Compensation Exam 4

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

Behaviorally Anchored Rating Scales

When a job involves very routine, mechanistic tasks, the most appropriate appraisal format is:

Behaviorally Anchored Rating Scales.

Jake's new car was dented by his employee, Steve. Ever since then, Jake has been consistently giving lower ratings to Steve during performance reviews to get back at him. Which of the following errors has been exhibited by Jake?

Severity error

Which of the following is an advantage of gain-sharing plans?

They increase employees knowledge of business

The motivation triangle includes _____.

culture

Available evidence indicates that managers believe the most important factor for pay increases is

Performance

________ have indirect pay-performance links and require employees to put up money to exercise grants.

Stock options plan

The most obvious sorting factor is

ability

The most common form of outcome-based appraisal is:

Management By Objectives

Which of the following statements is true of the Rowan plan?

It is an individual incentive plan that provides for variable incentives as a function of a standard expressed as time period per unit of production.

________ is a nonpermanent (variable) payment (bonus or lump sum) form of variable pay granted to employee as function of some (typically primarily subjective) assessment of individual employee performance.

Merit Bonus

When pay is based on individual performance, turnover tends to be highest among

Poor performers

According to the ________ theory of motivation, employees prefer certain or fixed income flows, such as wage or salary, to variable income flows, such as performance-based pay.

agency

In ________ ranking, raters look at a list of employees, decide who the best employee is, and cross that person's name off the list. From the remaining names, the manager decides who the worst employee is and crosses that name off the list—and so forth.

alternation

Which of the following is an example of the sorting effect in action?

an employee leaving a high-paying job for one that provides more work/life balance

The amount of fairness given to employees refers to

distributive justice

According to ________ theory, relative pay is important as employees evaluate the adequacy of their pay via comparisons with other employees.

dont know

Allowing nonperformance factors to affect performance scores is known as

dont know

In the context of the performance evaluation process, which of the following ensures that raters are motivated to rate accurately?

dont know

One review of the evidence suggests that employees do not begin to consider changing their behavior unless raises are at least an increase of ________ percent.

6-7

Which of the following is a reward that recognizes outstanding past performance?

Merit pay

an incentive system with three piecework rates is the

Merrick plan

Which of the following is a disadvantage of gain-sharing plans?

Payouts can occur even if a company's financial performance is poor

Which of the following are an example of a long-term incentive plan?

Performance plans

Company X pays for performance. Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards. This is an example of the:

Sorting effect

Droppiece, Inc. is a company that provides more performance-based pay and less base pay than its competitors. Who among the following is most likely to join Droppiece?

Stella, a recent college graduate who loves to take on a challenge

Which of the following is an advantage of team incentives?

They are effective in stimulating ideas and problem solving

When a company moves from an individual incentive plan to a group incentive plan, the company is most likely to experience

higher turnover among high performers

Which of the following is an advantage of providing stock ownership as variable pay to employees?

It defers a portion of taxes to employees

Which of the following is statements is true of leniency error?

It is the error of consistently rating someone higher than is deserved.

Which of the following rating formats has the lowest rating errors?

Management By Objectives

Which of the following types of rankings would be least preferred by managers of more than 10-15 employees?

Paired-comparison ranking

Which of the following is the most commonly used team incentive performance standard?

not financial performance

Which of the following statements is true of merit pay?

not merit pay decr. fixed compensation costs over time

Which of the following statements is true of the Halsey 50-50 method?

It derives its name from the shared split between worker and employer of any savings in direct cost

In the context of evaluation formats, which of the following is true of the alternation ranking method?

It recognizes that raters are better at ranking people at extreme ends of a distribution.

Louie received the highest performance rating and is in the second quartile of his pay range. He received a pay increase of 8 percent. Bart also received the highest performance rating and is in the fourth quartile. Given the way most merit increase grids work, what size of pay increase would you expect Bart to receive?

Less than 8 percent

Last year, your performance was not very good and your performance rating was below average; however, this year you have done very well by exceeding your performance goals. To your surprise, your boss gives you just an average performance rating. What error has your boss most likely committed?

Spillover error

Menthorp, Inc. wants to design a variable pay plan that fosters teamwork and increases the 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?

The Merrick plan

Which of the following statements is true of individual spot awards?

They are given to employees for exceptional performance as an add-on bonus

A person with low self-esteem is likely to seek _____.

a large, decentralized organization with little pay for performance

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.

All of the following are categories of rater training EXCEPT ________ training.

behavior modeling

________ theory argues that pay should be based on outcomes if monitoring of behaviors is difficult or costly and if risk due to variability in outcomes is not large.

dont know

In the context of performance appraisal formats, which of the following criteria is concerned with whether the evaluation form initially requires a long time to be developed?

dont know Personnel research or employee development

A horn error occurs when an employee is:

downgraded across all performance dimensions because of poor performance on one dimension.

The trend in recent variable-pay design is to combine the best of

gain-sharing and profit-sharing plans

Telling raters that sometimes the work environment and system affect job performance more than the individual employee's behavior:

leads to higher ratings

When employee performance is easily measured and the organization's performance is fairly stable over time, the most effective type of compensation is to offer

monetary rewards with large incentives

Deming's major argument regarding performance appraisals is that:

the work situation is the major determinant of performance.

In the context of performance appraisals, which of the following statements is true?

All other things being equal, males are rated higher than females.

In which of the following jobs is it most appropriate to use behaviorally anchored rating scales?

An assembly line job that involves tightening nuts on an engine

Which of the following is an open-ended performance appraisal format that involves the use of descriptors ranging from comparisons with other employees to adjectives, behaviors, and goal accomplishment?

An essay format

During the performance review of her employees, Sarah gives higher ratings to employees from her hometown, Oklahoma, as she believes that people from Oklahoma are hardworking and trustworthy. Which of the following rating errors is Sarah exhibiting?

Clone error

Which of the following motivational theories states that performance-based payments work best when they closely follow performance?

Reinforcement Theory

In the context of a pay-for-performance plan, which of the following questions is related to equity?

Do employees view the amount of compensation received as fair?

The ________ theory of motivation states that employee motivation is the product of instrumentality and valence.

Expectancy

Which of the following theories states that people choose the behavior that leads to the most satisfactory exchange?

Expectancy Theory

In the context of pay influencing turnovers, which of the following is a result of too little pay?

Feelings of unfair treatment among employees

________ is a variable pay plan where payout depends not on company level performance such as profitability, but rather on performance at some subunit such as a plant or facility.

Gain sharing

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the

Gantt plan

Which of the following is a negative outcome of the management by objectives method?

Increase in performance pressure and stress

Grabhouse, Inc. is experiencing an increase in the turnover rates of its top employees. Upon consulting with its managers for the reasons for this increase, Grabhouse finds that employees are uneasy about the current pay mix as it involves too many risky elements. In order to make its pay mix less risky, Grabhouse needs to:

Increase the base pay component of its pay mix

________ is employees' beliefs that higher job performance will be rewarded by the organization.

Instrumentality

Horizon Inc. wants its employees to focus on organizational as well as individual goals. It also wants to motivate its employees to contribute toward increasing the company's shareholder value. It has implemented a variable pay plan that links incentive payouts to the company's financial targets. Horizon believes that this plan would help it clearly communicate its priorities to its employees. However, the downside of this plan is that the employees receive reduced payouts if the company's financial targets are not fulfilled. Which of the following variable pay plans is Horizon most likely using?

a balanced scorecard plan

________ requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action.

a bedeaux plan

Teaching raters what constitutes good, average, and bad performance is ________ training.

performance-standard

A major criticism of standard rating scales is that:

raters have different definitions of scale levels.

The ability triangle includes

selection

A team leader with a free-rider problem in his team can most likely maximize the performance of his team by:

specifying performance levels and due dates

Which of the following statements is true regarding rater training?

Training to reduce halo errors and improve accuracy has been most successful.

In the context of subordinates as raters, which of the following statements is true?

Upward feedback has been historically viewed as countercultural.

________ is the value employees attach to the organization rewards received for job performance.

Valence

Which of the following statements is NOT true?

Workers whose performance is consistently average are rated higher than those who perform better at the end of a rating cycle.

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer

a base pay with low incentives and a wide array of awards

Maxwell Construction Corp. employs a lot of uneducated laborers. The company wants to introduce a variable pay plan that is easy to understand and does not cost much to administer. Which of the following variable pay plans is Maxwell most likely to introduce?

a cash profit sharing plan

When an organization's performance has frequent highs and lows, but individual performance is fairly stable and performance measures are clear, the most effective compensation mix is to offer

a large base pay and low incentive pay

Components identified as vital to the success of both Scanlon and Rucker plans are:

a productivity norm and effective worker committees

If you had repair work done on your car, the shop most likely used ________ to pay the mechanic.

a standard hour plan

In situations where the nature of the task is so uncertain that it may be difficult to specify expected goals, the most appropriate rating format is

a standard rating scale.

Which of the following is an individual incentive plan?

a stock ownership plan

Paying a dime for every bottle collected and turned to a collection center is an example of:

a straight piecework system

The most frequently implemented incentive system is

a straight piecework system

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

The corporate performance of Yellow Corp. is fairly stable. However, it is difficult to measure individual performance. In this case, the most effective compensation mix is to offer

a wide range of awards beyond just money

Which of the following is a disadvantage of team incentives?

they are administratively complex to implement

Which of the following is true of merit bonuses?

they are viewed as less of an entitlement than merit pay

In gain-sharing plan formulas,

labor inputs are in the numerator and productivity outcomes are in the denominator.

Among peer raters, the most objective evaluations are given by:

high-performing workers.

TreeDen Corp. experiences an increase in its employee turnover rate. Upon investigating, it discovers that employees are dissatisfied with the company's pay. Employees cannot see a direct link between their performance and their pay. They are also unhappy about having to pay out of their pockets to obtain grants. In this case, TreeDen is most likely using a

stock ownership plan