Human Resource Management Chapter 12

According to agency theory, the likely agent of a business owner would be_______

A manager

Contracts that generally do not result in a transfer of risk to the agent and, as such, do not require a wage differential are known as _____ - based contracts

Behavior

Which of the following characteristics concerning pay-for-performance programs may help increase the probability that the program has the intended effects and decrease the probability of unintended consequences and problems?

Careful alignment with organizational strategy balancing of objectives careful alignment with human resource strategy

Pay plans are used in part to do which of the following???

Energize direct sustain or control employee behavior

Expectancy theory emphasizes experienced rewards

Expected rewards

Individual incentive plans generally contribute to the development of a cross trained, flexible, proactive, and efficient problem-solving workforce

False

According to research, intrinsic motivation is ________ when extrinsic incentives are available

Higher

The fact that most profit sharing plans are deferred tends to

Reduce their motivational impact

According to W. Edwards Deming, rating individual performance is an unfair practice because

apparent differences between people arise almost entirely from the system that they work in, not from the people themselves

A ______ program considers group or plant performance to determine incentive payouts, whereas profit sharing plans use organization-level indicators

gainsharing

In agency theory a business's principal is typically______

the owner

According to research findings, when an organization changes from a pay strategy that has below average variability to one with above average variability, on average they will experience a ROI increase of approximately______

2%

Which of the following are potential advantages of profit sharing plans?

Labor costs automatically decline during difficult economic times Employees feel and act like owners, helping to make the organization more effective

Which of the following are potential reasons individual incentives are relatively rare?

Many jobs have no physical output to measure They may result in employees doing only what they are getting paid for and little or nothing else

Which of the following can be combined to contribute to improvement in a wide array of performance dimensions

Merit pay gainsharing profit sharing

Which of the following encourage self-monitoring and peer monitoring?

Monetary incentives (outcome-oriented contracts in agency theory) Environment that fosters trust and cooperation

Some scholars using cognitive evaluation theory believe which of the following regarding extrinsic and intrinsic motivation?

Monetary rewards might increase extrinsic motivation but decrease intrinsic motivation

Under a profit sharing system, payments are__________

Not part of base salary

In order to make high performance more likely in the future, employers are well advised to _______

Offer a monetary reward for high employee performance

Which of the following differentiate between gainsharing and profit sharing plans?

Payouts in gainsharing plans are not deferred and are paid out more frequently Gainsharing plans use group or plant-level performance rather than organization-level performance

The strength of the relationship between performance and pay is known as _______ and must be considered when designing pay-for-performance plans

incentive intensity

When choosing a contracting scheme that helps align the interests of the agent and principal, the principal must choose between ______ - orineted (such as merit pay) and _____ - orinted (such as commissions and stock options) contracts

behavior; outcome

Which of the following conditions help gainsharing succeed?

(1) management commitment, (2) a need to change or a strong commitment to continuous improvement, (3) management's acceptance and encouragement of employee input, (4) high levels of cooperation and interaction, (5) employment security, (6) information sharing on productivity and costs, (7) goal setting, (8) commitment of all involved parties to the process of change and Page 525improvement, and (9) agreement on a performance standard and calculation that is understandable, seen as fair, and closely related to managerial objectives.

One reason that many organizations use merit pay is

A form of variable pay Ability to define and reward a broad range of performance dimensions.

The effect pay has on workforce composition is known as

A sorting effect

Which of the following focuses on how employee compensation can be used to align the divergent interests and goals of an organizations various stakeholders?

Agency theory

In an outcome- oriented contract, when profits are high, compensation

Increases

Information about changes in compensation comes primarily through ________

Individual discussions with a supervisor

In________ plans, payments are not added into base pay and must be continuously earned

Individual incentive

When organizations link pay to performance, they are likely to attract candidates who are _______

Individualistic

What happens when a principal has imperfect information concerning the degree to which the agent is pursuing and achieving the principal's goals?

Information asymmetry

Which of the following are among the factors used in determining what type of contract an organization should use?

Risk aversion Outcome uncertainty Job progammability Measurable job outcomes Ability to pay Tradition

Which of the following is an employee ownership plan that provides employees with the opportunity to buy company shares at previously established prices?

Stock options

Which of the following make ESOPs attractive to organizations?

The defense they offer against takeovers Their tax advantages Their financing advantages

Which of the following factors determine the size and frequency of pay increases on the merit increase grid?

The individuals performance rating Position in range (an individuals compa-ratio)

The appropriate amount of differentiation in performance and pay will depend on _______

The level of interdependence desired in a particular context

Which of the following statements about executive and managerial compensation are true?

There is generally an emphasis on outcome-oriented results when determining executive pay. The bulk of executive compensation comes from stock options and other forms of long-term compensation

Organizations that use profit sharing plans may not have to rely on layoffs as much to reduce costs during economic downturns

True

When a company uses a balanced scorecard, it takes a(n) ______ approach to balancing objectives

structured

Unlike merit pay, individual incentives are rarely based on _________

subjective ratings