Compensation Chapter 9 Study Guide
Which of the following is NOT true?
**True Statements** - More companies are using pay based upon individual group and organizational performance - Workers with higher security needs may accept lower pay for higher wage security - Workers may need higher pay to stay and perform in an at-risk company
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%
According to research, which of the following is NOT one of the most important factors for employees influencing their pay systems?
Team-based pay
All of the following EXCEPT ______ require periodically re-earning the added pay.
Do require*** - Success-sharing - Merit Bonuses - Profit-Sharing Plans Example of an "except" - cost-of-living increases
According to _____ theory, relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.
Equity Theory
When salary increases are based on inputs, or performance, companies are following:
Equity theory
Which of the following theories states that people choose the behavior that leads to the greatest reward?
Expectancy Theory
_________________ theory contends that we choose to do those things that we believe are most likely to lead to desired rewards.
Expectancy Theory
________ theory states that success-sharing plans will be motivating, wheras at-risk plans will be demotivating.
Herzberg's Two-Factor Theory
___________ theory contends that success-sharing will be motivating but at-risk plans will be de-motivating
Herzeberg's Two factor theory
When a company moves from an individual incentive plan to a group incentive plan, the company is most likely to experience _______.
High turnover among high performers.
According to expectancy theory, the instrumentality is:
The percieved probability that a specified level of behavior will recieve a specific level of reward.
_______ is the value employees attach to the organization rewards offered for satisfactory job performance.
Valence
The motivation triangle includes _________.
Culture, Compensation, Performance Management
When an organization's performance has regular and large swings and individual peformance 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.
When an organization's performance has fequent 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/
Which of the following best supports a culture of flexibility and innovation?
A strong commitment to job security.
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 perfomance. In this case, the most effective compensation mix is to offer ________.
A wide range of rewards beyond just money.
______ theory argues that performance-based pay is the optimal compensation choice for complex jobs, where monitoring employee performance is difficult.
Agency
A key factor in increasing trust in top management is _____________.
An acceptable appraisal system
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.
Which among the following components of a reward system is a dimension of emplowerment?
Control
The amount of fairness given to employees refers to _______.
Distributive justice
________ is employees' beliefs that requisite job performance will be rewarded by the organization.
Instrumentality
Compensation should reinforce all but which of the following behaviors?
Keeping turnover to nearly 0
A(n) ________ requires annually "re-earning" the added pay.
Lump-sum bonus
When identifying, what is important to employees, which theory would be most useful?
Maslow's Need Theory
In ___________________ theory, incentive pay is motivating if it helps an employee gain a sense of achievement, recognition or approval.
Maslow's Theory
When developing a flexible compensation system, which theory or theories would be most useful?
Maslow's Theory and Herzberg's Theory
_______ is an individual form of performance pay.
Merit Bonus
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.
Available evidence indicates managers believe the most important factor for pay increases is __________.
Performance
When pay is based on individual performance, turnover tends to be highest among ________.
Poor performers
Which of the following focuses on increasing the frequency of desired behaviors and decreasing the frequency of undesired behaviors through enviornment consequences?
Reinforcement Theory
The ability triangle includes _____.
Selection, Recruitment, Training
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
The most obvious sorting factor is _____.
ability
According to the expectancy theory, the valence of an outcome is the:
degree to which an outcome is desired
The key to designing a pay-for-performance system rests on standards. Specifically, managers need to be concerned about the:
objectives, measures, elgibility, and funding
