Compensation :: Chapter Nine

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

20%

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.

15% or 1.5.....ask fink

The ability triangle includes _____.

selection, recruitment and training

_____ is the value employees attach to the organization rewards offered for satisfactory job performance.

valence

When developing a flexible compensation system, which theory or theories would be most useful?

Maslow & Herzberg's theory

In ___________________ theory, incentive pay is motivating if it helps an employee gain a sense of achievement, recognition or approval.

Maslow's

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

Maslow's need theory

Compensation should reinforce all but which of the following behaviors?

SHOULD - attracting and hiring good employees - encouraging skill development - motivating high job performance DOES NOT: -try to keep turnover to nearly zero

The motivation triangle includes _____.

culture, compensation, and performance management

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

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

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 _____.

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 _____.

wide range of awards beyond just money

According to research, which of the following is NOT one of the most important factors for employees influencing their pay systems?

ARE IMPORTANT: - changes in cost of living - pay at market rate - seniority

Which of the following is NOT true?

ARE TRUE: - more companies are using pay based on individual, group, and organizational performance - workers with high security needs may accept lower for pay security - workers may need higher pay to stay and perform in an at-risk paying company ANYTHING ELSE IS NOT TRUE

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

DO REQUIRE: - success sharing plans - merit bonuses - profit sharing plans

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

Herzberg Two-Factor

__________________ theory contends that success-sharing will be motivating but at-risk plans will be de-motivating.

Herzberg's two factor

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 high base pay with low incentives and a variety of rewards

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

Which of the following best supports a culture of flexibility and innovation?

a strong commitment to job security

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

________________________ theory argues that performance-based pay is best 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 among the following components of a reward system is a dimension of empowerment?

control

According to expectancy theory, the valence of an outcome is the:

degree to which an outcome is desired

The amount of fairness given to employees refers to _____.

distributive justice

Which of the following is an example of the sorting effect in action?

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

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

equity

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 contends that we choose to do those things that we believe are most likely to lead to desired rewards.

expectancy

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

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

instrumentality

A(n) ___________________ requires annually "re-earning" the added pay

lump-sum bonus

_____ is an individual level form of performance pay.

merit bonuses

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

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

The key to designing a pay-for-performance system rests on standards. Specifically, managers need to be concerned about the:

objectives, measures, eligibility, and funding

According to expectancy theory, the instrumentality is:

perceived probability that a specified level of behavior or performance will receive a specific level of reward

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 environmental consequences?

reinforcement theory