Potential advantages of profit sharing plans
When used well, pay
plans have ______.
·
an incentive effect
According to the law
of effect, rewards make responses ______.
·
recur in the future
When considering
employee compensation, ______ theory is focused on the effects of incentives.
·
expectancy
Extrinsic motivation
is dependent on rewards that are under the control of ______.
·
an external source
The process that
matches people, over time, to jobs that fit their preferences, including reward
preferences, and helps ensure that extrinsic incentives do not adversely affect
intrinsic motivation, is known as ______.
·
the sorting process
Pay plans are used in
part to do which of the following? (Select all that apply.)
·
direct employee
behavior
energize employee behavior
control employee behavior
Which of the following
focuses on how employee compensation can be used to align the divergent
interests and goals of an organizations' various stakeholders?
·
agency theory
In order to make high
performance more likely in the future, employers are well advised to ______.
·
offer a monetary
reward for high employee performance
In agency theory, a
business's principal is typically a(n) ______.
·
owner
The main influence of
compensation is on instrumentality, which can be described as the perceived
link between ______.
·
behaviors and pay
Some scholars using
cognitive evaluation theory believe which of the following regarding extrinsic
and intrinsic motivation?
·
They argue that
monetary rewards might increase extrinsic motivation but decrease intrinsic motivation.
Which of the following
statements are true about agents in large, modern corporations? (Select all
that apply.)
·
Agents are expected to
act on behalf of principals.
Owners (principals) and managers (agents) are usually different people.
According to research,
intrinsic motivation is ______ when extrinsic incentives are available.
·
higher
What happens when a
principal has imperfect information concerning the degree to which the agent is
pursuing and achieving the principal's goals?
·
information asymmetry
For the modern
corporation, ownership is nearly always separate from ______.
·
management
Which of the following
statements are true? (Select all that apply.)
·
What is best for the
manager may not be best for the principal.
What is best for the agent may not be best for the principal.
According to agency
theory, the likely agent of a business owner would be a(n) ______.
·
manager
When choosing a
contracting scheme that helps align the interests of the agent and principal,
the principal must choose between ______-oriented (such as merit pay) and
______-oriented (such as commissions and stock options) contracts.
·
behavior; outcome
Which of the following
may be factors that give rise to agency costs? (Select all that apply.)
·
principals and agents
who have information asymmetry
principals and agents who have goal incongruence
A key drawback to
outcome-oriented contracts is that they tend to ______ the agent's risk.
·
increase
When designing either
managerial or nonmanagerial compensation, the central issue is determining
______.
·
how agency costs can
be minimized
Which of the following
can a principal do to overcome the information asymmetry issue that exists with
behavior-based contracts? (Select all that apply.)
·
Link pay partly to
outcomes.
Invest in monitoring.
Add more supervisors.
Outcome-oriented
contracts are more likely when outcomes are more ______.
·
measurable
In an outcome-oriented
contract, when profits are high, compensation ______.
·
increases
When organizations
link pay to an employee's performance, they are likely to attract candidates
who are ______.
·
individualistic
Contracts that
generally do not result in a transfer of risk to the agent and, as such, do not
require a wage differential are known as _______-based contracts.
·
behavior
Which of the following
are among the factors used in determining what type of contract an organization
should use? (Select all that apply.)
·
outcome uncertainty
job programmability
ability to pay
It is important to pay
high performers an amount they believe is equitable in order to ______ them.
(Select all that apply.)
·
motivate
retain
attract
The effect pay has on
workforce composition is known as a(n) ______.
·
sorting effect
Which of the following
increase with increasing incentive intensity?
·
the chance of
unintended consequences
motivation
the possibility of undesirable outcomes
Employees notice how
some employees get paid differently, and their perceptions of ______ will
influence their behaviors.
·
fairness
Which of the following
are design features that potentially help differentiate pay-for-performance
programs? (Select all that apply.)
·
frequency of payout
payment method
ways of measuring performance
Employee performance
can be measure at the ______ level. (Select all that apply.)
·
organizational
unit
individual
The strength of the
relationship between pay and performance is known as ______.
·
incentive intensity
When a company uses a
balanced scorecard, it takes a(n) _______ approach to balancing objectives.
·
structured
Which of the following
characteristics concerning pay-for-performance programs may help increase the
probability that the program has the intended effects and decrease the
probability of unintended consequences and problems? (Select all that apply.)
·
careful alignment with
human resource
strategy
careful alignment with organizational strategy
balancing of objectives
Pay programs that
recognize employee contributions differ depending on whether payouts are
______. (Select all that apply.)
·
variable
a fixed cost
part of base pay
True or false: Merit
pay exists in most organizations.
·
True
A grid that combines
an employee's performance rating with his or her position within a pay range so
as to determine the size and frequency of pay increases is known as the ______
grid.
·
merit increase
Which of the following
are suitable considerations for using a balanced scorecard to structure
employee compensation? (Select all that apply.)
·
financial results
nonfinancial measures
how financial results are achieved
According to W.
Edwards Deming, rating individual performance is an unfair practice because
______.
·
differences between
workers are almost entirely the result of the system they work in rather than
the people
Merit pay, or merit
bonuses, is a form of ______ pay.
·
variable
Unlike merit pay,
individual incentives are rarely based on ______.
·
subjective ratings
Which of the following
factors determine the size and frequency of pay increases on the merit increase
grid? (Select all that apply.)
·
an individual's
performance rating
an individual's compa-ratio
Which of the following
system factors exist beyond workers' control but help determine whether they
receive merit pay? (Select all that apply.)
·
equipment
customers
co-workers
True or false:
Individual incentive plans generally contribute to the development of a
cross-trained, flexible, proactive, and efficient problem-solving workforce.
·
False
Payments are not added
into base pay and must be continuously earned in ______ plans.
·
individual incentive
\
Under a profit sharing
system, payments are ______.
·
not part of base
salary
Which of the following
are potential reasons individual incentives are relatively rare? (Select all
that apply.)
·
Many jobs have no
physical output to measure.
They may result in employees doing only what they are getting paid for and
little or nothing else.
Which of the following
are potential advantages of profit sharing plans? (Select all that apply.)
·
Labor costs
automatically decline during difficult economic times.
Employees feel and act like owners, helping to make the organization more
effective.
The compensation plan
known as ______ involves payments being based on some measure of organizational
performance, and the payments do not become part of the base salary.
·
profit sharing
The fact that most
profit sharing plans are deferred tends to ______.
·
reduce their
motivational impact
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