Chapter 9

Strategic Compensation, 7e (Martocchio)
Chapter 9 Discretionary Benefits
1) In 2010, discretionary benefits accounted for as much as what percentage of an employer's

total payroll costs?
A) 30.5%
B) 50.0%
C) 60.5%
D) 75.0%
Answer: A
Difficulty: Moderate
Type: Concept
Learning Obj: 1
2) Discretionary benefits are generally divided into which three categories?

A) health benefits, intellectual enhancements, paid time-off
B) pension benefits, protection programs, health benefits
C) services, paid time-off, protection programs
D) intellectual enhancements, health benefits, services
Answer: C
Type: Concept
Learning Obj: 1
3) Which of the following is an example of a welfare practice?

A) overtime pay
B) regular wages
C) workers' compensation laws
D) employee recreational areas
Answer: D
Type: Concept
Learning Obj: 1
4) You broke your neck at work. The company called to inform you that they had to switch your
benefits from the short-term disability account to the long-term account. That means you've
probably been off work around how long?
A) 6 months
B) 12 months
C) 1 month
D) 18 months
Answer: A
Difficulty: Easy
Type: Application
Learning Obj: 2
1
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
5) Which of the following is NOT a condition manifesting short-term disability?
A) pregnancy
B) recovery from surgery
C) recovery from illness
D) recovery from major injuries
Answer: C
Difficulty: Easy
Type: Concept
Learning Obj: 2
6) This is a mental or physical disability for which medical advice, diagnosis, care, or treatment
was received, during a designated period preceding the beginning of disability insurance
coverage.
A) preeligibility condition
B) exclusive condition
C) eliminating condition
D) preexisting condition
Answer: D
Type: Concept
Learning Obj: 2
7) Which of the following is a feature of short-term disability plans?

A) preexisting conditions
B) inclusion provisions
C) partial disabilities inclusion
D) waiting period
Answer: A
Type: Concept
Learning Obj: 2
8) Self-inflicted wounds and drug dependency are generally considered as what in most short-
term disability insurance plans?
A) partial disability provisions
B) exclusion provisions
C) elimination provisions
D) preexisting conditions
Answer: B
Type: Concept
Learning Obj: 3
2
9) Long-term disability benefits usually pay employees which range of monthly pretax salary?
A) 10% to 20%
B) 30 %to 45%
C) 50% to 70%
D) 80% to 95%
Answer: C
Type: Concept
Learning Obj: 2
10) Companies that offer long-term disability insurance plans only require an elimination period
that runs how long?
A) 12-18 months
B) 1-2 months
C) 8-12 months
D) 3-6 months
Answer: D
Type: Concept
Learning Obj: 2
11) Employer sponsored disability plans supplement legally required benefits established by
which law?
A) COBRA
B) ERISA
C) NLRA
D) OASDI
Answer: B
Type: Concept
Learning Obj: 2
12) What is the most common type of life insurance policy offered by companies?
A) group life insurance
B) term life insurance
C) whole life insurance
D) universal insurance
Answer: B
Difficulty: Difficult
Type: Concept
Learning Obj: 2
3
13) By what percentage have total healthcare expenditures risen since 1960?
A) 100%
B) 500%
C) 2000%
D) 5000%
Answer: D
Difficulty: Easy
Type: Concept
Learning Obj: 2
14) Unscheduled absenteeism has climbed to its highest levels in XYZ Company last month. In
order to reduce the costs associated with unscheduled absenteeism HR professionals in XYZ
Company decided to change their paid time off policy. This company used to grant each
employee 10 vacation days, 5 paid days for sick leave, and 4 days for personal leave. With the
new policy, this company combines vacation, sick leave, and personal leave policies into one
single paid time off policy (i.e., 19 days). The management decided to keep funeral leave as a
stand-alone policy. What is XYZ Company's new policy called?
A) integrated paid time off
B) combined paid time off
C) sabbatical leave
D) volunteer leave
Answer: A
Type: Application
Learning Obj: 3
15) Which of the following is a characteristic of integrated paid time off policies?
A) Such policies distinguish among reasons for absence
B) Individuals have to justify reason for taking time off
C) Holiday, vacation, sick leave, and personal leave are combined
D) Can lead to increased unscheduled absences
Answer: C
Type: Concept
Learning Obj: 3
16) This policy allows employees to schedule time off without having to justify the reasons, and
is more effective in controlling absenteeism than other types of absence control policies.
A) personal paid time off
B) social service leaves
C) sick leaves
D) integrated paid time off
Answer: D
Difficulty: Easy
Type: Concept
Learning Obj: 3
4
17) Which of the following is an aspect of voluntary leaves to meet business needs?
A) given in times of downsizing
B) they are paid leaves
C) given in times of low production
D) they are extended periods of time off
Answer: B
Type: Concept
Learning Obj: 3
18) The giving of one's time to support a meaningful cause is better known as this.
A) volunteerism
B) self-service
C) cause-oriented efforts
D) social empowerment
Answer: A
Type: Concept
Learning Obj: 3
19) Which of the following is true about providing paid time off for volunteer services?
A) They often help promote the company's overall image in the public eye.
B) They have a negative correlation with employee retention.
C) They make it more difficult to balance work and life demands.
D) They take away from commitment to the company.
Answer: A
Type: Critical Thinking
Learning Obj: 3
20) XYZ Company provides a program for its employees who need help dealing with the effects
of domestic violence. XYZ Company can offer this kind of service through which of the
following programs?
A) family assistance program
B) employee assistance program
C) wellness program
D) employer assistance program
Answer: B
Difficulty: Easy
Type: Application
Learning Obj: 4
5
21) The approximate annual cost of employee assistance programs (EAPs) is usually no more
than how much?
A) $200
B) $100
C) $60
D) $10
Answer: C
Type: Concept
Learning Obj: 4
22) Referrals to on-site child care or elder care centers and company-sponsored day care
programs are examples of which type of service?
A) employee assistance programs
B) family assistance programs
C) day care
D) cessation programs
Answer: B
Type: Concept
Learning Obj: 4
23) This type of flexible work schedule allows employees to work four 10-hour days a week.
A) flextime
B) compressed work week
C) job sharing
D) relaxed work standards
Answer: B
Difficulty: Easy
Type: Concept
Learning Obj: 4
24) Full or partial reimbursement of training costs is which type of benefit?

A) financial assistance
B) employee assistance
C) tuition reimbursement
D) sabbatical leave
Answer: C
Type: Concept
Learning Obj: 4
6
25) Due to a recent merger with another major airline, ABC Airlines decided to layoff some of its
employees. ABC Airlines offers training sessions to teach job search and interviewing techniques
to those laid off employees. What kind of service was provided by this airline?
A) employee assistance program
B) tuition reimbursement
C) wellness program
D) outplacement assistance
Answer: D
Difficulty: Easy
Type: Application
Learning Obj: 4
26) Outplacement assistance programs are best suited for which condition?
A) new plant openings
B) mergers and acquisitions
C) workforce increases
D) global operations
Answer: B
Type: Concept
Learning Obj: 4
27) XYZ Company tries to influence employee food choices by stocking vending machines with
nutritional food. They also offer programs to teach stress reduction techniques. What kind of
discretionary benefit program does this company sponsor?
A) family assistance program
B) employee assistance program
C) wellness program
D) employer assistance program
Answer: C
Difficulty: Easy
Type: Application
Learning Obj: 4
28) Which of the following would be considered an act as part of a company's wellness program?
A) putting a soda machine in the break room
B) giving out cigars to expecting fathers
C) offering anti-smoking courses
D) giving employees free pizza at lunch
Answer: C
Difficulty: Easy
Type: Application
Learning Obj: 4
7
29) Smoking cessation, stress reduction, and weight loss programs are examples of which type of
employee benefit program?
A) employee assistance
B) employee welfare
C) wellness
D) employee education
Answer: C
Type: Concept
Learning Obj: 4
30) Which of the following is a strategic purpose fulfilled by discretionary benefits?

A) accommodating a diverse workforce
B) becoming similar to competing firms
C) encouraging employee entitlements
D) keeping a fixed workforce
Answer: A
Type: Concept
Learning Obj: 4
31) In the 1940s and 1950s, companies began offering ________ as an alternative to pay hikes in
order to motivate employees through greater work benefits.
Answer: welfare practices
welfare benefits
Type: Concept
Learning Obj: 1
32) ________ replaces income for employees who become unable to work because of sicknesses
or accidents.
Answer: Disability insurance
Difficulty: Easy
Type: Concept
Learning Obj: 2
33) The ________ is the time between the initial date of hire and the time that coverage in a
disability insurance program begins.
Answer: preeligibility period
Type: Concept
Learning Obj: 2
8
34) An ________ refers to the minimum amount of time that an employee must wait after
becoming disabled before disability insurance payments begin.
Answer: elimination period
Type: Concept
Learning Obj: 2
35) ________ life insurance gives protection to the beneficiaries of employees based on the
insurance feature of term life insurance and a more flexible savings or cash accumulation plan
than found in whole life insurance plans.
Answer: Universal
Difficulty: Easy
Type: Concept
Learning Obj: 2
36) Retirement programs, or ________, provide income to employees and their beneficiaries
during some or all of their retirement.
Answer: pension plans
Type: Concept
Learning Obj: 2
37) ________ are paid time off for professional activities such as a research project or a
curriculum development.
Answer: Sabbatical leaves
Type: Concept
Learning Obj: 3
38) ________ programs help bring employees to the workplace and back home again by using
more energy-efficient forms of transportation.
Answer: Transportation services
Difficulty: Easy
Type: Concept
Learning Obj: 4
39) ________ are career and personal programs designed to develop the job-hunting skills and
strategies of employees being laid off or terminated.
Answer: Outplacement assistance
Type: Concept
Learning Obj: 4
9
40) Employers sponsor ________ to promote employees' physical and psychological health.
Answer: wellness programs
Difficulty: Easy
Type: Concept
Learning Obj: 4
41) What are the components of discretionary benefits? Provide two examples for each
component of discretionary benefits.
Answer: There are three types of discretionary benefits: 1) protection, 2) paid time off, 3)
services.
Protection: One example can be income protection programs such as disability insurance, life
insurance, or retirement programs. Another protection program example is health protection
programs.
Paid time off: These policies compensate employees when they are not performing their work
duties. Examples: holidays, sick leave.
Services: There are a variety of services that companies provide such as wellness programs
(smoking cessation, stress management) and family assistance programs (flexible scheduling,
day care).
Difficulty: Easy
Type: Synthesis
Learning Obj: 2, 3, 4
42) What kind of discretionary benefits would help companies to have better control over
absenteeism?
Answer: Integrated paid time off policies combine holiday, vacation, sick leave, and personal
leave policies into a single paid time off policy. This allows employees to schedule time off
without justifying the reasons. Family assistance programs can also be helpful in controlling
employee absence. Flexible scheduling and leave allow employees to take time off during work
hours to take care of relatives or emergency situations. Flexible scheduling such as compressed
work weeks and flextime help employees to balance the demands of work and family.
Type: Synthesis
Learning Obj: 3, 4
10
43) What are the implications of discretionary benefits for strategic compensation?
Answer: Answer should include the following main points:
Discretionary benefits, like core compensation, can contribute to a company's competitive

advantage.
Management can use discretionary benefit offerings to promote particular employee behaviors
that have strategic value.
A company can use discretionary benefits to distinguish itself from the competition.
Discretionary benefits also serve a strategic purpose by accommodating the needs of a diverse
workforce.
Finally, the tax advantage afforded companies from offering particular discretionary benefits has
strategic value.
Type: Critical Thinking
Learning Obj: 4
11

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Strategic Compensation, 7e (Martocchio)

Chapter 9 Discretionary Benefits

1) In 2010, discretionary benefits accounted for as much as what percentage of an employer's

2) Discretionary benefits are generally divided into which three categories?

3) Which of the following is an example of a welfare practice?

7) Which of the following is a feature of short-term disability plans?

24) Full or partial reimbursement of training costs is which type of benefit?

30) Which of the following is a strategic purpose fulfilled by discretionary benefits?

Discretionary benefits, like core compensation, can contribute to a company's competitive

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