MGT 3306 FINAL STUDY Ch 9-13

Which of the following theories states that people choose the behavior that leads to the greatest reward?

Expectancy theory

A health maintenance organization (HMO) pulls together a group of providers willing to provide services at an agreed upon rate in exchange for employers:

limiting employees to these providers for health services.

Steve has a small company with 12 employees. One of his employees, Larry, has been laid off because his work has been outsourced. Larry had health coverage through Steve's company and wants to continue that coverage. According to COBRA, how long can Larry continue his coverage through Steve's company after being laid off?

0 months

Gain-sharing plans do not to use a historical standard to set productivity standards since environmental conditions can change quickly.

False

The Rowan plan uses a standard that is purposefully set high requiring high performance levels.

False

Which of the following is NOT a disadvantage of flexible benefit programs?

New benefits are more difficult to introduce.

Which of the following is NOT true regarding performance appraisals?

Race has no effect in layoff decisions.

If you had repair work done on your car, the shop most likely used the _____ plan to pay the mechanic. Bedeaux standard hour Halsey 50-50 straight piecework

standard hour

There is evidence that every 10 percent increase in the bonus paid to employees by a firm yields a _____ percent increase in ROA to the firm

1.5

How many weeks of leave does Family Medical Leave Act (1993) mandate for all workers at companies that employ 50 or more people?

12 weeks

Jennifer is hurt at work while driving a forklift. Her employer claims that she was injured as a result of her careless driving, and therefore she is not eligible for workers' compensation. What will be the outcome of the employer's challenge to her worker's compensation claim?

She will likely receive workers' compensation benefits.

Droppiece Inc. is a company that provides more performance-based pay and less base pay than its competitors. Who among the following is most likely to join Droppiece?

Stella, a recent college graduate who loves to take on a challenge

Which of the following is NOT a strength of supervisors as raters?

Their ratings are immune to halo and leniency errors.

Which of the following statements is true of individual spot awards? They are an example of long-term incentives. They are more expensive than merit pay increases. They are given to employees for exceptional performance as an add-on bonus. They are given to all employees as a one-time cost-of-living adjustment.

They are given to employees for exceptional performance as an add-on bonus

When employee performance measures are ambiguous and vary from time to time, but the organization's performance is fairly stable over time, the most effective type of compensation is to offer _____.

a variety of rewards with significant incentive pay

The corporate performance of Yellow Corp. is fairly stable. However, it is difficult to measure individual performance. In this case, the most effective compensation mix is to offer _____.

a wide range of awards beyond just money

Grabhouse Inc. is experiencing an increase in turnover rates of its top employees. Upon consulting with its managers for the reasons for this increase, Grabhouse finds that employees are uneasy with the current pay mix as it involves too many risky elements. In order to make its pay mix less risky, Grabhouse needs to:

increase the base pay component of its pay mix

The rising costs of Social Security have been covered by:

increases in the maximum earnings base and the rate at which that base is taxed.

In gain-sharing plan formulas, _____ are in the numerator and _____ are in the denominator. productivity measures; inputs productivity measures; labor inputs costs; revenues labor inputs; productivity outcomes

labor inputs; productivity outcomes

The typical employee can recall _____ percent of the benefits he or she receives.

less than 15

When employee performance is easily measured and the organization's performance is fairly stable over time, the most effective type of compensation is to offer _____.

monetary rewards with large incentives

Teaching raters what constitutes good, average, and poor performance is _____ training.

performance-standard

A _____ plan is a hybrid health plan combining the benefits of HMO and _____.

point-of-service; preferred provider organization

When pay is based on individual performance, turnover tends to be highest among ____

poor performers

Surveys show the most popular type of variable pay plans are _____. stock option plans gainsharing plans individual incentive plans special recognition plans

special recognition plans

TreeDen Corp. experiences an increase in employee turnover rate. Upon investigating, it discovers that employees are dissatisfied with the company's pay. Employees cannot see a direct link between their performance and their pay. They are also unhappy about having to pay out of their pockets to obtain grants. In this case, TreeDen is most likely using a _____. stock ownership plan cash profit sharing plan gain-sharing plan team incentive plan

stock ownership plan

Paying a dime for every bottle collected and turned into a collection center is an example of a: standard hour plan. Merrick system. straight piecework system. Rowan plan.

straight piecework system

The most frequently used incentive system is the: standard hour plan. straight piecework system. Merrick system. Taylor differential piece-rate plan.

straight piecework system

The best appraisal format for employee development is:

the MBO format.

The most widely used benefit survey is conducted by:

the U.S. Chamber of Commerce.

Deming's major argument regarding performance appraisals is that:

the work situation is the major determinant of performance.

Roughly _____ of all employees have access to paid life insurance.

three-fourths

Which of the following is the best appraisal format in terms of legal defensibility?

BARS

_____ is the best appraisal format across the five criteria for evaluating rating formats.

BARS

When a job involves very routine, mechanistic tasks, the most appropriate appraisal format is:

BARS.

Which of the following is NOT part of the cost-centered approach for deciding to provide a benefit?

Basing benefits on historical costs

A _____ plan requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action. standard hour Rowan Bedeaux Merrick

Bedeaux

_____ allows employees who have resigned or have been laid off through no fault of their own to continue receiving health coverage under their employer's plan at a cost borne by the employee.

COBRA (1984)

Maxwell Construction Corp. employs a lot of uneducated laborers. The company wants to introduce a variable-pay plan that is easy to understand and does not cost much to administer. Which of the following variable-pay plans is Maxwell most likely to introduce? Balanced scorecard plan Gain-sharing plan Stock ownership plan Cash profit sharing plan

Cash profit sharing plan

Menthorp Inc. wants to design a variable-pay plan that fosters teamwork and business knowledge of its employees. In order to ensure maximum motivation, Menthorp wants its variable-pay plan to show a clear performance-reward link. Which of the following plans is most suitable for Menthorp? Gain-sharing plan Cash profit sharing plan Stock ownership plan Stock options plan

Cash profit sharing plan

During the performance review of her employees, Sarah gives higher ratings to employees from her hometown, Oklahoma, as she believes that people from Oklahoma are hard working and trustworthy. Which of the following rating errors is Sarah exhibiting?

Clone error

Which of the following is NOT true?

Companies are moving back to entitlement-oriented pay to reduce turnover.

Which of the following is the most commonly used team incentive performance standard? Quality of goods Customer satisfaction measures Financial performance Quality of services

Customer satisfaction measures

Which of the following companies uses probationary periods as a cost-containment measure?

DLG Corp. excludes its new recruits from benefit coverage until they complete a year

Which of the following is NOT an advantage of team incentives? Stimulates problem solving May better reflect how work is performed Easy to set equitable targets for all teams Minimizes distinctions between team members

Easy to set equitable targets for all teams

An advantage of group incentives is that it leads to increased line-of-sight.

False

The free-rider problem is common in firms using individual incentive plans.

False

The percentage of companies using some form of variable pay is declining because many employees prefer base wages.

False

Unions prefer individual incentive pay plans to group incentive pay plans since members can earn more money.

False

Which of the following types of workers are generally NOT covered by workers' compensation?

Farm workers

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the _____ plan. Halsey 50-50 Gantt Taylor Rowan

Gantt

Which of the following statements is true of employee benefits?

Group insurance benefits has relatively easy qualification standards.

_____ is designed to lessen an employer's ability to deny coverage to an employee for a preexisting condition.

HIPPA

_____ theory states that success-sharing plans will be motivating, whereas at-risk plans will be demotivating.

Herzberg's two-factor

Which of the following is NOT a long-term incentive plan? ESOPs Broad-based option plans (BBOPs) Improshares Performance plans

Improshares

Which of the following is a negative outcome of the management by objectives method?

Increase in performance pressure and stress

_____ is employees' beliefs that requisite job performance will be rewarded by the organization.

Instrumentality

Which of the following is an advantage of providing stock ownership options as variable pay to employees? It reinforces team identity. It is the simplest type of variable-pay plan. It defers a portion of taxes to employees. It provides a direct pay-performance link.

It defers a portion of taxes to employees

Which of the following is statements is true of leniency errors?

It is the error of consistently rating someone higher than is deserved.

Which of the following is a benefit under Social Security?

Lump-sum death payments

Which of the following rating formats has the lowest rating errors?

MBO

The most common form of outcomes-based appraisal is:

MBO.

DrenchFort Corp. is a small company that pays high wages. As its wages are high, it does not provide any benefits. Recently, it has noticed that its employee turnover has increased, so it decides to provide benefits to retain employees. Which of the following benefits is most likely to reduce turnover?

Medical coverage

_____ is an individual level form of performance pay.

Merit bonus

An incentive system with three piecework rates is the _____ plan. Taylor Gantt Halsey 50-50 Merrick

Merrick

Which of the following does NOT provide for incentives based on standards that are expressed in terms of time period per unit of production? Gantt plan Rowan plan Halsey 50-50 method Merrick system

Merrick system

Which of the following types of rankings would be least preferred by managers of more than 10-15 employees?

Paired-comparison ranking

The _____ requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship.

Patient Protection and Affordable Care Act

Which of the following is NOT a benefit that is required by statutory law?

Pension and retirement benefits

_____ are NOT used for determining employee benefit preferences.

Product market share data

_____ relieve an employer's liability when a pre-employment injury combines with a work-related injury to produce a disability greater than that caused by the latter alone.

Second-injury funds

Jake's new car was dented by his employee, Steve. Ever since then, Jake has been consistently giving lower ratings to Steve during performance reviews to get back at him. Which of the following errors has been exhibited by Jake?

Severity error

Which of the following benefits is a federally administered program?

Social Security

Last year your performance was not very good and your performance rating was below average, but this year you have done very well by exceeding your performance goals. To your surprise, your boss gives you just an average performance rating. What error has your boss most likely committed?

Spillover error

Most experts agree that employees do not begin to consider changing their behaviors unless payouts are at least _____ percent higher.

20

In 1959, benefits were approximately _____ percent of payroll and in 2010 it was approximately _____ percent of payroll.

25; 30

For an employee to gain lifetime coverage under Social Security, they must have worked for _____ quarters during which they were covered by the Act.

40

A study of ratings of managers found that approximately only _____ percent of the managers were rated below average.

5

Today, _____ percent of the workers participate in the pension plan coverage provided by their employers.

53

Data from WellPoint Inc shows that _____ percent of its 29 million customers account for over 60 percent of its medical costs.

7

Which of the following is NOT true regarding self-ratings?

They are immune to leniency errors.

Which of the following is an advantage of flexible benefit plans?

They increase the involvement of employees in choosing benefit plans.

Which of the following statements is true regarding rater training?

Training to reduce halo errors and improve accuracy has been most successful.

High performance ratings are nearly always statistically related to high merit increases.

True

In the long run, merit bonuses cost employers less than merit pay.

True

Individual incentives yield higher productivity gains than group incentives.

True

Many variable-pay plans have some form of profit trigger linked to revenue growth or profit margins.

True

Merit pay is a pay-for-performance plan used for more than three-quarters of all exempt, clerical, and administrative employees.

True

Standard hour plans are better for nonrepetitive jobs requiring numerous skills for completion.

True

_____ is the value employees attach to the organization rewards offered for satisfactory job performance.

Valence

Which of the following benefits is NOT mandated by state or federal legislation?

Work/life balance

A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called _____ plan.

a flexible benefit

Components identified as vital to the success of both Scanlon and Rucker plans are: top management support and primary focus on wage incentives. a flexible pay out formula and low turnover rates. union and top management support. a productivity norm and effective worker committees.

a productivity norm and effective worker committees

In situations where the nature of the task is so uncertain that it may be difficult to specify expected goals, the most appropriate rating format is _____.

a standard rating scale

Telling raters that sometimes the work environment and system affect job performance more than the individual employee's behavior:

leads to higher ratings.

The biggest cost-containment strategy in recent years is the movement to:

outsourcing.

Various studies have found that only two specific benefits curtailed employee turnover: _____ and _____.

pensions; medical coverage

Available evidence indicates managers believe the most important factor for pay increases is _____

performance

Available evidence indicates managers believe the most important factor for pay increases is _____.

performance

All of the following are cost-containment practices designed to reduce benefit costs EXCEPT:

provision of skills development training.

A major criticism of standard rating scales is that:

raters have different definitions of scale levels.

A survey shows that the majority of employers are responding to increased benefit costs by _____.

requiring employees to pay higher deductibles and copays

A recent survey shows employees ranking employee benefits _____ in explaining job satisfaction.

second

The ability triangle includes _____.

selection

A team leader with a free-rider problem in his team can most likely maximize the performance of his team by: instructing them to do their best. specifying performance levels and due dates. assigning tasks only to the top performers in the team. punishing free riders who fail to meet standards.

specifying performance levels and due dates

One of the most preferred benefits is _____.

stock plans

All of the following support the use of individual incentives EXCEPT: the independent nature of task accomplishment. the high commitment levels of workers to their profession. the readily apparent performance standards. the presence of a union.

the presence of a union

The most obvious sorting factor is _____

ability

In _____ ranking, raters look at a list of employees, decide who the best employee is, and cross that person's name off the list. From the remaining names, the manager decides who the worst employee is and crosses that name off the list—and so forth.

alternation

One common feature of all types of incentive plans is: an established standard of performance that is used to determine the magnitude of the incentive pay. a sharing contract between the employees and employers, which stipulates that the losses incurred by the companies will be shared by both employees and employers. the established formula that specifies the maximum percentage of base pay allocated as incentives. a risk-sharing plan that increases pay depending upon the turnover rate of a company.

an established standard of performance that is used to determine the magnitude of the incentive pay

Subordinate ratings _____.

are likely to be inflated if they are not anonymous

If a benefit forecast suggests future cost containment may be difficult, the benefit should:

be offered to employees only on a cost-sharing basis.

All of the following are categories of rater training EXCEPT _____ training.

behavior modeling

Contingent workers receive _____ benefits than regular workers; contingent workers' benefits cost _____ for employers than it does for regular workers.

fewer; less

The first issue in setting up a benefits package is:

finding out who should be protected or benefited.

All of the following factors are reasons for the growth of benefits EXCEPT:

foreign lawsuits.

An employer experiencing high turnover and seeking to reduce pension cost is likely to prefer:

full vesting after three years

An employee who changes jobs four or more times during his or her career will likely receive a pension approximately _____ as that of an employee whose working career is spent with one employer, assuming that both employees have the same starting salary and receive annual increases equal to inflation rate.

half the size

Among peer raters, the most objective evaluations are given by:

high-performing workers.

When a firm is _____ on business risk, and its outcomes are _____, its performance is more likely to be higher without any incentive plans. variable; certain high; uncertain low; certain low; invariable

high; uncertain

The majority of defined benefit plans calculate average earnings over the last _____ years of service for a prospective retiree.

3 to 5

_____ theory argues that performance-based pay is the optimal compensation choice for complex jobs, where monitoring employee performance is difficult

Agency

_____ theory argues that performance-based pay is the optimal compensation choice for complex jobs, where monitoring employee performance is difficult.

Agency

_____ is the most frequently used medium for communicating employee benefits.

An employee benefit handbook

Which of the following is an example of the sorting effect in action?

An employee leaving a high-paying job for one that provides more work/life balance

Jacob, an 18-year-old, has been working at HoldVille Corp. for over a year. If HoldVille offers full vesting after one year, which of the following statements is true?

Jacob is not eligible for pension as he is not over 21.

A combination plan often favored by CEOs who don't like to make payouts when the company loses money is a completely self-funding plan.

True

A group performance-based pay plan is superior to an individual plan when production methods and labor mix must change to meet changing pressures.

True

A major problem in group incentive plans is that performance targets are not correctly set.

True

All incentive plans share an established standard against which worker performance is compared to determine the magnitude of the incentive pay.

True

Employees working under individual incentive plans tend to resist the introduction of new technology.

True

Which of the following statements is NOT true?

Workers whose performance is consistently average are rated higher than those who perform better at the end of a rating cycle.

Which of the following is NOT true about individual spot awards? Smaller companies may be more casual about recognition for spot awards. Someone in an organization alerts top management about performances deserving of an award. A majority of companies do not feel that these awards are effective. Smaller companies are more subjective about deciding the size of the award.

a majority of companies do not feel that these awards are effective

By limiting liability for an employee's hospital stay costs to $200,000, an employer is using a cost-containment measure known as:

benefit ceiling.

The motivation triangle includes _____

culture

The motivation triangle includes _____.

culture

All of the following are advantages of flexible benefits EXCEPT:

decreased administrative expenses.

In a _____ plan, an employer agrees to provide a specific level of retirement pension, which is expressed as either a fixed dollar or a percentage-of-earnings amount that may vary (increase) with years of seniority in the company.

defined benefit

Trumbrella Corp. is a pharmaceuticals company. One of its employees reports that he had an on-the-job injury caused by slippery factory floor that broke his back. When Trumbrella initiates its claims processing, it should first:

determine whether the accident happened.

The amount of fairness given to employees refers to _____.

distributive justice

A horn error occurs when an employee is:

downgraded across all performance dimensions because of poor performance on one dimension.

Experts attribute the decline in dollar cost of workers' compensation after 2005 relates to:

employer safety programs

In the majority of the states, unemployment insurance is financed exclusively by:

employers that pay federal and state unemployment insurance.

According to the _____ theory, relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.

equity

Surveys show that the most highly valued benefit is:

medical insurance.

According to research, which of the following is NOT one of the most important factors for employees influencing their pay systems?

Team-based pay

Which of the following is NOT true of merit bonuses? They are viewed as less of an entitlement than merit pay. They are more expensive than merit pay in the long run. Employees dislike them. They are thought to be a substitute for merit pay.

They are more expensive than merit pay in the long run

Which of the following is an advantage of gain-sharing plans? They are the simplest type of variable-pay plan. They allow payouts to occur even if a company's financial performance is poor. They are administratively easy to implement. They increase employees' knowledge of business.

They increase employees' knowledge of business

What is the first question that should be asked when determining the amount of retirement income an employer should provide?

What level of retirement compensation would the employer like to set as a target, expressed in relation to pre-retirement earnings?

The trend in recent variable-pay design is to combine the best of _____ and _____ plans. individual; group gain-sharing; profit-sharing Halsey 50-50; Rowan balanced scorecard; cash profit sharing

gain-sharing; profit-sharing

When a company moves from an individual incentive plan to a group incentive plan, the company is most likely to experience _____.

higher turnover among high performers

Company X pays for performance. Allan, an employee of the company, is not in favor of this reward system and, therefore, leaves Company X in search of another company with different rules for getting rewards. This is an example of the:

sorting effect

As part of the efforts to bring down the employee benefits cost to the company, GrindStop Corp. restricts the number of visits to the dentists covered in the dental plan to two per year. Which of the following cost-containment strategies is used by GrindStop?

Benefit limitation

_____ have the disadvantage of requiring employees to spend money to obtain their incentive. Cash profit sharing plans Balanced scorecard plans Stock options plans Deferred profit sharing plans

Stock options plans

Scanlon plans are designed to lower labor costs by lowering the level of a firm's activity.

False

Which of the following is a disadvantage of gain-sharing plans? Payouts can occur even if a company's financial performance is poor. Pay-performance link is indirect. Employees are required to put up money to exercise grants. Mandatory stock ownership required by gain-sharing plans can increase turnover rates.

Payouts can occur even if a company's financial performance is poor

The authors argue that for merit pay to live up to its potential, all of the following should be done EXCEPT _____. using more peer raters than supervisor raters improving the accuracy of appraisals allocating enough merit money to truly reward performance ensuring the size of the merit increase differentiates across performance levels

using more peer raters than supervisor raters