Question 1

The central issue associated with attendance incentives is the notion that these programs treat only the symptoms while ignoring the underlying issues that cause absenteeism in the first place.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following management strategies is likely to benefit the most from using a gain-sharing plan as part of their compensation strategy?

Accepted Answer

A)  human relations management strategy 
B)  classical management strategy 
C)  any management strategy operating in a dynamic environment 
D)  high-involvement management strategy

Question 3

As the owner of a real estate firm with multi-office operations, you provide a bonus to all sales personnel in the highest-producing office each month. What type of performance pay plan are you using?

Accepted Answer

A)  goal-sharing 
B)  competitive bonus 
C)  pooled performance 
D)  group commissions

Question 4

In what way are piece rates and commissions similar to each other?

Accepted Answer

A)  Employees don't have to worry about working themselves out of a job. 
B)  They reduce the need for external control of employees through supervision. 
C)  Both types are commonly used in conjunction with base pay. 
D)  Both are popular systems widely used in the service sector.

Question 5

Unions generally oppose profit-sharing plans on the basis of potential manipulation of profits by management and the uncertainty associated with profit sharing when compared with base pay.

Accepted Answer

A) True 
 B)False

Question 6

Your CEO is concerned that employees are not saving enough for their retirement. At the same, the CEO wants to have some of the company's profits shared with all employees. To address these issues, your CEO asks you, a human resource compensation specialist, to recommend the most appropriate profit-sharing plan to address this retirement issue. Which of the following profit-sharing plans would you recommend?

Accepted Answer

A)  deferred profit sharing 
B)  combination profit sharing 
C)  current distribution 
D)  cash plan

Question 7

Which of the following pay plans targets organizational-level performance?

Accepted Answer

A)  goal-sharing plans 
B)  merit-pay plans 
C)  special-purpose incentive pay plans 
D)  profit-sharing plans

Question 8

Which of the following is NOT a suitable condition for merit pay?

Accepted Answer

A)  Individual performance varies. 
B)  Performance is not controllable by the individual. 
C)  Individual performance can be separated out. 
D)  Undesirable side effects are readily manageable.

Question 9

According to the textbook, what is the main drawback associated with attendance plans?

Accepted Answer

A)  There are costs associated with administering the program. 
B)  Both intended and unintended behaviours are not easy to observe. 
C)  It is difficult to deal with the so-called "legitimate" absences. 
D)  They do not deal with the underlying cause of the issue.

Question 10

Which plans are set up so that a payout is contingent on the achievement of three- to five-year performance goals?

Accepted Answer

A)  pension plans 
B)  long-term incentives 
C)  deferred profit-sharing plans 
D)  goal-sharing plans

Question 11

Which of the following characteristics of profit-sharing plans may be viewed as negative from the perspective of an employer?

Accepted Answer

A)  They align employee and employer interests. 
B)  They eliminate the "free rider" principle by holding everyone accountable. 
C)  They are more complex than gain-sharing plans. 
D)  They require the sharing of potentially confidential information with employees.

Question 12

There is strong congruency between classical management philosophies and piece rate pay schemes, particularly in industrial settings. What characteristic of this management philosophy do you believe hinders the expansion of piece rate schemes in such organizations?

Accepted Answer

A)  It requires significant management follow-up. 
B)  It is very difficult to determine a "fair" piece rate. 
C)  There is lack of trust between management and employees. 
D)  Managers in classical organizations often do not want to compensate strong performers.

Question 13

Which of the following would NOT be an ideal scenario in which to consider using a piece rate plan?

Accepted Answer

A)  Quality standards can be monitored effectively. 
B)  Significant teamwork is needed to complete a particular task. 
C)  Each unit of production can be easily measured. 
D)  Tasks tend to be fairly static over time.

Question 14

As a human resources specialist, your job is to review the pattern of merit raises issued by managers last year. You found that the vast majority of managers did not differentiate between high and low performers, choosing to provide similar merit raises. What would you speculate is the driving force behind the managers' actions?

Accepted Answer

A)  They want to be fair to all employees. 
B)  They want to keep labour costs down. 
C)  They are not comfortable with the performance management process. 
D)  They want to maintain a high degree of team spirit.

Question 15

Which of the following best explains why, despite their motivational potential, piece rate systems often do not motivate maximum effort?

Accepted Answer

A)  Work group norms define acceptable rates of production. 
B)  Piece rates are used in conjunction with base pay. 
C)  Workers may be tempted to cut corners on quality. 
D)  Workers are more concerned with production than safety.

Question 16

Identify and briefly define each of the three types of employee stock plans.

Accepted Answer

The answer of Identify and briefly define each of the...

Question 17

As a human resource specialist, you have been asked by your organization to lead a discussion on the merits of using internal promotions as a main reward mechanism. Which of the following point(s) would you most likely NOT raise?

Accepted Answer

A)  They are an expensive process, as promotions are typically associated with pay increases. 
B)  They often carry both intrinsic and extrinsic rewards. 
C)  They recognize contributions made by strong performers. 
D)  They are often seen as a key motivation tool for employees.

Question 18

Sales commissions are usually appropriate in situations where individual sales people exercise significant independence.

Accepted Answer

A) True 
 B)False

Question 19

When should the proportion of base pay relative to commission be higher?

Accepted Answer

A)  the more that each salesperson works independently of others 
B)  the shorter the length of the sales cycle 
C)  the greater the concern for high turnover 
D)  the higher the degree of persuasive skills required

Question 20

Which of the following is normally seen as an advantage associated with long-term incentives plans?

Accepted Answer

A)  They may encourage a better understanding of the business. 
B)  They tie rewards to the company's ability to pay. 
C)  They usually dilute shareholder equity for existing shareholders. 
D)  Goals are easy to determine, particularly in dynamic industries.

Exam 5: Performance Pay Choices

The central issue associated with attendance incentives is the notion that these programs treat only the symptoms while ignoring the underlying issues that cause absenteeism in the first place.

Which of the following management strategies is likely to benefit the most from using a gain-sharing plan as part of their compensation strategy?

As the owner of a real estate firm with multi-office operations, you provide a bonus to all sales personnel in the highest-producing office each month. What type of performance pay plan are you using?

In what way are piece rates and commissions similar to each other?

Unions generally oppose profit-sharing plans on the basis of potential manipulation of profits by management and the uncertainty associated with profit sharing when compared with base pay.

Which of the following pay plans targets organizational-level performance?

Which of the following is NOT a suitable condition for merit pay?

According to the textbook, what is the main drawback associated with attendance plans?

Which plans are set up so that a payout is contingent on the achievement of three- to five-year performance goals?

Which of the following characteristics of profit-sharing plans may be viewed as negative from the perspective of an employer?

There is strong congruency between classical management philosophies and piece rate pay schemes, particularly in industrial settings. What characteristic of this management philosophy do you believe hinders the expansion of piece rate schemes in such organizations?

Which of the following would NOT be an ideal scenario in which to consider using a piece rate plan?

Which of the following best explains why, despite their motivational potential, piece rate systems often do not motivate maximum effort?

Identify and briefly define each of the three types of employee stock plans.

As a human resource specialist, you have been asked by your organization to lead a discussion on the merits of using internal promotions as a main reward mechanism. Which of the following point(s) would you most likely NOT raise?

Sales commissions are usually appropriate in situations where individual sales people exercise significant independence.

When should the proportion of base pay relative to commission be higher?

Which of the following is normally seen as an advantage associated with long-term incentives plans?