Mgt461 Chapter 9 & 10

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

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

20

Which of the following is the most commonly used team incentive performance standard?

Customer satisfaction measures

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

Equity

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

Expectancy theory

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the _____ plan.

Gantt

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

Herzberg's two-factor

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.

A team leader with a free-rider problem in his team can most likely maximize the performance of his team by:

specifying performance levels and due dates.

Which of the following statements is true of individual spot awards? They are given to employees for exceptional performance as an add-on bonus. If you had repair work done on your car, the shop most likely used the _____ plan to pay the mechanic.

standard hour

Which of the following is NOT true of merit bonuses?

They are more expensive than merit pay in the long run.

Which of the following is an advantage of gain-sharing plans?

They increase employees' knowledge of business.

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

The trend in recent variable-pay design is to combine the best of _____ and _____ plans.

gain-sharing; profit-sharing

When a firm is _____ on business risk, and its outcomes are _____, its performance is more likely to be higher without any incentive plans.

high; uncertain

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

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

poor performers

Which of the following is NOT true about individual spot awards?

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

The most obvious sorting factor is _____.

Ability

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

Agency

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

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.

Bedeaux

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?

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?

Cash profit sharing plan

Which of the following is NOT true?

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

The motivation triangle includes _____.

Culture

Which of the following is NOT a long-term incentive plan?

Improshares

_____ 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 defers a portion of taxes to employees.

When identifying what is important to employees, which theory would be most useful?

Maslow's need theory

_____ is an individual level form of performance pay.

Merit Bonus

An incentive system with three piecework rates is the _____ plan.

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?

Merrick system

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

Performance

Which of the following statements about merit pay is NOT true?

Removal of merit pay lowers satisfaction but not performance.

The ability triangle includes _____.

Selection

Surveys show the most popular type of variable pay plans are _____.

Special recognition plans

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

_____ have the disadvantage of requiring employees to spend money to obtain their incentive.

Stock options plans

When an organization's performance has frequent highs and lows, but individual performance is fairly stable, and performance measures are clear, the most effective compensation mix is to offer _____.

a large base pay and low-incentive pay

A person with low self-esteem is likely to seek _____.

a large, decentralized organization with little performance-based pay

Components identified as vital to the success of both Scanlon and Rucker plans are:

a productivity norm and effective worker committees.

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

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.

All of the following EXCEPT _____ require periodically re-earning the added pay.

cost-of-living increases

The amount of fairness given to employees refers to _____.

distributive justice

Which of the following is NOT an advantage of team incentives?

easy to set equitable targets for all teams

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:

increases the base pay component of its pay mix

In gain-sharing plan formulas, _____ are in the numerator and _____ are in the denominator.

labor inputs; productivity outcomes

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

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

Paying a dime for every bottle collected and turned into a collection center is an example of a:

straight piecework system

The most frequently used incentive system is the:

straight piecework system

All of the following support the use of individual incentives EXCEPT:

the presence of a union

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