Comp & Benefits Chapter 9

Expectancy

Employees' assessment of their ability to complete necessary job tasks

Instrumentality

Employees' beliefs that their organization will reward requisite job performance

T/F: The best pay-for-performance plan is rigid and consistent across all divisions in an organization.

False

________ ________ is based on the idea that only the individual employee knows what package of rewards would best suit personal needs; it allows tradeoffs between pay and benefits.

Flexible compensation

Materialists

Relatively more concerned about pay level than others

Risk takers

Seek more pay based on performance

Measures

They need to be communicated to employees so that they will know what is used to determine whether their performance merits a payout

A criticism of Alfie Kohn's stance on incentives is that in the real world, performance-based incentives are: a. required for the completion of uninteresting jobs b. very effective in boosting employees' internal rewards c. most commonly used for jobs that involve multitasking d. necessary for the recognition of teamwork

a

According to Herzberg's two-factor theory, _________ are factors related to basic living needs that prevent behaviors in their absence, whereas _________ are factors that motivate performance. a. hygiene factors; satisfiers b. expectancies; valencies c. esteem needs; physiological needs d. achievement factors; maintenance factors

a

According to reinforcement theory, how should an organization discourage undesirable behavior? a. by withholding payouts b. by giving incentives c. by reassigning an employee d. by laying off redundant employees

a

Studies have consistently proven that high performers in an organization: a. are given larger merit increases than average performers b. prefer incentive plans based on team performance c. receive the same amount of bonuses as average performers d. dislike pay that is based on individual performance

a

Identify the theory of motivation that emphasizes consistency and fairness of performance based pay across employees in a company: a. Maslow's needs hierarchy theory b. equity theory c. Herzberg's two-factor theory d. agency theory

b

In general, employers desire for employees to perform in ways that result in: a. improved reservation wages b. improved organizational performance c. greater reliance on competitors d. greater organizational turnover rates

b

Which of the following is a prediction about performance-based pay made by Maslow's needs theory? a. base pay must be comparable to that of an employee's peers to avoid conflict b. base pay must be sufficient for individuals to meet their basic living needs c. base pay must be the greatest reward that motivates employees to choose the best behavior d. base pay must be high enough to allow individuals to attain self-actualization

b

Why does Alfie Kohn believe that performance-based incentives are morally wrong? a. he claims that they do not fulfill the basic living needs of employees b. he claims that they involve a person being controlled by another c. he claims that they make employment a reciprocal arrangement d. he claims that they work against risk-seeking employees

b

A negative impact of new pay systems that expect employees to bear a share of risks is that these systems: a. have no connection to group and corporate performance b. lack a clear link between performance and compensation c. work against efforts that build employee commitment d. attract only security-driven employees to a company

c

Employees seek transparency of pay practices so that they can: a. determine their own incentives and compensation b. completely control distributive justice c. ensure that organizational structure is completely centralized d. give input into expectations for them

d

In general, group incentives result in: a. higher turnover of poor performers b. lower turnover for good performers c. higher returns than do individual incentives d. small increases in productivity

d

A type of fairness that is a concern for employees is fairness in the amount that is distributed to employees, and this type of fairness is labeled __________ _________.

distributive justice

Rank wage components in increasing order of their riskiness, beginning with the least risky component. a. cost of living increase b. individual incentive c. merit pay d. across the board increase e. lump sum bonus f. base pay

f, d, a, c, e, b

The type of fairness that employees are concerned about that involves the fairness of the procedures used to determine the amount of rewards they receive is known as ________ _________.

procedural justice

Alfe Kohn believes that performance-based incentives are practically wrong because he believes that they reduce: a. control b. skills c. productivity d. labor costs

c

Identify the essential features of Maslow's needs hierarchy. (Select all that apply) a. needs operate cyclically as they can never be completely met b. when needs are met, they become frustrating c. people are motivated by external needs d. needs are arranged into a hierarchy from basic psychological needs to higher-order needs e. higher-order needs motivate people after basic needs have been met

a, d, e

When is turnover much higher for poor performers in a company? a. when pay is linked to individual performance b. when pay is tied to group performance c. when pay is independent of performance d. when pay is based on corporate performance

a

What kind of pay systems has research shown employees to be comfortable with? (Select all that apply) a. pay systems that give superior performing employees bonuses b. pay systems that offer mostly team-based incentives c. pay systems that place substantial future incomes at risk d. pay systems that link primarily to individual performance

b, c

A garage began offering its employees incentives for fixing cut brake lines in order to increase the time spent on quality checks. Which of the following is a change in the behavior of its employees that could be considered a failure of the garage's incentive plan? a. the employees begin spending twice as much time looking under cars than they used to b. the employees begin finding dangerous flaws that could have cost car owners their lives c. the employees begin inspecting brake lines much more carefully d. the employees begin cutting brake lines just to repair them

d

Evidence shows that skill-based pay benefits an organization by: a. creating a surplus of employees with a required skill b. increasing productivity c. creating cost efficiencies d. helping employees believe in the importance of quality

d

_________ provides an opportunity for employers to allow employees to develop a reward package that is less expensive and more satisfying. a. cash-only compensation b. equity compensation c. expectancy compensation d. flexible compensation

d

Identify an accurate statement about the goal setting theory's approach to performance-based pay: a. it should be contingent upon the completion of major performance goals b. targets must be fixed so that employees believe that they are unchangeable c. targets should be communicated in terms of easily achievable, general goals d. it should keep the amount of incentive award independent of a goal's difficulty

a

What are the factors that contribute to the success of an organization's attempt to change its employees' behavior? (Select all that apply) a. performance needs to be measured by the organization b. a compensation system should be set up to reward the desired behavior c. the desired behavior needs to be incorporated into the organization culture d. employees need to be motivated to take their knowledge and abilities outside the company e. the organization needs to lay off workers who do not immediately change f. the people whose behavior needs to be changed should have the necessary training g. the right people need to be selected by the organization

a, b, c, f, g

According to agency theory, what motivates and directs employee performance? a. goals b. innovation c. flexibility d. pay

d

There is substantial evidence that indicates that most employees and managers believe that: a. incentives are morally wrong because they involve one person controlling another b. seniority needs to be the primary basis for pay increases c. incentives directly reduce productivity, making them practically useless d. salary increases should be tied to job performance

d

Why should an organization's pay-for-performance plan comply with existing laws? a. to ensure that managers control distributive justice b. to undervalue competitors' pay systems c. to eliminate risk-takers from the job applicant pool d. to maintain the organization's reputation

d

In what kind of organizations is it appropriate to emphasize base pay while having a low-incentive component in the compensation strategy? a. in organizations that have highly variable annual performance b. in organizations that encourage innovation c. in organizations that want employees to be flexible and show commitment d. in organizations that expect employees to perform the same task every day

a

Identify a mistake pay-for-performance plans make that cause them to be inefficient: a. they allow flexible variations of themselves b. they make payouts that influence performance on the bottom line c. they focus on quantity at the expense of quality d. they unnecessarily reduce cost inefficiencies

c

What significance does pay level have in the application of Herzberg's two-factor theory to designing compensation to motivate employees? a. it induces extra performance in addition to the level of performance induced by incentives b. it operates as the primary motivator of employee performance in an organization c. it must satisfy an employee's hygiene needs before the employee can be motivated d. it negates the motivation to perform well created by performance-based pay in employees

c

Valency

Employees' valuation of organization rewards provided for satisfactory job performance

Individualists

Prefer pay that is based on individual performance rather than pay that is based on group performance

_________ influences a job applicant's decision to join a company because it is one of the more visible rewards during the process of recruitment. a. level of pay b. empowerment c. work variety d. workload

a

The approach to motivation that believes that employees have the highest quality motivation when both extrinsic and intrinsic motivators are used is: a. goal setting theory b. reinforcement theory c. expectancy theory d. self-determination theory

d

Over the last several decades, organizations have been using new forms of pay that are more ________ than before. a. invariable b. stable c. entitlement-oriented d. performance-oriented

d

Applicants with low self-esteem

Prefer large, decentralized company with little performance-based pay

What does reinforcement theory recommend for reinforcing performance? a. performance must be rewarded discontinuously for maximum effect b. performance-based payments must always match an employee's perceived value of behavior c. performance-based payments must be given in anticipation of performance d. performance must be directly followed with performance-based payments

d

Rank the steps involved in reinforcing employee behaviors through an organization's compensation system in the order in which they occur. -Motivating employees to perform their jobs well by using their knowledge and skills to improve organizational performance -Developing a compensation package that attracts good potential employees to the organization -Ensuring that skilled and talented employees remain with the organization -Developing further knowledge and skills of employees

1. Developing a compensation package that attracts good potential employees to the organization 2. Ensuring that skilled and talented employees remain with the organization 3. Developing further knowledge and skills of employees 4. Motivating employees to perform their jobs well by using their knowledge and skills to improve organizational performance

How does organization development help an organization with inefficient processes? a. it frees up motivated employees to utilize their skills b. it eliminates all old skills in favor of new ones c. it reinforces all behaviors exhibited by an employee d. it increases the steps involved in getting approval for change

a

If other elements of a total HR plan are developed to nurture and reinforce risk-taking behavior, the compensation component of the HR plan should: a. avoid rewarding the status quo b. also reinforce the status quo c. also nurture risk averseness d. avoid selecting risk-taking behavior

a

In what kind of structure do group incentives work well? a. in individual-based structures where one employee directs all other team members b. in team-based structures where team members personally sanction poor performers c. in individual-based structures where each employee is responsible for himself or herself d. in team-based structures where members are not responsible for monitoring team performance

b

How does the sorting effect improve productivity in an organization that uses individual incentives? a. poor performers are forced to improve productivity, and good performers reduce productivity to create a balance b. employees who do not want to perform better remain at the bottom structure c. employees who do not want to work harder leave and are replaced by better performers d. poor performers reject difficult projects, and good performers take those up instead, so overall productivity improves

c

Rewards have been shown by hundreds of studies to: a. cause cost inefficiencies b. have no effect on productivity c. motivate performance d. devalue effort

c

What are the predictions that expectancy theory makes about performance-based pay? (Select all that apply) a. performance-based pay returns must be small enough to be seen as rewards b. employees must believe that performance targets are unchangeable c. smaller incentive payments are not as effective as larger ones d. employees select the behavior that yields the biggest reward e. the connection between pay and performance must be clearly visible to an employee

c, d, e

Objectives

They need to be specific yet flexible, and they need to avoid the "line-of-sight" issue

How do poorly administered skill-based pay plans create cost inefficiencies that lead to plan abandonment? a. by permitting more employees to obtain certification in a skill than are needed b. by taking employees' focus off the importance of quality in the work they do c. by increasing productivity to an excessive, unmanageable degree d. by lowering the pay of employees who are trained in an unnecessary skill

a