MML Quiz Ch 4 & Study Plan
4.6 Which of the following is NOT a key factor to be considered when designing an incentive pay system? A. Who should be responsible for distributing incentive funds B. Whether company goals should be long-term or short-term C. The amount of risk employees will accept in their overall compensation plan D. Whether the incentive plan should be based on individual or group performance E. The criteria by which either group or individual performance should be judged
a
A piecework plan is an example of ________. A. an individual incentive plan B. merit pay C. a company-wide incentive plan D. a seniority pay plan E. a group incentive plan
a
Companies often award incentive pay based on the volume of production. What is a common issue associated with incentive pay based on this type of measure? A. It leads to workers who meet production quotas being intimidated by workers who do not. B. It makes incentive pay more time consuming to calculate and distribute. C. It requires making costly changes in the production process. D. It makes it harder for operations managers to count the volume produced. E. It makes it more difficult for businesses to determine production needs.
a
How does the introduction of new and improved methods at work pose a problem for management in instituting individual incentive awards? A. It takes time for employees to become proficient with newer methods, and incentives are harder to implement for management. B. Employees need much greater incentives to be proficient with the newer methods. C. Employees become aware of how supervisors measure performance and perform accordingly. D. Employees lose focus on the incentives and focus on the newer methods. E. Employees become uncertain about how the newer methods at work tie into incentives.
a
How often does a current profit sharing plan distribute profits to employees? A. Typically on a quarterly or annual basis B. Typically every couple of weeks C. Typically every five years D. Typically every month E. When employees retire
a
In order for team-based incentives to work appropriately, work teams must be effective. Work teams are most effective when team members ________. A. are cross-trained to perform each other's work B. care for each other C. have similar education and experience levels D. receive the same pay E. are equally close to their supervisor
a
Management most often and typically relies on what measurement to determine incentive pay? A. The company's achievement of business objectives B. The educational level of an employee C. An employee's level of technical skills D. An employee's length of employment E. Management's subjective assessment of an employee
a
The Rucker plan and the Scanlon plan are similar gain-sharing plans. What is the key difference between the two plans? A. The Rucker plan uses the value-added formula, and the Scanlon plan uses the sales value of production formula. B. The Scanlon plan provides no input from management, but the Rucker plan does. C. The Scanlon plan does not recommend employee involvement, but the Rucker plan does. D. The Rucker plan emphasizes the suggestion system within the company, but the Scanlon plan does not. E. The Scanlon plan does not emphasize monetary rewards as much as the Rucker plan does.
a
The disadvantage of profit-sharing plans for employees is that ________. A. employees find it difficult to predict their earnings from year to year B. profit-sharing plans create unnecessary competition among workers C. employees do not see a significant increase in base pay D. management makes it harder to achieve the performance standards E. profit-sharing plans generally replace cost-of-living increases
a
When designing incentive plans, it is important to keep time horizons in mind. Most HR professionals follow the general guideline that ________. A. short-term goals can be achieved in 5 years or less and long-term goals take longer than 5 years B. short-term goals take less than a year and long-term goals take longer than a year to be achieved C. short-term goals can be achieved in 8 years or less and long-term goals take longer than 8 years D. long term goals can be achieved in less than 3 years E. short-term and long-term goals can be divided arbitrarily by a supervisor
a
Which of the following factors is NOT a likely cause for the failure of a gain sharing plan? A. Supervisors' lack of training in leading teams B. Companies that experience variable profits year to year C. A company culture of working on an individual basis D. Good communication flow between and within departments E. A highly competitive product market
a
Which statement regarding the time orientation of incentive pay plans is true? A. Long-term incentives, such as stock option plans, are commonly used in relation to professionals. B. Long-term incentive plan goals can generally be achieved in less than five years. C. In general, short-term goals are considered achievable in six months or less. D. Legal standards clarify the difference between short-term and long-term goals. E. Incentive programs for executives typically have a short-term orientation.
a
Which type of incentive would be most applicable for a company that values employees with exemplary attendance records? A. Behavioral encouragement plan B. Referral plan C. Piecework plan D. Spot bonuses E. Management incentive plan
a
Wilson Enterprises has implemented a gain sharing program based on improvements in company performance. Wilson employees would most likely receive gain sharing bonuses for all of the following EXCEPT ________. A. employee social skill improvements B. productivity increases C. worker safety record improvements D. higher customer satisfaction ratings E. production cost decreases
a
Ideally, the interests of which two groups are brought closer together by instituting company-wide incentive plans? A. Workers and the owners of the company B. Labor leaders and managers C. Customers and supervisors in the company D. Administrative staff and manufacturing staff E. Workers and executives
a
4.2 What two forms of core compensation are the most common types of pay used in a traditional pay system? A. Bonus and hourly wage B. Hourly wage and annual salary C. Hourly wage and commission D. Commission and bonus E. Annual salary and commission
b
A fixed first-dollar-of-profits formula is based on ________. A. a variable percentage of company profits based on corporate performance B. a specific percentage of profits contingent upon accomplishing a defined company goal C. the achievement of a company goal and a unanimous vote from company shareholders D. the company exceeding a predetermined minimum profit level E. a specific percentage of company profits contingent upon the input of supervisors
b
A greater number of employees are becoming eligible for incentive pay. The key reason behind this phenomenon is that ________. A. more companies want to share their profits with employees B. companies want to control costs and motivate employees C. incentive pay is replacing merit pay D. more workers demand incentive pay E. companies award incentive pay instead of cost-of-living adjustments
b
Companies generally institute incentive pay programs to control payroll costs and motivate employee productivity. Of the following, which would be an example of an incentive pay program element that could help an organization meet those objectives? A. Increasing sales commissions from 20% of sales to 25% of sales B. Profit-sharing program C. Overtime pay program D. Holiday bonus program E. 10% base pay increase for all employees
b
How does a company decide between using group or individual-based incentives? A. It depends on what type of a profit-sharing plan the company wants to institute (group vs. individual). B. It depends on whether the type of work and the specific objectives require independent performance or interdependent performance. C. It depends on whether management is trying to promote individual incentives or group incentives. D. It depends on whether workers want to work individually or in group settings. E. It depends on the cost of instituting the group or individual-based incentives.
b
Jill works at a factory where she is responsible for producing collector dolls. More than likely, Jill's employer uses ________. A. merit plans B. individual incentive plans C. group incentive plans D. bonus plans E. company-wide incentive plans
b
One of the advantages of introducing incentive pay instead of merit pay for cyclical industries such as retail sales is that ________. A. incentive pay is perceived as more valuable by employees than merit pay B. compensation expenses can be minimized with incentive pay C. incentive pay is always less than merit pay D. incentive pay is much easier to achieve for all types of performers E. supervisors can choose not to award incentive pay
b
The flexibility of profit sharing plans for companies means that ________. A. companies are in a flexible position to forego all distribution of profits when profit levels are less than anticipated B. companies can vary the amount of profit they distribute based on the amount of profits they earn C. companies can reduce benefits or base pay to distribute profit levels D. employees are always in control of the level of profits E. companies always give a defined percentage of profits to their employees
b
Well-designed incentive programs are based on ________. A. the number of years of service B. performance on the job C. creativity on the job D. a regular presence at work rather than absenteeism E. the relationship employees have with their supervisors
b
When designing an incentive pay plan, the time horizon of the plan becomes a major issue. Of the following, which is true? A. Production workers' performance should be based on longer periods of time in order to accurately assess skills. B. Production workers' performance is sometimes judged on periods as short as one hour. C. Incentive programs for professionals and executives should have a short-term orientation. D. As a general rule of thumb, short-term goals can be achieved in two years or less. E. In general, incentives for lower-level employees should be based on long-term goals.
b
Which of the following jobs would most likely use incentive pay as the base compensation plan? A. Wait staff B. Automobile salespersons C. Customer service representatives D. Teachers E. Factory workers
b
Which statement about incentive pay is true? A. Incentive pay is based on the number of years a worker has been with a firm. B. Incentive pay is given to employees in a one-time payment. C. Incentive pay is usually a larger amount than an employee's base pay. D. Incentive pay is only available to salaried workers, not hourly workers, due to wage laws. E. Incentive pay is motivating but tends to increase payroll costs.
b
Which statement about teams in the workforce is true? A. German companies first made the team concept popular in the United States. B. Innovation in the work environment is enhanced by team-based job design. C. Firms can use the same individualistic reward programs as incentives for teams. D. Seniority- and merit-based pay programs are effective incentives for work teams. E. The percentage of U.S. employers that use teams is declining due to poor results.
b
4.1 Which of the following would be considered an example of incentive pay? A. At the annual sales convention held by a large marketing organization, the president of the organization announces that there will be a new policy. Each year, the five top-selling sales representatives will each win a week-long vacation for two in the Bahamas. In addition, each will be given $2,500 in spending money for the trip. B. A toy store manager decides to give her employees a holiday bonus on the first of the year because of the scheduling flexibility they showed during the busy holiday season. C. A lawn care service owner pays his two salespeople a salary of $25,000 per year. On February 1, he informs them that for every 15 new clients one of them signs, that salesperson will earn a $200 bonus. Also, if the company's profits for the year increase by 15%, they each will be given $1,000 of the profit increase. D. A pizza shop owner raises his employees' hourly wage by 50 cents in an effort to encourage them to increase their speed of service. E. After a particularly sluggish year, a restaurant owner decides to provide her customers an incentive to visit more often. She slashes prices on the menu by an average of 15% and offers a loyalty card that entitles card bearers a free meal after purchasing 10 meals.
c
All of the following factors should be considered by HR professionals before designing an incentive plan EXCEPT ________. A. the criteria for judging performance B. whether the plan should be based on individuals or groups C. whether customers should have an input on the incentive plans given to employees D. whether incentive pay should replace traditional pay E. how much risk employees can accept with their overall compensation
c
Current profit-sharing plans pay cash awards to employees. Typically, how often are these awarded? A. On a semi-annual basis B. Every other year C. On a quarterly or annual basis D. Every two or three years E. On a monthly basis
c
Employees are rewarded in a company-wide incentive plan ________. A. when an individual worker exceeds the performance standard B. when the company perceives loyalty on the part of the employees C. when the company exceeds the minimum acceptable performance standard D. regardless of the prevailing profit levels and stock price of the company E. to promote healthy individual competition among workers
c
Group incentive plans ________. A. work well when some of the members have a greater impact on achieving a goal B. often do not cultivate loyalty among employees, even though they may be well-designed C. can eventually increase productivity if well-designed. D. cannot be of different types; generally there is only one kind of plan E. that are well-designed do not necessarily encourage teamwork
c
In traditional pay plans, employees are paid ________. A. based on performance B. every two weeks C. a fixed hourly rate or annual salary D. for length of service to the company E. in advance of work performed
c
Incentive or variable pay is defined as compensation, other than ________ that fluctuate(s) according to employees' attainment of some standard, such as a pre-established formula, individual or group goals, or company earnings. A. group-based pay B. performance-based pay C. base wages or salaries D. merit pay E. bonus pay
c
Incentive pay helps cut payroll costs for companies. This is because incentive pay ________. A. is reserved for a select few in top management, and not for the majority of employees B. remains constant and is always a small portion of base pay C. is given instead of annual increases, and only when the company enjoys some measure of success D. is given only on rare occasions E. is much smaller than annual seniority increases
c
Incentive plans that promote collaborative behavior are called ________. A. team-building incentives B. team-based incentive plans C. group incentive plans D. cooperation incentives E. behavioral rewards
c
John has been employed for 15 years with a textile company that produces men's shirts. John has received incentive pay for most of the 15 years of his employment. What is the term an economist would use to classify this longevity of employment? A. Incentive effect B. Base pay effect C. Sorting effect. D. Seniority effect E. Longevity effect
c
Matt, Juan, Linda, and Ming are working on a new product for their company that will be launched in the near future. Management wants to reinforce cohesiveness among the team. Which type of group incentive plan would be best suited for attaining the management objective? A. Differential incentive payments B. Referral plans C. Equal incentive payments approach D. Differential payments based on ratio of base pay E. Gain-sharing plans
c
One of the three assumptions of an effective incentive pay system is that ________. A. a company should create rewards for loyalty and seniority B. a company needs to think of overall performance by all employees, rather than in relative terms for each employee or team C. a company's individual workers and work teams differ in what they contribute to the company and how well they perform D. individuals and teams achieve the same amount and quality of work E. a company's overall performance depends on its financial situation
c
The performance measures chosen for incentive pay should ________. A. be based primarily on employee input B. consider the opinions of union leaders and supervisors C. relate to a firm's competitive strategy D. depend on a rival firm's market share E. be qualitative rather than quantitative
c
Which is true of profit-sharing plans? A. Profit-sharing plans do not pay cash awards. B. Profit-sharing plans include merit pay. C. Profit-sharing plans pay a part of the company's profit to the employees. D. Profit-sharing plans are short-term in nature. E. There is only type of profit-sharing plan in use todaylong dash—the deferred profit-sharing plan.
c
Which of the following best defines group incentives? A. A program that rewards groups on company-wide objectives B. An incentive fund that can be distributed to individual team members based on supervisor appraisals C. A program that rewards employees for their collective performance D. Incentive pay based on individual group members' contribution E. Incentives paid to group members based on individual performance
c
Which of the following statements best describes a piecework plan? A. In piecework plans, the time for producing a unit is long and each unit is unique. B. In a piecework plan, quantity is valued more than quality. C. In piecework plans, the time for producing a unit is short and production of units is repeated. D. In a piecework plan, an employer would never use subjective criteria. E. Companies that use piecework plans pay little attention to profit levels.
c
Which statement about incentive pay is correct? A. Incentive pay is used to reward individual employees but not groups. B. Incentive pay is more costly for firms than seniority and merit pay. C. Incentive pay is a one-time payment that augments an employee's base pay. D. Incentive pay is limited to production and nonsupervisory employees. E. Incentive pay replaces an employee's traditional pay at most firms.
c
A key difference between merit pay and incentive pay is that supervisors generally ________. A. offer greater incentive pay than merit pay B. communicate in advance about merit pay, but do not communicate in advance about incentive pay C. offer greater merit pay than incentive pay D. communicate in advance about the incentive pay amounts, but do not communicate in advance about the merit awards E. base incentive pay on subjective assessment and merit pay on objective assessment of the employees
d
Each of the following is true of a company-wide incentive plan EXCEPT ________. A. employees are rewarded based on company profits B. company-wide incentive plans are used to motivate employees to work toward increased profits C. employees are rewarded based on stock values for publicly traded companies D. individual performance is measured in support of company goals E. company-wide incentive plans make employees' goals more compatible with corporate goals
d
In a behavioral encouragement plan, individuals are awarded incentives for ________. A. accomplishing specific objectives B. producing better-quality output C. exceeding production and sales D. having exemplary attendance E. showing hard work, diligence, and skill
d
Incentive pay plans are given to ________. A. management only B. individuals only C. those who are in production, not management, roles D. individuals, teams, or the entire company E. teams only
d
Java Jazz is a company known for superior pay and good benefits. Java Jazz is having a hard time finding qualified employees, and it is experiencing high growth. Which type of incentive is it most likely to offer? A. Management incentive plan B. Individual incentive plans C. Group incentive plan D. Referral plan E. Spot bonuses
d
When there is a low supply of highly qualified individuals, what is the best way for a company to fill empty positions? A. Give spot bonuses B. Give financial awards when highly qualified employees meet or exceed targeted objectives C. Contact employment agencies because the company believes them to be worthwhile D. Give referral bonuses to increase the recruitment of highly qualified employees E. Give promotions to qualified individuals in order to retain them in the company
d
Which of the following statements is true? A. Merit and seniority pay are compatible with team-based work. B. Companies that rely on groups should offer more individualistic incentives. C. Traditional pay programs are beneficial for work teams. D. Team-based pay plans should compensate employees for achieving group objectives as well as assuming their respective roles in a team. E. Individualistic compensation practices encourage group behavior.
d
4.3 It would be easiest for an employer to award individual incentive pay to a(n) ________. A. employee who relies on three other departments to process paperwork correctly B. customer service representative who handles defective product returns C. group of six employees who assess the safety measures for a utility company D. executive who works at an advertising firm E. employee who works on the assembly line in a shoe factory
e
4.4 With the group incentive plan, different payments are made to group members based on their contribution to the team's performance. What are these payments called? A. Effort incentive payments B. Contribution incentives payments C. Unequal incentive payments D. Ratio incentives payments E. Differential incentive payments
e
4.5 Historically, what led to management instituting company-wide incentive plans? A. Management wanted workers to be loyal to the company. B. Management wanted workers to avoid being unionized. C. Management wanted workers to be financially well off. D. Management felt that workers would work harder if given incentives. E. Management felt workers would be less likely to challenge management practices if profits were shared.
e
In the current business environment, most companies ________. A. give a decreasing degree of importance to incentive pay methods B. use incentive pay systems to increase employee loyalty to the firm C. rely on traditional pay systems more than incentive pay systems D. use traditional pay systems to reward employees for creativity rather than longevity E. use a mix of traditional and incentive pay methods
e
The level of risk increases for employees as incentive pay becomes a greater proportion of total compensation. Generally this perceived level of risk ________. A. is subjective for most employees B. increases for all employees regardless of their rank C. can be controlled by supervisors D. is lower for higher-rank employees E. is higher for higher-ranked employees
e
What is the benefit of including an incentive component in the core compensation program offered to employees in an industry that experiences cyclical demand, such as retail sales? A. Attracting better educated applicants B. Reducing absenteeism C. Having tax advantages associated with the strategy D. Reducing turnover E. Lowering payroll costs during lean periods
e
Which of the following is typically used to determine incentive pay for managers? A. Number of days a manager is present versus absent from employment B. Personal history C. Number of years at work D. Perception of the manager by subordinates E. Ability to meet business objectives
e
Which of the following would be considered a long-term incentive plan? A. Profit sharing B. Spot award C. Team-based incentive D. Bonus pay E. Stock option plan
e
Why do companies institute incentive pay programs? A. To satisfy upper management's goals for employees B. To produce loyal employees C. To satisfy union leaders' requests for better pay for workers D. To increase the budgets associated with payroll E. To motivate employee productivity and control payroll costs
e
