The distribution of a portion of a company's earnings
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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