FIN 3302 Chapter 09 Study Guide

Jorge knows that Sue Ellen is extrinsically motivated. To increase her motivation Jorge would most likely A) give Sue Ellen interesting work. B) give Sue Ellen tasks that give her a feeling of accomplishment. C) increase Sue Ellen's salary. D) give Sue Ellen more autonomy.

C) increase Sue Ellen's salary.

Behavior that is performed by an employee "for its own sake" is referred to as A) extrinsically motivated behavior. B) an external locus of causality. C) intrinsically motivated behavior. D) equity behavior.

C) intrinsically motivated behavior.

The term ________ refers to the psychological forces that determine the direction of a person's behavior in an organization a person's level of effort and a person's level of persistence. A) resiliency A security with a reasonably stable price will have a lower required rate of return than a security with an unstable price. B) stimulus C) motivation D) adaptability

C) motivation

The required return of a preferred stockholder, rps, is higher than the cost of preferred stock for the corporation because stockholders must pay federal taxes on their dividend income.

false

According to goal-setting theory to stimulate high motivation and performance

goals must be A) specific and easy. B) general and easy. C) specific and difficult. D) general and difficult., C) specific and difficult.

The cost of debt increases relative to the investor's required return due to flotation costs, but decreases relative to the investor's required return due to the tax deductibility of interest.

true

The firm's cost of capital may also be referred to as the firm's opportunity cost of capital.

true

Explain what is meant by a "merit pay plan" and discuss the use of piece-rate pay commission pay the Scanlon plan and a profit sharing plan.

A merit pay plan is a compensation plan that is based on performance. Using piece-rate pay an individual-based merit plan managers base employees' pay on the number of units each employee produces whether televisions computer component, or welded auto parts. Using commission pay another individual-based merit pay plan managers base pay on a percentage of sales. Examples of organizational-based merit pay plans include the Scanlon plan and profit sharing. The Scanlon plan focuses on reducing expenses or cutting costs. Members of an organization are motivated to propose and implement cost-cutting strategies because a percentage of the cost savings achieved during a specified time is distributed to the employees. Under profit sharing employees receive a share of an organization's profits. Regardless of the specific kind of plan that is used managers should always strive to link pay to the performance of behaviors that help an organization achieve its goals.

At Space Solutions Ltd. William works on valence by A) making sure his employees will value the opportunity of working with less supervision. B) deciding that a five percent raise for all employees is fair. C) informing his employees that they are expected to work overtime. D) reducing the number of employees to increase the profit margin.

A) making sure his employees will value the opportunity of working with less supervision.

In Herzberg's motivator-hygiene theory needs that are related to the nature of the work itself and the degree of challenge contained in the work are known as ________ needs. A) motivator B) actualization C) esteem D) hygiene

A) motivator

How hard an employee works on the job is referred to as A) value. B) effort. C) affiliation. D) valence.

B) effort.

In Herzberg's motivation theory needs that are related to the physical and psychological context in which the work is performed are known as ________ needs. A) motivator B) hygiene C) valence D) expectancy

B) hygiene

The degree to which an employee keeps trying to accomplish a goal when faced with obstacles is referred to as A) assertiveness. B) persistence. C) conscientiousness. D) effort.

B) persistence.

Discuss the differences in impact on motivation of a bonus versus a salary increase of the same amount of money.

Bonuses tend to have more effect for three reasons: Salary levels are typically based on performance levels cost-of-living increases and so forth from the day people start working in an organization which means the absolute level of the salary is based largely on factors unrelated to current performance. The amount as a percent of salary may seem relatively small. Often salary increases reflect nonperformance factors such as cost-of-living or marketing adjustments. Bonuses give managers more flexibility in distributing outcomes because salaries rarely go down while bonuses are expected to vary from one period to another.

The theory that distinguishes needs related to the work itself from those related to the context of the work is ________ theory. A) Maslow's hierarchy B) B.F. Skinner's C) Herzberg's motivator-hygiene D) McClelland's needs

C) Herzberg's motivator-hygiene

A firm's cost of capital is influenced by A) the current ratio. B) par value of common stock. C) capital structure. D) net income.

C) capital structure.

Sanya, a real-estate agent, is paid on the basis of the percentage of the sale price of a house she sold. This is an example of A) piece-rate pay. B) profit sharing. C) commission pay. D) the Scanlon plan.

C) commission pay.

Donal an accountant has had many inputs related to his position as an accountant over the years. One of his inputs is A) praise from his boss. B) job security. C) education. D) vacation time.

C) education.

According to expectancy theory high motivation will occur when A) expectancy is low and valence is high. B) instrumentality is low and expectancy is high. C) expectancy instrumentality and valence are high. D) both expectancy and valence are low.

C) expectancy instrumentality and valence are high.

Higher flotation costs will result in all of the following EXCEPT A) higher after-tax cost of debt. B) higher weighted average cost of capital. C) higher cost of retained earnings. D) higher cost of common equity when new common shares are sold.

C) higher cost of retained earnings.

Brenda is the dean of the College of Business. She enjoys the pace of her work and the feeling of accomplishment she gets when she is able to initiate a new program to help students. She also appreciates her attractive salary which allows her to travel abroad on her vacations. Brenda is A) intrinsically and input motivated. B) extrinsically motivated. C) intrinsically and extrinsically motivated. D) input motivated.

C) intrinsically and extrinsically motivated.

Which of the following statements is MOST correct? A) Because the cost of debt is lower than the cost of equity, value-maximizing firms maintain debt ratios of close to 100%. B) Corporations that are 100% equity financed will have a much lower weighted average cost of capital because the lack of debt lowers their risk of bankruptcy. C) The source of capital with the lowest after-tax cost is preferred stock, because it is a hybrid security, part debt and part equity. D) The cost of a particular source of capital is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.

D) The cost of a particular source of capital is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.

A strong desire to perform challenging tasks well and to meet personal standards for excellence is called the need for A) stability. B) power. C) affiliation. D) achievement.

D) achievement.

Sosuke requested feedback from Clement his manager on his performance. Clement is delighted by Sosuke's attitude. As a result Clement rated Sosuke high on the need for A) affiliation. B) power. C) recognition. D) achievement.

D) achievement.

People experiencing underpayment inequity are most likely to A) raise their perceptions of their own inputs. B) lower their perceptions of others' outcomes. C) work harder. D) be absent.

D) be absent.

The theory that describes how outcomes such as pay should be distributed in proportion to inputs is ________ theory. A) expectancy B) need C) goal-setting D) equity

D) equity

Amau was often late to work despite his manager Ebba warning him against it several times. As a last resort Ebba reduced Amau's salary in proportion to the hours he missed at work by being late. It turned out to be the right thing to do as Amau was never late to work after the incident. This scenario is explained by A) instrumentality. B) valence. C) positive reinforcement. D) negative reinforcement.

D) negative reinforcement.

How employees learn to perform behaviors that lead to desired consequences and avoid behaviors that lead to undesired consequences is described in ________ theory. A) needs hierarchy B) ERG C) equity D) operant conditioning

D) operant conditioning

Because he has a high need for power Gunnar would most likely decide to A) spend long-hours of overtime to create a great computer game. B) take a co-worker who is having a hard time at work out to dinner. C) review an annual report several times to make sure it is accurate. D) persuade the governor of a state to pass laws that benefit his company.

D) persuade the governor of a state to pass laws that benefit his company.

Ali Lucia Liam and Miyu all agree that the work they do for Jamison Ltd. results in company improvements and other positive outcomes. They also agree that their hard work positively benefits them personally in a variety of ways. Ali does interesting creative work for a moderate salary. Lucia does routine work but has high seniority. Liam does work that helps disadvantaged children for high pay. Miyu often works alone and has high seniority. Which of these employees would be most likely quit their job? A) Ali who has high valence for pay rate B) Lucia who has high valence for job security C) Liam who has high valence for prosocial work D) Miyu who has high valence for autonomy

A) Ali who has high valence for pay rate

Establishing and maintaining good interpersonal relations and being liked are characteristics of individuals who can be rated high on the need for A) affiliation. B) power. C) consciousness. D) achievement.

A) affiliation.

Dan a car salesperson is extrinsically motivated. As a result he most likely chose his profession because of the A) attractive sales commission he receives on each car sale. B) pleasure of selling high-quality cars to customers. C) opportunity to provide customers with cars at bargain prices. D) freedom of scheduling his own time to sell cars.

A) attractive sales commission he receives on each car sale.

A department store that pays its salespeople in the shoe department a percentage of the dollar value of shoes sold is said to be using a(n) ________-based pay plan. A) commission B) equity C) underpayment inequity D) overpayment inequity

A) commission

Two considerations that cause a corporation's cost of capital to be different than its investors' required returns are A) corporate taxes and flotation costs. B) individual taxes and corporate taxes. C) individual taxes and dividends. D) corporate taxes and the earned income tax credit.

A) corporate taxes and flotation costs.

The perception of workers of the fairness of their work outcomes relative to their work inputs is the focus of ________ theory. A) equity B) valence C) instrumentality D) needs hierarchy

A) equity

The idea that motivation is high when workers believe that high levels of effort lead to high performance and high performance leads to the attainment of desired outcomes is explained by the ________ theory. A) expectancy B) valence C) hierarchy of needs D) motivator-hygiene

A) expectancy

An example of an employee's input with an organization is A) experience. B) a feeling of accomplishment. C) vacation time. D) interesting work assignments.

A) experience.

A manager removes a positive reinforcement in order to change the behavior of a subordinate. This is called A) extinction. B) positive reinforcement. C) negative reinforcement. D) instrumentality.

A) extinction.

Behavior that is performed by an employee to acquire a material reward to acquire a social reward or to avoid punishment is referred to as ________ motivated behavior. A) extrinsically B) practically C) vicariously D) intrinsically

A) extrinsically

Lotte is highly intrinsically and prosocially motivated and to a lesser degree extrinsically motivated. As a result she enjoys her work as a fashion designer for Clothes Plus Inc. because she uses A) her creativity to design clothes for needy families while receiving lower pay than designers working for top fashion houses. B) little of her creatively in designing bland clothes for needy families but receives as much pay as designers working for top fashion houses. C) her creativity to design clothes for wealthy people while being paid a rate comparable to the top clothing designers. D) little of her creativity to design basic clothes for wealthy people while receiving moderate pay for the industry.

A) her creativity to design clothes for needy families while receiving lower pay than designers working for top fashion houses.

An employee's perception of the extent to which performance at a given level will result in outcomes the employee desires is known as A) instrumentality. B) inequity. C) valence. D) expectancy.

A) instrumentality.

Professor Arthur offers his students $10 if they can run around the classroom building in two minutes. Mohammed his student believes that even if he does this Professor Arthur would not really give him the money. Mohammed's lack of motivation can be explained by A) instrumentality. B) underpayment inequity. C) valence. D) directive leadership.

A) instrumentality.

Sanja is exceptional in mathematics. She does not treat it as just a subject. Rather she loves solving complicated problems related to mathematics. Sanja's behavior is explained by A) intrinsically motivated behavior. B) an external locus of control. C) an internal locus of control. D) prosocially motivated behavior.

A) intrinsically motivated behavior.

People experiencing overpayment inequity are most likely to A) raise their perceptions of their own inputs. B) ask for a raise in accordance with their experience. C) work slower so they are paid more for less work. D) be absent more to take advantage of vacation benefits.

A) raise their perceptions of their own inputs.

At RKA Electronics Ltd. a manager decides to combine individual and organization merit plans by giving bonuses A) to each employee if they produce a certain number of circuits and a pay raise based on reaching an overall sales goal. B) to each employee if they produce a certain number of circuits and a percentage of sales to the sales people. C) if the annual production of circuits reaches 500,000 and a pay raise based on reaching an overall sales goal. D) if the annual production of circuits reaches 500,000 and a pay raise based on the increase of the profit margin.

A) to each employee if they produce a certain number of circuits and a pay raise based on reaching an overall sales goal.

Discuss the concepts of Herzberg's motivator-hygiene theory. How does it differentiate between motivation needs and hygiene needs of workers?

According to Herzberg's motivator-hygiene theory, people have two sets of needs or requirements: motivator needs and hygiene needs. Motivator needs are related to the nature of the work itself and how challenging it is. Outcomes such as interesting work autonomy responsibility being able to grow and develop on the job and a sense of accomplishment and achievement help to satisfy motivator needs. Hygiene needs are related to the physical and psychological context in which the work is performed. Hygiene needs are satisfied by outcomes such as pleasant and comfortable working conditions pay job security good relationships with coworkers and effective supervision. When hygiene needs are not met workers are dissatisfied and when hygiene needs are met workers are not dissatisfied. Satisfying hygiene needs however does not result in high levels of motivation or even high levels of job satisfaction. For motivation and job satisfaction to be high, motivator needs must be met.

Explain how an employee can be intrinsically motivated extrinsically motivated or both depending on the factors in his or her job situation. Give one example of an employee who exhibits each of these three possible work situations.

An employee may be intrinsically motivated when he or she works hard and long at a job because it is interesting or challenging. An elementary school teacher who really enjoys teaching children is intrinsically motivated. An employee may be extrinsically motivated when he or she works hard at a job because of some external reward such as money or promotion. A car salesperson who is motivated by receiving a commission on all cars sold is extrinsically motivated. Many people work hard at their jobs both because they enjoy the work and because of the external rewards. A top manager who derives a sense of accomplishment and achievement from managing a large corporation and strives to reach year-end targets to obtain a hefty bonus is both intrinsically and extrinsically motivated.

In the context of motivation theory what is an output? What is an input? Give examples of each.

An outcome is anything a person gets from a job or an organization. Some outcomes such as autonomy responsibility a feeling of accomplishment and the pleasure of doing interesting or enjoyable work result in intrinsically motivated behavior. For example, a costume designer for a play or movie can find doing his or her work to be pleasurable because it is creative in a way that the designer finds interesting. Also creating great costumes can provide a feeling of accomplishment. Outcomes such as improving the lives or well-being of other people and doing good by helping others result in prosocially motivated behavior. For example, a social worker helping impoverished people can feel good about helping others. Other outcomes such as pay job security benefits and vacation time result in extrinsically motivated behavior. For instance, an air traffic controller can become more motivated to do this stressful job if he or she receive a large raise in salary and more vacation time. Organizations hire people to obtain important inputs. An input is anything a person contributes to the job or organization such as time effort education experience skills knowledge and actual work behaviors. For example, a person working as a research physicist for a company contributes many types of input: including long work hours (time) intense concentration on tasks (effort) schooling at a university (education) an ability to analyze problems and come up with creative solutions (skills) knowledge from past research (experience) a co-operative attitude toward other researchers (actual work behaviors). Inputs such as these are necessary for an organization to achieve its goals. Managers strive to motivate members of an organization to contribute inputs—through their behavior effort and persistence—that help the organization achieve its goals. Managers ensure that members of an organization obtain the outcomes they desire when they make valuable contributions to the organization. Giving people outcomes when they contribute inputs and perform well aligns the interests of employees with the goals of the organization as a whole because when employees do what is good for the organization they personally benefit.

A hospital has an opening for a nurse and wants to hire a person who is motivated by something other than extrinsic or intrinsic forces. Considering this and what you know about the nature of motivation which of the following statements by interviewees for the job would most likely impress the interviewer in a positive way? A) "I'd love working for a hospital like this which is rated so highly." B) "What I like the most about being a nurse is helping others." C) "With my experience I do expect to receive a certain salary level." D) "I find providing treatments to patients to be very interesting."

B) "What I like the most about being a nurse is helping others."

Suzanne is a low-level employee who is friends with several co-workers does not worry about paying the rent or buying food and knows that her position in the company is necessary and that her managers do not want her to leave. Considering this which of the following notes would she most likely place in her company's suggestion box? A) Provide more autonomy for employees to use their skills in a creative way. B) Crack the glass ceiling by promoting more women to upper management jobs. C) Increase the pay for all employees by 10 percent. D) Sponsor more social activities to improve teamwork.

B) Crack the glass ceiling by promoting more women to upper management jobs.

An organization focuses on cost-savings techniques and shares a percentage of the cost savings resulting from these techniques with its employees. This is the idea behind the ________ plan. A) Maslow B) Scanlon C) Skinner D) McClelland

B) Scanlon

Miray an employee at J.R. Smith was promoted recently due to the huge success of two projects she delivered that generated more revenue and further projects for the technology division. She is highly motivated by the promotion and perceives ________ justice of the firm to be high. A) individual B) distributive C) informational D) interpersonal

B) distributive

Paul sets a goal of completing the design for a new display box for a major customer by the end of the week. In general, he motivates himself to achieve goals by using self-reinforcement. In this case Paul practices self-reinforcement by A) agreeing to take a training course suggested by his manager to improve his confidence at work. B) doing something he loves namely playing golf over the weekend if he is able to complete the project on time. C) accepting the invitation of co-workers to observe their work thereby enabling Paul to hone his skills. D) promising his manager that he will double-check his work to make sure it has been completely correctly.

B) doing something he loves namely playing golf over the weekend if he is able to complete the project on time.

An employee's perception of the extent to which his or her effort will result in a given level of his or her performance is known as A) valence. B) expectancy. C) instrumentality. D) equity.

B) expectancy.

Elizabeth believes she is dealing with underpayment inequity with a co-worker named Sally. Elizabeth wants to correct this by adjusting their outcome-input ratios to achieve equity. To do this Elizabeth would most likely want to A) get paid as much as her co-worker Sally but reduce Sally's work hours. B) get paid as much as her co-worker Sally for the same amount of work. C) increase the pay for her co-worker Sally who does as much work as Elizabeth. D) increase the pay for herself and for Sally by the same amount.

B) get paid as much as her co-worker Sally for the same amount of work.

After conducting a study of company a business consultant realized this organization has low instrumentality for pay. As a result the consultant would most likely recommend that the company A) set up more social events to promote esprit de corps. B) give bonuses for people who work overtime. C) provide support to enable employees to achieve high performance. D) hire people who have a higher valence for job security than autonomy.

B) give bonuses for people who work overtime.

According to Maslow's hierarchy of needs Ethan a middle manager is trying to help his employees satisfy their self-actualization needs at work by A) establishing a merit system that awards their accomplishments. B) giving them tasks that fit their skill set. C) organizing a company picnic. D) replacing equipment that is old.

B) giving them tasks that fit their skill set.

In general motivation of employees in an organization is high with ________ informational justice. A) low interpersonal justice and high B) high interpersonal justice and high C) high interpersonal justice and low D) low interpersonal justice and low

B) high interpersonal justice and high

According to expectancy theory when people perceive that high performance leads to the receipt of certain outcomes the concept of ________ is high. A) valence B) instrumentality C) expectancy D) self-actualization

B) instrumentality

Sonya the manager of a restaurant has just hired three servers. As part of their training program, she wants them to first learn by watching another current server act out his job. Based on what you know about social learning theory Sonya should A) have the three new servers crowd around the server acting as the model at the same time. B) make sure the server acting as a model emphasizes the large tips given for attentive service. C) skip quizzing the new servers to see what they learned from the server acting as the model. D) emphasize that the three servers should not ask questions of the server acting as the model.

B) make sure the server acting as a model emphasizes the large tips given for attentive service.

It is especially important that upper-level managers have a need for A) affiliation. B) power. C) consciousness. D) achievement.

B) power.

Miranda performs a dysfunctional behavior and her manager administers an undesired consequence. This is known as A) extinction. B) punishment. C) counteractive control. D) equity.

B) punishment.

An outcome that satisfies motivator needs is A) pay. B) responsibility. C) job security. D) good relationships with coworkers.

B) responsibility.

Liam a manager strongly believes that rewarding an employee can cause motivation. Also he believes that the employee's thoughts and beliefs about the work and the organization influence the employee's learning and motivation. Which learning theory supports Liam's understanding of motivation? A) cognitive B) social C) emotional D) constructive

B) social

Which of the following causes a firm's cost of capital (WACC) to differ from an investor's required rate of return on the company's common stock? A) the fact that the risk-free rate of interest has increased B) the incurrence of flotation costs when new securities are issued C) The market risk premium exceeds 12%. D) None of the above - the WACC and required return are the same.

B) the incurrence of flotation costs when new securities are issued

Specific difficult goals may be detrimental for A) learning tasks involving minimal effort. B) work that is very creative and uncertain. C) performing routine tasks. D) jobs requiring a significant amount of time.

B) work that is very creative and uncertain.

Basil an engineer gets paid more than his colleague Mitch. Basil has more years on the job than Mitch and works more hours. Basil thinks he and Mitch are paid fairly but Mitch thinks that he should be paid the same as Basil because his degree is from a better university and he is more creative. Basil is experiencing A) overpayment inequity and Mitch is experiencing underpayment inequity. B) underpayment inequity and Mitch is experiencing overpayment inequity. C) equity and Mitch is experiencing underpayment inequity. D) equity and Mitch is experiencing overpayment inequity.

C) equity and Mitch is experiencing underpayment inequity.

The justice impartiality and fairness to which all organizational members are entitled are collectively referred to as A) valence. B) expectancy. C) equity. D) instrumentality.

C) equity.

Henry an employee of Azla Communications believes that the procedural justice of his manager is low. Considering this Henry's motivation would most likely increase if the A) manager treated Henry with more respect. B) manager renovated the office to improve working conditions. C) method of performance appraisal used by his manger improved. D) explanations by the manager about new policies improved.

C) method of performance appraisal used by his manger improved.

At Long Shot Inc. the CEO Jorge wants to increase the overall number of golf clubs produced each year without increasing the size of the work force. Producing a golf club requires many steps in an assembly line process. Given this process which of the following payment systems would Jorge most likely use? A) one that pays individual assembly line employees a percentage based on golf club sales B) one that pays all of the employees on the assembly line a percentage of each golf club sale C) one that pays all of the employees on the assembly line for each golf club they complete as a team D) one that pays each individual employee based on their individual contribution to each golf club made

C) one that pays all of the employees on the assembly line for each golf club they complete as a team

Which of the following outcomes satisfies hygiene needs? A) interesting work B) responsibility C) pay D) sense of accomplishment

C) pay

Which of the following motivators is the most basic need in Maslow's hierarchy of needs? A) safety B) belongingness C) physiological D) esteem

C) physiological

A worker who is paid on the basis of the number of computer components produced per day is said to be paid on a(n) ________ basis. A) underpayment inequity B) overpayment inequity C) piece-rate D) equity

C) piece-rate

When managers provide employees with highly valent outcomes it is likely to result in A) low motivation. B) low expectancy. C) reduced turnover. D) reduced job satisfaction.

C) reduced turnover.

Enzois intrinsically motivated so he is motivated by A) praise. B) job security. C) responsibility. D) vacation time.

C) responsibility.

According to Maslow's hierarchy of needs theory which of the following is the highest level of needs of workers? A) physiological B) safety C) self-actualization D) esteem

C) self-actualization

An individual's belief about his or her ability to perform a behavior successfully is called A) internal stimulus. B) self-appreciation. C) self-efficacy. D) locus of control.

C) self-efficacy.

An employee controls his or her own behavior without the need for outside control of that behavior by a manager. This is an example of A) vicarious learning. B) self-efficacy. C) self-reinforcement. D) observational learning.

C) self-reinforcement.

Anything that an employee can give to himself or herself as a reward for "good" performance on the job is known as a(n) A) interpersonal stimulus. B) equity reinforce. C) self-reinforcer. D) self-compliment.

C) self-reinforcer.

To administer the punishment of an employee effectively Tsitsi would most likely A) inform Mark that his probation for violating company policy is not surprising considering the type of person he is. B) tell Kamela at a team meeting that she will be put on probation for violating company policy. C) take Chuy aside to a private area and emphasize that docking his pay is only because he violated company policy. D) think about an incident for more than a month and then tell Dorinda that her pay will be docked because of her violation of company policy.

C) take Chuy aside to a private area and emphasize that docking his pay is only because he violated company policy.

Cost of capital is A) the coupon rate of debt. B) a hurdle rate set by the board of directors. C) the rate of return that must be earned on additional investment if firm value is to remain unchanged. D) the average cost of the firm's assets.

C) the rate of return that must be earned on additional investment if firm value is to remain unchanged.

The desirability to an employee of each of the outcomes available from the employee's job or organization is known as A) instrumentality. B) expectancy. C) valence. D) equity.

C) valence.

Observational learning is also known as A) self-efficacy. B) operant learning. C) vicarious learning. D) equity learning.

C) vicarious learning.

By granting promotions and recognizing accomplishments of an employee a manager can satisfy the ________ need of the employee. A) self-actualization B) belongingness C) safety D) esteem

D) esteem

A worker in an automobile assembly line who chooses his or her work because of the job security it entails is said to be A) intrinsically motivated. B) experiencing overpayment inequity. C) experiencing underpayment inequity. D) extrinsically motivated.

D) extrinsically motivated.

When managers of an organization treat their subordinates with dignity and respect and are polite and courteous the interpersonal justice is A) low and motivation is low. B) low and motivation is high. C) high and motivation is low. D) high and motivation is high.

D) high and motivation is high.

Donnie changed his behavior from a dysfunctional to a functional one and his manager then removed an undesired outcome. This is known as A) positive reinforcement. B) extinction. C) negative reinforcement.

D) inequity. C) negative reinforcement.

A computer programmer who does his or her job well because he or she enjoys solving complicated computer problems is said to be A) extrinsically motivated. B) negatively reinforced. C) experiencing extinction. D) intrinsically motivated.

D) intrinsically motivated.

A relatively permanent change in a person's knowledge or behavior that results from practice or experience is known as A) individuality. B) adaptation. C) self-efficacy. D) learning.

D) learning.

An employer can attempt to meet the employees' safety needs by providing A) adequate pay. B) company social events. C) promotions. D) medical benefits.

D) medical benefits.

A compensation plan that bases pay of an employee on his or her performance is called a(n) ________ plan. A) customized pay B) economic C) distributive D) merit pay

D) merit pay

Maria a middle manager enjoys talking over work situations with Daniel her subordinate who is a first-line supervisor. However she notices that Daniel frequently brings problems to her that he expects her to solve rather than solving them himself. Since Daniel has been a supervisor for a significant length of time he should be more independent in his actions. Based on what you know about operant conditioning theory what should Maria do? A) solve the problems for Daniel to give him an example on how to deal with these situations B) compliment Daniel on his various managerial abilities to boost his confidence C) allow Daniel to take the afternoon off to think of a solution whenever one of these problems occurs D) stop acting interested in the problems Daniel brings to her and make her responses brief

D) stop acting interested in the problems Daniel brings to her and make her responses brief

Jennifer perceives that though she works harder than her coworker Kelly she is paid the same. This is an example of A) the valence effect. B) extinction. C) negative reinforcement. D) underpayment inequity.

D) underpayment inequity.

Eduardo a production manager at a growing company has mastered the processes and procedures of overall management of the ongoing production operations by walking around and watching other managers as they work. This is an example of A) negative reinforcement. B) contingent learning. C) equity learning. D) vicarious learning.

D) vicarious learning.

Define distributive justice procedural justice interpersonal justice and informational justice. Describe the influence of these perceptions on the motivation of employees in an organization.

Distributive justice refers to an employee's perception of the fairness of the distribution of outcomes (such as promotions pay job assignments and working conditions) in an organization. Employees are more likely to be highly motivated when they perceive distributive justice to be high rather than low. Procedural justice refers to an employee's perception of the fairness of the procedures used to determine how to distribute outcomes in an organization. If important outcomes are distributed based on performance appraisals and an employee perceives that the procedure used is unfair then procedural justice is low. Motivation is higher when procedural justice is high rather than low. Interpersonal justice refers to an employee's perception of the fairness of the interpersonal treatment he or she receives from whoever distributes outcomes to him or her. This justice is high when managers treat subordinates with dignity and respect and are polite and courteous. Motivation is higher when interpersonal justice is high rather than low. Informational justice refers to an employee's perception of the extent to which his or her manager provides explanations for decisions and the procedures used to arrive at them. If a manager explains how performance is appraised and how decisions about the distribution of outcomes are made informational justice and motivation are high than if the manager does not do this. All in all, it is most advantageous for distributive procedural interpersonal and informational justice all to be high.

Explain equity theory. What does equity theory suggest people do when they feel they are not being treated fairly? Give an example of a situation from your own experience where a person felt he or she was being treated inequitably and explain it using equity theory.

Equity theory is a theory of motivation that concentrates on people's perceptions of the fairness of their work outcomes relative to or in proportion to their work inputs. Underpayment inequity exists when a person's own outcome-input ratio is perceived to be less than that of a referent. In comparing yourself to a referent you think that you are not receiving the outcomes you should be given your inputs. Equity theory suggests when people perceive underpayment inequity that they may be motivated to lower their inputs by reducing their working hours putting forth less effort on the job or being absent or they may be motivated to increase their outcomes by asking for a raise or a promotion. For example, I had a friend who often worked overtime when asked for a bookstore. Another worker often declined to work overtime. However, this person was promoted to manager of the store instead of my friend. As a result my friend never agreed to work overtime again and within two months quit her job for other employment.

Abraham Maslow developed a hierarchy of needs model of motivation. Discuss the different kinds of needs in this model and give one specific example of each of these types of needs in terms of a worker's behavior.

Maslow's hierarchy of needs model includes physiological needs safety needs belongingness needs esteem needs and self-actualization needs. Physiological needs are basic needs for things such as food water and shelter that must be met in order for a person to survive. For example, an office clerk for a business works to get a salary to pay for groceries and rent for an apartment. Safety needs are needs for security stability and a safe environment. For example, a person employed by a steel company wears protective goggles and clothes when working in the mill. Belongingness needs are needs for social interaction friendship affection and love. For instance workers for an insurance company look forward to the annual costume party during the holiday season where they can wear creative costumes and have fun with co-workers. Esteem needs are the needs to feel good about oneself and one's capabilities to be respected by others and to receive recognition and appreciation. A graphic designer for example satisfies esteem needs when given an award for his or her work. Self-actualization needs are the needs to realize one's full potential as a human being. For example, a person enjoys working as a head architect for a firm which enables him or her to use creativity by designing and overseeing the construction of a lakeside shopping area in a city.

Operant conditioning theory presents four major techniques that managers can use to influence the behavior of subordinates. Discuss each of these techniques and give a specific example of how a manager could use each of these techniques in attempting to change a subordinate's behavior.

Operant conditioning theory provides four tools that managers can use to motivate high performance and prevent workers from engaging in absenteeism and other behaviors that detract from organizational effectiveness. Managers can use positive reinforcement, negative reinforcement punishment, and extinction in an attempt to influence the behavior of subordinates in the work setting. Positive reinforcement gives people outcomes they desire when they perform organizationally functional behaviors. These desired outcomes called positive reinforcers include any outcomes that a person desires, such as pay praise or promotion. For example, a manager promoting an employee because he or she has done excellent work will probably motivate this employee to continue doing excellent work. Negative reinforcement can encourage members of an organization to perform desired or organizationally functional behaviors. Managers using negative reinforcement actually eliminate or remove undesired outcomes once the functional behavior is performed. For example, a manager might threaten to put an employee on probation to stop him or her from constantly coming to work late. If the employee begins to arrive on time on a consistent basis, then the manager would stop making this threat. According to operant conditioning theory, all behavior is controlled or determined by its consequences. One way for managers to curtail the performance of dysfunctional behaviors is to eliminate whatever is reinforcing the behaviors. This process is called extinction. For example, say two friends who sit in adjacent cubicles spend a lot of time chatting instead of focusing on their tasks. To stop this behavior, a manager could rearrange the cubicles so that friends are situated at opposite ends of the floor. Punishment is administering an undesired or negative consequence to subordinates when they perform the dysfunctional behavior. For example, a manager could suspend an employee for breaking organizational rules.

Define prosocially motivated behavior. Can behavior be prosocially motivated in addition to being extrinsically or intrinsically motivated? Give an example to support your answer.

Prosocially motivated behavior is behavior that is performed to benefit or help others. Behavior can be prosocially motivated in addition to being extrinsically and/or intrinsically motivated such as an elementary school teacher who not only enjoys the process of teaching young children (has high intrinsic motivation) but also has a strong desire to give children the best learning experience possible (prosocially motivated behavior).

Discuss the pros and cons of using punishment. If managers use punishment, how should they minimize the negative side effects?

Punishment is good at stopping an undesired behavior quickly. However, it may cause resentment loss of self-respect, and retaliation. To avoid negative side effects managers should do the following: Downplay the emotional element by focusing on the person's performance, not the person himself or herself. Try to punish as soon as possible and let people know why they are being punished. Try not to punish in front of others but do let people know that offenders are punished.

Specific difficult goals have been found to increase both motivation and performance in some types of work situations. However, they have also been found to decrease both motivation and performance in some other types of work situations. Discuss both of these possibilities and explain the factors that are likely to produce each of these two results.

Regardless of whether specific difficult goals are set by managers workers or teams of managers and workers, they lead to high levels of motivation and performance. When managers set goals for their subordinates, their subordinates must accept the goals or agree to work toward them. Also, they should be committed to them or really want to attain them. Having subordinates participate in the actual setting of goals boosts their acceptance of and commitment to the goals. In addition, organizational members need to receive feedback about how they are doing. Specific difficult goals (a) motivate people to contribute more inputs to their jobs and (b) affect motivation by helping people focus their inputs in the right direction. The fact that the goals are specific and difficult frequently causes people to develop action plans for reaching them. Specific difficult goals may detract from performance under certain conditions. When people are performing complicated and challenging tasks that require them to focus on a considerable amount of learning, specific difficult goals may impair performance. Striving to reach such goals may direct some of a person's attention away from learning about the task and toward trying to figure out how to achieve the goal. Additionally, for work that is very creative and, uncertain specific difficult goals may be detrimental.

Psychologist David McClelland extensively researched the needs for achievement affiliation and power. Describe these needs and give an example for each. Discuss the influence of these needs in the workplace.

The need for achievement is the extent to which an individual has a strong desire to perform challenging tasks well and to meet personal standards for excellence. People with a high need for achievement often set clear goals for themselves and like to receive performance feedback. For example, a chemist for a drug company who wants to devise a medicine that will cure cancer would probably have a nigh need for achievement. The need for affiliation is the extent to which an individual is concerned about establishing and maintaining good interpersonal relations being liked and having the people around him or her get along with each other. For example, a market researcher who needs to work on a team where everyone gets along would probably have a high need for affiliation. The need for power is the extent to which an individual desires to control or influence others. For example, a person who wants to become the CEO of an international fast food chain because of the extensive influence he or she will have on people throughout the world would probably have a high need for power. The importance of these needs in the workplace depends on the position one occupies. Research suggests that high needs for achievement and for power are assets for first-line and middle managers and that a high need for power is especially important for upper managers. U.S. presidents with a relatively high need for power tended to be especially effective during their terms of office. A high need for affiliation may not always be desirable in managers and other leaders because it might lead them to try too hard to be liked by others (including subordinates) rather than doing all they can to ensure that performance is as high as it can and should be.

Discuss the three major factors in expectancy theory and give an example for each. Explain the possible impact of these factors on the motivation of a worker.

The three major factors of expectancy theory are (1) expectancy (2) instrumentality (3) valence. Expectancy is the extent to which a person feels that his or her effort will result in a certain performance level. When a person expects to create a great computer game if he or she works overtime then this person's expectancy is high. When a person expects the quality of the computer game to remain the same no matter how hard he or she works then this person's expectancy is low. Instrumentality is the extent to which a certain level of performance will result in the attainment of certain outcomes. For example, a person who works hard as a real estate agent because he or she expects to receive a bonus has high instrumentality. On the other hand, a person who works hard at the same job but does not receive any desired outcomes such as bonuses or a pay raise has low instrumentality. Valence is the desirability of each of the outcomes available from a job or an organization to a person. For example for a person who feels that working at a creative interesting job is important getting promoted to a job that is less creative would have low valence. However, for a person who wants a high salary getting promoted to a job with a higher salary even if it is less creative would have high valence. According to expectancy theory, high motivation results from high levels of expectancy instrumentality and valence. If any one of these factors is low motivation is likely to be low.

Vicarious learning is one of the most important concepts in social learning theory. Discuss the steps to be taken by managers to promote vicarious learning.

Vicarious learning (also called observational learning) occurs whenever a manager learns by observing the behavior and its positive or negative consequences of another manager in the organization. New managers learn management techniques in part by observing experienced members of an organization performing the behavior and being positively reinforced for doing them. In general, people are more likely to be motivated to imitate the behavior of models who are highly competent are experts in the behavior have high status receive attractive reinforcers, and are friendly or approachable. To promote vicarious learning managers should strive to have the learner meet the following conditions: The learner observes the model performing the behavior. The learner accurately perceives the model's behavior. The learner remembers the behavior. The learner has the skills and abilities needed to perform the behavior. The learner sees or knows that the model is positively reinforced for the behavior.

"Attitude" refers to how hard an employee works for an organization. True or False

false

"Effort" refers to whether an employee keeps trying or gives up when faced with obstacles in an organization. True or False

false

According to equity theory when an employee perceives that his or her own outcome-input ratio is greater than that of a referent underpayment inequity has occurred. True or False

false

Financing with new common stock is generally more costly than financing with retained earnings due to increasing tax rates.

false

Flotation costs cause a corporation's cost of capital to be lower than its investors' required returns.

false

If preferred stock pays a $5 annual dividend and sells for $50, the cost of preferred stock financing is 10% since dividends are not tax deductible and preferred stock is sold without flotation costs.

false

In Herzberg's theory needs that are related to the physical and psychological context in which the work is performed are known as motivator needs. True or False

false

Punishment involves removing a negative consequence when dysfunctional behaviors occur. True or False

false

The after-tax cost of equity equals one minus the marginal tax rate times the required rate of return on common stock.

false

The extent to which a person has a strong desire to control or influence others is called the need for achievement. True or False

false

The investor's required rate of return will equal the firm's cost of capital if corporate transactions costs are taken into account.

false

The market risk premium remains constant over time because the risk-free rate of return moves inversely with beta.

false

A corporation's cost of common equity may be estimated using either a dividend valuation model or the capital asset pricing model.

true

A reasonable estimate of the market risk premium based on historical data and expert opinion is between 5% and 7%.

true

A security with a reasonably stable price will have a lower required rate of return than a security with an unstable price.

true

According to operant conditioning theory people learn to perform behaviors that lead to desired consequences and learn not to perform behaviors that lead to undesired consequences. True or False

true

Acor Ltd. bases sales representatives' pay on the percentage of sales dollars they generate. They are using a commission pay program. True or False

true

An employee's perception about the extent to which his or her effort will result in a given level of performance is called expectancy. True or False

true

Corporations have two costs of common equity, one for retained earnings and one if the company issues new common stock.

true

If a firm were to earn exactly its cost of capital, we would expect the price of its common stock to remain unchanged.

true

In order to create value, a corporation must earn a rate of return on its invested capital that is higher than the market's required rate of return on that invested capital.

true

Learning theory focuses on the linkage between performance and outcomes in the motivation equation. True or False

true

Other things equal, management should retain profits only if the company's investments within the firm are at least as attractive as the stockholders' other investment opportunities.

true

The Capital Asset Pricing Model may be used to estimate the cost of retained earnings.

true

The cost of a particular source of capital (debt, preferred stock, common stock) is equal to the investor's required rate of return after adjusting for the effects of both flotation costs and corporate taxes.

true

The cost of capital is the rate that must be earned on an investment project if the project is to increase the value of the common shareholders' investment.

true

The cost of debt capital is obtained by substituting the net proceeds per bond for the bond price in the bond valuation equation and solving for the required return.

true

The cost of preferred stock is equal to the preferred stock dividend divided by the net proceeds per preferred share.

true

The firm financed completely with equity capital has a cost of capital equal to the required return on common stock.

true