MGT 461 Chapters 9, 10, 11, & 12

5

A study of ratings of managers found that approximately only ____ percent of the managers were rated below average. 30 20 10 5

Requiring employees to pay higher deductibles and copays

A survey shows that the majority of employers are responding to increased benefit costs by _____. Requiring employees to pay higher deductibles and copays Laying off employees Dropping health care plans Relying on the Patient Protection and Affordable Care Act

Decreased administrative expenses

All of the following are advantages of flexible benefits EXCEPT: Containment of costs of benefits Increased understanding of benefits by employees Reduced expenses of introducing new benefits Decreased administrative expenses

False

Employers prefer the noncontributory approach to financing benefits because this allows greater control of costs. T or F

True

Some experts argue that applying total-quality-management principles to performance appraisals can improve them. T or F

Patient Protection and Affordable Care Act

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 Family and Medical Leave Act Health Maintenance Organization Act Consolidated Omnibus Budget Reconciliation Act

False

The behaviorally anchored rating scales are inexpensive to develop but time-consuming to use. T or F

The MBO format

The best appraisal format for employee development is: The BARS format The MBO format The essay format The ranking format

Outsourcing

The biggest cost-containment strategy in recent years is the movement to: Benefit limitations HMOs Outsourcing Higher deductibles

False

The favorable tax status granted to many benefits is sage from the threat of recurrent tax reform proposals. T of F

False

The performance of hourly workers is more accurately tied to quantifiable measures than the performance of managerial workers. T or F

Pensions; medical coverage

Various studies have found that only two specific benefits curtailed employee turnover: _____ and ____. Vacation days; dental plans Profit-sharing plans; life insurance Retirement benefits; paid vacations Pensions; medical coverage

False

When raters must justify their scoring of subordinates in writing, the rating is less accurate. T or F

Work/life balance

Which of the following benefits is NOT mandated by state or federal legislation? Workers' compensation Work/life balance Social Security Unemployment insurance

New benefits are more difficult to introduce

Which of the following is NOT a disadvantage of flexible benefit programs? Administrative burdens and expenses increase. Adverse selection of benefits by employees results in increase in costs. New benefits are more difficult to introduce. Flexible benefits are subject to nondiscrimination requirements in Section 125 of Internal Revenue Code.

They increase the involvement of employees in choosing benefit plans.

Which of the following is an advantage of flexible benefit plans? They require no expenditure from the employees They decrease the administrative burdens from employers They decrease the costs as employees pick only those benefits they will use resulting in the subsequent high benefit utilization. They increase the involvement of employees in choosing benefit plans.

Group insurance benefits has relatively easy qualification standards

Which of the following statements is true of employee benefits? Employers can substitute insurance benefits for job security Group insurance benefits has relatively easy qualification standards Most employee benefits are taxable Many group-based benefits are obtained at a higher rate than could be obtained by employees action on their own.

Group insurance benefits has relatively easy qualification standards.

Which of the following statements is true of employee benefits? Employers can substitute insurance benefits for job security. Group insurance benefits has relatively easy qualification standards. Most employee benefits are taxable. Many group-based benefits are obtained at a higher rate than could be obtained by employees acting on their own.

COBRA (1984)

_____ 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 company. Health Maintenance Act (1973) FLSA (1938) The tax reform of 1982 COBRA (1984)

An employee benefit handbook

_____ is the most frequently used medium for communicating employee benefits. A notice board A seminar An employee benefit handbook A meeting with the chief executive officer

True

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

True

A major reason for the proliferating cost of benefit programs is the narrow focus of benefit administrators. T of F

Second

A recent survey shows employees ranking employee benefits ____ in explaining job satisfaction. First Second Third Last

Team-based pay

According to research, which of the following is NOT one of the most important factors for employees influencing their pay systems? Team-based pay Changes in cost of living Pay at market rate Seniority

Equity

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

False

Agency theory argues that employees prefer risky pay as rewards can be greater than a salary. T or F

False

All employee benefits provided by employers are taxable. T or F

Benefit limitation

As part of the efforts to bring down the employee benefit 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? Copay Benefit limitation Administrative cost containment Wellness program

Performance

Available evidence indicates managers believe the most important factor for pay increases is _____. Experience Nature of the job Seniority Performance

Benefit ceiling

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

False

Central tendency errors are the most difficult form of error to eliminate. T or F

A productivity norm and effective worker committees

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

Medical Coverage

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? Counseling service Early retirement plan Medical coverage Profit-sharing plan

True

During performance appraisals, managers tend to focus on either good performance, counterproductive performance, or both. T or F

True

Employees who are dissatisfied with performance appraisals are less satisfied wit their pay. T or F

False

Employees' preferences of various benefits can be predicted accurately from demographic data. T or F

False

Flexible benefit plans eliminate the involvement of employees. T or F

False

Flexible compensation is based on the idea that the organization knows what package of rewards would be sit an individual employee's needs. T or F

Gantt

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

False

Gain sharing poses greater risk to individual employees than profit sharing. T or F

False

Halo error is the error that occurs when an employee is downgraded across all performance dimensions exclusively because of poor performance in one dimension. T or F

True

Herzberg's two-factor theory argues success-sharing plans will be motivating, while at-risk plans will be demotivating. T or F

True

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

12 weeks

How many weeks of leave does Family Medical Leave Act (1993) mandate for all workers at companies that employ 50 or more people? 4 weeks 8 weeks 12 weeks 16 weeks

False

If the future cost containment of a benefit may be a problem, the benefit should be offered on a noncontributory basis. T or F

Standard hour

If you had repair work done on your car, the shop most likely used the ____ plan to pay the mechanic. Bedeaux Standard plan Halsey 50-50 Straight piecework

True

In most Asian cultures, employees do not welcome performance feedback. T or F

Spillover Error

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? Horn error Halo error Severity error Spillover error

Less than 8 percent

Louie received the highest performance rating and is in the second quartile of his pay range. He received a pay increase of 8 percent. Bart also received the highest performance ratings and is in the fourth quartile. Given the way most merit increases grids work, what size of pay increase would you expect Bart to receive? Less than 8 percent More than 8 percent 8 percent There is no relationship between ratings and position in pay range.

True

One of the best strategies for determining external equity is to conduct a benefit survey. T or F

Stock plans

One of the most preferred benefits is _____. Stock plans Profit sharing Shorter working hours Early retirement

Straight piecework system

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

A flexible benefit

A benefit plan that allocates a set dollar amount to employees and allows them to select benefits is called ____ plan. A select choice A no-deductible A flexible benefit A flat dollar benefit

True

A disadvantage of flexible benefit programs is that they increase administrative burdens. T or F

True

Supervisors tend to weigh negative attributes more heavily than positive attributes. T or F

False

The Employment Retirement Income Security Act (1974) requires employers to offer some form of pension. T of F

False

The family medical leave act of 1993 mandates 20 weeks of leave for all workers at companies that employ 10 or more people. T or F

The U.S. Chamber of Commerce

The most widely used benefit survey is conducted by: The U.S. Chamber of Commerce Watson-Wyatt The Society for Human Resource Management The American Compensation Association

Less than 15

The typical employee can recall _____ percent of the benefits he or she receives. Almost 50 Less than 15 Over 30 40

False

Today, benefits make up about 25 percent of payroll costs. T or F

Determine whether the accident happened.

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 Determine if the employee is eligible for any benefit Calculate the payment required to be paid to the employee. Contact the insurance companies to enquire about the possibility of a joint payment.

Easy to set equitable targets for all teams

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 memebers

They are more expensive than merit pay in the long run

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 substitute for merit pay

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

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 direct Employees are required to put up money to exercise grants Mandatory stock ownership required by gain-sharing plans can increase turnover rates

BARS

Which of the following is the best appraisal format in terms of legal defensibility? BARS MBO Essay format Ranking Method

Product Market Share Data

______ are NOT used for determining employee benefit preferences. Demographic data Product market share data Employee surveys Cafeteria-style plans

Bedeaux

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

True

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. T or F

True

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

Downgraded across all performance dimensions because of poor performance on one dimension

A horn error occurs when an employee is: Consistently rated higher than deserved Given a favorable rating on all job duties based on his or her impressive performance in just one job function. Downgraded across all performance dimensions because of poor performance on one dimension. Consistently rated lower than deserved

A large, decentralized organization with little performance-based pay

A person with low self-esteem is likely to seek _____. A small, hierarchical organization with pay plans based upon individual performance A flat organization with a significant amount of pay based upon performance A small organization with large benefits based on group performance A large, decentralized organization with little performance-based pay

Specifying performance levels and due dates

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

True

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

Behavior modeling

All of the following are categories of rater training EXCEPT ____ training. Rater-error Performance-standard Behavior modeling Performance-dimension

Cost-of-living increases

All the following EXCEPT ____ require periodically re-earning the added pay. Success-sharing plan Merit bonuses Profit-sharing plans Cost-of-living increases

True

An important implication of reinforcement theory is that the timing of payouts to employees is very important. T or F

Merrick

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

Clone error

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. Severity error Horn error Spillover error Clone Error

True

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

True

For the same level of performance, employees low in a pay range receive higher percentage increases than employees higher in the range. T or F

False

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

False

Goal-setting theory argues that employees' performance is maximized when performance targets are unchallenging and unspecific. T or F

Increase the base pay component of its pay mix

Grabhouse Inc. is experiencing an increase in turnover rates of its top employees. Upon consulting with its managers for the reasons for this increases, 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 pax mix Introduce a profit-sharing plan to its pay mix Introduce a risk-sharing plan to its pay mix Increases the merit bonus component of its pay mix

True

Group Incentive pay increases turnover of better performers, while individual incentive increases turnover of poorer performers. T or F

Labor inputs; productivity outcomes

In gain-sharing plan formulas, ____ are int he numerator and _____ are in the denominator. Productivity measures; inputs Productivity measures; labor inputs Costs; revenues Labor inputs; productivity outcomes

False

In the formula "Behavior = f(M,A,E)" M denotes monetary incentive. T or F

True

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

An assembly line job that requires tightening nuts on an engine

In which of the following jobs is it most appropriate to use behaviorally anchored rating scales? The job of a trainer requires training new employees every month The job of a web designer that requires designing websites according to client expectations An assembly line job that requires tightening nuts on an engine A client relations job that requires bringing in new clients to a firm

True

Individual incentives yield higher productivity gains than group incentives. T or F

Severity Error

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? Halo error Severity error Leniency error Clone error

True

Keeping a performance diary can help employers defend against discrimination charges stemming from performance ratings. T or F

True

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

True

Maslow's theory suggest that performance-based pay can be demotivating if it impinges upon employees' capacity to meet daily living needs. T or F

Cash profit sharing plan

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 to 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

True

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

20

Most experts agree that employees do not begin to consider changing their behaviors unless payouts are at least ____ percent higher. 8 5 10 20

True

Risk-sharing plans include a provision for cuts in base pay that are only recaptured in years when an organization meets performance objectives. T or F

False

Scanlon plans are designed to lower labor costs by lowering the level of a firm's activity. T or F

True

Security in terms of compensation refers to the predictability of one's paycheck from one time to the next. T or F

Are likely to be inflated if they are not anonymous.

Subordinate ratings _____. Are likely to be inflated if they are not anonymous. Are immune to halo errors Are immune to horn errors Are used by 70% of all team-style organizations

Special recognition plans

Surveys show the most popular type of variable plan plans are _____. Stock option plans Gainsharing plans Individual incentive plans Special recognition plans

Leads to higher ratings

Telling raters that sometimes the work environment and system affect job performance more than the individual employee's behavior: Makes the ratings completely accurate Leads to higher ratings Has no effect on the ratings Leads to lower ratings

Selection

The ability triangle includes ____. Selection Performance Management Compensation Organization development

True

The authors argue that a system of flexible compensation could lead to more desirable employee behaviors at a lower total cost. T or F

True

The central issue involving merit pay is how to get employees to view raises as a reward for performance. T or F

A Wide range of awards beyond just money

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 high base pay with high incentives Monetary rewards alone A large base pay and low-incentive pay A wide range of awards beyond just money

False

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

MBO

The most common form of outcomes-based appraisal is: The essay method MBO The performance standards review the BARS

Straight piecework system

The most frequently used incentive systems is the: Standard hour plan Straight piecework system Merrick system Taylor differential piece-rate plan

Ability

The most obvious sorting factor is ____. Seniority Ability Experience Educational Qualification

Culture

The motivation triangle includes _____. Selection Organizational design Culture Organization development

False

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

False

The total-quality-management advocates contend that informing raters that the work environment has more influence on performance than individual employee behavior will make the raters' rate lower. T or F

Gain-sharing; profit-sharing

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

Stock ownership plan

TreeDen corp. experiences as 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

Higher turnover among high performers

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 An increase in instrumentality Higher turnover among poor performers An increase in perceived equity

BARS

When a job involves very routine, mechanistic tasks, the most appropriate appraisal format is: BARS MBO standing rating scales alternation ranking

A base pay with low incentive and a variety of rewards

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer ____. A base pay with low incentives and a variety of rewards Monetary rewards with large incentives A large base pay and low-incentive pay A wide range of rewards and significant incentives

A base pay with low incentives and a variety of rewards

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure, the most effective compensation mix is to offer ____. A base pay with low incentives and a variety of rewards Monetary rewards with large incentives A large base pay with low-incentive pay A wide range of rewards and significant incentives

A variety of rewards with significant incentive pay

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 large base pay and low-incentive pay An increase in base pay A variety of rewards with significant incentive pay Monetary rewards with no benefits

Maslow's need theory

When identifying what is important to employees, which theory would be most useful? Expectancy theory Equity theory Maslow's need theory Agency theory

Poor Performers

When pay is based on individual performance, turnover tends to be highest among _____. Poor Performers Good performers Single women with children Ethnic minorities

True

When pay raises are based on events over which employees lack significant control, they are likely to regard the system as unfair. T or F

Merrick System

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 Plan

Improshares

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

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

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 performance 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

Increase in performance pressure and stress

Which of the following is a negative outcome of the management by objectives method? Increased difficulty of the planning process Decrease in superior/subordinate communication Increase in performance pressure and stress Lack of direction of work units

It defers a portion of taxes to employees

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

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

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 The provision of across-the-board pay increases by a company The provision of cost-of-living increases by a company An employee choosing fewer incentives in his flexible compensation plan

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

Which of the following is statements is true of leniency errors? It is the error of consistently rating someone higher than is deserved. It is the error of downgrading an employee across all performance dimensions exclusively because of poor performance on one dimension. It is the error of avoiding extremes in ratings across employees. it is the error of giving better ratings to individuals who are like the rater in behavior and personality.

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

Which of the following is statements is true of leniency errors? It is the error of downgrading an employee across all performance dimensions exclusively because of poor performance on one dimension. It is the error of consistently rating someone higher than is deserved. It is the error of avoiding extremes in ratings across employees. It is the error of giving better ratings to individuals who are like the rater in behavior and personality.

Customer satisfaction measures

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

Removal of merit pay lowers satisfaction but not performance

Which of the following statements about merit pay is NOT true? It has small but significant effect on performance Removal of merit pay lowers satisfaction but not performance Departments and units with merit pay show higher performance Merit pay has a sorting effect

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

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.

Expectancy theory

Which of the following theories states that people choose the behavior that leads to the greatest reward? Maslow's need theory Expectancy theory Herzberg's two-factor theory Goal-setting theory

Paired-comparison ranking

Which of the following types of rankings would be least preferred by managers of more than 10-15 employees. Straight ranking Alternation ranking Paired-comparison ranking Forced distribution ranking

True

Workload and work variety are both components of total reward system. T or F

Merit bonus

____ is an individual level form of performance pay. Risk sharing Gain sharing Merit bonus Success sharing

Valence

____ is the value employees attach to the organization rewards offered for satisfactory job performance. Equity Instrumentality Valence Reinforcement

Agency

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

Instrumentality

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

BARS

_____ is the best appraisal format across the five criteria for evaluating rating formats. Ranking MBO BARS Standard rating scales

Herzberg's two-factor

_____ theory states that success-sharing plans will be motivating, whereas at-risk plans will be demotivating. Equity Expectancy and agency Herzberg's two-factor Agency

Stock options plans

______ 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