Ch 12 & 15 Smartbook
Which of the following is an example of the sorting effect?
Frankel Incorporated's full match for employee retirement plan contributions encourages Shania to apply for a job there.
Which of the following are potential reasons individual incentives are relatively rare? (Select all that apply.)
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 statements are true? (Select all that apply.)
What is best for the manager may not be best for the principal., What is best for the agent may not be best for the principal.
When choosing a contracting scheme that helps align the interests of the agent and principal, the principal must choose between ____________-oriented (such as merit pay) and ____________-oriented (such as commissions and stock options) contracts.
behavior; outcome
How would you describe ability and motivation?
behaviors
Organizations should choose a pay strategy in the context of how effectively it will further the organization's ____________.
business strategy
When making changes to the company's compensation system, Blank______ is vital to combat rumors and assumptions.
communication
"Feminine" societies value ____________ more than "masculine" societies. (Select all that apply.)
community, protecting the environment, serving other people
The fact that Andrew cannot sell his shares until he leaves the organization is likely to
decrease the motivation potential of the program for him.
According to W. Edwards Deming, rating individual performance is an unfair practice because ____________.
differences between workers are almost entirely the result of the system they work in rather than the people
What are the factors that affect HRM policies in global markets? (Select all that apply.)
economic system, culture, education-human capital, political-legal system
Countries with small power distances seek to ____________.
eliminate inequalities in power and wealth
Which type of plan not only provides stock ownership in the company to its employees but also potential tax and financial advantages to employers?
employee stock ownership
When growth is high, extending stock options to lower levels of the organization is likely to
enable employees at all levels to share in the organization's growth, increasing attachment to the organization.
Which of the following system factors exist beyond workers' control but help determine whether they receive merit pay? (Select all that apply.)
equipment, customers, co-workers
What is the common currency used by the European Union (EU)?
euro
When considering employee compensation, ____________ theory is focused on the effects of incentives.
expectancy
In general, companies first enter international markets by ____________.
exporting their products
Employees notice how some employees get paid differently, and their perceptions of ____________ will influence their behaviors.
fairness
Which of the following are design features that potentially help differentiate pay-for-performance programs? (Select all that apply.)
frequency of payout, payment method, ways of measuring performance
Cultures with strong uncertainty avoidance ____________. (Select all that apply.)
have rules for how people should behave, demonstrate inflexibility when dealing with differing viewpoints
The Asteroid Corporation, a computer hard drive manufacturing company, has its headquarters in Italy. It has marketing facilities in Norway, has a manufacturing facility in Thailand, and imports materials from Taiwan. It sells its products exclusively to high-end customers in the United States and France. Norway is a __________________ country for the company.
host
When designing either managerial or nonmanagerial compensation, the central issue is determining ____________.
how agency costs can be minimized
The Axelrod Corporation, a manufacturer of high-end medical systems, decided to relocate its lower-level skill and wage manufacturing and assembly jobs to Mexico because it has a:
low level of human capital.
For the modern corporation, ownership is nearly always separate from ____________.
management
Which of Hofstede's cultural dimensions describes the division of roles between the sexes in a society?
masculinity-femininity dimension
A grid that combines an employee's performance rating with his or her position within a pay range so as to determine the size and frequency of pay increases is known as the ____________ grid.
merit increase
Which of the following may be factors that give rise to agency costs? (Select all that apply.)
principals and agents who have information asymmetry, principals and agents who have goal incongruence
When it comes to evaluating the fairness of distributed rewards, employees tend to focus on which aspects? (Select all that apply.)
procedural, distributive
Organizations may not need to rely on layoffs to reduce costs using which compensation program?
profit sharing
Outcome-oriented contracts make some portion of executive pay contingent on what factors? (Select all that apply.)
profitability, stock performance
Transnational __________________ is the multinational composition of a company's managers.
representation
Which of the following trade-offs does a company need to consider with compensation management?
risk-reward
Mary wants to use a balanced scorecard to set pay (for CEO role) because it
sets pays in accordance with achieving key organizational objectives.
Studies show that in most companies, executive pay is significantly aligned with ____________.
shareholder return
The legal regulations pertaining to HRM practices in other countries typically reflect the country's ____________.
societal norms
Which of the following is likely to be valued most in a feminine culture?
solidarity
The effect pay has on workforce composition is known as a(n) ____________.
sorting effect
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
A ________________ rating on performance is used in merit pay programs.
supervisor's
Which is considered the most fundamental criticism of the merit pay system?
that it does not actually exist
Which of the following countries are considered individualist cultures? (Select all that apply.)
the Netherlands, United States, Great Britain
Which countries were part of the North American Free Trade Agreement (NAFTA)?
the United States, Canada, and Mexico
In the context of Hofstede's cultural dimensions, the masculinity-femininity dimension describes
the division of roles between the sexes within a society.
Who collects the majority of information on an individual's performance in traditional merit pay programs?
the immediate supervisor
What factor indicates that human capital is high in a country?
the presence of educational opportunities for citizens
The individualism-collectivism dimension primarily describes
the strength of the relationships between the members of a society.
Which of the following make ESOPs attractive to organizations? (Select all that apply.)
their tax advantages, the defense they offer against takeovers, their financing advantages
Expatriate assignments must be made carefully because ____________.
they are expensive for companies
In determining a new location for international markets, companies must determine if ____________. (Select all that apply.)
they can obtain and supervise human resources in the new location, the legal system of the new location is conducive to business
Land cast Incorporated has its headquarters in the United States and has a facility in France. A virtual team operates from around the globe, with most members from Japan. Japan is a(n) __________________ country for Land cast.
third
Ariel Monet, a biomedical engineer, was born in Peru and is currently working in Australia for a company headquartered in Italy. Ariel is called a __________________ national.
third-country
How does international expansion provide companies with a competitive advantage? (Select all that apply.)
through access to more customers, through access to some countries' low labor costs
What is the purpose of the General Agreement on Tariffs and Trade (GATT)?
to reduce trade barriers among its member-nations
A global company often exhibits strong ____________, which means that the company's ranks are composed of multinational managers.
transnational representation
Which of the following refers to a company's ability to make HRM decisions from an international perspective?
transnational scope
Which of Hofstede's cultural dimensions describes how cultures seek to deal with a future that cannot be completely predicted?
uncertainty avoidance
Feedback in traditional merit pay programs typically flows in which direction?
unidirectionally, from supervisor to subordinate
Countries such as Mexico with low human capital are likely to attract:
unionized low-skill-high-wage jobs.
Employee performance can be measured at the ____________ level. (Select all that apply.)
unit, organizational, individual
The World Trade Organization (WTO)
was established by GATT to resolve dispute among member countries around the world.
Companies considering an expansion into global markets must recognize that the new markets ____________.
will be different in a number of ways from the home country
Which of the following increase with increasing incentive intensity? (Check all that apply.)
Motivation, The chance of unintended consequences
Which of the following statements is true about employee productivity?
Pay incentives increase productivity.
Which of the following is true of skill-based pay programs for recognizing employee contributions?
Performance is measured using either subjective or objective measures.
In addition to Japan and China, which Asian countries have recently become economic forces? (Select all that apply.)
Singapore, Malaysia
Which organization was established by the General Agreement on Tariffs and Trade (GATT) to seek solutions to conflicts between member-nations?
World Trade Organization (WTO)
When used well, pay plans have a(n) ____________.
incentive effect
The strength of the relationship between pay and performance is known as ____________.
incentive intensity
Payments are not added into base pay and must be continuously earned in ____________ plans.
individual incentive
In order to make high performance more likely in the future, employers are well advised to ____________.
offer a monetary reward for high employee performance
Agents prefer a behavior-based contract when
outcome uncertainty is high.
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 return on assets of approximately ____________.
2%
Which of the following is true of how agents may differ from principals?
Agents are more averse to risk.
Fleuretta S.p.A, a leather goods company, has its headquarters in France. It has marketing facilities in Belgium, has a manufacturing facility in Bangladesh, and imports materials from Malaysia and Taiwan. It sells its products exclusively to high-end customers in the United States and Japan. Which of the following is the host country for Fleuretta S.p.A?
Bangladesh
Which Asian country has the largest potential consumer market for goods and services?
China
Which countries have a long-term orientation? (Select all that apply.)
China, Japan
In measuring a team's performance, what potential drawbacks might be encountered? (Check all that apply.)
Competition between individual team members may be reduced., Plans that do not recognize individual performance differences may demotivate top performers.
Which of the following statements about human capital is true?
Countries with low human capital attract facilities that require low skills and low wage levels.
Which of the following is true of how the agency theory views monitoring?
Employees understand fellow employees better than managers do.
Companies may need to offer new products to meet the needs of international consumers.
Employees' technical competence
Which of the following statements about overseas assignments is true?
Expatriate assignments are very costly for companies.
__________________ focuses on the link between rewards and behaviors and emphasizes anticipated rewards.
Expectancy theory
True or false: Individual incentive plans generally contribute to the development of a cross-trained, flexible, proactive, and efficient problem-solving workforce.
False
True or false: U.S. companies have been successful in making expatriate selections from their employee resources.
False
The __________________ involves an international framework of rules and principles for reducing trade barriers across countries around the world.
General Agreement on Tariffs and Trade (GATT)
__________________ refers to the productive capabilities of individuals.
Human capital
What phrase is used to describe the strength of the relation between an individual and other individuals in a society?
Individualism-collectivism
In general, what are some characteristics of a domestic company? (Select all that apply.)
It is often started by an entrepreneur., It tends to employ local labor almost exclusively., It offers a product or service that meets the needs of domestic consumers.
Because Andrew's contribution to the stock's performance is less than it would be at a smaller company, what effect will stock options have at Titan on employee motiviation?
It likely will decrease.
Why does E. L. Thorndike's Law of Effect work?
It states a response followed by a reward is more likely to recur in the future.
What is a possible benefit of operating a company facility in a foreign country?
Labor costs may be lower.
What strategy can expatriate managers use to adapt to the culture of the new country? (Select all that apply.)
Learn to speak the language of the new country if a language barrier exists., Identify behaviors and interpersonal styles that are acceptable in business and social settings.
Based on Hofstede's cultural dimensions framework, which of the following scenarios is likely to be valued in a culture with a short-term orientation?
LeeAnn Long's reliance on traditions
How can companies help their employees successfully manage the repatriation process? (Select all that apply.)
Manage expatriates' expectations of available positions after their overseas assignments., Recognize their achievements when they return home., Communicate with employees while they are on assignment overseas.
What are the main implications for HRM of cultural differences? (Select all that apply.)
Managers may need to adjust their managerial style., Companies may need to adjust who makes decisions., Companies may need to adjust how they encourage and inspire workers.
Which of the following is a host-country national?
Raoul was born and raised in Panama where Kingsworth Ltd. plans to relocate.
In what type of plan are monetary bonuses paid to employees if the ratio of labor costs to the sales value of production is kept below a certain standard?
Scanlon
What has been the result of European countries coming together as members of the European Union (EU)? (Select all that apply.)
The European Union (EU) is a large, free-market economy., The economies of European Union (EU) member countries are closely intertwined.
Which of the following statements are true about agents in large, modern corporations? (Select all that apply.)
The interests of agents and principals do not always converge., Owners (principals) and managers (agents) are usually different people.
What are some of the reasons expatriates want to leave their companies once they return from overseas assignments? (Select all that apply.)
They have no idea what their position will be once they return home., They feel "out of the loop" the entire time they are working overseas., They are placed in jobs that give them less independence and power.
What components of cultural sensitivity are important for expatriates to possess? (Select all that apply.)
They must understand their own cultural background and how it may be seen by host-country nationals., They must understand the new culture., They must understand the new culture.
True or false: For an expatriate manager to be successful, his or her family must be able to adapt to life overseas as well.
True
True or false: Merit pay exists in most organizations.
True
True or false: North American Free Trade Agreement (NAFTA) member nations made up a larger free market than European Union (EU) member nations.
True
What is the most important factor influencing international HRM?
a country's culture
Pay programs that recognize employee contributions differ depending on whether payouts are ____________. (Select all that apply.)
a fixed cost, variable, part of base pay
A socialist economic system is characterized by a tax system that takes ____________.
a higher percentage of income than a capitalist system does as a person moves up the economic ladder
Organizations often worry that merit pay increases may lead to which of the following?
a sense of entitlement
When profit-sharing takes a broad view of what needs to be done to make the organization more effective, it may encourage
a sense of ownership.
Cultural intelligence (CQ) is a person's ability to ____________.
adapt across cultures by observing behavior
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
Before she does, she wants to examine carefully the various kinds of pay-for-performance plans she can offer to the candidate. It is critical that the compensation plan for the new CEO minimizes agency risk (the risk that the individual might act in his or her own interest, rather than that of the company) to ensure that Super Mega Corporation is being managed in the long-term interest of the shareholders. In addition, the pension fund that owns 14% of Super Mega Corporation has been very unhappy about the pay of the executive team, and its management team wants Mary to make sure that CEO pay is independently set, using incentives carefully to drive results. Some sort of balanced scorecard will probably be used to set pay. She is also determined to keep her position as chairwoman of the board. She does not want the role combined with the CEO role, as has been done in the past. One of the primary issues with executive pay that Super Mega Corporation needs to avoid is executive pay that is
always high, regardless of performance.
Which of the following encourage self-monitoring and peer monitoring? (Select all that apply.)
an environment that fosters trust and cooperation, monetary incentives
Which of the following factors determine the size and frequency of pay increases on the merit increase grid? (Select all that apply.)
an individual's performance rating, an individual's compa-ratio
The Jet Set Corporation, a U.S.-based global manufacturer of computer systems, provides its employees who are doing international assignments with a total compensation package that equalizes the purchasing power of each expatriate manager with that of employees in similar positions in the United States and provides incentives to offset the inconvenience incurred from taking an international assignment. This is known as the __________________ approach.
balance sheet
In order to address multiple objectives and track both financial results and progress made in expanding capabilities and acquiring intangible assets, organizations can take an approach known as a(n) ____________.
balanced scorecard
Which of the following is a tool that allows companies to track financial results while monitoring progress in building the capabilities and acquiring the intangible assets they would need for future growth?
balanced scorecard
According to Hofstede's research, countries with individualist cultures tend to ____________.
be wealthy
The main influence of compensation is on instrumentality, which can be described as the perceived link between ____________.
behaviors and pay
What are some typical components of a total pay package for an expatriate? (Select all that apply.)
benefits, base salary, tax equalization allowances
When a company invests in education to reap future monetary rewards, it is part of a __________________ system.
capitalist
Workers have economic incentives to invest in their individual human capital in ____________ economic systems.
capitalist
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? (Select all that apply.)
careful alignment with human resource strategy, balancing of objectives, careful alignment with organizational strategy
In merit pay programs, an individual's __________________ represents his or her position in the pay range.
compa-ratio
In a merit increase grid, the _________________ determines the size and frequency of pay increases.
compa-ratio of employees
What HRM practices or requirements may be dictated by a country's political-legal system?
compensation, hiring and firing, employee training
According to agency theory, monitoring would be cheaper and more effective if ____________.
conducted by employees
A South African manager is given an expatriate assignment in Australia. Day-to-day expenses in Australia are higher than in South Africa. Which of the following is the firm likely to provide to offset this difference?
cost-of-living allowances
The set of important assumptions (often unstated) that members of a community share is the definition of ____________.
culture
Pay plans are used in part to do which of the following? (Select all that apply.)
direct employee behavior, energize employee behavior, control employee behavior
A(n) __________________ program is based on group or plant performance that does not become part of the employee's base salary.
gainsharing
Which of the following is a compensation program that would best support an organizational culture of cooperation and problem solving?
gainsharing
Gainsharing plans differ from profit-sharing plans in that
gainsharing plans distribute payouts more frequently.
Which of the following can be combined to contribute to improvement over an array of performance dimensions? (Select all that apply.)
gainsharing, profit sharing, merit pay
Hofstede's cultural dimensions ____________. (Select all that apply.)
help companies know how to manage workers who come from different cultures, help companies decide where to do business
Wonderland Company is a company based in the United States. It expands its operations and sets up a manufacturing facility in Chile. In this scenario, Chile is the ________________ country of Wonderland.
host
A country in which an organization seeks to locate or has already located a facility is called the ____________.
host country
An expatriate employee who works and lives in the country in which he was born and is employed at the satellite location of company is known as a(n) ____________.
host-country national
Companies may make a foreign assignment appealing to workers by offering them which of the following? (Select all that apply.)
housing allowances, relocation allowances, cost-of-living allowances
Employees assess fairness along the distributive dimension when their assessment is based on
how much they receive.
Andrew Westbrook, a fifteen-year veteran of the consulting industry, is a junior vice president of marketing for Titan Consulting, the second largest consulting company in the United States. As part of his compensation package, he has received stock options in the company over the years. As Titan has grown rapidly during his time there, Andrew (along with many others at the organization) has reaped a great deal of benefit from the stock options he has received, even as a junior consultant. Like many companies, the value of Titan stock has decreased substantially over the past two years. The majority of his options entitle him to purchase stock for $22 a share; Titan's stock currently trades at $15. The ongoing global recession is expected to continue to weigh on Titan's results; the company (and its stock) is not expected to grow much in the short-to-medium time horizon. Titan policy prevents Andrew from selling his stock until he leaves the firm. Under what circumstances will Andrew's stock options generate any gain for him?
if the stock price goes above $22
In incentive pay, performance measures are primarily based on
individual productivity.
In the United States there is a great difference between the highest and lowest paid individuals. Based on Hofstede's cultural dimensions framework, because of this difference, the United States is a(n)
individualist culture.
According to Hofstede's cultural dimensions framework, a country's economic health is positively correlated with
individualist cultures.
When organizations link pay to an employee's 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
Many multinational firms hire managers from different countries who become members of the corporate headquarters staff even though they are not from the parent country; these managers are called ____________.
inpatriates
A firm that enters foreign markets by exporting goods to another country is at the __________________ level of global participation.
international
Query Facts Incorporated is a British company with operations across different areas. After a few years, the company extends its operations to the United States and opens a center in New York. As a result of this expansion, Query Facts Incorporated has become a(n) __________________ company.
international
The Boulder Corporation, based in the United States, has operated an international office in the United Kingdom for the last 20 years. It has now decided to open additional international offices in Australia, Brazil, and China. Based on this situation, this company is transforming from a(n) ___________.
international company to a multinational company.
Separating the role of CEO and chair of the board, as Super Mega Corporation wants to do
is a way to assert board independence.
Which of Hofstede's cultural dimensions describes how a culture balances immediate benefits with future rewards?
long-term-short-term orientation
Which of the following conditions help gainsharing succeed? (Select all that apply.)
management commitment, commitment to continuous improvement, strong levels of cooperation
According to agency theory, the likely agent of a business owner would be a(n) ____________.
manager
Ownership in the company via stock options might be less motivational to employees because they ____________.
may not realize any financial gain until they sell the stock
When measuring performance, team award plans consider which of the following? (Select all that apply.)
meeting deadlines, successful completion of product design, cost savings
Which of the following does evidence suggest has the highest positive impact on future job performance?
merit bonuses
A basic feature of __________________ is the compa-ratio, which controls compensation costs and maintains the integrity of the pay structure,
merit pay
A large power difference between a host country and a home country may cause ____________ between the involved parties.
miscommunication
Expectancy theory implies that linking an increased amount of rewards to performance will increase motivation and performance. Followers of cognitive evaluation theory are likely to question this assumption, arguing that
monetary rewards may decrease intrinsic motivation.
It is important to pay high performers an amount they believe is equitable in order to ____________ them. (Select all that apply.)
motivate, retain attract
One reason why Titan might be less likely to grant employees like Andrew stock options in the future is that
new accounting standards require companies to expense those options, reducing net income.
Which of the following are suitable considerations for using a balanced scorecard to structure employee compensation? (Select all that apply.)
nonfinancial measures, how financial results are achieved, financial results
Under a profit-sharing system, payments are ____________.
not part of base salary
In agency theory, a business's principal is typically a(n) ____________.
owner
According to the agency theory, who are the principals?
owners
Employees are positively motivated by which of the following factors related to their jobs? (Select all that apply.)
pay, participation in decision making, desire for control
The Coastal Corporation, an American company, is preparing a number of its managers for international assignments at various countries around the world. For the company's employees to be successful in their international assignments, it is important that they possess skills related to which dimension?
perception dimension
In order to succeed at a foreign assignment, which adaptive dimensions are most important for an expatriate to have? (Select all that apply.)
perception dimension, self dimension, relationship dimension
In an individualist culture, the extent of ____________ is the main indicator of how long an employee will remain in a job.
person-job fit
Which of Hofstede's dimensions refers to how a culture deals with hierarchical power relationships?
power distance
The compensation plan known as ____________ involves payments being based on some measure of organizational performance, and the payments do not become part of the base salary.
profit sharing
One of the primary reasons for putting significant executive compensation "at risk" in the form of incentive pay is to
provide an incentive to pursue both short-term and long-term performance goals.
According to the law of effect, rewards make responses ____________.
recur in the future
Before she does, she wants to examine carefully the various kinds of pay-for-performance plans she can offer to the candidate. It is critical that the compensation plan for the new CEO minimizes agency risk (the risk that the individual might act in his or her own interest, rather than that of the company) to ensure that Super Mega Corporation is being managed in the long-term interest of the shareholders. Mary's function in this case is to represent
shareholders.
A _________________ plan gives employees the opportunity to buy the company's shares at a previously fixed price.
stock option
The performance motivation of __________________ is limited from a reinforcement theory standpoint.
stock option plans
One way that employees can achieve ownership in the company they work for is via ____________.
stock options
Merit pay, or merit bonuses, is a form of ____________ pay.
variable
performed by managers from other departments
video messages from the chief executive officer, brochures or websites that include scenarios for typical employees, individual discussions with supervisors
When does an international company become a multinational company?
when it builds facilities in a number of different countries
