Comp Final

The free-rider problem is common in firms using individual incentive plans (T/F)

False

•Team performance is measured against a set standard to determine incentive pay.

Group incentive plans

____ work in some situations and not in others.

Incentives

_____ is employees' beliefs that requisite job performance will be rewarded by the organization

Instrumentality

_____ is employees' beliefs that requisite job performance will be rewarded by the organization.

Instrumentality

Which of the following is NOT a provision of the Fair Labor Standards Act of 1938?

It requires that employers provide 15 weeks of medical leave to employees

Which of the following is a benefit under Social Security?

Lump-sum death payments

DrenchFort Corp. is a small company that pays high wages. As its wages are high, it does not provide any benefits. Recently, it has noticed that its employee turnover has increased, so it decides to provide benefits to retain employees. Which of the following benefits is most likely to reduce turnover?

Medical coverage

people sort themselves by what is important to them.

Sorting effect

360-degree feedback assesses performance from five points of view

Supervisor, peer, self, customer, and subordinate.

Caught between upper management and employees.

Supervisors

What are the special groups of compensation?

Supervisors, Top Management, Board of Directors, Professional Employees, Sales Staff, and Contingent Workers.

What employee benefits are required by law?

Workers compensation, social security, unemployment compensation, FMLA, COBRA, and HIPPA

One common feature of all types of incentive plans is

an established standard of performance that is used to determine the magnitude of the incentive pay

_____ is a function of motivation, ability, and environment

behavior

A key element in fairness is ____

communications

Title VII of the Civil Rights Act of 1964 prohibits ___

discrimination

The pay model suggests effectiveness depends on three things

efficiency, equity, and compliance.

The executive branch of the federal government _____

enforces laws through agencies and its other bodies

(Equal Pay Act of 1963) Jobs are considered equal if requiring

equal skill, effort, and responsibility, performed under the same conditions

A major compensation problem for contingent workers is ___

equity

All of the following factors are reasons for the growth of benefits EXCEPT

foreign lawsuits

The disconnect between ___ and _____ of the nation's top executives has been a source of contention for over 30 years.

pay and performance

Controls on managers' pay decisions come from those inherent in the design of the ____ and ____

technique and the formal budgeting process.

All of the following support the use of individual incentives EXCEPT

the presence of a union

Deming's major argument regarding performance appraisals is that

the work situation is the major determinant of performance

Labor costs = ______ x (______ + ______)

Labor costs = Number of hours worked x (Average cash compensation + Average benefit cost)

Employers deal with inequity on two fronts

One way is to view contingent workers as a pool of candidates for future permanent hire. A second way is to champion the idea of boundary-less careers.

Employers must pay Social Security, unemployment and workers compensation taxes on wages and salaries, unless the worker is an

independent contractor

When compared to the impact of unions during periods of strong economies, the impact of unions during periods of higher unemployment is _____.

larger

Annual bonuses often play a major role in executive compensation and are primarily designed to _____.

motivate better short-term performance

The biggest cost-containment strategy in recent years is the movement to:

outsourcing

If Philadelphia has a CPI of 165 and Houston has a CPI of 145, and if both cities started with bases of 100, it means that _____.

prices have risen faster in Philadelphia since the base year than in Houston

A major criticism of standard rating scales is that

raters have different definitions of scale levels

Executives, supervisors, and sales staff often receive special compensation treatment because ___

these jobs face conflicting demands

The _____ recognizes the fact that when people leave an organization, they typically are replaced by employees who earn a lower wage

turnover effect

Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and wants to continue that coverage. According to COBRA, how long can Larry continue his coverage through Steve's company after being laid off?

0 months

How many weeks of leave does Family Medical Leave Act (1993) mandate for all workers at companies that employ 50 or more people?

12 weeks

Research indicates that the presence of a union adds about _____ to employee benefits

30 to 40 percent

•Savings plan where employees can defer pretax income. •Employers match at 50 cents on the dollar.

401(k) plan

Three popular forms of defined contribution plans

401(k) plan, Employee Stock Ownership Plan (ESOP), and Profit sharing plan.

Menthorp Inc. wants to design a variable-pay plan that fosters teamwork and business knowledge of its employees. In order to ensure maximum motivation, Menthorp wants its variable-pay plan to show a clear performance-reward link. Which of the following plans is most suitable for Menthorp?

Cash profit sharing plan

____ is when an employee asserts an event has occurred and demands the employer pay.

Claims processing

Play an important "safety valve" role for companies

Contigent workers

Overall _____ is calculated as a weighted average of the ratings on all performance dimensions in both the standard rating scale and BARS

employee performance

Which of the following involves periodic adjustments based typically on changes in the consumer price index?

A COLA clause

Pay offs for teams defined at the level of a strategic business unit.

Gain-sharing plans

pay can motivate people to perform better.

Incentive effect

_____ are the link to customers and this profession requires high initiative and low supervision.

Sales staff (force)

The most common approach to motivating executives to make decisions that are in the best interests of stockholders is _____.

a long-term incentive plan using stock options

When employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time, the most effective type of compensation is to offer _____.

a variety of rewards with significant incentive pay

In a _____ plan, an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company.

defined benefit

Trumbrella Corp. is a pharmaceuticals company. One of its employees reports that he had an on-the-job injury caused by slippery factory floor that broke his back. When Trumbrella initiates its claims processing, it should first

determine whether the accident happened

Organizations reduce ____ through layoffs or exit incentives.

headcount

Among peer raters, the most objective evaluations are given by

high-performing workers

A health maintenance organization (HMO) pulls together a group of providers willing to provide services at an agreed upon rate in exchange for employers

limiting employees to these providers for health services

Surveys show that the most highly valued benefit is:

medical insurance

The starting point of all plans is _____

merit pay

A _____ links increases in base pay to how highly employees are rated on a performance evaluation.

merit pay system

A major advantage of a _____ is that it reduces benefits costs, something that the other cost-cutting options ordinarily do not achieve

reduction in force

Presumably, if employees are offered ____ that satisfy one or more needs, they will behave in desired ways.

rewards

Efficiency involves three areas of concern:

strategy, structure, and standards.

Variable pay can be traced to two trends

•increasing competition from foreign producers •a fast-paced business environment requires workers adapt quickly to change.

According to research, which of the following is NOT one of the most important factors for employees influencing their pay systems?

Team-based pay

is the denial of particular jobs, promotions or training opportunities to qualified women or minorities.

Access Discrimination

______ incorporates the political motivations in the corporate world.

Agency theory

Which of the following is the best appraisal format in terms of legal defensibility?

BARS

Components of an Executive Compensation Package

Base salary, Annual bonuses, Long-term incentives, benefits, and perquisites.

_____ seems to be the most common format using behaviors as descriptors.

Behaviorally anchored rating scales (BARS)

Face possibility disgruntled stockholders may sue over corporate strategies that don't "pan out"

Board of directors

fairness in the amount that is distributed to employees

Distributive justice

There are two types of equity, or fairness

Distributive justice and procedural justice

____ Are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments

Employee Benefits

Generate long-term effects. Foster employee willingness to participate in the decision-making process. Have little impact on productivity or profit.

Employee Stock Ownership Plans (ESOPs).

_____ revolves around four issues

Employee benefit communication

The ______forbids wage discrimination on the basis ofgender if performing equal work in the same firm

Equal Pay Act of 1963

______ is employees' assessment of their ability to perform required job tasks

Expectacny

_____ argues that people behave as if they cognitively evaluate what behaviors are possible in relation to the value of rewards offered in exchange

Expectancy theory

Covers all employees of companies engaged in interstate commerce or in the production of goods for interstate commerce.

Fair Labor Standards Act of 1938 (FLSA)

•Major provisions include minimum wage, hours of work, and child labor. Records must be kept of employees, their hours worked, and their pay.

Fair Labor Standards Act of 1938 (FLSA)

Agency theory argues that employees prefer risky pay as rewards can be greater than a salary (T/F)

False

Jim was a full-time student for four years, but he could not find a job after graduating. Jim is eligible to collect unemployment insurance (T/F)

False

The behaviorally anchored rating scales are inexpensive to develop but time-consuming to use (T/F)

False

Which of the following is NOT a benefit that is required by statutory law?

Pension and retirement benefits

•Driven by financial earnings or return measures. •Pay for meeting or exceeding specific goals.

Performance plans (performance shares and performance units)

______ are used in a wide variety of decision in organizations.

Performance reviews

A hybrid plan combining HMO and PPO benefits.

Point-of-service plan (POS).

fairness of the procedures used to determine the amount of rewards.

Procedural justice

May be torn between goals, objectives, and ethical standards of their profession

Professional Employees

____ Focus on a predetermined index of profitability.

Profit-Sharing Plans

Two categories of evaluation formats are ____ and _____

Ranking and Rating

Require raters to evaluate employees against a standard rather than against each other. Each performance standard is measured on a scaleso variation falls along a continuum.

Ratings formats

Which of the following statements about merit pay is NOT true?

Removal of merit pay lowers satisfaction but not performance

•Standard compensation is not designed for this type of work. •There is more reliance on incentive payments tied to individual performance. •High demand products rely more on base pay while incentives increase with sales ability.

Sales Forces

Often go for extended periods in the field with little supervision

Sales Staff

Pay differences legal if affirmative defense

Seniority, merit or quality of performance, quality or quantity of production, or some factor other than sex.

Stockholders want healthy return on investments.

Top Management

______ sets an estimated pay increase budget for the whole organization

Top management

A compa-ratio greater than 1 means that, on average, the rates exceed the intended policy (T/F)

True

____ is the value employees attach to the organization rewards offered for satisfactory job performance

Valence

looks at the pay women and minorities receive for the jobs they perform

Valuation discrimination

What is the first question that should be asked when determining the amount of retirement income an employer should provide?

What level of retirement compensation would the employer like to set as a target, expressed in relation to pre-retirement earnings?

A _____ approach looks at what contributes value in an organization

balanced scorecard

Prevailing-wage laws _____.

were passed in response to conditions on projects such as the construction of the Hoover Dam during the Depression

What are the four issues employee benefit communication revolve around?

what is communicated, to whom, how it is communicated, and how frequently

Tying pay to performance requires three things

•A definition of performance. •A continuum showing levels from low to high. •Awarded merit increase at each level.

•Employer makes a tax deductiblecontribution of stock shares or cash to a trust. •The trust allocates stock to employees based on earnings.

•Employee Stock Ownership Plan (ESOP)

What are the major requirements of the Employee Retirement Income Security Act (ERISA)

•General requirements •Vesting and portability •Pension Benefit Guaranty Corporation •The Pension Protection Act of 2006 (PPA)

The four factors in the labor cost model are not independent.

•Number of employees. •Hours worked. •Cash compensation. •Benefit costs.

•This can be considered a DC pension plan if the distribution of profits are delayed until retirement.

•Profit sharing plan

Reducing benefits costs includes

•Suspending matching contributions. •Seeking bankruptcy protection. Controlling health care benefits

•Four major issues in setting up a benefit package

•Who should be protected or benefited? •How much choice should employees have among an array of benefits? •How should benefits be financed? •Are the benefits legally defensible?