Question 1

When hired by Delmar Designs,Shane agreed to forego 6% of his normal pay if he didn't meet his goals in return for a 12% bonus if he exceeded his goals.In which type of plan does Shane most likely participate?

Accepted Answer

A)  earnings-at-risk pay plan 
B)  variable risk sharing plan 
C)  at-risk gainsharing plan 
D)  employee at-risk plan

Question 2

Which of the following terms refers to the right to purchase a stated number of shares of a company stock at today's price at some time in the future?

Accepted Answer

A)  at-risk variable plan 
B)  multiplier method 
C)  stock option 
D)  gainsharing plan

Question 3

Research indicates that employee stock ownership plans most likely ________.

Accepted Answer

A)  encourage employees to retire too early 
B)  place firms at greater risk for employee lawsuits 
C)  increase employee commitment and motivation 
D)  encourage transparency within global organizations

Question 4

The Scanlon plan includes all of the following features EXCEPT ________.

Accepted Answer

A)  identity 
B)  competence 
C)  a philosophy of cooperation 
D)  a focus on individual achievement

Question 5

Dual-career ladders are effective tools for managing the professional pay of working mothers who desire a work-life balance.

Accepted Answer

A) True 
 B)False

Question 6

According to Vroom's theory,if expectancy,instrumentality,or valence is equal to zero,there will be no employee motivation.

Accepted Answer

A) True 
 B)False

Question 7

The perceived relationship between successful performance and obtaining the reward is referred to by Vroom as ________.

Accepted Answer

A)  instrumentality 
B)  valence 
C)  expectancy 
D)  optimism

Question 8

What type of pay plan is being used when workers are paid a sum for each unit they produce?

Accepted Answer

A)  competency-based pay 
B)  job-based pay 
C)  piecework 
D)  bonus

Question 9

Robert Katz popularized the use of financial incentives for workers whose production exceeds some predetermined standard.

Accepted Answer

A) True 
 B)False

Question 10

Edward is the new sales manager at Wilson Auto Mart.The previous sales manager set commission rates informally without considering how much each sale covered expenses.As a result,Wilson Auto Mart barely breaks even on each car sale once commissions are paid.Edward wants to motivate his sales force but avoid having excessive commissions. All of the following questions are relevant to developing an effective sales compensation plan EXCEPT ________.

Accepted Answer

A)  How much time does each Wilson salesperson spend with qualified prospects? 
B)  What are the motivation and skill levels of Wilson sales team members? 
C)  What is the average annual bonus received by Wilson's CEO? 
D)  What is Wilson's desired profit for each car sale?

Question 11

The complicated nature of piecework makes it an unpopular individual incentive plan among employers.

Accepted Answer

A) True 
 B)False

Question 12

How does merit pay differ from a bonus?

Accepted Answer

A)  Merit pay becomes part of an employee's base pay, but a bonus does not. 
B)  A bonus becomes part of an employee's base pay, but merit pay does not. 
C)  Merit pay is linked to individual performance, while a bonus is linked to profits. 
D)  A bonus is linked to individual performance, while merit pay is linked to profits.

Question 13

Which of the following is the primary advantage of piecework plans?

Accepted Answer

A)  powerful incentive to workers 
B)  workers earn efficiency bonuses 
C)  firms save on overtime wages 
D)  entices independent contractors

Question 14

Gainsharing is an incentive plan that ________.

Accepted Answer

A)  uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement 
B)  engages employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company 
C)  contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees 
D)  provides tax advantages for employees by deferring income taxes, often until the employee retires

Question 15

Employees at GameTime Software participate in a gainsharing plan.Employee bonuses are calculated by dividing payroll expenses by total sales.GameTime Software most likely uses which of the following plans?

Accepted Answer

A)  Lincoln 
B)  Rucker 
C)  Improshare 
D)  Scanlon

Question 16

Which of the following terms refers to an incentive plan in which a person is paid a sum for each item he or she makes or sells,with a strict proportionality between results and rewards?

Accepted Answer

A)  variable pay 
B)  straight piecework 
C)  straight hourly pay 
D)  standard hour plan

Question 17

Rebecca's manager wants to acknowledge her outstanding service record for the past quarter.The manager decides to give Rebecca a bonus of $1000 as a reward.According to Edward Deci,which of the following will most likely occur as a result?

Accepted Answer

A)  The bonus will encourage Rebecca to work harder than before. 
B)  The bonus will detract from Rebecca's inner desire to work hard. 
C)  Rebecca's bonus will satisfy her higher-level needs and increase her motivation. 
D)  Rebecca will feel inadequate because the bonus fails to address hygiene factors.

Question 18

Jack is in the process of implementing a gainsharing plan for his firm.He has already determined that the plan's objectives will be to lower labor costs.What is the next step that Jack needs to take?

Accepted Answer

A)  choose specific performance measures 
B)  decide on a funding formula 
C)  decide how often to pay bonuses 
D)  select the form of payment

Question 19

Ryobi is a large,international power tool manufacturer that develops affordable,high-quality products,such as drills,circular saws,and routers,for both homeowners and craftspeople.As the company continues to grow,its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective.Currently,the firm provides merit raises based on performance appraisals; however,executives are considering changing the current incentive plan. Which of the following,if true,undermines the argument that Ryobi should discontinue all merit raises?

Accepted Answer

A)  Ryobi employees have expressed that they would prefer stock options to merit raises. 
B)  Ryobi managers have not received significant training about conducting performance appraisals. 
C)  Ryobi managers have noticed significant productivity improvements among employees who receive merit raises. 
D)  Ryobi's top executives receive a combination of base salary and stock options to encourage them to focus on the firm's strategic goals.

Question 20

Elaine,the HR manager at Western Enterprises,has been assigned the task of implementing a gainsharing plan.What does Elaine most likely need to do first?

Accepted Answer

A)  choose specific performance measures 
B)  decide how often to pay bonuses 
C)  establish general plan objectives 
D)  develop an involvement system

Exam 12: Pay for Performance and Financial Incentives

When hired by Delmar Designs,Shane agreed to forego 6% of his normal pay if he didn't meet his goals in return for a 12% bonus if he exceeded his goals.In which type of plan does Shane most likely participate?

Which of the following terms refers to the right to purchase a stated number of shares of a company stock at today's price at some time in the future?

Research indicates that employee stock ownership plans most likely ________.

The Scanlon plan includes all of the following features EXCEPT ________.

Dual-career ladders are effective tools for managing the professional pay of working mothers who desire a work-life balance.

According to Vroom's theory,if expectancy,instrumentality,or valence is equal to zero,there will be no employee motivation.

The perceived relationship between successful performance and obtaining the reward is referred to by Vroom as ________.

What type of pay plan is being used when workers are paid a sum for each unit they produce?

Robert Katz popularized the use of financial incentives for workers whose production exceeds some predetermined standard.

The complicated nature of piecework makes it an unpopular individual incentive plan among employers.

How does merit pay differ from a bonus?

Which of the following is the primary advantage of piecework plans?

Gainsharing is an incentive plan that ________.

Employees at GameTime Software participate in a gainsharing plan.Employee bonuses are calculated by dividing payroll expenses by total sales.GameTime Software most likely uses which of the following plans?

Which of the following terms refers to an incentive plan in which a person is paid a sum for each item he or she makes or sells,with a strict proportionality between results and rewards?

Rebecca's manager wants to acknowledge her outstanding service record for the past quarter.The manager decides to give Rebecca a bonus of $1000 as a reward.According to Edward Deci,which of the following will most likely occur as a result?

Jack is in the process of implementing a gainsharing plan for his firm.He has already determined that the plan's objectives will be to lower labor costs.What is the next step that Jack needs to take?

Elaine,the HR manager at Western Enterprises,has been assigned the task of implementing a gainsharing plan.What does Elaine most likely need to do first?