c
A pay structure specifically designed to energize, direct, or
control employees' behavior is known as:
A. monthly salary.
B. wage.
C. incentive pay.
D. annual salary.
E. fixed pay.
·
C. incentive pay.
Vactin Motors, an automobile company, ties individual
performance, profits, and other measures of employees' success to a particular
form of pay. This form of pay is influential because the amount paid is linked
to certain predefined behaviors or outcomes. Which of the following is
exemplified in this scenario?
·
A. Minimum wage
B. Overtime pay
C. Incentive pay
D. Piecework rates
E. Bonus payment
·
C. Incentive pay
A feature of an effective incentive pay plan is that it should:
A. have performance measures based on employees' requirements.
B. not be provided as a direct percentage of employees' performance.
C. encourage group performance and sideline individual achievements.
D. be the same for all employees in the organization.
E. have performance measures linked to the organization's goals.
·
E. have performance
measures linked to the organization's goals.
The many kinds of incentive pay fall into three broad
categories: _____
A. incentives linked to individual, group, or organizational performance.
B. incentives linked to output, productivity, or quality of a product.
C. pay linked to goals, focus, or achievements of an organization.
D. pay related to base salary, bonus, and travel allowance.
E. incentives obtained in the form of company shares, gift coupons, and trial
products.
·
incentives linked to
individual, group, or organizational performance.
Which of the following is a disadvantage of using incentive
plans?
A. The goals of an incentive plan may interfere with other management goals.
B. The goals of incentive plans can seldom be linked to particular outcomes or
behaviors.
C. Incentive plans cannot be used to promote group and organizational
performance.
D. Incentive plans cause dissatisfaction among the non-performing employees in
the organization.
E. Incentive plans are not very effective for jobs other than sales and
service.
·
The goals of an
incentive plan may interfere with other management goals.
For incentive pay to motivate employees to contribute to the
organization's success, the pay plans must be well designed. Which of the
following statements would strengthen this argument?
A. Performance measures are to be linked to the individual's goals.
B. Employees are given unattainable performance standards.
C. Employees will value the rewards or incentives that are being offered.
D. Employees are given limited resources to meet their goals.
E. The pay plan takes into account that employees will accept all goals
irrespective of their rewards.
·
C. Employees will
value the rewards or incentives that are being offered.
Which of the following types of incentive plans are used to
reward individual performance?
A. Gainsharing
B. Merit pay
C. Scanlon plan
D. Profit sharing
E. Stock ownership
·
B. Merit pay
Token Inc. is an envelope manufacturer based in Dallas. The
employees of the organization receive incentive pay based on the amount of work
produced. If the output of an employee is more than the average production
volume, then the organization pays an incentive in addition to wages and
salaries. In this case, which of the following incentives is offered by Token
Inc.?
A. Piecework rate
B. Minimum wage
C. Employee labor
D. Training stipend
E. Group bonus
·
Piecework rate
Jules & Co., a smartphone manufacturing company, provides
wages to its employees based on the number of smartphones the workers assemble.
The more the employees assemble, the more they earn. This type of plan is
called:
A. piecework rate plan.
B. merit pay plan.
C. Scanlon plan.
D. profit sharing plan.
E. standard hour plan.
·
piecework rate plan.
A piecework rate plan is best suited for:
A. HR professionals.
B. executives.
C. production workers.
D. managers.
E. knowledge workers.
·
C. production workers.
Wayan Inc., a health care insurance company, pays an incentive
based on the average work per hour. Wayan pays $10 for billing 20 medical
charts per hour. An employee who bills 30 charts would earn $15 per hour.
Hence, Wayan pays the same rate per chart no matter how many charts an employee
produces per hour. Which of the following is being exemplified in this
scenario?
A. Straight piecework plan
B. Skill-based pay system
C. Merit pay system
D. Quality-based pay system
E. Straight commission plan
·
Straight piecework
plan
An employee at CellWorks who produces 10 components in an hour
earns $9 ($.90 × 10) per hour, while another employee who produces 15
components earns $13.50 ($.90 × 15). This is an example of a:
A. commission plan.
B. differential piece rate plan.
C. direct commission plan.
D. profit sharing plan.
E. straight piecework plan.
·
E. straight piecework
plan.
_____ refers to an incentive pay in which the wage paid is
higher when a greater amount is produced.
A. Profit sharing
B. Differential piece rate
C. Gain sharing
D. Scanlon pay
E. Merit pay
·
B. Differential piece
rate
Which of the following statements is true about a piecework rate
plan?
A. It can be used for all types of jobs and in all types of industries.
B. It is best suited for complex jobs and tasks.
C. It can be used to encourage team work and collaboration.
D. It has a direct link between the work done by the employee and the amount
earned.
E. It encourages the employee's peers to perform as well and reduces conflicts.
·
D. It has a direct
link between the work done by the employee and the amount earned.
The differential piece rates system refers to:
A. an incentive pay plan in which the employer pays the rate per piece based on
the difference in performance of employees.
B. a system that gives employees a bonus if the ratio of labor costs to the
sales value of production is below a set standard.
C. an incentive pay in which the piece rate is higher when a greater amount is
produced.
D. a system of linking pay increases to ratings on performance appraisals.
E. an incentive pay plan where every employee is paid different wages based on
the skills they possess.
·
C. an incentive pay in
which the piece rate is higher when a greater amount is produced.
Piecework rate plans are most suited for _____.
A. innovative tasks
B. non-standard jobs
C. managerial jobs
D. jobs with difficult-to-measure output
E. routine jobs
·
E. routine jobs
Johan, a manager of a construction company, believes that a
piecework plan benefits all types of work areas. However, his colleague,
George, argues that a piecework plan is not suitable for a few complex jobs and
that it might have a negative impact on the work production. Which of the
following statements, if true, strengthens George's argument?
A. It is easy to measure the output of managers using a piecework plan.
B. A piecework plan is not suitable for very routine, standardized jobs.
C. Complex jobs involve the coordination of many team members to complete
tasks.
D. Using a piecework plan helps employee empowerment.
E. Incentive plans do not impact productivity when work involves complex jobs.
·
C. Complex jobs
involve the coordination of many team members to complete tasks.
A standard hour incentive plan is likely to be successful if:
A. most or all of a salesperson's compensation is in the form of commissions.
B. employers keep labor costs to a minimum.
C. the pay increase is linked to ratings on performance appraisals.
D. employees want the extra money more than they want to work at a pace that
feels comfortable.
E. the organization values employee satisfaction, product quality, and customer
service more than profits.
·
D. employees want the
extra money more than they want to work at a pace that feels comfortable.
Jupiter Systems, an information technology company, determines a
particular time to complete a particular task. Even if an employee completes
the allotted task before the time of completion, the employee receives an
amount of pay equal to the wage for the designated time. Which of the following
payment methods is exemplified in this scenario?
A. Piecework plan
B. Differential plan
C. Standard hour plan
D. Merit plan
E. Skill-based plan
·
C. Standard hour plan
Jeff owns and manages a small electronics repair store. He
determines the time required by his employees to complete each task assigned by
him. When employees complete the repairs in less time, they receive an amount
of pay equal to that time determined by him. In this scenario, Jeff is using the:
A. standard hour plan.
B. differential piecework plan.
C. merit pay plan.
D. straight piecework plan.
E. Scanlon plan.
·
standard hour plan.
Which of the following statements is true about standard hour
plans?
A. They encourage employees to focus exclusively on customer service.
B. They succeed only for employees who are not motivated by money.
C. They encourage employees to focus mainly on quality.
D. In terms of their pros and cons, they are very different from piecework
plans.
E. They encourage employees to work as fast as they can.
·
E. They encourage
employees to work as fast as they can.
Which of the following is a drawback of a standard hour plan?
A. It does not focus on quality or customer service.
B. It escalates costs for an employer in the long term.
C. It is applicable only in team-based work environments.
D. It helps employees work at a comfortable pace.
E. It does not pay workers extra for work done in less than the standard time.
·
It does not focus on
quality or customer service.
An incentive system in which an organization links pay increases
to ratings on performance appraisals is referred to as _____.
A. commission
B. the Scanlon plan
C. merit pay
D. gain sharing
E. profit sharing
·
C. merit pay
_____ gives the biggest pay increases to the best performers and
to those whose pay is relatively low for their job.
A. Piecework pay system
B. Merit pay system
C. Standard hour plan
D. Differential plan
E. Skill-based plan
·
B. Merit pay system
In a company's merit pay program, individuals' compa-ratio
represents their:
A. pay relative to performance of other workers in the industry.
B. pay relative to average pay.
C. comparable worth versus others.
D. ratio of pay to benefits.
E. the average worth of the skills possessed by the individual.
·
B. pay relative to
average pay.
Merit pay system decisions are based on two factors: an
individual's performance rating and their:
A. compa-ratio.
B. seniority.
C. pay grade.
D. educational qualification.
E. experience.
·
compa-ratio.
Michael, formerly a model employee at his organization, has
recently begun losing interest in his work due to personal and financial
issues. He has spoken to his manager about leaving the company, complaining
that he hasn't been receiving enough recognition for his work of the last 12
years. In an effort to change Michael's mind, his manager decides to give him a
large amount of money as an incentive. In this scenario, Michael's manager is
giving him _____.
A. a commission
B. a retention bonus
C. stock options
D. merit pay
E. an attendance bonus
·
B. a retention bonus
Songreen Inc., a firm that manufactures ready-to-eat soups,
offers incentives based on an employee's performance rating and the employee's
compa-ratio. Which of the following payment plans is exemplified in this
scenario?
A. Piecework plan
B. Merit pay
C. Standard hour plan
D. Differential plan
E. Skill-based plan
·
B. Merit pay
Julianna, the HR manager at Hudson Corp., is facing criticism
from the company's high-performing employees for the lack of an effective
incentive scheme that rewards them with the necessary pay. The company has
avoided paying out incentives in addition to employees' monthly salary in an
attempt to minimize costs. But, after the last annual meeting, it has been
decided to pay employees an incentive amount based on their performance ratings
and their compa-ratio. In this scenario, Julianna would be applying the system
of:
A. merit pay.
B. piecework pay.
C. standard hour pay.
D. commission.
E. attendance bonus.
·
merit pay.
The primary function of a merit increase grid is to:
A. make the increases consistent.
B. further increase the pay for those whose pay is relatively higher for their
job.
C. increase the employees' compa-ratio.
D. stabilize economic conditions.
E. increase incentives on a year-by-year basis.
·
make the increases
consistent.
Alex, a researcher, claims that an exceptional employee with low
pay will benefit more than his or her co-workers, who receive significantly
better pay but perform below expectations, in a merit pay system. Which of the
following statements strengthens Alex's claim?
A. An employee receiving high pay performs better than other employees.
B. The quality of the output produced by employees with high pay is better than
that of other employees.
C. Employees with high pay complete their work before the standard time.
D. A higher pay range results in lower compa-ratios causing a bigger merit
raise.
E. The average pay in a merit pay system can only rise by a maximum of 2% each
year.
·
D. A higher pay range
results in lower compa-ratios causing a bigger merit raise.
To make the merit increases consistent, administrators of merit
pay programs must closely monitor the compa-ratio and the:
A. number of grades in the pay structure.
B. individual's performance ratings.
C. number of new hires in the company.
D. company's stock price in the current financial year.
E. average pay of the area where the organization is based.
·
B. individual's performance
ratings.
Which of the following is an advantage of the merit pay
incentive system?
A. It makes the reward more valuable by relating it to economic conditions.
B. It promotes group performance instead of promoting individual behavior.
C. It provides merit increases to employees solely on the basis of performance.
D. It is the most economical incentive system for the employers.
E. It provides a direct link between the work done by the employee and the
amount earned.
·
It makes the reward
more valuable by relating it to economic conditions.
Which of the following is a disadvantage of a merit pay system?
A. It does not relate the rewards to economic conditions.
B. It cannot be used effectively with performance appraisals.
C. Comparative pay is not considered in its evaluation.
D. It does not provide rewards for performance in all the dimensions measured
in the organization's performance management system.
E. It can quickly become expensive for the company.
·
E. It can quickly
become expensive for the company.
_____ provides a method for rewarding performance in all of the
dimensions measured in the organization's performance management system.
A. Differential piece rate
B. Standard hour plan
C. Merit pay
D. Piece rate
E. Commission
·
C. Merit pay
Which of the following statements is true of a performance
bonus?
A. It is designed to reward group performance.
B. It should be re-earned by employees during each performance period.
C. It is rolled into base pay and provided yearly or monthly.
D. It lacks flexibility and hence it is less popular.
E. It is exclusively linked to subjective ratings, rather than objective
performance measures.
·
B. It should be
re-earned by employees during each performance period.
Retention bonuses refer to:
A. the special reward programs used to satisfy the lower and middle-level
managers.
B. the bonuses provided to union members to withhold a strike.
C. the bonuses provided to employees who take long leaves without pay.
D. annual incentives paid to daily wage workers to remain in the organization.
E. one-time incentives paid in exchange for remaining with the company.
·
E. one-time incentives
paid in exchange for remaining with the company.
Gerald, the CEO of Logiworks, decides to scrap the current
individual incentive pay scheme for a group incentive structure in an effort to
increase the overall benefit to the organization. Which of the following
statements, if true, would weaken his decision?
A. Most of the employees had exercised their stock options before this change.
B. The employees were unaware of the impact of their actions on the company's
finances.
C. The move was a response to problems that arose out of a poorly constructed
bonus plan.
D. The organization was divided into departments whose managers were rewarded
as one group.
E. The employees in the company are required to work in teams in order to
accomplish their goals.
·
B. The employees were
unaware of the impact of their actions on the company's finances.
When an employee's pay is calculated as a percentage of sales,
it is referred to as:
A. commission.
B. gain sharing.
C. merit plan.
D. variable wage plan.
E. profit sharing.
·
commission.
Which of the following is most likely a consequence of paying
most or all of a salesperson's compensation in the form of commissions?
A. It encourages the salesperson to focus on closing the sale.
B. It frees the salesperson to focus on developing customer goodwill.
C. It encourages teamwork over individual performance.
D. It makes the employee appreciate the reward as the reward relates to
economic conditions.
E. It will quickly become expensive for the employer.
·
It encourages the
salesperson to focus on closing the sale.
Straight commission plans are plans which:
A. provide a straight salary to employees.
B. are useful when the organization wants salespeople to concentrate on
listening to customers.
C. help to attract risk-averse employees.
D. are common among insurance and real estate agents.
E. are uncommon among car salespeople.
·
D. are common among
insurance and real estate agents.
Which of the following incentive plans are specifically designed
to promote group performance?
A. Performance bonuses
B. Gainsharing
C. Standard hour plans
D. Merit pay
E. Commissions
·
B. Gainsharing
_____ is a group incentive program that measures improvements in
productivity and effectiveness and distributes a portion of each gain to
employees.
A. Profit rate
B. Gainsharing
C. Commission sharing
D. Merit rate
E. Group bonus
·
B. Gainsharing
Brendan, the HR manager at Baretta & Co., is trying to
implement an effective group incentive plan which measures increases in
productivity and effectiveness and distributes a portion of its earnings to all
employees. In this case, Brendan should apply the incentive scheme of _____.
A. piecework rate
B. gainsharing
C. sales commission
D. merit pay
E. ESOPs
·
B. gainsharing
The distribution of a portion of a company's earnings to its
employees will motivate them to focus more on efficiency and productivity.
Which of the following would strengthen this argument?
A. It helps create job opportunities.
B. It helps avoid competition among employees.
C. Employees spend long hours working.
D. Employees avoid taking days off when they are given a share of profit.
E. Employees consider the organization's goals along with their personal
interests.
·
E. Employees consider
the organization's goals along with their personal interests.
QVO Financial, an auditing firm, distributes a portion of the
profits resulting from improvements in productivity and efficiency among its
employees. If the company enjoys an improvement of $45,000, 60% of the
improvement might be the company's share. The other 40% would be distributed
among the employees in the company. Which of the following is being exemplified
in this scenario?
A. Profit rate
B. Gainsharing
C. Commission sharing
D. Merit gain
E. Group bonus
·
B. Gainsharing
Jennifer believes that the challenge of identifying appropriate
performance measures for complex jobs can be resolved by implementing a gainsharing
plan. Natalie argues that it is a poor incentive program in an organization
that wants to encourage teamwork. Which of the following statements weakens
Natalie's argument?
A. It oversimplifies the responsibilities involved in teamwork and motivates
employees to work hard.
B. It creates a competitive environment among the employees working in a team.
C. It offers less incentives because the incentives are distributed equally
among team members.
D. It encourages employees to learn new skills from other team members.
E. It encourages teams to take pay-related decisions.
·
It oversimplifies the
responsibilities involved in teamwork and motivates employees to work hard
Which of the following is a common condition for gainsharing to
be a success in an organization?
A. Employees who value working in groups
B. Employers who do not set short-term goals for employees
C. Work environment with minimum management commitment
D. Employees who prefer minimum interaction and cooperation
E. Low levels of cooperation and interaction
·
Employees who value
working in groups
Organizations that want employees to focus on efficiency and on
group incentives are most likely to implement a _____ program.
A. gainsharing
B. standard hour
C. bonus
D. commission
E. piece rate pay
·
gainsharing
A multi-national organization uses a gainsharing program in
which employees receive a bonus if the ratio of labor costs to the sales value
of production is below a set standard. This incentive plan is referred to as
the:
A. group bonus.
B. merit pay plan.
C. Scanlon plan.
D. piecework rate.
E. team award.
C. Scanlon plan.
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