chapter 11 and 12
_____ is the relative pay of different jobs and how much one is paid.
Pay structure
Which of the following is part of the cash compensation offered to employees?
Stock options
Which of the following is part of the benefits offered to employees?
Unemployment compensation
Which of the following statements about outcome-oriented or behavior-oriented contracts is true?
Behavior-oriented contracts do not transfer risk to the agent.
Which of the following is a procedure in which an organization compares its own practices against those of the competition?
Benchmarking
Which of the following is an example of the sorting effect?
Bevlink's full match for employee retirement plan contributions encourages Tina to apply for a job there.
Which of the following is true about pay?
Employees attach great importance to pay decisions when they evaluate their relationship with the organization.
_____ perception is the perceived link between effort and performance
Expectancy
A pay plan's ability to draw highly qualified applicants for jobs at a particular organization is known as the incentive effect.
FALSE
Actual market rates are used for key jobs in the pay policy line approach rather than in the market survey data approach.
FALSE
An employee's assessment of the fairness of his or her compensation based on how much pay the employee receives is referred to as procedural fairness.
FALSE
Benchmarking is a procedure in which a company compares its different practices with the standard set by the management.
FALSE
In incentive pay programs, annual pay increases are usually linked to performance appraisal ratings.
FALSE
Nonkey jobs are those that are common to many organizations.
FALSE
Pay level refers to the relative pay of jobs in an organization.
FALSE
Product market comparisons that focus on labor costs deserve greater weight when the product demand is inelastic.
FALSE
The equity theory suggests that people evaluate the fairness of their situations by comparing them with how they were treated in their previous organization.
FALSE
The flow of feedback tends to be multi-directional in merit pay programs.
FALSE
Valence of pay outcomes should change according to different pay systems.
FALSE
Which of the following observations is true about the equity theory?
It suggests that people evaluate the fairness of their situations by comparing them with those of other people.
As jobs become less programmable,
behavior-oriented contracts become less likely.
External equity pay comparisons focus on what
employees in other organizations are paid for doing the same general job
The average compensation—including wages, salaries, and bonuses—of jobs in an organization is called the _____.
pay level
Which of the following is true of how agents may differ from principals?
Agents are more averse to risk.
Which of the following must a principal do to reduce agency costs?
Align the agent's interests with the principal's interests
Which of the following is most likely to provide intrinsic motivation?
An interesting work assignment
Which of the following theories describes the conditions when the benefits of higher pay outweigh higher costs?
Efficiency wage theory
Which of the following theories states that pay influences worker productivity?
Efficiency wage theory
Which of the following components is a perceived link between behavior and pay?
Instrumentality
Which of the following is true of external equity pay comparison?
It influences employees' decisions regarding whether to stay or move to another organization.
Which of the following administrative tools is used by organizations to design job structures?
Job evaluation
Which of the following is a likely consequence of an internal equity perception?
Job rotation
Which of the following is true of labor market competition?
Labor market competition places a lower bound on pay levels
Which of the following is true of how managers may differ from shareholders?
Managers are likely to prefer more emphasis on uncertain incentives than base pay
Which of the following is an example of a behavior-oriented contract?
Merit pay
Which of the following is a likely consequence of external equity perception?
Retention
Which of the following makes outcome-oriented contracts less likely to occur?
Risk aversion among agents
According to E. L. Thorndike's Law of Effect, high performance followed by a reward will motivate employees to repeat the performance and make it recur more often in the future.
TRUE
An example of the sorting effect is a social media firm offering employee stock options to attract a higher caliber of applicants for positions in the organization.
TRUE
In merit pay systems, performance is measured based on a supervisor's rating.
TRUE
Internal job worth can be measured using the administrative tool of job evaluation.
TRUE
Job evaluation is a more appropriate tool for internal equity pay comparisons than market pay surveys.
TRUE
According to the _____, a person (p) compares her own ratio of perceived outcomes to perceived inputs to the ratio of a comparison other (o).
equity theory
Internal equity pay comparison is
focused on what employees within the same organization but in different jobs are paid
Organizations use benchmarking primarily to compete
for talent
Expectancy theory implies that linking an increased amount of rewards to performance will increase motivation and performance. Followers of cognitive evaluation theory are likely to question this assumption, arguing that
monetary rewards may decrease intrinsic motivation
Agency theory is of particular value in compensation management because of its emphasis on the _____ trade-off.
risk-reward
_____ is the relative pay of jobs in an organization.
Job structure
A firm that has a manufacturing unit in China considers shifting production to Cambodia. Which of the following would be a possible reason for it to not shift the production base?
Less skilled labor in Cambodia
Merit pay has the ability to define and reward a broad range of performance dimensions.
TRUE
Organizations usually develop a market pay policy line based on the key jobs for which there are both job evaluation and market pay survey data available.
TRUE
Pay plans are typically used to energize, direct, or control employee behavior.
TRUE
The compa-ratio directly assesses the degree to which actual pay is consistent with the pay policy.
TRUE
Which of the following is true about outcome-oriented contracts?
They are typically a major component of executive compensation.
Separating the functions of principals and agents is likely to result in
diversification of investment risk
According to expectancy theory, compensation systems differ according to their impact on the components of motivation; the main influence of compensation is on _____.
instrumentality
According to expectancy theory, motivation is hypothesized to be a function of _____.
instrumentality
Agents prefer a behavior-based contract when _____.
outcome uncertainty is high
According to the agency theory, the principals are the _____.
owners
Agency costs are likely to arise when _____.
principals and agents have different goals