the rules and continue working for the company is called disciplinary action without punishment. The approach is to throw out formal punitive disciplinary action policies for situations such as chronic tardiness or a bad attitude in favor of affirming procedures that make employees want to take personal responsibility for their actions and be models for the corporate mission. Diff: 2 Page Ref: 364 Chapter: 13 Skill: Concept LO: 4 20) Disciplinary action without punishment is most effective when all rules are explicitly stated in writing. Answer: TRUE Explanation: When disciplinary action without punishment is used, it is especially important that all rules be explicitly stated in writing. At the time of orientation, new workers should be told that repeated violations of different rules will be viewed in the same way as several violations of the same rule. This approach keeps workers from taking undue advantage of the process. Diff: 2 Page Ref: 365 Chapter: 13 Skill: Concept LO: 4 21) Documenting disciplinary actions is essential to protecting a firm's interests. Answer: TRUE Explanation: One of the best ways for a company to protect itself against suits claiming discrimination or harassment is to ensure that it has proper, written policies barring unfair treatment of its staff, and a system for ensuring that the policies are followed. Disciplinary actions should be fully documented, and managers should be trained in how to avoid bias claims. Diff: 2 Page Ref: 365 Chapter: 13 Skill: Concept LO: 4 22) Taking disciplinary action against a worker in the presence of others is essential to providing the necessary legal documentation. Answer: FALSE Explanation: Taking disciplinary action against a worker in the presence of others may embarrass the individual and actually defeat the purpose of the action. Written documentation is necessary but witnesses are not. Diff: 2 Page Ref: 365 Chapter: 13

Skill: Concept LO: 4 23) According to experts, firing employees on Mondays is best because it allows them to begin searching for a job immediately. Answer: TRUE Explanation: Experts suggest that firings should be on Mondays because it lets the dismissed workers start looking for a job right away. Further, firing a worker at the end of the day leaves little chance for discussion among the remaining staff that may interrupt the workplace. Diff: 2 Page Ref: 366 Chapter: 13 Skill: Concept LO: 5 24) Firing employees is typically easier to do at unionized firms than at union-free firms. Answer: FALSE Explanation: When the firm is union-free, workers can generally be terminated more easily since the worker is most likely an at-will employee. If the firm is unionized, the termination procedure is typically well defined in the labormanagement agreement. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 25) In most cases, terminated CEOs are able to go through the same formal appeal procedure as terminated non-managerial employees. Answer: FALSE Explanation: Executives usually have no formal appeal procedure. The reasons for termination may not be as clear as those for lower-level employees. Diff: 2 Page Ref: 368 Chapter: 13 Skill: Concept LO: 5 26) Demotion involves moving a worker to a lower level of duties and responsibilities. Answer: TRUE Explanation: Demotion is the process of moving a worker to a lower level of duties and responsibilities, which typically involves a reduction in pay. Diff: 1 Page Ref: 369 Chapter: 13 Skill: Concept LO: 5

27) Downsizing and termination are synonymous terms. Answer: FALSE Explanation: Downsizing is not the same as termination but the results for workers involved is the same; they no longer have a job. Downsizing is essentially the reverse of a company growing; it suggests a one-time change in the organization and the number of people employed. Termination is the most severe penalty that an organization can impose on an employee. Diff: 2 Page Ref: 369 Chapter: 13 Skill: Concept LO: 6 28) In most cases, terminations at unionized firms are based on performance and merit. Answer: FALSE Explanation: When the firm is unionized, the layoff procedures are usually stated clearly in the labormanagement agreement. Seniority usually is the basis for layoffs, with the least senior employees laid off first. In non-union firms, terminations are typically based on performance. Diff: 2 Page Ref: 369 Chapter: 13 Skill: Concept LO: 6 29) The term "ghost work" refers to the additional work required of employees who remain after an organization downsizes. Answer: TRUE Explanation: Workers who remain after downsizing are also faced with the realization of having to do additional work (some call it "ghost work"). In a CareerBuilder survey, 47 percent of workers reported they have taken on more responsibility because of a layoff within their organization and 37 percent said they are handling the work of two people. Diff: 2 Page Ref: 370 Chapter: 13 Skill: Concept LO: 6 30) The EEOC requires employers to give employees 60 days notice before initiating a mass layoff. Answer: FALSE Explanation: The WARN Act requires covered employers to give 60 days advance notice before a plant closing or mass layoff that will affect a substantial number of workers. Covered employers generally include those with at least 100 full-time employees. Diff: 2 Page Ref: 370-371 Chapter: 13 Skill: Concept LO: 6

31) Outplacement helps employers preserve their reputation while softening the impact of displacement. Answer: TRUE Explanation: Outplacement will also likely have a positive influence on those who remain with the company after downsizing. More employers are offering outplacement help to preserve their employer brand and reputation. Through outplacement, the firm tries to soften the impact of displacement. Diff: 2 Page Ref: 371 Chapter: 13 Skill: Concept LO: 6 32) Employers are required by law to provide severance pay to employees who have been involuntarily terminated. Answer: FALSE Explanation: Although no federal law requires U.S. companies to pay severance, between 7080 percent of employers say that they offer severance to terminated employees. Severance pay is often provided to prevent lawsuits. Diff: 2 Page Ref: 371-372 Chapter: 13 Skill: Concept LO: 6 33) An ombudsperson listens to employee complaints and recommends appropriate action in an attempt to defuse internal problems. Answer: TRUE Explanation: An ombudsperson is a complaint officer who has access to top management and who hears employee complaints, investigates, and recommends appropriate action. Employers use ombudspersons in their organizations to help defuse problems before they become lawsuits or scandals. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6 34) Ombudspersons are neutral counselors who can give employees confidential advice about problems like abusive managers. Answer: TRUE Explanation: Ombudspersons are impartial, neutral counselors who can give employees confidential advice about problems ranging from abusive managers to allegations of illegal corporate activity. The ombudsperson is typically independent of line management and reports near or at the top of the organization. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6

35) Arbitration is a procedure whereby the employee and the company agree ahead of time that any problems will be addressed by an agreed-upon means. Answer: FALSE Explanation: Alternative dispute resolution (ADR) is a procedure whereby the employee and the company agree ahead of time that any problems will be addressed by agreedupon means. Some of the ADR methods may include arbitration, mediation, mini-trials, and ombudspersons. Diff: 1 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6 36) Alternative dispute resolution is less adversarial than litigation, but it tends to be more costly. Answer: FALSE Explanation: The idea behind ADR is to resolve conflicts between employer and employee through means less costly and contentious than litigation. A successful program can save a company thousands of dollars in legal costs and hundreds of hours in managers' time. Compared to litigation, ADR processes are less adversarial, faster and more efficient, relatively lower in cost, and private. Diff: 2 Page Ref: 372 Chapter: 13 Skill: Concept LO: 6 37) Transfers are increasingly necessary for managers who need to learn new skills before attaining promotions. Answer: TRUE Explanation: Because of a limited number of management levels, it is becoming necessary for managers to have a wide variety of experiences before achieving a promotion. Individuals who desire upward mobility often explore possible lateral moves so that they can learn new skills. Diff: 2 Page Ref: 373 Chapter: 13 Skill: Concept LO: 7 38) Many organizations use exit interviews to reduce employee turnover. Answer: TRUE Explanation: An exit interview is a means of revealing the real reasons employees leave their jobs; it is conducted before an employee departs the company and provides information on how to correct the causes of discontent and reduce turnover. Diff: 2 Page Ref: 374 Chapter: 13 Skill: Concept LO: 7

39) Employment at will is a concept accepted in both the U.S. and Italy, where governments rarely attempt to protect employees when they lose their jobs. Answer: FALSE Explanation: The concept of employment at will is generally accepted in the United States. Other governments such as Italy are more willing to protect employees in the loss of their jobs. Diff: 2 Page Ref: 376 Chapter: 13 Skill: Concept LO: 7 40) Phased retirement allows employees to transition from full-time work to retirement in steps rather than all at one time. Answer: TRUE Explanation: Phased retirement as an arrangement that allows people to move from fulltime work to retirement in steps. Retirement is treated as a phased process rather than a sudden event marked by a sentimental speech and a gold watch. Diff: 2 Page Ref: 376-377 Chapter: 13 Skill: Concept LO: 7 Human Resource Management, 12e (Mondy) Chapter 14: Global Human Resource Management Multiple-Choice Questions 1) The Foreign Corrupt Practices Act prohibits U.S. firms from ________. A) bribing foreign officials B) purchasing foreign firms C) paying customs and tariffs D) offshoring any technical jobs Answer: A Explanation: A) The United States is rigorously enforcing the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. firms from bribing foreign officials. However, countries other than the United States face far fewer constraints when dealing with bribery. The FCPA does not prevent U.S. firms from dealing with foreign firms or offshoring jobs. Diff: 2 Page Ref: 382 Chapter: 14 Skill: Concept LO: 1 2) U.S. firms are prohibited from bribing foreign officials under the ________. A) Federal Bribery Act. B) Foreign Corrupt Practices Act. C) Corruption Practices Act.

D) U.S. Bribery Act. Answer: B Explanation: B) The United States is rigorously enforcing the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. firms from bribing foreign officials. However, countries other than the United States face far fewer constraints when dealing with bribery. Diff: 2 Page Ref: 382 Chapter: 14 Skill: Concept LO: 1

3) What has been a result of the Foreign Corrupt Practices Act? A) U.S. firms have not been allowed to conduct any business overseas. B) European and Asian firms have stopped bribing public officials. C) U.S. firms have lost contracts because they cannot pay bribes. D) European and Asian governments have passed bribery laws. Answer: C Explanation: C) Not having the ability to use bribery as a tool of doing business has been costly for American companies. In one survey, 43 percent of the companies surveyed reported that they had lost new business in the last five years because of bribery. Foreign firms continue using bribery as a tool. Diff: 3 Page Ref: 382 Chapter: 14 Skill: Concept LO: 1 4) How are many U.S. firms preventing FCPA breaches? A) moving corporate headquarters B) conducting business online C) using internal audit teams D) bribing foreign officials Answer: C Explanation: C) Conducting business globally exposes the United States and other companies to an environment that permits bribery, which is against the law in the United States. To ward against problems, some companies have started deploying internal audit teams to help their compliance and legal departments uncover potential FCPA breaches and improve processes and controls. Diff: 3 Page Ref: 383 Chapter: 14 Skill: Concept LO: 1 5) Dailey Enterprises is a mid-sized business that is considering expanding its operations globally. Which of the following is LEAST likely to occur as a result of Dailey globalizing? A) improved selection process B) expanded customer base C) increased competition D) increased profitability Answer: A Explanation: A) There are a number of benefits for the small- to mid-sized business going global. First, of course, is that having a global customer base provides some protection against domestic business cycles. Companies that tend to export tend to be more profitable, better organized and more competitive than are companies that are exclusively domestically focused. The selection process will not necessarily improve. Diff: 3 Page Ref: 384 Chapter: 14 Skill: Application

LO: 2 6) According to experts, a firm that does not ________ will most likely fail. A) franchise B) globalize C) mediate D) arbitrate Answer: B Explanation: B) The growth of international businesses is no longer in doubt. "Organizations must either globalize or they will die" is an apt description of the 21stcentury economy. Diff: 1 Page Ref: 384 Chapter: 14 Skill: Concept LO: 2 7) Jenny's Jewelry is a small firm that sells its products abroad, either directly or indirectly, by retaining foreign agents and distributors. Jenny's Jewelry is most likely involved in ________. A) foreign investing B) exporting C) licensing D) franchising Answer: B Explanation: B) Exporting entails selling abroad, either directly or indirectly, by retaining foreign agents and distributors. Foreign investing, licensing, and franchising are other methods for firms globalizing. Diff: 1 Page Ref: 385 Chapter: 14 Skill: Application LO: 2 8) Hartford Toys is a small business that wants to enter the global market. What is the most common way for small businesses such as Hartford Toys to enter the global market? A) foreign investing B) licensing C) exporting D) franchising Answer: C Explanation: C) Exporting entails selling abroad, either directly or indirectly, by retaining foreign agents and distributors. It is a way that many small businesses enter the global market. Licensing is usually limited to manufacturers. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Application LO: 2

9) Modern Mosaics, an American firm, has granted a Chinese firm the right to use the Modern Mosaics manufacturing processes for a specific period of time. Modern Mosaics is most likely involved in ________. A) foreign investing B) exporting C) licensing D) franchising Answer: C Explanation: C) Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Franchising is an option whereby the parent company grants another firm the right to do business in a prescribed manner. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Application LO: 2 10) An arrangement whereby the parent company grants another firm the right to do business in a prescribed manner is referred to as ________. A) foreign investing B) exporting C) licensing D) franchising Answer: D Explanation: D) Franchising is an option whereby the parent company grants another firm the right to do business in a prescribed manner. Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 11) Which of the following would most likely globalize through licensing? A) fast food restaurant B) telemarketing firm C) luxury hotel chain D) electronics manufacturer Answer: D Explanation: D) Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Licensing is usually limited to manufacturers. Franchising is popular with service firms, such as restaurants and hotels. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Application

LO: 2 12) Franchising would most likely be used to globalize by a ________. A) fast food restaurant B) commercial bank C) health insurance firm D) toy manufacturer Answer: A Explanation: A) Franchising is popular with service firms, such as restaurants and hotels. Licensing is usually limited to manufacturers. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Application LO: 2 13) Which of the following is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries)? A) global investment corporation B) multinational corporation C) foreign exporter D) franchise Answer: B Explanation: B) A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). A multinational corporation directs manufacturing and marketing operations in several countries; these operations are coordinated by a parent company, usually based in the firm's home country. Diff: 1 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 14) PEC Enterprises is based in the U.S. and produces plastic cooking utensils at plants in Taiwan and India. All operations are coordinated from the firm's U.S. headquarters. PEC Enterprises is most likely a ________. A) franchiser B) export/import firm C) transnational corporation D) multinational corporation Answer: D Explanation: D) A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). A transnational corporation moves work to the places with the talent to handle the job and the time to do it at the right cost. PEC has headquarters only in the U.S. so it is most likely an MNC. Diff: 2 Page Ref: 385 Chapter: 14

Skill: Application LO: 2 15) What type firm directs manufacturing and marketing operations in several countries and these operations are coordinated by a parent company, usually based in the firm's home country? A) global investment B) foreign corporation C) multinational corporation D) international corporation Answer: C Explanation: C) A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). A multinational corporation directs manufacturing and marketing operations in several countries; these operations are coordinated by a parent company, usually based in the firm's home country. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 16) Wilson Enterprises has corporate units in a number of countries that are integrated to operate as one organization worldwide. Wilson Enterprises is most likely a(n) ________. A) global corporation B) multinational corporation C) foreign corporation D) international corporation Answer: A Explanation: A) Global corporations have corporate units in a number of countries that are integrated to operate as one organization worldwide. A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). Diff: 1 Page Ref: 385 Chapter: 14 Skill: Application LO: 2

17) Which of the following sells similar products throughout the world with components that are made in different countries? A) foreign corporation B) multinational corporation C) international corporation D) global corporation Answer: D Explanation: D) Global corporations sell essentially the same products throughout the world with components that may be made and/or designed in different countries. Expectations are that as the world becomes more globally open, the globalization of corporations will become much more commonplace. A multinational corporation directs manufacturing and marketing operations in several countries; these operations are coordinated by a parent company, usually based in the firm's home country. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 18) Procter & Gamble is best categorized as a ________ corporation. A) foreign-based B) multinational C) global D) national Answer: C Explanation: C) Not many years ago, Procter & Gamble was primarily a U.S. business investing heavily in food brands. Now it is a truly global corporation with more than 300 brands in more than 180 countries crossing the Americas, Europe, the Middle East and Africa, and Asia. P&G shifted from an MNC to a GC. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Application LO: 2 19) Which of the following moves work to the places with the talent to handle the job and the time to do it at the right cost? A) transnational corporation B) national corporation C) multinational corporation D) global corporation Answer: A Explanation: A) Today, global corporations are transforming themselves into transnationals. A transnational corporation moves work to the places with the talent to handle the job and the time to do it at the right cost. Diff: 1 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2

20) For the Global Professional in HR certification, which of the following is an area that has been identified for testing and training? A) global compensation B) talent development C) risk management D) all of the above Answer: D Explanation: D) The importance of human resource management in the global environment is illustrated by the fact that the Human Resource Certification Institute now has an international component. The Global Professional in Human Resources certification focuses on strategic HR management, global talent acquisition and mobility, global compensation and benefits, organizational effectiveness, talent development, workforce relations, and risk management. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 21) Companies that engage in the global economy place even greater emphasis on ________. A) foreign language skills B) talent mobility C) strategic HRM D) benefits Answer: C Explanation: C) Companies that engage in the global economy place even greater emphasis on strategic HR. Individuals dealing with global human resource matters face a multitude of challenges beyond that of their domestic counterparts. Before upper management decides on a global move, it is vitally important that the critical nature of human resource issues be considered. Diff: 2 Page Ref: 385-386 Chapter: 14 Skill: Concept LO: 2

22) William, an HR manager at a global organization, is in the process of systematically matching the firm's internal and external supply of people with job openings anticipated in the organization over the next year. What task is William most likely performing? A) job analysis B) HR planning C) succession planning D) HR global management Answer: B Explanation: B) Before the staffing process for an international assignment begins, a thorough understanding of what is involved in the job should be developed (job analysis). A global organization must systematically match the internal and external supply of people with job openings anticipated in the organization over a specified period of time (human resource planning). Diff: 2 Page Ref: 386 Chapter: 14 Skill: Application LO: 3 23) Which of the following is NOT a type of global staff member? A) expatriate B) contingent worker C) third-country national D) host-country national Answer: B Explanation: B) Global staff members may be selected from among three different types: expatriates, host-country nationals, and third-country nationals. Contingent workers may or may not be global, but they are not one of the main categories of global staff members. Diff: 2 Page Ref: 386 Chapter: 14 Skill: Concept LO: 3

24) An employee who is not a citizen of the country in which the firm is located but is a citizen of the country in which the organization is headquartered is referred to as a(n) ________. A) host-country national B) third-country national C) expatriate D) operant Answer: C Explanation: C) An expatriate is an employee who is not a citizen of the country in which the firm operations are located, but is a citizen of the country in which the organization is headquartered. A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. Diff: 2 Page Ref: 386-387 Chapter: 14 Skill: Concept LO: 3 25) The U.S. expatriate population has grown rapidly in recent years because of the large numbers being sent to ________. A) Russia and Italy B) China and India C) France and Mexico D) China and Taiwan Answer: B Explanation: B) An expatriate is an employee who is not a citizen of the country in which the firm operations are located, but is a citizen of the country in which the organization is headquartered. The U.S. expat population has grown rapidly largely because of the large numbers of workers who are being sent to China and India. Diff: 2 Page Ref: 386-387 Chapter: 14 Skill: Concept LO: 3

26) Murphy Enterprises recently acquired a controlling interest in Mexico's leading clothing retailer. Murphy plans to open additional retail stores in the next three years. Some of Murphy's top executives advocate the idea of transferring U.S. managers to Mexico to oversee the construction and opening of the new stores. Another group of Murphy executives believe that host-country nationals should manage the project. Which of the following best supports a decision to fill management positions with expatriates? A) Murphy needs to ensure that Mexico operations are closely linked to headquarters. B) Most Murphy expatriates resign within one year of their return to the U.S. C) Murphy wants to develop close community relationships in Mexico. D) Employees hired by Murphy are provided extensive training. Answer: A Explanation: A) Generally, expatriates are used to ensure that foreign operations are linked effectively with parent corporations. If repatriated employees are resigning quickly, it would most likely be a mistake and a waste of money to fill positions with expatriates. Hiring locals would make more progress with building community ties than bringing in American managers. Diff: 3 Page Ref: 386-387 Chapter: 14 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 27) Murphy Enterprises recently acquired a controlling interest in Mexico's leading clothing retailer. Murphy plans to open additional retail stores in the next three years. Some of Murphy's top executives advocate the idea of transferring U.S. managers to Mexico to oversee the construction and opening of the new stores. Another group of Murphy executives believe that host-country nationals should manage the project. Which of the following questions is LEAST relevant to the decision to fill management positions in Mexico with expatriates or host-country nationals? A) What are Murphy's anticipated relocation costs for using expatriates? B) What degree of corporate control does Murphy want in Mexico? C) What is the global safety and health record for Murphy? D) What is the attrition rate for Murphy's expatriates? Answer: C Explanation: C) Relocation costs, corporate control, and expatriate turnover rates are important to the decision to use expatriates or locals in management positions. Health and safety issues are less relevant to the decision. Diff: 3 Page Ref: 386-387 Chapter: 14 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking

28) Murphy Enterprises recently acquired a controlling interest in Mexico's leading clothing retailer. Murphy plans to open additional retail stores in the next three years. Some of Murphy's top executives advocate the idea of transferring U.S. managers to Mexico to oversee the construction and opening of the new stores. Another group of Murphy executives believe that host-country nationals should manage the project. Which of the following best supports a decision to fill management positions in Mexico with host-country nationals? A) Murphy's marketing department created a new advertising campaign for the Mexican audience. B) Murphy's HR department is translating the firm's e-learning programs from English to Spanish. C) Murphy plans to direct operations in Mexico from the firm's U.S. headquarters. D) Murphy is establishing a fully functioning HR department in Mexico. Answer: D Explanation: D) Organizations that use the polycentric approach and primarily hire hostcountry nationals will usually have a fully functioning human resource department in each foreign subsidiary responsible for managing all local human resource issues. Corporate human resource managers focus primarily on coordinating relevant activities with their counterparts in each foreign operation. Marketing plans and e-learning are less relevant to the decision. If the firm wants to control operations from headquarters then expatriates would be better than locals. Diff: 3 Page Ref: 386-387 Chapter: 14 Skill: Critical Thinking LO: 3 AACSB: Reflective Thinking 29) Murphy Enterprises recently acquired a controlling interest in Mexico's leading clothing retailer. Murphy plans to open additional retail stores in the next three years. Some of Murphy's top executives advocate the idea of transferring U.S. managers to Mexico to oversee the construction and opening of the new stores. Another group of Murphy executives believe that host-country nationals should manage the project. Which of the following best supports the decision to use a polycentric staffing approach? A) Murphy's HR department has been unable to locate qualified Mexican managers. B) Murphy wants to establish that the corporation is fully committed to Mexico. C) HR managers at Murphy rely on selection tests to find competent workers. D) Most Murphy managers have international work or travel experience. Answer: B Explanation: B) With a polycentric approach, most employees are host-country nationals. Employing host-country nations helps to clearly establish that the company is making a commitment to the host country and not just setting up a foreign operation. Being unable to find local managers suggests that an ethnocentric approach would be better than a polycentric approach. If most Murphy managers have international experience, then perhaps ethnocentric staffing would be effective. Diff: 3 Page Ref: 386-387 Chapter: 14 Skill: Critical Thinking

LO: 3 AACSB: Reflective Thinking 30) Jorge, a Mexican citizen, works for Ford Motor Company at the firm's factory near Mexico City. Jorge would most likely be categorized as a(n) ________. A) host-country national B) third-country national C) expatriate D) operant Answer: A Explanation: A) A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. An expatriate is an employee who is not a citizen of the country in which the firm operations are located, but is a citizen of the country in which the organization is headquartered. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Application LO: 3 31) Most foreign operations of North American MNCs are primarily staffed by ________. A) host-country nationals B) third-country nationals C) contingent workers D) expatriates Answer: A Explanation: A) Normally, the bulk of employees in international offices will be hostcountry nationals. In most industries, host-country nationals comprise more than 98 percent of the workforce in the foreign operations of North American and Western European multinational companies. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 32) Which of the following is most likely a host-country national? A) a U.S. citizen working for a Japanese company in the United States B) a Japanese citizen working for a Japanese company in the United States C) an Italian citizen working for a French company in Germany D) an Indian citizen working for an Indian company in Singapore Answer: A Explanation: A) A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. An American working for a Japanese firm based in the U.S. is a host-country national. A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country.

33) In most cases, the majority of employees in international offices are ________. A) foreigners B) third-country nationals C) expatriates D) host-country nationals Answer: D Explanation: D) A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. Normally, the bulk of employees in international offices will be host-country nationals. Not only are companies staffed by locals less expensive, but they also offer advantages from a cultural and business standpoint. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 34) Which of the following is most likely associated with hiring host-country nationals? A) repatriation B) lower costs C) cultural problems D) required relocation Answer: B Explanation: B) A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. Not only are companies staffed by locals less expensive, but they also offer advantages from a cultural and business standpoint. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 35) Sarita, a Spanish citizen, is employed at a Samsung facility in Texas. Samsung is a South Korean firm. Sarita would most likely be categorized as a(n) ________. A) expatriate B) third-country national C) home-country national D) host-country national Answer: B Explanation: B) A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Application LO: 3

36) Which of the following is an example of a third-country national? A) a U.S. citizen working for a Japanese company in the United States B) a Japanese citizen working for a Japanese company in the United States C) Italian citizen working for a French company in Germany D) an Indian citizen working for an Indian company in Singapore Answer: C Explanation: C) A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. An Italian employed by a French company that is located in Germany is a third-country national. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Application LO: 3 37) Which of the following is NOT an approach to global staffing? A) polycentric B) biocentric C) regiocentric D) ethnocentric Answer: B Explanation: B) Using the three basic types of global staff, there are four major approaches to global staffing: ethnocentric, polycentric, regiocentric, and geocentric staffing. These reflect how the organization develops its human resource policies and the preferred types of employees for different positions. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 38) Which staffing strategy assumes that home-office perspectives and issues should take precedence over local perspectives and issues? A) polycentric B) ethnocentric C) regiocentric D) geocentric Answer: B Explanation: B) With ethnocentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. This strategy assumes that home-office perspectives and issues should take precedence over local perspectives and issues and that expatriates will be more effective in representing the views of the home office. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3

39) All of the following are primary HR concerns associated with ethnocentric staffing EXCEPT ________. A) handling repatriation issues B) selecting experienced local managers C) developing global compensation packages D) training managers for foreign assignments Answer: B Explanation: B) With the ethnocentric staffing approach, the corporate human resources department is primarily concerned with selecting and training managers for foreign assignments, developing appropriate compensation packages, and handling adjustment issues when managers return home. Local managers are less likely to run foreign offices with this staffing approach. Diff: 3 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 40) With which staffing strategy do companies primarily hire expatriates to staff higherlevel foreign positions? A) polycentric B) geocentric C) regiocentric D) ethnocentric Answer: D Explanation: D) With ethnocentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. This strategy assumes that home-office perspectives and issues should take precedence over local perspectives and issues and that expatriates will be more effective in representing the views of the home office. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3

41) Monique is a manager at a firm based in Chicago. She has recently been selected to manage the firm's Singapore office along with three other managers from the Chicago office. The firm hopes that the American managers will effectively represent the views of the home office and will link the Singapore office to the Chicago office. Which type of staffing approach is most likely being used by Monique's employer? A) polycentric B) regiocentric C) ethnocentric D) geocentric Answer: C Explanation: C) With ethnocentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. This strategy assumes that home-office perspectives and issues should take precedence over local perspectives and issues and that expatriates will be more effective in representing the views of the home office. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 42) When host-country nationals are used throughout the organization, from top to bottom, what staffing approach is being used? A) polycentric B) geocentric C) regiocentric D) ethnocentric Answer: A Explanation: A) When host-country nationals are used throughout the organization, from top to bottom, it is referred to as polycentric staffing.With ethnocentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3

43) Which staffing model assumes that host-country nationals are better equipped to deal with local market conditions? A) ethnocentric B) regiocentric C) polycentric D) geocentric Answer: C Explanation: C) When host-country nationals are used throughout the organization, from top to bottom, it is referred to as polycentric staffing. The use of the polycentric staffing model is based on the assumption that host-country nationals are better equipped to deal with local market conditions. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 44) Shelby Enterprises is a global corporation that has a fully functioning HR department in each of its foreign subsidiaries. Host-country nationals are employed throughout the firm. Which staffing approach is most likely used by Shelby? A) biocentric B) geocentric C) polycentric D) ethnocentric Answer: C Explanation: C) When host-country nationals are used throughout the organization, from top to bottom, it is referred to as polycentric staffing. Organizations that use this approach will usually have a fully functioning human resource department in each foreign subsidiary responsible for managing all local human resource issues. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Application LO: 3

45) Tyler is a corporate HR manager at a global corporation that uses the polycentric staffing approach. Which of the following most likely describes the focus of Tyler's job? A) handling adjustment issues when home-country nationals return from assignment B) coordinating relevant activities with their counterparts in each foreign operation C) developing appropriate expatriate compensation packages D) selecting and training managers for foreign assignments Answer: B Explanation: B) With polycentric staffing, corporate human resource managers focus primarily on coordinating relevant activities with their counterparts in each foreign operation. With ethnocentric staffing, the corporate human resources department is primarily concerned with selecting and training managers for foreign assignments, developing appropriate compensation packages, and handling adjustment issues when managers return home. Diff: 3 Page Ref: 387 Chapter: 14 Skill: Application LO: 3 46) Firms that use a polycentric staffing approach will most likely employ ________ for positions at foreign facilities. A) expatriates B) contingent workers C) third-country nationals D) host-country nationals Answer: D Explanation: D) When host-country nationals are used throughout the organization, from top to bottom, it is referred to as polycentric staffing.The use of the polycentric staffing model is based on the assumption that host-country nationals are better equipped to deal with local market conditions than expatriates or third-country nationals. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 47) With the ________ staffing approach, regional groups of subsidiaries reflecting the organization's strategy and structure work as a unit. A) geocentric B) polycentric C) regiocentric D) ethnocentric Answer: C Explanation: C) Regiocentric staffing is similar to the polycentric approach, but regional groups of subsidiaries reflecting the organization's strategy and structure work as a unit. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3

48) Which of the following is NOT a characteristic of the regiocentric staffing approach? A) each region develops a common set of employment practices B) promotions from the region to headquarters rarely occur C) each region actively recruits third-country nationals D) some autonomy exists in regional decision-making Answer: C Explanation: C) Regiocentric staffing is similar to the polycentric approach, but regional groups of subsidiaries reflecting the organization's strategy and structure work as a unit. There is some degree of autonomy in regional decision making, and promotions are possible within the region but rare from the region to headquarters. Each region develops a common set of employment practices. Regiocentric staffing focuses on hiring hostcountry nationals rather than third-country nationals. Diff: 3 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 49) With which staffing approach does each region develop a common set of employment practices? A) ethnocentric B) polycentric C) geocentric D) regiocentric Answer: D Explanation: D) Each region develops a common set of employment practices with the regiocentric approach. With the polycentric staffing approach, corporate human resource managers focus primarily on coordinating relevant activities with their counterparts in each foreign operation. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 50) Which staffing approach uses a worldwide-integrated business strategy? A) ethnocentric B) polycentric C) geocentric D) regiocentric Answer: C Explanation: C) Geocentric staffing is a staffing approach that uses a worldwide integrated business strategy. Regiocentric staffing is similar to the polycentric approach, but regional groups of subsidiaries reflecting the organization's strategy and structure work as a unit. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3

51) With which staffing approach does the firm always attempt to hire the best person available for a position, regardless of where that individual comes from? A) geocentric B) polycentric C) regiocentric D) ethnocentric Answer: A Explanation: A) Geocentric staffing is a staffing approach that uses a worldwide integrated business strategy. The firm attempts to always hire the best person available for a position, regardless of where that individual comes from. The geocentric staffing model is most likely to be adopted and used by truly global firms. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 52) Which staffing model is most likely to be adopted and used by truly global firms? A) ethnocentric B) polycentric C) regiocentric D) geocentric Answer: D Explanation: D) Geocentric staffing is a staffing approach that uses a worldwide integrated business strategy. The firm attempts to always hire the best person available for a position, regardless of where that individual comes from. The geocentric staffing model is most likely to be adopted and used by truly global firms. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 53) In which staffing approach would the corporate HR function typically be the most complicated? A) ethnocentric B) polycentric C) geocentric D) regiocentric Answer: C Explanation: C) Geocentric staffing is a staffing approach that uses a worldwide integrated business strategy. The firm attempts to always hire the best person available for a position, regardless of where that individual comes from. The geocentric staffing model is most likely to be adopted and used by truly global firms. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3

54) Which of the following is NOT one of the stages in the expatriate selection process? A) supervisor recommendation B) candidate pool creation C) technical skills assessment D) self-selection Answer: A Explanation: A) Expatriates are often selected from those already within the organization and the process involves four distinct stages: self-selection, creating a candidate pool, technical skills assessment, and making a mutual decision. Although a candidate's supervisor would provide valuable input, a supervisor recommendation is not one of the stages in the expatriate selection process. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 55) Which of the following occurs in the first stage of the expatriate selection process? A) creating a candidate pool from a database B) conducting personal and family assessments C) determining technical and managerial skills D) conducting a thorough background investigation Answer: B Explanation: B) In stage one, self-selection, candidates determine whether they are right for a global assignment, whether their spouses and children are interested in relocating internationally, and whether this is the best time for a move. Creating a candidate pool, assessing skills, and investigating backgrounds occur later in the process. Diff: 3 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 56) Which of the following is LEAST likely to be an expatriate selection criterion? A) cultural adaptability B) interpersonal skills C) technical competence D) foreign language degree Answer: D Explanation: D) Expatriate selection criteria should include cultural adaptability, strong communication skills, technical competence, professional or operational expertise, global experience, country-specific experience, interpersonal skills, language skills, family flexibility, and country- or region-specific considerations. Although foreign language skills are helpful, having a degree is not necessary. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3

57) With regard to background investigation, which country prohibits criminal checks of its citizens? A) Mexico B) Japan C) Canada D) United Kingdom Answer: B Explanation: B) Each country has its own laws, customs, and procedures for background screenings. For instance, Japanese law covers a person working at the Tokyo office of a U.S.-based company and includes privacy statutes that prohibit criminal checks on Japanese citizens. In the U.K., third-parties are not allowed to have access to criminal records, so specific agencies have to handle background checks. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 58) A background investigation of a potential employee would most likely take up to 40 days in which country? A) United States B) United Kingdom C) Japan D) Canada Answer: B Explanation: B) In the United Kingdom, the job applicant and the recruiting organization must sign and submit a formal request to a specific agency responsible for handling criminal records. It can take up to 40 business days to get information back. Background checks in the U.S. and Canada typically occur more quickly, and Japan does not allow background checks. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 59) E-mail, text messaging, and other forms of wireless communication have led to the growth of ________. A) metrics B) cyberwork C) work sampling D) global franchises Answer: B Explanation: B) Wireless communication has created the potential for cyberwork, a possibility of a never-ending workday. BlackBerrys or iPhones, text messaging, e-mail, and around-the-clock computer access create endless possibilities for communication. Diff: 2 Page Ref: 389 Chapter: 14 Skill: Concept

LO: 3 AACSB: Use of IT 60) Which of the following terms refers to modern-day workers who struggle to manage multiple data streams and competing impulses? A) telecommuters B) cyberworkers C) intraviduals D) freelancers Answer: C Explanation: C) In his book, Elsewhere, USA, Dalton Conley calls the class of professionals who live this way "intraviduals." He defines his term: "a new breed of modern workers who struggles to manage multiple data streams and competing impulses and even selves." Diff: 2 Page Ref: 389 Chapter: 14 Skill: Concept LO: 3 AACSB: Use of IT 61) Which of the following is used by some Japanese firms to quickly find part-time workers? A) corporate career sites B) GPS-enabled phones C) online job boards D) Blackberry devices Answer: B Explanation: B) Employers in Japan have discovered a new way to find part-time workers in a hurry. They use global positioning systems in cell phones to find them. Diff: 2 Page Ref: 389 Chapter: 14 Skill: Concept LO: 3 AACSB: Use of IT 62) Which of the following is LEAST likely to be a component of the ideal expatriate preparation and development program? A) pre-move orientation B) continual development C) repatriation training D) availability forecasting Answer: D Explanation: D) Pre-move orientation, continual development, and repatriation training are elements of ideal expatriate development programs. Availability forecasting is an aspect of HR planning rather than global staffing. Diff: 2 Page Ref: 390-391 Chapter: 14 Skill: Concept

63) Approximately 60% of international assignments fail because employees do not receive adequate ________. A) compensation B) health benefits C) cultural training D) technical support Answer: C Explanation: C) Approximately 60% of international assignments fail due to lack of cultural training and support. Difficulty in adjusting to a new environment greatly impacts an employee's work and home life, so the development process should start as soon as workers are selected. Compensation, health benefits, and technical support are less common reasons for the failure of international assignments. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4 64) Language, culture, and history are addressed during which stage of expatriate preparation and development? A) pre-move orientation B) repatriation orientation C) continual development D) repatriation training Answer: A Explanation: A) Language, culture, history, and local customs are topics covered prior to departure during pre-move orientation and training. Continual development addresses career planning and skills, while repatriation training and development focuses on transitioning employees back to the U.S. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4 65) Which of the following topics would most likely be addressed during the continual development stage of expatriate preparation and development? A) language skills B) local customs and traditions C) home-country development D) home-country living conditions Answer: C Explanation: C) Home-country development is addressed during the continual development phase of expatriation. Language, customs, and living conditions are covered prior to departure. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4

66) Why have many global organizations established a formal buddy system for expatriates and their families? A) provide them with technological assistance B) reduce the stress of moving overseas C) help them repatriate to the U.S. D) give them temporary housing Answer: B Explanation: B) Many organizations have established a formal buddy system to alleviate the stress new expatriates and their families normally endure, to reduce the time it takes for expatriates to operate at peak productivity. Buddies often inform expatriates of hostoffice norms and politics, invite them into their homes, introduce them to friends and networks, and help bolster their credibility in the office. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4 67) The process of bringing expatriates home is referred to as ________. A) repatriation B) global e-learning C) strategic training D) succession planning Answer: A Explanation: A) Orientation and training are also necessary prior to repatriation, which is the process of bringing expatriates home. Globalization has created a special need for elearning and companies are embracing it to train the global workforce. Diff: 1 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4 68) Studies indicate that approximately ________ of repatriated employees leave the company within one year after an international assignment ends. A) 5% B) 25% C) 45% D) 65% Answer: B Explanation: B) According to a study by a partnership between PricewaterhouseCoopers and Cranfield University School of Management, more than 25 percent of repatriated employees leave the company within one year after an international assignment ends. Reasons given for leaving include they were not being properly prepared to return to their work and not being able to use skills that they learned abroad. Diff: 2 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4

69) According to studies, which of the following best explains why expatriates leave their firms within one year of completing an international assignment? A) discord among family and friends B) desire to spend more time overseas C) inadequate financial compensation D) inability to utilize skills learned abroad Answer: D Explanation: D) According to a study by a partnership between PricewaterhouseCoopers and Cranfield University School of Management, more than 25 percent of repatriated employees leave the company within one year after an international assignment ends. Reasons given for leaving include they were not being properly prepared to return to their work and not being able to use skills that they learned abroad. Family problems, interest in traveling, and finances are less likely reasons. Diff: 3 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4 70) Mary has been on assignment in Japan for one year, and she will soon be returning to work at her firm's Dallas headquarters. Which of the following would most likely improve Mary's repatriation experience? A) career planning discussions B) polycentric staffing options C) e-learning opportunities D) workforce reorganizations Answer: A Explanation: A) To counter the challenges of repatriation, firms need to have a formal in-house repatriation program in place. A dialogue regarding expectations and career planning upon return will help to manage expectations. Major changes at a firm, such as reorganizaiton, can create difficulties for the expatriate. Diff: 3 Page Ref: 391 Chapter: 14 Skill: Application LO: 4

71) All of the following are characteristics of an effective in-house repatriation program EXCEPT ________. A) recognition of the employee's overseas contribution B) clarification of the employee's position at the firm C) reorganization of the employee's work environment D) utilization of the employee's new international skills Answer: C Explanation: C) To counter the challenges of repatriation, firms need to have a formal inhouse repatriation program in place. Acknowledgment and recognition of the significant overseas contribution is a courtesy to the returning employee. A dialogue regarding expectations and career planning upon return will help to manage expectations. Employees also benefit from using the skills they learned overseas. Creating an unfamiliar environment for the employee could be problematic. Diff: 3 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4 72) Shannon, an HR professional, has been given the task of implementing a global elearning program at her firm. Employees located in the firm's offices and factories around the world will use the e-learning program for training purposes. Which of the following is most important for Shannon to consider as she establishes the program? A) virtual teams B) global safety C) cultural differences D) global compensation Answer: C Explanation: C) The most obvious challenge for any global e-learning implementation is failure to recognize the impact of cultural differences on the programs' success. Without a culture analysis or failing to recognize cultural differences can seriously damage a global organization's success. Virtual teams, safety, and compensation are less relevant. Diff: 2 Page Ref: 391 Chapter: 14 Skill: Application LO: 4 AACSB: Multicultural and Diversity

73) According to research, approximately ________ of employees of global corporations said that English is "required" or "important" in their jobs. A) 30% B) 50% C) 70% D) 90% Answer: D Explanation: D) In Global English Corporation's "Globalization of English" research, 91 percent of employees of global corporations said that English is "required" or "important" in their jobs, and that the need is increasing dramatically. Eighty-nine percent of employees said they are more likely to climb the corporate ladder if they can communicate in English. Diff: 2 Page Ref: 391-392 Chapter: 14 Skill: Concept LO: 4 AACSB: Multicultural and Diversity 74) Michael, an HR manager at an international hotel chain, is advocating for the implementation of a global e-learning program. In addition to cost savings, what is another benefit that best supports the use of e-learning? A) provides learners with a re-usable resource B) assists expatriates with cultural skills C) enables virtual teams to discuss issues D) offers access to contingent workers Answer: A Explanation: A) Where a classroom course cannot be re-visited after its completion, an e-learning course can be used as a reference tool, returned to when team members feel the need to refresh their memories, so it is a re-usable resource. Diff: 3 Page Ref: 392 Chapter: 14 Skill: Application LO: 4 AACSB: Use of IT

75) Matt has a weekly meeting with other engineers who are located at different sites and regions around the world, yet none of the employees travel to the meetings. Matt most likely belongs to a(n) ________. A) expatriate community B) orientation group C) virtual team D) franchise Answer: C Explanation: C) With virtual teams, team members do not have to meet face-to-face to be effective, thereby eliminating "dead time" caused by traveling. These teams operate across boundaries of time and geography and have become a necessity of everyday working life. Diff: 2 Page Ref: 392 Chapter: 14 Skill: Application LO: 4 AACSB: Use of IT 76) Karen, a software engineer, belongs to a virtual team that meets regularly to solve problems and discuss issues. All of the following are most likely benefits of such a team EXCEPT ________. A) feeling personally connected to team members B) eliminating wasted time of traveling C) accomplishing tasks quickly D) lowering meeting expenses Answer: A Explanation: A) Dispersed team members often do not feel as connected or committed to the team. There may be a feeling of disconnect caused by communicating by e-mail, instant messaging, audio conferencing, and other tools. Benefits of virtual teams include the elimination of "dead time" caused by traveling. Virtual teams enable companies to accomplish things more quickly and efficiently. Firms save money by not having to pay travel expenses. Diff: 3 Page Ref: 392 Chapter: 14 Skill: Application LO: 4 AACSB: Use of IT

77) Which term refers to the human tendency to credit other people's behavior to their personal characteristics rather than the situation? A) cognitive dissonance B) factor configuration C) authoritarian tendency D) fundamental attribution error Answer: D Explanation: D) Workers in virtual teams may experience a psychological concept called fundamental attribution error, which is the human tendency to credit other people's behavior to their personal characteristics rather than the situation they are in. Diff: 1 Page Ref: 392 Chapter: 14 Skill: Concept LO: 4 78) What is the key to keeping virtual teams working effectively together? A) work sampling methods B) strategic planning C) communication D) efficiency Answer: C Explanation: C) Communication is the key to keeping teams working effectively together. Some of the difficulties that virtual teams confront regard communication that lacks personal connection. Diff: 2 Page Ref: 392 Chapter: 14 Skill: Concept LO: 4 AACSB: Use of IT 79) Which of the following is most likely a FALSE statement regarding virtual teams? A) Dispersed team members often do not feel as connected or committed to the team. B) Cultural differences complicate the communication among virtual team members. C) Maintaining impersonal relationships on virtual teams increases group productivity. D) Communication problems correlate to the number of time zones separating team members. Answer: C Explanation: C) Virtual teams benefit from forming group bonds by communicating informally at times. Problems occur because dispersed team members often do not feel as connected or committed to the team and because of cultural differences. Communication problems between team members appear to be directly proportional to the number of time zones that separate them. Diff: 3 Page Ref: 392 Chapter: 14 Skill: Concept LO: 4

80) What is becoming the world language? A) English B) French C) Spanish D) Russian Answer: A Explanation: A) Since English is becoming the world language, those for whom English is a second language may be at a disadvantage. Many Asians are concerned with saving face if they do not understand something. Diff: 1 Page Ref: 392 Chapter: 14 Skill: Concept LO: 4 81) The compensation for host-country nationals is normally ________ the prevailing wage rates in the area. A) much more than B) slightly above C) the same as D) lower than Answer: B Explanation: B) Globally, the question of what constitutes a fair day's pay is not as complicated as it is in the United States; normally, it is slightly above the prevailing wage rates in the area. The same is often true of benefits and nonfinancial rewards. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Concept LO: 5 82) Which of the following is LEAST likely to be considered when a company is establishing global compensation packages for host-country nationals? A) local laws B) living costs C) tax policies D) U.S. pay rates Answer: D Explanation: D) Variations in laws, living costs, tax policies, and other factors all must be considered when a company is establishing global compensation packages. Hostcountry nationals are typically paid based on the prevailing wage rate rather than based on U.S. wages. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Concept LO: 5

83) As an HR manager for an MNC, Eliot needs to establish appropriate compensation practices in each country. Which of the following is a factor that Eliot should most likely consider? A) education requirements B) available technologies C) standard working hours D) recruitment techniques Answer: C Explanation: C) The company will want to create a precise picture of employment and working conditions in order to establish appropriate practices in each country. Some of the factors that should be considered include: minimum wage requirements, which often differ from country to country and even from city to city within a country; working-time information such as annual holidays, vacation time and pay, paid personal days, standard weekly working hours, probation periods, and overtime restrictions and payments; and hiring and termination rules and regulations covering severance practices. Education requirements, technologies, and recruitment methods are less important than typical working hours in the region. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Application LO: 5 AACSB: Multicultural and Diversity 84) According to the text, when compensating host-country nationals in Puerto Rico, a firm would most likely need to ________. A) pay a Christmas bonus B) contribute to a 401(k) plan C) provide disability insurance D) offer a significant life insurance policy Answer: A Explanation: A) Variations in laws, living costs, tax policies, and other factors all must be considered when a company is establishing global compensation packages. For example, Puerto Rico has laws requiring the paying of severance pay and a Christmas bonus. Pension plans and life insurance are more important in other countries according to the text. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Concept LO: 5

85) With regard to tax equalization payments, under Internal Revenue Service rules, U.S. citizens living overseas can exclude up to how much income earned abroad from taxes? A) $27,800 B) $45,700 C) $68,300 D) $91,400 Answer: D Explanation: D) Regarding tax-equalization payments, U.S. citizens living overseas were able to exclude up to $91,400 of gross income earned abroad in 2009 but the IRS adjusts the exclusion amount yearly for inflation. Also, credits against U.S. income taxes are given for a portion of the foreign income taxes paid by U.S. expatriates beyond the $91,400 level. Diff: 2 Page Ref: 394 Chapter: 14 Skill: Concept LO: 5 86) In Italy, what is the most likely result of giving a sales incentive to a team's top sales professional? A) motivating team members to work harder B) creating a competition against the recipient C) discouraging the recipient from working hard D) attracting high quality employees to the team Answer: C Explanation: C) In Italy, where teamwork is more valued than individual initiative, sales incentives for top sales professionals working in small teams can be demotivational. The recipient of a large award may feel awkward when receiving larger than a fair share of the reward pie. Diff: 2 Page Ref: 393-394 Chapter: 14 Skill: Application LO: 5 87) Which of the following has been a recent problem associated with expatriate compensation? A) devaluation of the U.S. dollar B) expansion of Chinese firms C) relocation expenses D) NAFTA changes Answer: A Explanation: A) In the past few years, additional challenges have hit companies as they have attempted to go global. The devaluation of the U.S. dollar has had a major impact on expat compensation as well as changes to the U.S. tax code that affect expatriate lifestyle. China and NAFTA are not relevant to expatriate compensation. Relocating expatriates is expensive but not necessarily a new problem. Diff: 2 Page Ref: 394 Chapter: 14

Skill: Concept LO: 5 88) Which country typically operates safer and healthier global facilities than those operated by host-country firms? A) Canada B) Japan C) United States D) North Korea Answer: C Explanation: C) U.S.-based global operations are often safer and healthier than hostcountry operations, but frequently not as safe as similar operations in the United States. Safety and health laws and regulations often vary greatly from country to country. Such laws can range from virtually nonexistent to as stringent as those in the United States. Diff: 1 Page Ref: 395 Chapter: 14 Skill: Concept LO: 6 89) According to international health and safety experts, what is one of the most important trends among successful MNCs? A) using a single safety management system for all global operations B) offering safety and health training through e-learning software C) handling safety and health emergencies with virtual teams D) using regionally-based safety and health procedures Answer: A Explanation: A) Health and safety professionals with international experience say one of the most important trends sweeping through successful multinational companies is the shift to a single safety management system that applies to all their operations throughout the world. Taking a global approach to safety and health not only avoids problems, but it also opens up a wealth of opportunities to improve performance. Diff: 3 Page Ref: 395 Chapter: 14 Skill: Concept LO: 6 90) Which of the following terms refers to requiring firms to have union or worker representatives on their boards of directors? A) collective bargaining B) employment-at-will C) codetermination D) labor relations Answer: C Explanation: C) Codetermination, which requires firms to have union or worker representatives on their boards of directors, is very common in European countries. Even though they face global competition, unions in several European countries have resisted changing their laws and removing government protections.

Diff: 1 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 91) In which country would codetermination most likely be an issue? A) Brazil B) India C) Germany D) South Korea Answer: C Explanation: C) Codetermination, which requires firms to have union or worker representatives on their boards of directors, is very common in European countries. Global firms in Germany would likely have to consider codetermination. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 92) Which of the following countries prohibits collective bargaining for textile workers? A) Canada B) Chile C) Sweden D) United States Answer: B Explanation: B) In some South American countries such as Chile, collective bargaining for textile workers, miners, and carpenters is prohibited. And unions are generally allowed only in companies of 25 workers or more. This practice has encouraged businesses to split into small companies to avoid collective bargaining, leaving workers on their own. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 93) Which of the countries listed below is NOT a part of NAFTA? A) United States B) Canada C) Mexico D) Brazil Answer: D Explanation: D) The North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the United States facilitated the movement of goods across boundaries within North America. Brazil is not a NAFTA member. Diff: 1 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7

94) Which of the following was created by NAFTA? A) national monetary system B) government-funded jobs C) free-trade zone D) exchange rate Answer: C Explanation: C) The North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the United States facilitated the movement of goods across boundaries within North America. It forms a free-trade zone of more than 400 million people with a combined gross domestic profit of about $12 trillion dollars. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 95) According to NAFTA, a country that consistently fails to enforce its own labor laws could be fined up to ________ million per violation. A) $20 B) $10 C) $5 D) $1 Answer: A Explanation: A) A country that consistently fails to enforce its own labor laws could be fined up to $20 million per violation. There are also a number of principles identifying broad areas of common agreement to protect the rights and interests of each workforce. Diff: 1 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 96) Data protection laws in ________ conflict directly with the Sarbanes-Oxley Act. A) United Kingdom B) Canada C) France D) Mexico Answer: C Explanation: C) Legal and political forces are unique to each country, and sometimes, the laws of one contradict those of another. For instance, the French authorities acknowledge that their data protection laws are in direct conflict with the U.S. Sarbanes Oxley Act, but they insist that multinationals comply with French law. Diff: 2 Page Ref: 397 Chapter: 14 Skill: Concept LO: 8

97) Taxes collected on goods that are shipped across national boundaries are called ________. A) fees B) tariffs C) quotas D) surtaxes Answer: B Explanation: B) Also affecting the environment in which global companies operate are certain tariffs and quotas that can greatly impact business profitability. Tariffs are taxes collected on goods that are shipped across national boundaries. Quotas are policies that limit the number or value of goods that can be imported across national boundaries. Diff: 1 Page Ref: 397 Chapter: 14 Skill: Concept LO: 8 98) Which of the following limits the number or value of goods that can be imported across national boundaries? A) import taxes B) tariffs C) luxury taxes D) quotas Answer: D Explanation: D) Quotas are policies that limit the number or value of goods that can be imported across national boundaries. Tariffs are taxes collected on goods that are shipped across national boundaries. Diff: 1 Page Ref: 398 Chapter: 14 Skill: Concept LO: 8 99) Which of the following protects American employees working overseas for U.S.controlled businesses? A) international employment laws B) U.S. employment laws C) local employment laws D) regional employment laws Answer: B Explanation: B) The global assignment of women and members of racial/ethnic minorities can involve legal issues, as these individuals may be protected by EEO regulations. American workers employed by American-controlled businesses operating overseas are still protected under the American employment laws. Diff: 1 Page Ref: 398 Chapter: 14 Skill: Concept LO: 9

100) In which of the following countries is sexual harassment categorized as a criminal offense? A) Thailand B) Germany C) Italy D) Spain Answer: C Explanation: C) Italy, the Philippines, Taiwan, and Venezuela define sexual harassment as a criminal offense, and penalties and remedies are provided in special statutory penal codes. In Germany, Spain, and Thailand, sexual discrimination law is based on the concept of termination indemnity that allows employees to terminate their employment relationships due to discrimination or harassment. Diff: 1 Page Ref: 398 Chapter: 14 Skill: Concept LO: 9 True/False and Essay Questions 1) The Foreign Corrupt Practices Act prohibits U.S. firms from bribing foreign officials. Answer: TRUE Explanation: The United States is rigorously enforcing the Foreign Corrupt Practices Act (FCPA), which prohibits U.S. firms from bribing foreign officials. Diff: 2 Page Ref: 382 Chapter: 14 Skill: Concept LO: 1 2) Since the Organization of Economic Cooperation and Development's 1997 convention made it a crime to bribe foreign officials, there has been strict enforcement of new laws by national governments. Answer: FALSE Explanation: Although the 35 signatories of the Organization of Economic Cooperation and Development's 1997 convention made it a crime to bribe foreign officials, there has been little enforcement of laws by national governments, other than by the United States. Not having the ability to use bribery as a tool of doing business has been costly for American companies. Diff: 2 Page Ref: 382 Chapter: 14 Skill: Concept LO: 1

3) Licensing entails selling abroad, either directly or indirectly, by retaining foreign agents and distributors. It is a way that many small businesses enter the global market. Answer: FALSE Explanation: Exporting entails selling abroad, either directly or indirectly, by retaining foreign agents and distributors. It is a way that many small businesses enter the global market. Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Diff: 1 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 4) Exporting is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Answer: FALSE Explanation: Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Exporting entails selling abroad, either directly or indirectly, by retaining foreign agents and distributors. It is a way that many small businesses enter the global market. Diff: 1 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 5) Licensing is typically used by manufacturing firms that want to globalize. Answer: TRUE Explanation: Licensing is an arrangement whereby an organization grants a foreign firm the right to use intellectual properties such as patents, copyrights, manufacturing processes, or trade names for a specific period of time. Licensing is usually limited to manufacturers. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2

6) A multinational corporation is based in one country and produces goods or provides services in one or more foreign countries. Answer: TRUE Explanation: A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). A multinational corporation directs manufacturing and marketing operations in several countries; these operations are coordinated by a parent company, usually based in the firm''s home country. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 7) An organization that has corporate units in a number of countries that are integrated to operate as one organization worldwide is a multinational corporation. Answer: FALSE Explanation: A multinational corporation (MNC) is a firm that is based in one country (the parent or home country) and produces goods or provides services in one or more foreign countries (host countries). Many firms have evolved beyond being multinational to becoming global corporations (GCs), an organization that has corporate units in a number of countries that are integrated to operate as one organization worldwide. Diff: 2 Page Ref: 385 Chapter: 14 Skill: Concept LO: 2 8) The functional areas in global human resource management are unlike those in domestic human resource management because of cultural and economic differences around the world. Answer: FALSE Explanation: The functional areas associated with effective global human resource management are similar to the ones they experience domestically. Although the five functions are the same, the manner in which they are implemented may differ. Diff: 2 Page Ref: 386 Chapter: 14 Skill: Concept LO: 2

9) A host-country national is an employee who is not a citizen of the country in which the firm's operation (or subsidiary) is located, but is a citizen of the country in which the organization is headquartered. Answer: FALSE Explanation: An expatriate is an employee who is not a citizen of the country in which the firm operations are located, but is a citizen of the country in which the organization is headquartered. A host-country national is an employee who is a citizen of the country where the subsidiary is located. Diff: 1 Page Ref: 386 Chapter: 14 Skill: Concept LO: 3 10) A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. Answer: TRUE Explanation: An expatriate is an employee who is not a citizen of the country in which the firm operations are located, but is a citizen of the country in which the organization is headquartered. A host-country national is an employee who is a citizen of the country where the subsidiary is located. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 11) Normally, the bulk of employees in international offices will be expatriates because they are less costly and more reliable than locals. Answer: FALSE Explanation: Normally, the bulk of employees in international offices will be hostcountry nationals. Not only are companies staffed by locals less expensive, but they also offer advantages from a cultural and business standpoint. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 12) In most cases, global firms employ host-country nationals with the long-term goal of turning over control to local management. Answer: TRUE Explanation: In most industries, host-country nationals comprise more than 98 percent of the workforce in the foreign operations of North American and Western European multinational companies. Hiring local people and operating the company like local companies whenever possible is good business. The ultimate goal of most foreign operations is to turn over control to local management. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept

LO: 3 13) A host-country national is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. Answer: FALSE Explanation: A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. A host-country national (HCN) is an employee who is a citizen of the country where the subsidiary is located. Diff: 1 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 14) An example of a third-country national would be an Italian citizen working for a French company in Germany. Answer: TRUE Explanation: A third-country national (TCN) is a citizen of one country, working in a second country, and employed by an organization headquartered in a third country. An example would be an Italian citizen working for a French company in Germany. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 15) With polycentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. Answer: FALSE Explanation: With ethnocentric staffing, companies primarily hire expatriates to staff higher-level foreign positions. When host-country nationals are used throughout the organization, from top to bottom, it is referred to as polycentric staffing. Diff: 2 Page Ref: 387 Chapter: 14 Skill: Concept LO: 3 16) Surveys indicate that safety and health concerns are the most common reasons for refusing an international assignment. Answer: FALSE Explanation: In a recent survey, 89 percent of those surveyed listed family concerns as the most common reason for assignment refusal. Spousal career concerns was listed by 62 percent. Employee health and safety concerns are less common reasons for refusing international assignments. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3

17) With geocentric staffing, employers try to hire the best regional person for a position. Answer: FALSE Explanation: Geocentric staffing is a staffing approach that uses a worldwide integrated business strategy. The firm attempts to always hire the best person available for a position, regardless of where that individual comes from. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 18) The best employees for global assignments typically have strong communication skills, cultural adaptability, and technical competence. Answer: TRUE Explanation: Expatriate selection criteria should include cultural adaptability, strong communication skills, technical competence, global experience, country-specific experience, interpersonal skills, and language skills. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 19) Japanese law prohibits criminal checks on Japanese citizens except when they are employed by U.S.-based firms. Answer: FALSE Explanation: Each country has its own laws, customs, and procedures for background screenings. For instance, Japanese law covers a person working at the Tokyo office of a U.S.-based company and includes privacy statutes that prohibit criminal checks on Japanese citizens. Diff: 2 Page Ref: 388 Chapter: 14 Skill: Concept LO: 3 20) For the most successful outcome, training and orientation for expatriates and their families should begin as soon as they arrive in their new foreign home. Answer: FALSE Explanation: The development process should start as soon as workers are selected definitely before they begin the global assignment. Organizations are recognizing that expatriate employees and their families face special situations and pressure that training and development activities must prepare them to deal with. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4

21) The most successful expatriate programs provide orientation before and after the international assignment and continual development opportunities during the assignment. Answer: FALSE Explanation: The ideal expatriate preparation and development program includes premove orientation and training, continual development, and repatriation orientation and training. Diff: 2 Page Ref: 390 Chapter: 14 Skill: Concept LO: 4 22) Relocation is the process of bringing expatriates home. Answer: FALSE Explanation: Orientation and training are also necessary prior to repatriation, which is the process of bringing expatriates home. Relocation is the process of moving an employee to another state or country. Diff: 1 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4 23) According to surveys, less than 5% of repatriated employees leave a firm soon after an international assignment ends. Answer: FALSE Explanation: According to a study by a partnership between PricewaterhouseCoopers and Cranfield University School of Management, more than 25 percent of repatriated employees leave the company within one year after an international assignment ends. Reasons given for leaving include they were not being properly prepared to return to their work and not being able to use skills that they learned abroad. Diff: 2 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4 24) Experts recommend giving returning expatriates jobs with less responsibility than their international assignments to help ease the repatriation process. Answer: FALSE Explanation: Upon an expat's return from an international assignment, employers should make every effort to find a place in the organization that will use the experience gained during the assignment. Also, the returning expat should be given a job with at least the same degree of responsibility and authority but not less. Diff: 2 Page Ref: 391 Chapter: 14 Skill: Concept LO: 4

25) E-learning is less costly than instructor-led training and serves as a re-usable tool. Answer: TRUE Explanation: E-learning costs less than classroom training. In addition, a classroom course cannot be re-visited after its completion, but an e-learning course can be used as a reference tool and returned to when team members feel the need to refresh their memories. Diff: 2 Page Ref: 391-392 Chapter: 14 Skill: Concept LO: 4 AACSB: Use of IT 26) Many companies offer training courses only in English, which may explain why most employees at global firms indicate that English is important for their careers. Answer: TRUE Explanation: According to research, 91% of employees of global corporations said that English is "required" or "important" in their jobs, and that the need is increasing dramatically. Many companies offer courses only in English or in English and one other language, usually Spanish. Diff: 2 Page Ref: 391-392 Chapter: 14 Skill: Concept LO: 4 AACSB: Multicultural and Diversity 27) Although virtual teams save global corporations money on travel expenses, such teams are typically inefficient because of poor communication skills. Answer: FALSE Explanation: Virtual teams save firms both time and money because travel is not required, and they enable companies to accomplish things more quickly and efficiently. Communication is a problem at times but does not necessarily impede productivity. Diff: 2 Page Ref: 392 Chapter: 14 Skill: Application LO: 4 AACSB: Use of IT 28) In most cases, compensation for host-country nationals tends to be twice the prevailing wage rate in the area. Answer: FALSE Explanation: Globally, the question of what constitutes a fair day's pay is not as complicated as it is in the United States; normally, it is slightly above the prevailing wage rates in the area. The same is often true of benefits and nonfinancial rewards. Firms hire locals to save money in many cases. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Concept

29) The communist system in China rewarded additional pay to hard workers, and modern global firms find that Chinese workers who are paid by the hour work extra hard. Answer: FALSE Explanation: In mainland China, workers who are paid by the hour often do not work hard. Under the communist system, working harder than anyone else did not result in additional pay. Therefore, there was no reason to do so. Diff: 2 Page Ref: 393 Chapter: 14 Skill: Concept LO: 5 30) Changes to the U.S. tax code do not affect expatriates, whose compensation depends solely on host-country wage standards. Answer: FALSE Explanation: Changes to the U.S. tax code affect expatriate lifestyles. For expatriate managers and professionals, compensation is more complex than simply paying at or slightly above local host-country compensation rates. Diff: 2 Page Ref: 394 Chapter: 14 Skill: Concept LO: 5 31) Regarding tax equalization payments, U.S. citizens living overseas can exclude up to $50,000 of income earned abroad. Answer: FALSE Explanation: Regarding tax-equalization payments, U.S. citizens living overseas were able to exclude up to $91,400 of gross income earned abroad in 2009 but the IRS adjusts the exclusion amount yearly for inflation. Also, credits against U.S. income taxes are given for a portion of the foreign income taxes paid by U.S. expatriates beyond the $91,400 level. Diff: 2 Page Ref: 394 Chapter: 14 Skill: Concept LO: 5 32) The recent trend in expatriate compensation is using the balance-sheet approach and paying expatriates premiums for taking overseas assignments. Answer: FALSE Explanation: In the past, expats regularly received a premium for taking an overseas assignment. However, this benefit is disappearing from more recent programs. Organizations have moved away from the traditional expat programs. In the past, you had the typical U.S.-based balance-sheet approach with fully equalized employees and a strong focus on keeping employees on home-country compensation and benefits. Now, expatriates are moved to the host country's compensation package and treated like local employees. Diff: 2 Page Ref: 394 Chapter: 14

Skill: Concept LO: 5 33) In many cases, private companies handle the evacuation and care of injured employees working in global facilities. Answer: TRUE Explanation: Often, evacuation and care of injured employees is done through private companies. Medical emergencies are frightening under any circumstances, but when an employee becomes sick or injured abroad, it can be a traumatic experience. Diff: 2 Page Ref: 395 Chapter: 14 Skill: Concept LO: 6 34) Global competition has forced all European Union labor organizations and lawmakers to revoke codetermination laws. Answer: FALSE Explanation: Codetermination, which requires firms to have union or worker representatives on their boards of directors, is very common in European countries. Even though they face global competition, unions in several European countries have resisted changing their laws and removing government protections. Laws make it hard to fire workers, so companies are reluctant to hire. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 35) Chilean textile unions are allowed to participated in collective bargaining, but miner and carpenter unions are prohibited from the activity. Answer: FALSE Explanation: In some South American countries such as Chile, collective bargaining for textile workers, miners, and carpenters is prohibited. And unions are generally allowed only in companies of 25 workers or more. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 36) In Chile, unions are generally allowed only in companies of 15 workers or more. Answer: FALSE Explanation: In some South American countries such as Chile, collective bargaining for textile workers, miners, and carpenters is prohibited. And unions are generally allowed only in companies of 25 workers or more. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7

37) NAFTA facilitates trade across boundaries within North America. Answer: TRUE Explanation: The North American Free Trade Agreement (NAFTA) between Canada, Mexico, and the United States facilitated the movement of goods across boundaries within North America. Although no agreement is perfect, NAFTA has opened markets and established a record of growth and success that could prove key to a strong recovery. It forms a free-trade zone of more than 400 million people with a combined gross domestic profit of about $12 trillion dollars. Diff: 2 Page Ref: 396 Chapter: 14 Skill: Concept LO: 7 38) The U.S. and French governments have similar data protection laws, which eases compliance issues for U.S. based MNCs operating in France. Answer: TRUE Explanation: Legal and political forces are unique to each country, and sometimes, the laws of one contradict those of another. For instance, the French authorities acknowledge that their dataprotection laws are in direct conflict with the U.S. SarbanesOxley Act, but they insist that multinationals comply with French law. Diff: 2 Page Ref: 397 Chapter: 14 Skill: Concept LO: 8 39) Tariffs are taxes collected on goods that are shipped across national boundaries. Answer: TRUE Explanation: Also affecting the environment in which global companies operate are certain tariffs and quotas that can greatly impact business profitability. Tariffs are taxes collected on goods that are shipped across national boundaries. Diff: 1 Page Ref: 397 Chapter: 14 Skill: Concept LO: 8