Question 1

If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:

Accepted Answer

A)  $5.00 is the basic incentive to produce. 
B)  Q is completely dependent on random elements in the production system. 
C)  $0.10 is the incentive to increase effort. 
D)  effort is unimportant in this production system. 
A)  $5.00 is the basic incentive to produce. 
B)  Q is completely dependent on random elements in the production system. 
C)  $0.10 is the incentive to increase effort. 
D)  effort is unimportant in this production system.

Question 2

Beyond some minimum level of effort, it usually expected that teamwork will have the impact of _______ relative to individual effort.

Accepted Answer

A)  reducing output 
B)  leaving output the same 
C)  increasing output 
D)  reducing and then increasing the output 
A)  reducing output 
B)  leaving output the same 
C)  increasing output 
D)  reducing and then increasing the output

Question 3

Make a case for 360-degree performance evaluation based on the informativeness principle. What problems may be encountered from implementation of such a system?

Accepted Answer

The informativeness principle states tha

Question 4

The goal of a performance pay system is to get an employee to meet and exceed production quotas or goals. But an employee is always faced with events that are clearly beyond his/her control. What measures can be taken by management to understand and minimize the impact of these 'random' elements in the production system?

Accepted Answer

Actual employee effort may be impossible

Question 5

The old saying is "Be careful what you pay for, because you may get it." Discuss commission based salaries and gaming in light of the saying.

Accepted Answer

Commission based salaries will direct ef

Question 6

A president of a large university issues the following policy for faculty pay-raises in the smaller satellite campuses: faculty pay increases will be possible only if enrollment increases above last year's targets. Evaluate the impact of this policy on the overall system.

Accepted Answer

Faculty members are not trained in admis

Question 7

Objective measures included in an evaluation and incentive system might include:

Accepted Answer

A)  improved quality of communications with subordinates. 
B)  meeting or exceeding sales goals. 
C)  reorganizing a department for improved human relations. 
D)  recognition for finding and solving problems. 
A)  improved quality of communications with subordinates. 
B)  meeting or exceeding sales goals. 
C)  reorganizing a department for improved human relations. 
D)  recognition for finding and solving problems.

Question 8

Presidents who constantly react to their ratings in the Gallup Poll are:

Accepted Answer

A)  likely to become very popular from historical point of view. 
B)  likely to take both long-term and short-term views of their actions seriously. 
C)  likely to take their legacy seriously and concentrate on the long run value of their actions. 
D)  likely to take popular short term actions rather than those with longer historical value. 
A)  likely to become very popular from historical point of view. 
B)  likely to take both long-term and short-term views of their actions seriously. 
C)  likely to take their legacy seriously and concentrate on the long run value of their actions. 
D)  likely to take popular short term actions rather than those with longer historical value.

Question 9

If TruLite management studied the light fabrication department and found that the departments should assemble 25 lamps per hour per worker and set its piece rate to get workers to meet output level, then this standard is called the:

Accepted Answer

A)  risk premium. 
B)  benchmark. 
C)  incentive adjustment. 
D)  random element of production. 
A)  risk premium. 
B)  benchmark. 
C)  incentive adjustment. 
D)  random element of production.

Question 10

Gaming refers to a situation where:

Accepted Answer

A)  employers fix unachievable output and target levels. 
B)  employees consistently understate the target levels so as to meet them. 
C)  employees increase output to gain commissions beyond the firm's capacity. 
D)  employees inappropriately increase output to gain commissions. 
A)  employers fix unachievable output and target levels. 
B)  employees consistently understate the target levels so as to meet them. 
C)  employees increase output to gain commissions beyond the firm's capacity. 
D)  employees inappropriately increase output to gain commissions.

Question 11

In a very basic principal-agent model, output is contractible if:

Accepted Answer

A)  output can be observed with some positive cost. 
B)  the employee produces many products. 
C)  the employee works in a team. 
D)  the employee works independently and cannot game the process. 
A)  output can be observed with some positive cost. 
B)  the employee produces many products. 
C)  the employee works in a team. 
D)  the employee works independently and cannot game the process.

Question 12

A salesperson's bonus for this year is based on meeting targets based on last year's sales. This year turns out to be an unusually good year. The salesperson is likely to:

Accepted Answer

A)  meet the target easily and push forward with all potential sales. 
B)  fail to meet the last year's targets because of overconfidence. 
C)  just be satisfied with meeting last year's target. 
D)  defer some sales to the next fiscal year, as in processing delay of some of this year's orders. 
A)  meet the target easily and push forward with all potential sales. 
B)  fail to meet the last year's targets because of overconfidence. 
C)  just be satisfied with meeting last year's target. 
D)  defer some sales to the next fiscal year, as in processing delay of some of this year's orders.

Question 13

If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:

Accepted Answer

A)  the employee can remain completely risk-averse. 
B)  the employee must accept risk of production variability. 
C)  output becomes a subjective measure of performance. 
D)  there are no compensating differentials. 
A)  the employee can remain completely risk-averse. 
B)  the employee must accept risk of production variability. 
C)  output becomes a subjective measure of performance. 
D)  there are no compensating differentials.

Question 14

If a work performance measure is based on both objective and subjective measures, the objective measure might be the:

Accepted Answer

A)  number of units produced. 
B)  dependability of worker. 
C)  quality of units produced. 
D)  cooperation of worker. 
A)  number of units produced. 
B)  dependability of worker. 
C)  quality of units produced. 
D)  cooperation of worker.

Question 15

Which of the following should not be on a list of things you should do to get an honest evaluation?

Accepted Answer

A)  Have a list of creative solutions to problems that you have encountered. 
B)  Show how your output influenced the profitability of your division. 
C)  Illustrate how your actions will improve the company next year. 
D)  Take your boss to dinner the night before evaluations are due. 
A)  Have a list of creative solutions to problems that you have encountered. 
B)  Show how your output influenced the profitability of your division. 
C)  Illustrate how your actions will improve the company next year. 
D)  Take your boss to dinner the night before evaluations are due.

Question 16

If a company wants an employee to average about $14.00 per hour to produce 60 units per hour, plus it provides a base salary of $7.00 per hour, what should be the incentive rate per hour?

Accepted Answer

A)  $0.117 
B)  $8.54 
C)  $0.333 
D)  $1.25 
A)  $0.117 
B)  $8.54 
C)  $0.333 
D)  $1.25

Question 17

Employee performance evaluation is needed because:

Accepted Answer

A)  it justifies the incredibly high wages of the CEOs. 
B)  it justifies the incredibly high fringe benefits of the CEOs. 
C)  it puts the employees in their places which is important for success. 
D)  it determines rewards and sanctions - wages, raises, bonuses, and dismissals. 
A)  it justifies the incredibly high wages of the CEOs. 
B)  it justifies the incredibly high fringe benefits of the CEOs. 
C)  it puts the employees in their places which is important for success. 
D)  it determines rewards and sanctions - wages, raises, bonuses, and dismissals.

Question 18

In a subjective evaluation system where an employee with many tasks is ranked from excellent to poor, a system like this called a:

Accepted Answer

A)  standard rating scale system. 
B)  goal-based system. 
C)  piece work incentive system. 
D)  external benchmark system. 
A)  standard rating scale system. 
B)  goal-based system. 
C)  piece work incentive system. 
D)  external benchmark system.

Question 19

Employees often limit their output and engage in soldiering because of the fear that if they exceed output levels this time, management will increase output goals for the next time period. This is called the:

Accepted Answer

A)  incentive effect. 
B)  ratchet effect. 
C)  benchmark effect. 
D)  goal standard effect. 
A)  incentive effect. 
B)  ratchet effect. 
C)  benchmark effect. 
D)  goal standard effect.

Exam 16: Individual Performance Evaluation

If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:

Beyond some minimum level of effort, it usually expected that teamwork will have the impact of _______ relative to individual effort.

Make a case for 360-degree performance evaluation based on the informativeness principle. What problems may be encountered from implementation of such a system?

The old saying is "Be careful what you pay for, because you may get it." Discuss commission based salaries and gaming in light of the saying.

A president of a large university issues the following policy for faculty pay-raises in the smaller satellite campuses: faculty pay increases will be possible only if enrollment increases above last year's targets. Evaluate the impact of this policy on the overall system.

Objective measures included in an evaluation and incentive system might include:

Presidents who constantly react to their ratings in the Gallup Poll are:

If TruLite management studied the light fabrication department and found that the departments should assemble 25 lamps per hour per worker and set its piece rate to get workers to meet output level, then this standard is called the:

Gaming refers to a situation where:

In a very basic principal-agent model, output is contractible if:

A salesperson's bonus for this year is based on meeting targets based on last year's sales. This year turns out to be an unusually good year. The salesperson is likely to:

If TruLite's basic production employee receives an hourly wage of Comp = $5.00 + .10 Q where Q is the number of light switches installed per hour, then:

If a work performance measure is based on both objective and subjective measures, the objective measure might be the:

Which of the following should not be on a list of things you should do to get an honest evaluation?

If a company wants an employee to average about $14.00 per hour to produce 60 units per hour, plus it provides a base salary of $7.00 per hour, what should be the incentive rate per hour?

Employee performance evaluation is needed because:

In a subjective evaluation system where an employee with many tasks is ranked from excellent to poor, a system like this called a:

Employees often limit their output and engage in soldiering because of the fear that if they exceed output levels this time, management will increase output goals for the next time period. This is called the:

Introduction

Economists View of Behavior

Markets, Organizations, and the Role of Knowledge

Demand

Production and Cost

Market Structure

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

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