Answers and explanations guide 2 business

1. _____ is mostly concerned with establishing internal pay equity.
2. Grenstall Inc., a software development firm, has adopted a new job evaluation system in which managers are asked to objectively quantify the value of eight to ten compensable factors of each job in the organization. These compensable factors are based on their importance to that particular job and may include skill, physical effort, mental effort, and so forth. In this system, jobs are compared against a standard of key ratings. Which of the following job evaluation systems is Grenstall Inc. most likely using in the given scenario?
3. Which of the following statements is true of life-cycle benefits?
4. The Employee Retirement Income Security Act (ERISA):
5. prevents organizations from establishing private pension plans.
   b. provides protection for the funding underlying pension plans.
   c. includes provisions for minimum wages and child labor.
   d. makes vesting rights operational after 3 years of service at the most.

_____ is mostly concerned with establishing internal pay equity.

1. A pay survey
   Job evaluation
   c. Pay inversion
   d. A maturity curve

b
Explanation
Job evaluation is mostly concerned with establishing internal pay equity. Several job-evaluation techniques and methods have been established.

Grenstall Inc., a software development firm, has adopted a new job evaluation system in which managers are asked to objectively quantify the value of eight to ten compensable factors of each job in the organization. These compensable factors are based on their importance to that particular job and may include skill, physical effort, mental effort, and so forth. In this system, jobs are compared against a standard of key ratings. Which of the following job evaluation systems is Grenstall Inc. most likely using in the given scenario?

1. The market-basket analysis method
   The classification system
   c. The factor-comparison method
   d. The point system

d
Explanation
The point method is an extension of the factor comparison method. Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument. The points for each factor are summed to form a total point score for the job.

Which of the following statements is true of life-cycle benefits?

1. They can be availed only at the end of an employee’s service with the organization.
   They refer to fitness workshops that help employees stay healthy.
   c. They include child-care and elder-care benefits.
   d. They are benefits that an employee’s family receives after the employee’s death.

C
Explanation
Life cycle benefits are defined as a part of the compensation package offered to the employees according to their part of life cycle; which means for instance to their age or their social situation.[1] More generally spoken they are “designed to meet the needs of employees throughout the stages of life”.

The Employee Retirement Income Security Act (ERISA):

1. prevents organizations from establishing private pension plans.
   provides protection for the funding underlying pension plans.
   c. includes provisions for minimum wages and child labor.
   d. makes vesting rights operational after 3 years of service at the most.

B
Explanation
Before the enactment of ERISA, however, the tax code contained no mandate for the Internal Revenue Service (IRS) to police the actuarial soundness of pension plans, and provided little protection for the pension rights of individual participants.

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