ch. 12 Recognizing employee contributions with pay

for incentive pay to motivate employees they must meet these requirements:

-performance measures are linked to the orgs goals -employees believe they can meet performance standards -the org gives employees the resources they need to meet their goals -employees value the rewards given -employees believe the system is fair -the pay plan takes into account that employees may ignore any goals that are not rewarded.

pay for organizational performance

-profit sharing -stock options

6. Which of the following is a drawback of a minimum wage in terms of social policy?

It tends to be lower than the earnings required for a full time worker to rise above the poverty level.

pay for group performance:

-gainsharing -group bonuses

profit sharing

-payments are a % of the organization's profits and do not become part of the employee's base salary ex: GM provides profit sharing for its contract workers. at least 6% of the company's profits are divided among the workers according to how many hours they worked that year. -intended to encourage employees to "think like owners"

scanlon plan

a gainsharing program in which employees receive a bonus if the ratio of labor costs to the sales value of production is below a set standard.

piecework rate

a wage based on the amount workers produce.

20. Pay is not always the most important factor in accepting a new position. Over 50% of college students said they would accept lower pay if they received which of the following: (Select all that apply)

a. Flexible hours Correct c. Access to social media Correct d. Doing work they have a passion for Correct

17. Paying most or all of a salesperson's compensation in the form of commissions encourages the salesperson to focus mainly on:

a. closing the sale. Correct

13. Under the FLSA, exempt status of an employee depends on his/her:

a. job responsibilities and salary. Correct

standard hour plans

an incentive plan that pays workers extra for work done in less than the "Standard time"

7. Which of the following is true about skill-based pay? (Select all that apply)

b. It can be utilized in organizations where there is growth and change. Correct d. Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures. Correct e. It encourages adaptability. Correct

8. The Fair Labor Standards Act (FLSA) includes provisions for: (pick all that apply)

b. Provides for a minimum wage. Correct d. Restrictions on use child labor Correct

19. Madeline wants to ensure she is paying people fairly. Which of the following sources would give her valid salary data? (select all that apply)

b. Society for Human Resources Management Correct c. World at Work Correct e. Hewitt Consulting Correct

14. According to the FLSA, which of the following is most likely a nonexempt employee?

c. HR Administrative Assistant Correct

12. Stock options have their greatest motivational potential during periods of:

c. high economic growth. Correct

sales commissions

calculated as a % of sales. this is a variation of piece rate.

Balanced Scorecard:

combo of performance measures directed toward company's long term and short term goals and used as the basis for awarding incentive pay -includes financial, customer, internal, learning and growth

16. When an employee's pay is calculated as a percentage of sales, it is referred to as:

commission

9. Which of the following is true of the Fair Labor Standards Act (FLSA)? (Select all that apply)

d. Nonexempt employees are covered by FLSA and include most hourly workers. Correct e. Under the FLSA, executive, professional, and administrative employees are considered exempt employees. Correct

10. An effective incentive pay plan should:

d. have performance measures linked to the organization's goals. Correct

11. Which of the following incentive plans would enable its employees to think like owners, taking a broad view of what they need to do in order to make the organization more effective?

e. Profit sharing

15. An employee who produces 10 components in an hour earns $9 ($.90 X 10) per hour, while an employee who produces 15 components earns $13.50 ($.90 x 15). This is an example of a:

e. straight piecework plan. Correct

straight piecework plan

employer pays the same rate per piece, no matter how much the worker produces

1. According to equity theory, people measure outcomes such as pay in terms of their outputs.

false

3. Under the FLSA, children aged 14 and 15 may not be employed in any work associated with interstate commerce.

false

incentive pay

forms of pay linked to an employees' performance as an individual, group member, or organization member. -this type of pay is deisgned to energize, direct, or control employees' behavior

differential piece rates

incentive pay in which the piece rate is higher when a greater amount is produced

performance bonuses

like merit pay, these reward individual performance, but bonuses are not rolled into base pay. the employee must re-earn them during each performance period.

merit pay

links pay increases to ratings on performance appraisals.

pay for individual performance:

organizations may reward individual performance with a variety of incentives: -piecework rates -standard hour rates -merit pay -individual bonuses -sales commissions

18. Which of the following is a long-term incentive? )Choose all that apply)

stock option

compa ratio

the employees salary divided by the midpoint of his salary range.

group bonuses

this contrasts from gainsharing which rewards the performance of all employees at a facility. -group bonuses: used for smaller work groups -both encourage group or team members to cooperate.

stock ownership

this plan actually makes employees part owners of the org. -rights to buy a certain number of shares of stock at a specified price.

2. Compensable factors are job characteristics that an organization values and chooses to pay for.

true

4. Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes.

true

5. Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

true

gainsharing

use this for orgs that want employees to focus on efficiency -it measures improvements in productivity and effectiveness and distributes a portion of each gain to employees -used for high levels of cooperation and interaction