Spring Semester 2002

Professor Hendricks

LIR 445

1st Half Exam

            Please provide the following at the top of your exam booklet:  your name, your social security number and your group. Please label all parts of the questions. All questions will count equally in your total grade. YOU MUST COMPLETE QQUESTION 1.  You can complete all five questions or you can complete four of the five questions. If you complete four questions, your grade on the other question will be the same as the grade given to your group for the question that you turned in on Tuesday. If you complete five questions, your grade will be based on these five questions.  Each question is worth 30 points.  You should put the number of the questions that you have completed in the upper right of your exam.  The numbers should be vertical so that I can place the number of points next to each.  They do not need to be in order.

 REQUIRED

1.                   Hiring on the basis of any individual characteristic can lead to statistical discrimination.

    1. Explain the basis for this statement. (8 points)  Give an example of a characteristic that is not usually associated with discrimination that could be used during hiring that could lead to statistical discrimination. (2 points)
    2. If the characteristic is not a group identity (minority status, disability status, etc.) for a group that is covered by U.S. discrimination laws, what would be required for use of the characteristic to lead to possible legal discrimination under U.S. discrimination laws? (5 points)
    3. Suppose that the characteristic is not membership in a covered group.  If the court holds that there is a basis for a suit against the employer, what must the employer do to defend against the suit? (5 points)
    4.  
      1. If the employer makes a positive defense against the suit, how might it be possible for statistical discrimination to still exist?  (Hint:  we covered two major reasons) (6 points)
      2. What would you look for as evidence for these reasons? (4 points)

CHOOSE 3 of 4

2.                   Explain how the following would influence the amount of resources that you would use in the hiring process (each is worth 10 points):

    1. The union of your blue collar workers is decertified.
    2. A new technology is taking over your industry.  It reduces the labor intensity of the process by doing many things by machine that were previously done by hand.  The new machinery in this technology is expense and requires training.
    3. You have lost a number of your top people (who are difficult to replace), but you have plenty of applicants for jobs.  Ultimately, you want some of your applicants to replace these people.  This is quite important now.

3.                   How does the state of the labor market influence your hiring costs, the wages that you pay and the benefits that you offer.  (Hint: For the most points, you must consider examples of different types of jobs.  The state of the labor market may influence the three things quite differently.) (30 points)

4.        Using variable pay methods, including bonus payments, pay by piece and other contingent pay schemes has both benefits and problems.  Identify these benefits (two major areas) and problems.  Use the Lincoln Electric, RKO-Warner and Big Mac cases (must use all three) as examples in your explanation of these problems (and cures for the problems) and benefits.

 

5.        Three companies have 3 different pay plans for their vice presidents (VP):

a.       Base salary=$200K; At performance rating of 5 or greater, there is an increase in salary of $20K for each performance point.  At performance 9, there is a $100K bonus in addition to the $20K for moving from level 8.  The $20K per rating point continues until the maximum VP salary of $500K.  Everyone has the title VP.

b.       There are three salary ranges:  VP-$480K (must have rating 10+) Associate VP-$280K (Ratings 6-9) Assistant VP-$200K (Ratings 0-5

c.       There are three salary ranges:  VP-$480K (must be with the company 7+ years) Assoc. VP-$280K (3-6 years) Asst.VP-$200K (years 1 and 2).

All ratings are done based only on the person’s performance, not in comparison to others in the firm.  Everyone starts at zero rating points in companies a and b.

Graph each of these plans separately.  Your axes need to be labeled.  The axes also must contain numbers so that your line of plan is approximately correct. (15 points)

A superstar is expected to gain 2 rating points/year.  At the end of the first year, she should have a rating of 2; at the end of the second year her rating should be 4.  For the three questions below (each worth 5 points), choose from the following choices.  Give a one or two sentence explanation of your choice.

I  Company a only                                                IV Company a or c                       VII Company a or b or c

II Company b only                                                V Company a or b

III Company c only                                               VI Company b or c

Question 1:  Which company does a superstar select if she plans to be with the company 1.5 years?

Question 2:  Which company does a superstar select if she plans to be with the company 5 years?

Question 3:  Which company does a superstar select if she plans to be with the company 8 years?