Chapter 10

According to the National Center for Employee Ownership, in 2010 approximately _____ organizations have employee stock ownership plans

10,500

A study on bonus vs. actual pay raises showed that improving one's pay through merit increases by 1 percent would increase future performance by ___ percent.

2

The standard time for producing one unit of work in a job paying $12.75 per hour was set at twelve minutes. The piece rate would be ____ per unit a.

2.55

In most profit-sharing plans, about _____ of the net profit is shared.

20 to 25 percent

A study of 20,000 employees found that ____ of "high potential" employees planned to leave their company by the end of 2010 due to perceived pay inequity.

27 percent

Executive base salaries represent between ____ percent of the total annual compensation.

30 to 40

ESOPs can qualify as tax-exempt employee trusts under section ____ of the Internal Revenue Code.

401(k)

In 2011, a study by the American Psychological Association found that _____ of employees feel they receive inadequate nonmonetary awards and recognition for their contributions at work.

43 percent

Research shows that a merit increase in the range of ____ percent is necessary to serve as a pay motivator.

7 to 9

Research shows that a merit increase in the range of _____ is necessary to serve as a pay motivator.

7 to 9 percent

According to one budget survey, what percentage of reporting organizations use variable pay?

80

More than _____ of companies globally are offering variable pay programs.

80 percent

A major problem of ESOPs is that:

ESOPs place employees' pensions at risk because they are tied to the market performance of the organization.

This group is between the ages of 25 and 41 and values a balanced lifestyle of work and play.

Generation X

Group incentive plans include:

Improshare

When the determination of a bonus includes both production employees and nonproduction employees and this bonus is based on overall group productivity, which type of gainsharing program is being used?

Improshare

Which of the following is NOT an advantage of an incentive pay program?

Incentive payouts are fixed costs linked to the achievement of results.

According to Sammer, which of the following is NOT a characteristic of a successful incentive plan?

Payout formulas should be technically detailed, quantitative and extremely thorough to prove that management took significant effort to create the plan

A grant of units equal in value to the fair market value or book value of a share of stock; on a specified date the executive will be paid the appreciation in the value of the units up to that time. This is known as:

Phantom stock

The straight commission plan is limited by all of the following disadvantages, EXCEPT:

Salespeople will stress low-priced products

A cash or stock award determined by increase in stock price during any time chosen by the executive in the option period, which does not require executive financing is known as:

Stock appreciation rights

A popular and prevalent method used in many different industries for motivating and compensating hourly, salaried, and executive personnel is:

Stock options

Enterprise incentive plans include:

Stock options

Which plan provides opportunities for executives to purchase shares of their organization's stock valued at full market or a discounted price?

Stock purchase

Compensation specialists recognize all the following generations of employees except:

Synthesizers

These individuals are over the age of 60 and are less likely to spend money on themselves.

Traditionalists

The performance threshold in incentive pay programs is:

a minimum level an employee must reach in order to qualify for variable pay

An appropriate reward for a consumer service representative who worked long hours to fill a new customer's large order is:

a spot bonus

An incentive given for a special employee contribution not directly tied to a performance standard is:

a spot bonus

A sales incentive plan that permits salespeople to be paid for performing various duties not reflected immediately in their sales volume is known as:

a straight salary plan.

Contemporary reasons given by organizations for implementing incentive plans are:

all of the above.

Management should guard against incentive payments being seen as _____.

an entitlement

Rate busting refers to:

an increase in output that results in the disapproval of fellow employees

Which of the following is not an executive long-term incentive program?

assigned benefits

When computing executive pay, ____ link operational yardsticks to traditional gauges.

balanced scorecards

Performance of sales people can be affected by all of the following external factors except:

change in the sales volume standard

The most widely used sales incentive program is the ____________________ plan.

combined salary and commission

The success of the Lincoln Electric Company profit-sharing plan rests largely on:

contributions by employees.

Profit sharing refers to any procedure by which an employer pays employees:

current or deferred sums based on the organization's financial performance.

When employees receive a higher rate of pay for all of their work if production exceeds a standard level of output, they are working under which incentive plan?

differential piece rate

Team incentive bonuses may be paid out in all of the following ways except:

distributed on the basis of individual performance appraisal

Disadvantages of profit sharing include all of the following except:

effective profit-sharing plans require a second HR program.

Which of the following is NOT one of the simple rules for maintaining motivation among professionals?

eliminate autonomy in work

The philosophy behind the Scanlon Plan is that:

employees should make suggestions to improve performance and be rewarded for their contributions.

One word, _____, describes the design of individual incentive plans

flexibility

Noncash incentive rewards are most effective as motivators when the award:

is combined with a meaningful employee recognition program

Which of the following is an individual type of incentive plan?

lump sum merit pay

In order for organizations to minimize the problems of merit raises, they should use:

merit guidelines.

The purpose of a profit-sharing plan is to:

motivate a total commitment to the organization as a whole.

A problem with creating team incentive plans is:

not all teams are alike

Special benefits given to executive employees, such as assigned chauffeurs, country club memberships, and special vacation policies, are known as:

perquisites

Executive compensation consists of all of the following except:

proficiency adjustments.

When setting performance measures for incentive systems, we can say that the best measures are:

quantitative, simple to understand, and show a clear relationship to improved performance.

Group incentive plans do all of the following except:

reduce free-ride effect

AS early as 1984 management guru Peter F. Drucker argued that CEO pay had ________.

rocketed out of control

Common output measures for productivity include:

sales

If employees' pay is based not on the actual amount of time it takes them to complete a job but instead on a predetermined amount of time for completing the job, which incentive plan are they working under?

standard hour plan

Enterprise incentive plans include:

stock options

Long-term incentive plans in which rights are granted to executives to purchase shares of their company's stock at a fixed price for a fixed period of time are known as:

stock options.

A compensation plan that compensates sales employees based on a percentage of sales is known as a:

straight commission plan.

When employees receive a certain rate for each unit produced, they are working under which incentive plan?

straight piecework

Studies have shown that variable pay plans may not achieve their proposed objectives or lead to organizational improvements due to each of the following, EXCEPT:

taxes are often a demotivator

The gainsharing plan that has as its most significant feature effective employee participation through committee representation is:

the Scanlon Plan.

A major concern of executive compensation involves:

the amount of compensation.

Advantages of ESOPs include all of the following except:

the employees' pensions are less vulnerable due to diversification.

Piecework is appropriate when:

the job is fairly standardized

The greatest influence on executive base salary is most likely:

the levels of competitive salaries in the job market.

Compensation committees justify large executive compensation packages for all of the following reasons except:

the pay gap between the CEO and employees builds credibility