HR CH 11

A survey of 1400 employers showed that ________ of them factor customer satisfaction into their calculation of incentive payments to employees.

35%

In most firms, pay-for-performance compensation systems experience a credibility gap among approximately ________ of employees.

75%

`Perry wants employees with unique skills and backgrounds to be able to tackle common projects. Flexibility in work assignments is also very important to his firm. Perry's best choice of an incentive program, based on these factors, would be a(n):

team-based plan.

Gainsharing works best when:

technology is used to gain efficiency.

Camara and Jose always ask the professor in their American Government class exactly what will be on the next exam. They ask this question so that they can study for no more than they absolutely must. This is an example of:

the "do only what you get paid for" syndrome.

If managers increase employee involvement in the design of an incentive compensation system, which of the following will most likely occur?

Employees will be more committed to the plan.

Which of the following is LEAST associated with the failure of individual-based pay-for-performance systems?

Performance appraisals are used for only one purpose.

What is the most common type of pay for performance used by firms?

bonuses

Corey is the president of a large corporation whose plants are very interdependent. Her corporation is vulnerable to cyclical ups and downs in product demand. Which of the following would be the best pay-for-performance plan for her corporation?

ESOP program

How does plantwide pay-for-performance work?

Employees receive a portion of the firm's cost savings.

Which of the following best explains why individual-based incentive plans work?

Expectancy theory

Which of the following best explains the findings of the Kaiser Permanente Northern California study?

External rewards decrease internal motivation and performance

Which of the following is an advantage of corporatewide pay-for-performance plans?

Financial flexibility

Which of the following is the LEAST likely result of using long-term income incentives to reward CEOs?

Frequent CEO turnover

What is the main requirement for the successful implementation of a piece-rate plan?

Giving employees control of work pace and quality.

Which of the following is the LEAST likely reason for the distance between executive performance and long-term incentives?

Golden parachutes fail to address what to pay executives when they are terminated from a

A firm that wants a gainsharing program that is easy to administer and communicate and based on an agreed-on level of output should most likely use a(n) ________ plan

Improshare

Which of the following is a negative aspect of straight-salary sales compensation plans?

Increase of fixed compensation costs

Which of the following is the most likely problem of using team-based pay-for-performance plans?

Intergroup competition causes a performance decline.

Which of the following would most likely enhance the perceived fairness of a pay-for-performance system?

Managers implementing a process for making appeals

Merit pay differs from bonus programs in what way?

Merit pay raises the employee's base pay permanently; bonuses do not.`

In what way are compensation programs for salespeople different from compensation programs for other types of employees?

Perceptions of pay inequity are a lesser concern for salespeople than for non-salespeople.

Most companies use a ________ when setting up their sales compensation plan.

combination plan

All of the following are disadvantages associated with team-based pay-for-performance plans EXCEPT:

diminishing quality goals.

Resources, Inc. has recently increased its emphasis on pay-for-performance. Within the last several months, there has been a sharp increase in employee competition and the sabotaging of projects. The incentive plan has most likely:

discouraged employee cooperation.

Profit sharing differs from gainsharing in that profit sharing:

doesn't reward productivity improvements.

David is frustrated at his company's inability to maintain a single system of pay-for-performance and is finding it difficult to adapt to new policies. David is probably:

encountering dissonance with his psychological contract.

In order for a firm to benefit the most from plantwide pay-for-performance plans, managers should:

encourage employees to work for the plant's common good.

In most cases, plantwide incentive programs:

exclude salaried workers.

Profit-sharing plans are most attractive to employers and employees alike when the firm:

faces highly cyclical ups and downs in product demand.

Plantwide pay-for-performance plans are built on the assumption that:

firms are more productive when employees are team players.

________ is a plantwide pay-for-performance plan which returns a portion of company savings to employees as a lump-sum bonus.

gainsharing

Casey wants a pay-for-performance incentive program that will increase both productivity and quality and that has few performance measurement difficulties. Her best choice is a(n):

gainsharing plan.

Profit-sharing and ESOP-type compensation plans feature some significant drawbacks, such as:

having only a limited effect on organizational productivity.

Lantech, a small manufacturer discussed in your text, ended its pay-for-performance program because of:

increases in employee conflicts and stress.

It is most likely true that the use of pay-for-performance systems is:

increasing rapidly around the world.

A firm should most likely use merit pay as an element of a(n):

individual-based compensation plan.

When gainsharing is first implemented:

inefficient plants are likely to post higher gains than efficient plants.

Reservation Specialists are able to speed up their turnaround time with customers by suggesting that customers put their questions/complaints in writing. This results in the specialists beating their productivity "numbers," but has buried the correspondence specialists in paperwork, destroying their productivity. This is an example of the team-based compensation plan drawback of:

intergroup competition.

An ESOP-based incentive compensation plan:

is based on the entire company's performance and rewards employees with stock.

Public and nonpublic praise, honorary titles, and expanded job responsibilities are all examples of:

nonfinancial rewards

In general, perquisites are:

nonmonetary incentives awarded to executives.

Piece-rate pay-for-performance would most likely work well with:

sewing machine operators paid for the number of pairs of pants they sew in a given

When setting up a compensation plan for salespeople to encourage them to service accounts, a ________ plan is the best choice.

straight salary

Felix Enterprises has relatively few levels of hierarchy, and the firm's technology lends itself to breaking employees into self-contained groups. The workforce is highly committed and intrinsically motivated by their work. These conditions most likely lend themselves to a:

team-based incentive program.

Bowen Productions wants to increase the flexibility of its workforce while increasing productivity and cooperation. Bowen would be best served by a(n):

team-based plan

You want to foster group cohesiveness and facilitate performance measurement. An incentive program that would most likely help you do this would be

team-based plan.

In any group, some individuals put in more effort than others. On occasion, the contribution is markedly less than the average of the rest of the team. The most appropriate term for this is:

the free-riding effect.

Team-based incentive plans work best when:

the goal is encouraging innovation within groups.

When implementing a team-based compensation plan, a firm would most likely:

use bonuses or noncash rewards.

If a team is paid based on meeting its production goals, and each member of the team must contribute a minimal percentage toward that goal to share in the team award, then the pay-for-performance system is:

using multiple layers of rewards.

If a firm frequently changes the basis of its pay-for-performance system, it will most likely:

violate its psychological contract with employees.

Kari is the VP of a mid-sized plant. Employees are able to see how their work affects the plant's performance. The corporation is relatively flat and the market for the product is quite stable. Which of the following would be the best choice of a pay-for-performance plan?

A gainsharing plan

Expectancy theory claims that:

people tend to perform activities that will be rewarded

The "do only what you get paid for" syndrome is a potential problem tied to which of the following conditions?

Pay is closely tied to specific performance indicators.

Marianne is binding biology notes at a university bookstore. She is paid based upon the number of note packs she binds in a day. Marianne is compensated on a:

piece-rate system.

What is the most popular incentive given by employers?

Consumer electronics

Which of the following is LEAST likely to cause the failure of a pay-for-performance program?

High-tech firms using piece-rate plans

Which term refers to a bonus given to executives that is proportional to the change in company stock prices, rather than changes in profitability measures?

Phantom stock

Benson Marketing is a small firm with less than 100 employees. The CEO wants to implement a pay-for-performance system. The CEO wants the plan to motivate employees, attract top workers, and reduce fixed costs. Which of the following would be most appropriate for Benson?

Profit sharing

Mario Development Group wants to give employees incentives while getting the maximum tax advantage for them and the firm. Flexibility in compensation costs is important. The firm needs to keep fixed compensation low while still attracting high quality job candidates. Which of the following would be most appropriate for Mario Development Group?

Profit sharing

Which of the following is a disadvantage of plantwide incentive programs?

Protection of low performers

Which of the following is an advantage of individual-based pay-for-performance plans?

Rewarded performance is likely to be repeated.

Which of the following plantwide plans incorporates the ideas of employees, union leaders, and top managers to generate cost-saving ideas?

Scanlon plan

Most employees at Sterling Enterprises work on a team. The firm is considering the implementation of a pay for performance plan. Which of the following would be the most likely challenge of such a plan?

Separating individual contributions from team contributions

In regards to pay-for-performance programs, which of the following is most likely characteristic of small firms than large firms?

Small firms lack personnel able to design and administer complex incentive plans.

An individual-based incentive compensation system has a number of disadvantages, such as:

promoting too narrow of a job focus.

Liz wants to begin a plantwide incentive compensation plan. She is setting up employee-management committees to solicit and screen cost-saving ideas. Liz is considering a variety of elements in the cost-savings calculation, not just labor costs. Her best choice of plan would be

a Rucker plan.

Dan, Laura, and Chuck are preparing a poster presentation for an upcoming business conference. Laura and Chuck have each dedicated over 10 hours to the task. Dan has contributed about 2 hours to the project, but he will receive equal credit with Laura and Chuck for the project's completion. In HR terms, Dan is

a free-rider

Unlike individual-based incentive plans, gainsharing:

accepts people's intrinsic motivations.

Pay-for-performance plans are more likely to succeed when:

an employee's job demands autonomy.

To minimize problems, a pay-for-performance plan should:

appropriately link pay and performance.

Employees who are rewarded on the basis of corporate-wide pay-for-performance plans:

are put at risk due to factors affecting corporate stock prices.

A firm is offering a one-time tangible prize to the employee who receives the highest customer service evaluation in a particular month. This company is using a(n) ________ incentive.

award

Profit sharing is one type of:

corporate-wide incentive pay plan.

Profit sharing and ESOPs are both

corporatewide compensation plans.

Healthy living incentives most likely benefit employers in all of the following ways EXCEPT by:

receiving tax breaks.

Individual-based pay-for-performance are most likely to:

work against TQM at an organization.

What is the primary concern about physicians receiving incentives from pharmaceutical firms and state governments?

Doctors placing financial gain ahead of patient care.

Approximately ________ of companies reward their executives with short-term year-end bonuses.

90%

Which of the following is most likely true about individual-based compensation systems?

They match the individualistic culture of the U.S.

________ permit the executive to buy stock at, or below, cost during a limited time.

Stock purchase plans

Tanglewood Enterprises wants a sales compensation plan that is simple to administer, controls sales costs, and encourages salespeople to be entrepreneurial. Which of the following would be the best compensation plan for Tanglewood?

Straight commission plan

Which of the following is an advantage of team-based pay-for-performance plans?

They make performance measurement easier.