Compensation Exam 3

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.

Asai uses a skill-based plan that establishes single flat rates for each skill level. Mark performs better than Steve, even though Steve has more seniority. Which of the following statements is most likely to be true in this scenario:

Both Mark and Steve will be paid the same amount.

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

Gain-sharing; profit sharing.

In gain-sharing plan formulas, ______ are in the numerator and ______ are in the denominator:

Labor inputs; productivity outcomes.

Which of the following is often used to set pay ranges:

Quartiles and percentiles.

Which of the following gain sharing plans is designed to lower labor costs without lowering the level of a firm's activity:

Scanlon plan.

What is the main difference between Scanlon and Rucker plans:

Scanlon plans focus on labor savings, Rucker plans focus on a variety of savings.

For organizations using a skill-competency-based pay system or generic job descriptions, the best approach for pricing jobs is:

The low-high approach.

What is a fuzzy market and types of jobs that would most likely fall into them:

The position of a senior director of Future Vision Services that was filled by a software engineer with e-commerce, marketing, and theater experience.

In the regression equation y= a + bx, job evaluation points are denoted by:

x.

Lead/lag:

Aging market data to a point halfway through a plan year.

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 will low self-esteem is likely to seek:

A large decentralized organization with little performance based pay.

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

A productivity norm and effective worker comities.

The _____ pay strategy emphasizes external competitiveness and deemphasizes internal alignment:

Market pricing.

_______ is an individual level form of performance pay:

Merit bonuses.

Which of the following is an individual incentive plan:

Merit pay.

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

Merrick plan.

Which of the following focuses on increasing the frequency of desired behaviors and decreasing the frequency of undesired behaviors through environmental consequences:

Reinforcement theory.

In which of the following standard hour plans does the employee's bonus increase as time required to complete the task decreases:

Rowan plan.

The ability triangle includes:

Selection, Recruitment, Training

If you had repair work done on your car, the shop most likely will use the _____ plan to pay the mechanic:

Standard hour plan.

Advantage of team incentives:

Stimulates problem solving. May better reflect how work is performed. Minimizes distinctions between team members.

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

Straight piecework system.

The most frequently implemented incentive system is:

Straight piecework system.

The size of pay differentials between grades should:

Support career movement through the pay structure.

Who usually has responsibility for managing a pay survey:

The compensation manager.

Which of the following support the use of individual incentives:

Stable individual performance standards- task accomplishment not dependent on performance of others- the independent nature of task accomplishment. The high commitment levels of workers to their profession. The readily apparent performance standards.

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

Gantt plan.

A company using a skill-based pay system prices the job of lead assembler between $10 and $22 per hour. Survey data showed that the job of assembler averages $10 per hour and the job of assembly supervisor averaged $22 per hour. The company is using the ______ method of job matching:

Low-high.

Which measure of central tendency minimizes distortion caused by outliers:

Median.

The corporate 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.

Instrumentality:

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

Available evidence indicates that mangers believe that most important factor for pay increases is:

Performance.

The most obvious sorting factor is:

Ability.

An incentive payment can be best described as:

Any form of pay tied directly to achievement of performance standards.

In the United States, the ______ is a major source of publicly available pay data, and it also calculates the consumer price index:

Bureau of Labor Statistics.

A common first step in interpreting compensation survey data is to:

Check for the accuracy of job matches.

The final decision in setting externally competitive pay and designing the corresponding pay structures is to:

Construct a pay policy line that reflects external pay policy.

The motivation triangle includes:

Culture, Compensation, Performance Management

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

Customer satisfaction measures.

The second major decision in setting externally competitive pay and designing the corresponding pay structures is to:

Define the purpose of the survey.

Valence:

Degree to which an outcome is desired.

The amount of fairness given to employees refers to:

Distributive justice.

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.

A market pay line does what according to the text:

Links a company's benchmark jobs with market rates paid by competitors.

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:

Sorting effect.

The first major decision in setting externally competitive pay and designing the corresponding pay structures is to:

Specify the employer's competitive pay policy.

Which of the following is true of market pricers:

They assume that little value is added through internal alignment.

Which of the following statements is true regarding broad bands:

They foster cross-functional growth.

Advantage of gain-sharing plans:

They increase employees' knowledge of business.

Which of the following statements is true of pay ranges:

They reflect the differences in performance or experience that an employer wishes to recognize with pay.

______ measures reveal competitors' use of performance-based cash payments.

Total cash.

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

20%.

Pay ranges for office and production work commonly range between:

5 and 15%.

Disadvantage of gain-sharing plans:

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

Disadvantage of team incentives:

Easy to set equitable targets for all teams.

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.

Which of the following are an example of a long-term incentive plan:

Employee stock ownership plans. Broad-based option plans (BBOPs). Performance plans.

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.

Gramhold in., a pharmaceutical company, reduces its ten salary grades to just three broad bands. Which of the following statements is most likely to be true in this case:

Gramhold will experience more career moves within bands than career moves between bands.

An advantage of providing stock ownership as variable pay to employees:

It defers a portion of taxes to employees.

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 statistical measures shows how similar or dissimilar the market rates are from each other:

Standard deviation.

When employee performance measure 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.

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

Agency theory.

Because employers are raising employee pay at various times during the year, survey data must be updated using a process called:

Aging.

Which of the following statements is true of merit pay:

False: They are more expensive than merit pay in the long run. True: They are viewed as less of an entitlement than merit pay. True: Employees dislike them. True: They are thought to be a substitute for merit pay.

Which of the following statements is true of individual spot awards:

True: Given to employees for exceptional performance as an add-on bonus. True: Smaller companies may not be more casual about recognition. True: Someone in an organization alerts top management about performance deserving an award. True: Smaller companies are more subjective about deciding the size of the award. False: They are an example of long-term incentives. False: They are more expensive than merit pay increases. False: They are given to all employees as a one-time cost-of-living adjustment. False: A majority of companies do not feel that these awards are effective.

Employment cost index- need to recognize true and false comments about it:

True: It allows a firm to compare changes in its average costs to an all-industry or specific-industry average.

Which of the following does not support the use of individual incentives:

Unionized work force.

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 plan.

The process of matching survey jobs by applying an employer's plan to the external jobs and then comparing the worth of the external jobs with its internal "match" is called:

Benchmark conversion.