Question 1

Lucretia Toys is investigating the use of team incentives in its production plant.Each work group is composed of about 25 individuals.As the manager of HR you

Accepted Answer

A)  recommend using equal payouts for each team member since it will simplify performance appraisal requirements. 
B)  express concern about the dilution of individual efforts on such large teams. 
C)  urge management to go forward with the plan because every job can benefit from increased teamwork. 
D)  recommend that management wait to implement any team incentive plan because this may trigger a union organizing attempt in a manufacturing environment.

Question 2

In general,a single criterion should be used for measuring sales staff performance..

Accepted Answer

A) True 
 B)False

Question 3

Which of the following statements is TRUE?

Accepted Answer

A)  Organizations operating in China cannot use individual pay-for-performance because it violates cultural norms of equal treatment. 
B)  Global firms can use pay-for-performance systems if the organization has the same competitive strategy in each country in which it operates. 
C)  Variable pay systems are unpopular in Europe because the culture values stability and predictability in compensation systems. 
D)  Global firms can use incentive systems if they are adapted to appropriate goals in different geographic regions.

Question 4

If sales staff can rely on receiving bonuses each year,it gives them income security and increases both morale and performance motivation.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an assumption of variable-pay systems?

Accepted Answer

A)  Some jobs contribute more to organizational success than others. 
B)  Cooperation and teamwork can be enhanced when individuals are rewarded for extra efforts. 
C)  Equality in pay is a strong motivator of exceptional employee performance. 
D)  Both good and poor performing employees will perceive a pay system that rewards high performance as satisfying and equitable.

Question 6

Andrew is excited about the new program at work.He will be allowed to purchase 20 shares of stock at $45 per share for a limited period of time.Andrew is planning to take advantage of this ____ plan because he expects that the market price of the stock will far exceed $45 in a couple years.

Accepted Answer

A)  windfall incentive 
B)  gainsharing 
C)  stock option 
D)  employee stock ownership (ESOP)

Question 7

What is a "draw?"

Accepted Answer

A)  an amount advanced to a sales employee and repaid from future commissions 
B)  a system by which sales employees "draw down" their sales quotas 
C)  a type of income equalization for tax purposes in which sales representatives can draw down their earnings from a high-income year and transfer them to a low-income year 
D)  a lump-sum payment or bonus at the end of the month for sales staff who are performing adequately.

Question 8

Despite the numerous scandals surrounding executive pay,such as Enron and Tyco,and seemingly excessive compensation to executives in the financial industry,there is no federal law that places restrictions on executive pay or mandates reporting requirements regarding executive pay.

Accepted Answer

A) True 
 B)False

Question 9

Amanda,a CEO of a large marketing firm,is paid bonuses based n quarterly organizational performance.This pay system undermines Amanda's inclination to take the long term view when making important strategic decisions.

Accepted Answer

A) True 
 B)False

Question 10

Clark's performance incentive is based entirely on the number of and dollar value of customer insurance claims he rejects.Clark will be motivated to reject as many claims as possible,regardless of the validity of the claim.

Accepted Answer

A) True 
 B)False

Question 11

Non-monetary incentives,such as travel awards,will motivate employee retention and will improve an individual's morale,but it will not motivate the individual to exert discretionary effort.

Accepted Answer

A) True 
 B)False

Question 12

Seeing other employees receive valuable service awards would be most likely to motivate employees to

Accepted Answer

A)  improve their performance. 
B)  remain with the organization. 
C)  work more cooperatively as team members. 
D)  be more psychologically invested in the organization.

Question 13

As the new Vice President of HR,you have been asked to implement a profit-sharing program at Megatherium Resources and Exploration.For years Megatherium has been plagued with a contentious relationship between employees and management.The executive committee feels that a profit-sharing plan would improve employee-management relations.You should disagree and argue that Megatherium is not ready for profit-sharing.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following statements is FALSE about sales incentive plans?

Accepted Answer

A)  The Internet has made it easier for managers to track daily sales of sales staff scattered all over the world. 
B)  If sales staff bonuses become viewed as deferred salary, then the bonuses lose their effectiveness in motivating discretionary effort from sales staff. 
C)  It is difficult to motivate the range of behaviors needed of sales staff in a complex environment unless there are at least three sales performance measures in an incentive system. 
D)  Sales incentives must be tied to the organization's broad strategic plans.

Question 15

Which of the following is classified as an individual variable pay plan?

Accepted Answer

A)  Scanlon plan 
B)  profit-sharing 
C)  sales commission 
D)  an ESOP

Question 16

The downside of bonuses is that

Accepted Answer

A)  they may cause low performing employees to quit. 
B)  employees who are passed over may become jealous of the bonus recipient. 
C)  a well-implemented bonus system may be more expensive to the firm than base pay raises for improved performance. 
D)  employees tend to view bonuses as lucky windfalls rather than a consequence of personal effort.

Question 17

Melanie has worked for 20 years for a manufacturer of specialized paint for the auto industry.Melanie stayed with the company rather than taking other job offers because of the generous ESOP,which has offset the somewhat lower than market pay.Which of the following statements is FALSE?

Accepted Answer

A)  ESOPs are a low-risk way for employees like Melanie to be "capitalists." 
B)  The ESOP probably has made Melanie more focused on the company's performance than she would have been otherwise. 
C)  If the company goes bankrupt, Melanie may lose some or all of her anticipated retirement. 
D)  The ESOP was a successful retention tool in Melanie's situation.

Question 18

A manager at your firm has recruited an individual who is an expert in his field,as well as being a strong team player.As the HR director,you think this individual will be a good match with the company because you are about to roll out an organizational level pay-for-performance system.

Accepted Answer

A) True 
 B)False

Question 19

The primary objectives of organizational incentive systems includes all of the following EXCEPT

Accepted Answer

A)  to attract competitive employees. 
B)  to retain productive employees. 
C)  to increase organizational performance. 
D)  to improve employee morale.

Question 20

A ____ approach for compensating sales staff is useful when serving and retaining existing client accounts is significantly more important than generating new sales and accounts.

Accepted Answer

A)  straight commission 
B)  salary-only 
C)  salary plus commission 
D)  salary draw

Exam 12: Incentive Plans and Executive Compensation

Lucretia Toys is investigating the use of team incentives in its production plant.Each work group is composed of about 25 individuals.As the manager of HR you

In general,a single criterion should be used for measuring sales staff performance..

Which of the following statements is TRUE?

If sales staff can rely on receiving bonuses each year,it gives them income security and increases both morale and performance motivation.

Which of the following is an assumption of variable-pay systems?

Andrew is excited about the new program at work.He will be allowed to purchase 20 shares of stock at $45 per share for a limited period of time.Andrew is planning to take advantage of this ____ plan because he expects that the market price of the stock will far exceed $45 in a couple years.

What is a "draw?"

Despite the numerous scandals surrounding executive pay,such as Enron and Tyco,and seemingly excessive compensation to executives in the financial industry,there is no federal law that places restrictions on executive pay or mandates reporting requirements regarding executive pay.

Amanda,a CEO of a large marketing firm,is paid bonuses based n quarterly organizational performance.This pay system undermines Amanda's inclination to take the long term view when making important strategic decisions.

Clark's performance incentive is based entirely on the number of and dollar value of customer insurance claims he rejects.Clark will be motivated to reject as many claims as possible,regardless of the validity of the claim.

Non-monetary incentives,such as travel awards,will motivate employee retention and will improve an individual's morale,but it will not motivate the individual to exert discretionary effort.

Seeing other employees receive valuable service awards would be most likely to motivate employees to

Which of the following statements is FALSE about sales incentive plans?

Which of the following is classified as an individual variable pay plan?

The downside of bonuses is that

Melanie has worked for 20 years for a manufacturer of specialized paint for the auto industry.Melanie stayed with the company rather than taking other job offers because of the generous ESOP,which has offset the somewhat lower than market pay.Which of the following statements is FALSE?

A manager at your firm has recruited an individual who is an expert in his field,as well as being a strong team player.As the HR director,you think this individual will be a good match with the company because you are about to roll out an organizational level pay-for-performance system.

The primary objectives of organizational incentive systems includes all of the following EXCEPT

A ____ approach for compensating sales staff is useful when serving and retaining existing client accounts is significantly more important than generating new sales and accounts.