Chapter 12 HRM

37) In a true individual incentive bonus plan each individual person gets a bonus based on:

A) individual effort and performance

8) A type of incentive plan that gives income over and above base salary to individual employees who meet a specific individual performance standard is a(n):

A) individual incentive program.

71) There are several specific common-sense considerations in establishing any incentive plan. Of primary importance is:

A) line of sight

3) Aziz is the human resources professional at a consulting engineering company. He has been asked by the executive team to suggest incentives that would most likely motivate the junior engineers who have recently graduated from university and are generally in their mid to late 20ʹs. Which of the following should Aziz suggest?

A) paid time off to volunteer for charitable organizations

70) Reasons why incentive plans do not work include the following:

A) performance pay cannot replace good management. B) rewards may undermine responsiveness. C) rewards rupture relationships. D) pay is not a motivator.

36) In a profit-sharing plan, each participant gets a bonus based on the companyʹs results:

A) regardless of the participant's actual effort

5) A term plan that refers to any plan that ties pay to productivity or to some other measure of the firmʹs profitability is called:

A) variable pay.

63) When a predetermined portion of profits is placed in each employeeʹs account under the supervision of a trustee, this is called a(n):

B) Deferred profit-sharing plan

12) A type of incentive plan that is an organization-wide pay plan designed to reward employees for improvements in organizational productivity is:

B) a gain-sharing program

33) When a target bonus is set for each eligible position, and adjustments are then made for greater - or less-than-targeted performance, this is called:

B) an individual award

39) Long-term incentives most often reserved for senior executives are called:

B) capital accumulation programs

51) There has been a definite movement away from the extremes of straight commission or fixed salary for salespeople to:

B) combination plans

75) Recognition is important for ________, who are driven by internal motivation.

B) high performers

28) To determine eligibility in a short-term incentive program, a job-by-job review is conducted to identify the key jobs that have measurable impact on profitability, which is called the criterion of:

B) key position

6) Accurate ________ are a precondition for effective variable pay plans.

B) performance appraisals

43) Long-term incentive plans whose payment or value is contingent on financial performance measured against objectives set at the start of a multi-year period are called:

B) performance plans

17) The following are disadvantages of a piecework incentive plan EXCEPT:

B) piece-rate plans appear equitable in principle

61) Many employers have incentive plans in which virtually all employees can participate. They include the following EXCEPT:

B) salary and fringe benefit programs (Scanlon plans, profit-sharing plans, deferred profit sharing plans, employee stock ownership)

26) Aziz is the human resources professional at a consulting engineering company. He has been asked by the executive team to implement a short term incentive plan for senior managers. The following are basic issues he should consider, with the exception of:

B) salary grade

30) Revlex Inc. has implemented a refinement of the salary cutoff approach to short -term incentive eligibility, which assumes that all managers should be eligible for short-term incentives. This is known as:

B) salary grade

49) Future Shop, an electronics retailer, is considering removing commission for its sales staff from their compensation plan, and compensating them on a straight salary basis. The following is an advantage of this approach EXCEPT:

B) straight salaries make it difficult to switch territories or quotas or to reassign salespeople

74) Employees favour recognition from their ________ by a majority of two -to-one over recognition from other sources.

B) supervisor/manager

2) Today, any plan that ties pay to productivity or profitability is called:

B) variable pay.

52) The term ʺmerit payʺ can apply to incentive raises given to any employees, but is most often used with respect to:

B) white-collar employees

Amish reports that recent research indicates that the number-one reason that employees leave an organization is:

D) lack of recognition and praise

72) Sue, the Compensation Analyst, found recent research that indicates that there are seven principles that support effective implementation of incentive plans. They include:

D) link incentives to measurable competencies

55) One adaptation of merit pay plans is merit raises that are:

D) paid in one lump sum once a year

34) A plan that offers each person a bonus based on the companyʹs results, regardless of the personʹs actual effort, is called:

D) profit sharing

42) In these long-term incentive plans, shares are usually awarded without cost to the executive, but with certain restrictions that are imposed by the employer. These plans are called:

D) restricted stock plans

40) The following are long-term incentive plans extended to employees EXCEPT:

D) retained earnings plans

14) Under this pay system, each worker receives a set payment for each piece produced or processed in a factory or shop. It is known as a:

D) straight piecework plan

18) When a worker is rewarded by a percent premium that equals the percent by which his/her performance is above standard, this is known as:

D) the standard hour plan

58) Professional employees almost always reach their positions through prolonged periods of:

D)formal study

38) One drawback to the split-award approach is that it pays too much to the marginal performer, who, even if his or her own performance is mediocre, at least gets the second, company -based bonus. One way to get around this would be to use the:

D)multiplier method

19) The piecework plan is expressed in monetary terms whereas the standard hour plan is expressed in:

E) a premium that equals the percent by which his or her performance exceeds standard

59) Studies in industries like pharmaceuticals and aerospace consistently show that firms with the most productive research and development groups have incentive pay plans for their professionals, usually in the form of:

E) bonuses

60) Non-salary items that professional employees need in order to do their best work include the following EXCEPT:

E) bonuses

64) A type of organization-wide incentive plan which usually involves having a corporation contribute shares of its own stock to a trust, and distributes the stock to employees on retirement or separation from service, is referred to as a(n):

E) employee stock ownership plan

67) One feature of the Scanlon plan is a focus on employee involvement, which means the companyʹs mission or purpose must be clearly articulated and employees must fundamentally understand how the business operates in terms of customers, prices, and costs. This is referred to as:

E) identity

27) The following are criteria to become eligible for a short-term incentive program:

E) key position; salary; salary grade

32) A non-deductible formula is:

E) none of the above

13) The most commonly used and oldest type of incentive plan is this system of pay based on the number of items processed by each individual worker in a unit of time. It is known as a(n):

E) piecework plan

22) The following are reasons to use team incentive plans EXCEPT:

E) reinforcing individual incentives (helping ensure collaboration, facilitating on-the-job training, reinforcing problem solving, reinforcing group planning)

47) Compensation plans for salespeople have typically relied heavily on incentives in the form of:

E) sales commissions

41) The right to purchase a specific number of shares of company stock at a specific price during a specified period of time is called a:

E) stock option

7) The following are types of incentive plans EXCEPT:

E) straight salary and commission.

45) Compensation experts suggest defining the strategic context for the executive compensation plan before creating the package itself by:

- checking for compliance with all legal requirements. - checking for tax effectiveness. - installing a process for review and evaluation whenever a major business change occurs. - defining external issues that face the company and its business objectives.

56) Traditional merit pay plans have the following characteristics:

A) a merit raise is usually based on individual performance, although the overall level of company profits may affect the total sum of merit raises

4) Aziz is the human resources professional at a consulting engineering company. He has been asked by the executive team to suggest incentives that would most likely motivate the senior engineers who have worked in their professional capacity for at least 20 years and are generally in their early 50ʹs. Which of the following should Aziz suggest?

A) a recognition program and adventure travel

65) Research suggests that employee stock ownership plans encourage employees to develop:

A) a sense of ownership in and commitment to the firm

50) Paying salespeople according to a plan that compensates them in direct proportion to their sales is called a:

A) commission plan

1) Popularized by Frederick Taylor in the late 1800s, financial rewards paid to workers whose production exceeds some predetermined standard came into use. These financial rewards are commonly referred to as:

A) financial incentives.

15) Under this pay system, each worker receives the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour. It is known as a:

C) Gauranteed piecework plan

11) A type of incentive plan that generally is organization-wide and that provides employees with a share of the organizationʹs profits in a specified period is a(n):

C) Profit-sharing plan

35) With a true individual incentive, it is the managerʹs individual effort and performance that are rewarded with a(n):

C) bonus

24) Because of the role managers play in determining divisional and corporate profitability, most employers pay their managers and executives some type of:

C) bonus or incentive

44) Executive compensation is more likely to be effective if it is appropriately linked to:

C) corporate strategy

23) The chief disadvantage of group plans is that:

C) each worker's rewards are no longer based just on his/her own efforts

68) The Scanlon plan has been quite successful at reducing costs and fostering a sense of sharing and cooperation among:

C) employees

69) A type of organization-wide incentive plan that engages many or all employees in a common effort to achieve a companyʹs productivity objectives by sharing the resulting cost savings among employees and the company is referred to as a:

C) gainsharing plan

10) Amy is part of a team of 4 software developers. Upon completion of a major client project she and each of her team members received a set amount in addition to their base salary. All received the same additional amount. Amy received this payment as part of a:

C) group incentive program

57) Employees whose work involves the application of learned knowledge to the solution of the employerʹs problems are referred to as:

C) professional employees

62) Untac Inc., a consulting engineering firm, has recently implemented a type of organization -wide incentive plan whereby all full time employees share in the companyʹs profits. Untac Inc. has implemented a:

C) profit-sharing plan

48) The most prevalent approach to compensating salespeople is to use a combination of:

C) salary and commissions

29) When all employees earning over a threshold amount are automatically eligible for consideration for short-term incentives, this is called the criterion of:

C) salary level cutoff point

21) The following are ways that employers use team or group incentive plans EXCEPT:

C) setting a standard that all members receive payment equal to the 75th percentile of the group as a whole

16) Ira, the manager of a woodworking business, is considering implementing a piecework incentive plan for the word workers reporting to him. You are an HR consultant he has asked for advice as to the benefits of implementing such a plan. You advise him of all of the following EXCEPT:

C) since the piece rate is quoted on a per-piece basis, in workers' minds, production standards become tied inseparably to the amount of money earned

9) Amy received $2000 from her employer last week in order to recognize the extra hours. beyond normal work hours, that she had worked in the past month. Which of the following did Amy receive?

C) spot bonus

20) A plan in which a production standard is set for a specific work group, and its members are paid incentives if the group exceeds the production standard, is known as a(n):

C) team or group incentive plan

31) For short term incentives, the term ʺfund sizeʺ means:

C) the total amount of bonus money that will be avaiilable to be paid out

53) Amy received a salary increase based on her individual performance over the past year. Amy received the following type of compensation:

D) Merit pay

25) A short-term incentive plan that is designed to motivate the short-term performance of managers and is tied to company profitability is called a(n):

D) annual bonus

66) The following are basic features of the Scanlon plan EXCEPT:

D) guaranteed minimum payouts (a formula for sharing of benefits, a philosophy of cooperation, competence required from all employees, an identity around which to focus employee involvement)

46) Sales compensation plans have typically relied heavily on incentives (sales commissions), although this varies by:

D) industry

54) The following are reasons why merit pay plans can backfire:

supervisors often tend to minimize differences in employee performance when computing merit raises. almost every employee thinks that he or she is an above-average performer, thus being paid a below-average merit increase can be demoralizing. supervisors often tend to minimize differences in employee performance when computing merit raises, to ensure that everyone gets a raise of at least the cost of living. the usefulness of the merit pay plan depends on the validity of the performance appraisal. system-if performance appraisals are viewed as unfair, so too will the merit pay that is based on them.