Chapter 13 - HR

Some companies adopt a set of performance measures that focus on the company's long and short term goals. This system of awarding incentive pay is called a _____.

balanced scorecard

One negative aspect of an ESOP is that it carries significant risk for _____.

employees

Compared to gainsharing plans, group bonuses are typically designed for _____.

smaller work groups

Why is it important to communicate with employees about their pay plan? (Select all that apply.)

It increases the chances that incentives will influence employee behavior as desired. It demonstrates that the pay plan is fair.

Which of the following conditions are important for success in gainsharing? Choose all that apply.

Management encouragement of employee input Employment security Goal setting

What is the disadvantage of offering bonuses for group performance?

May prevent cooperation among groups within the organization

Employee participation in pay-related decisions can contribute to the success of an incentive pay plan under what conditions? (Select all that apply.)

When the incentives encourage employees to monitor their performance. When the organization fosters trust and cooperation.

When is it most important to communicate with employees about a pay plan?

When the plan changes

What is the downside to using a standard hour plan as incentive for production workers?

Workers may not worry about quality or customer service

What are some disadvantages of a profit-sharing program?

Workers might not be motivated, because they feel they have little effect on the amount of profit the business generates. Waiting months to receive a check causes workers to lose their motivation. Workers expect their profit-sharing check to be about the same as what competing companies are offering.

For which type of job is a gainsharing plan most useful?

a complex job

Incentive pay is typically based on _____.

an employee's performance

Incentive pay based on a percentage of sales is called _____.

commission

Lori is a realtor and earns 5% on the sale of each house. Her pay is an example of a _____.

commission

Giuseppa works for a company that distributes shares of stock to all the employees by placing the stock in a trust. Her company has a(n) ______ ownership plan.

employee stock

When executive pay includes stock or stock options, companies need to be aware of the possibility of _____.

insider trading

An incentive system that gives a raise to employees who rank high on performance appraisals is called _____ pay.

merit

At her last performance review, Marlo received a 4% pay increase because she had met all of the goals her manager had set for her the previous year. Her pay increase is an example of _____ pay.

merit

An incentive paid once to an employee for agreeing to stay with an organization is called a(n) _____.

retention bonus

An incentive plan that pays workers more if they finish their work in less than the normal amount of time is called a(n) _____.

standard hour plan

The opportunity to purchase a specific number of stock shares at a predetermined price is referred to as .________ _________

stock option

Samira makes necklaces. Her buyer pays her $50 per necklace. This is an example of a(n) ______.

straight piecework plan

Which type of incentive plan would involve the employer paying the same amount per piece regardless of how much the worker produces?

straight piecework plan

In one study, employees said that in addition to being paid more money, the most important factor that prompted them to participate in the company's incentive plan was ______

the ability to affect the way their work was done.

Since there are advantages and disadvantages for all types of incentive pay, organizations offset the disadvantages by ______.

using a balanced scorecard approach

What is the difference between performance bonuses and merit pay?

Performance bonuses are not built into base pay

It is important that incentive pay plan meet which of the following requirements? (Select all that apply.)

The performance measures will help achieve the company's goals. Employees value the reward offered. The organization can provide resources employees need to achieve their goals.

Janine works as a seamstress at a tailor shop and sews buttons on clothing. She earns $2 for each item she completes. Her pay is an example of ____.

a piecework rate

The Dodd-Frank Wall Street Reform and Consumer Protection Act gives shareholders of public companies _____.

a vote of approval or disapproval on the companies' executive pay plans

Incentive plans often work best when ______.

employees are involved in crafting the plan itself.

By law, an ESOP must invest at least _____ of its assets in the company's own stock.

51%

What is the most common form of employee ownership?

An ESOP plan

Which of the following are examples of short-term incentives used for executives?

Bonus based on profits Return on investment

What are some risks associated with involving employees in pay-related decisions? (Select all that apply.)

Employees may make decisions that benefit them but not the organization. The process of creating and administering incentive plans can become more complex.

Incentive pay sometimes presents executives with significant ethical issues. Incentives linked to stock performance can lead to which of the following ethical issues? (Select all that apply.)

Scandal that damages the company's reputation Executives dishonestly raising the price of stock and thereby obtaining a bonus and stock option

A gainsharing plan is more likely to succeed when an organization features which of the following components?

Specific goals Employees who enjoy working as a team Committed managers

Which federal agency requires companies to reveal how much their executives are paid and how well the company has performed in comparison to its business rivals?

The Securities and Exchange Commission (SEC)

Why do organizations pay workers a piecework rate?

To motivate them to work efficiently

What is one advantage of a profit-sharing program?

When the company generates little or no profit, there is no need to spend much on this type of incentive.

Studies show that businesses perform better when they grant stock options to ______.

executives

A group incentive program that measures improvements in productivity and distributes a portion of the profits to each employee is called _____.

gainsharing

Forms of pay that are linked to an employee's performance as an individual, group member or organization member are called _____ pay.

incentive

Jake's sales team earned a 5% bonus for meeting its goals last quarter. This bonus is an example of _____.

incentive pay

George is the chief financial officer for a bank holding company and received a bonus last year based on the company's profits. He is not sure if he will get a bonus this year as the company is not doing as well financially. His bonus is an example of _____ incentive pay.

short-term