Compensation management - Questions and answers for Internal Assessment

1. COMPENSATION MANAGEMENT
MBA - II Year
Questions and Answers for Internal Assessment-I
Prepared by - Dr. G C Mohanta, BE (Mech), MSc (Engg.), MBA, PhD (Mgt), Professor
SECTION – A
Answer all questions. Each question carries ½ mark.
Write the choice in the given bracket for the following:
1. Wage differentials depend on the following factor / factors --------------------------- ( a )
(a) Difference in labour efficiency (b) Social esteem (c) Occupation (d) All (e) None
2. Base/Bases for traditional pay system is/are ---------------------------------------------- ( c )
(a) Cost of living and labour market (b) Base wage or salary (c) Both of these (d) None
3. Basic compensation system/systems is /are ---------------------------------------------- ( c )
(a) Time rate system (b) Piece rate system (c) Both of these (d) None
4. Components of wage & salary are ------------------------------------------------------------ ( d )
(a) Basic wage (b) Overtime wage (c) Dearness allowance (d) All of these (e) None
5. Base/Bases for Modern Pay System is/are ---------------------------------------- (b )
(a) Base wage or salary (b) Variable pay (c) Both of these (d) None
6. Employees are paid incentives on 'Output' basis if ----------------------------( d )
(a) Units of output can be measured (b) Direct relationship exists between employee efforts
and quantity of output (c) Jobs are standardised (d) All of these (e) None
7. Job Analysis is used in compensation to identify or determine --------------------------- ( d )
(a) Skill levels (b) Responsibilities (c) Required level of education (d) All of these (e) None
8. Differential piece rate system is suitable where ------------------------------------- ( d )
(a) Fixed costs are higher in proportion to variable cost (b) It is possible to determine
production accurately (c) There are standardised methods of production (d) All (e) None
9. Job description identifies for a job ----------------------------------------------------------- ( d )
(a) Tasks (b) Duties (c) Responsibilities (d) All of these (e) None
10. Group incentive plans may not become successful due to ---------------------------- ( d )
(a) Unevenness in performance of different members of groups (b) Ill-feeling among group
members (c) No recognition for individual performance (d) All of these (e) None
11. Compensation management is the establishment and implementation of sound policies
and practices through ------------------------------------------------------------------------- (c)
(a) Job evaluation (b) Surveys of wages & salaries (c) Both of these (c) None

2. 12. Incentive pay is --------------------------------------------------------------------------- (b)
(a) Any reward/benefit given to employee over and above the wage or salary (b) Provident
fund, gratuity & pension (c) Company car (d) All of these (e) None
13. Pay for knowledge is/are------------------------------------------------------------------ (b)
(a) Job based (b) Skill & Competency based (c) Both of these (d) None
14. Perquisite/Perk is ---------------------------------------------------------------------------- ( c )
(a) Any reward/benefit given to employee over and above the wage or salary (b) Provident
fund, gratuity & pension (c) Company car (d) All of these (e) None
15. Skill based pay is tied to ------------------------------------------------------------------- ( d )
(a) Skills (b) Abilities (c) Knowledge (d) All of these (e) None
16. Competency/Competencies is/are ------------------------------------------------------ (e )
(a) Expertise (b) Knowledge (c) Self concept (d) Traits (e) All of these (f) None
17. Total compensation/reward consists of ----------------------------------------------- (d)
(a) Direct financial compensation (b) Indirect financial compensation (c) Non-financial
compensation (d) All of these (e) None
18. Factor/ Factors influencing pay is/are ------------------------------------------------ (e)
(a) Market forces (b) Organisation policy (c) Work value (d) Individual performance
(e) All of these (f) None
19 Fringe Benefit/Benefits is /are ------------------------------------------------------ (e)
(a) Wage/Salary (b) Company car (c) Stock options (d) All of these (e) None
20. Method/ Methods of Wage Surveys is/are ---------------------------------------- (d )
(a) Personal Interviews (b) Mailed Questionnaires (c) Telephone Inquiries (d) All (e) None
SECTION – B
Answer all questions. Each question carries ½ mark.
Fill in the Blanks for the following:
1. Life Insurance, Medical insurance or reimbursement of medical bills are considered as
part of Fringe Benefit.
2. Variable pay is tying pay to individual, group or organisational performance.
3. Any imbalance in input-output relationship in the incentive payment can result in
dissatisfaction.
4. Differential piece rate system is based on Incentive Scheme.
5. Broadbanding is having salary grades and ranges in few wide bands.
6. In Taylor’s differential piece rate system, high piece rate is applicable if production is
more than standard.

3. 7. Business Strategy defines the direction in which organization is going in relation to its
environment in order to achieve its objectives.
8. For a normal adult the net intake of calories should be 2700.
9. Compensation Philosophy consists of a set of beliefs which underpin the
reward/compensation strategy of the organization and govern the reward policies.
10. Basic purpose of Wage and Salary administration is to establish and maintain an equitable
salary structure.
11. Compensation Strategy defines the intentions of the organization on reward policies,
processes and practices to ensure availability of skilled, competent and well-motivated
workforce.
12. Compensation should be proportional to efficiency & result.
13. Basis for establishing compensation plan is pay structure.
14. Generally, the strong & more powerful is the trade union, the higher are the wages.
15. Objective of Pay Plan is to ensure Internal, External, Individual & Process Equity.
16. In piece rate & time rate combination, if payment is calculated on the basis of guaranteed
payment and if number of pieces fall below the minimum wages, the employee is paid by
time rate.
17. Payment by result is an incentive scheme.
18. In high profit making organisation compensation paid is relatively higher.
19. Fredrick W. Taylor in Scientific Management focused on the basic elements of the job.
20. Compensation is the money and other benefits received by an employee for providing
service.
SECTION – C
Answer all questions. Each question carries One mark.
1. Compensation pay is direct cash payments, indirect payments (employee benefits) and
incentives to motivate employees to strive for higher levels of productivity
2. Seniority Pay is Salary or wages paid to an employee based on his/her seniority or length
of service with an organization
3. Fringe Benefits are the benefits given to an employee, such as, provident fund
contribution, payment of gratuity & pension, medical benefits, accident relief, health and life
insurance, provision of uniforms, Canteens & recreation facilities, etc.

4. 4. Pay plans are the compensation plans for the employees of and organisation, consisting of
base wage/salary, incentives, fringe benefits and perquisites.
5. Incentive pay is any reward of benefit given to the employees over and above the wage or
salary with a view to motivating them to excel in their work.
6. Team based pay is the incentive pay given to the employees of a team or group for
encouraging team-working and co-operative behaviour and improving the performance of the
group.
7. Merit pay is the additional pay given to an employee for making higher performance.
8. Job analysis is the systematic formal study of the duties and responsibilities of the jobs
and seeks to obtain important and relevant information about the nature and level of the work
performed.
9. Job evaluation is the methods and practices of ordering the jobs or positions with respect
to their value or worth to the organization.
10. Longevity pay is the additional pay given to an employee, based on his/her length of
service, who has reached to the maximum pay grade and there is no likely-hood for him/her
to move to the higher grades.