Ch10Comp

48. (T/F) High performance ratings are nearly always statistically related to high merit increases.

TRUE

50. (T/F) Over time, lump-sum bonuses cost employers less than merit pay.

TRUE

52. (T/F) One common feature an established standard against which worker performance is compared to determine the magnitude of the incentive pay.

TRUE

57. (T/F) The standard hour plan is likely to be an effective incentive plan for plumbers employed by a plumbing company.

TRUE

58. (T/F) Standard hour plans are better for non-repetitive jobs requiring numerous skills for completion.

TRUE

59. (T/F) A fast and efficient worker would earn more money under a Rowan plan than under a Halsey 50-50.

TRUE

61.(T/F) A common problem with incentive systems is workers focus primarily on behaviors and results that are rewarded.

TRUE

63. (T/F) Employees working under individual incentive plans tend to resist the introduction of new technology.

TRUE

65. (T/F) Many of the disadvantages of individual incentives are due to both a fear production standards may be changed and workers' focus on maximizing output.

TRUE

66. (T/F) While interest in teams and team compensation has grown significantly, most companies are not happy with their team compensation systems.

TRUE

68. (T/F) The level problem in team compensation is an example of the line of sight problem.

TRUE

69. (T/F) Firms high on business risk and those with uncertain outcomes, have higher corporate performance without incentive plans than with them.

TRUE

71. (T/F) Individual incentives yield higher productivity gains.

TRUE

74. (T/F) A group performance based pay plan is superior to an individual plan when individual production standards and production methods must change to meet changing events.

TRUE

79. (T/F) Most variable-pay plans have some form of profit "trigger" linked to revenue growth or profit margins.

TRUE

80. (T/F) Performance plans typically feature corporate performance objectives for a time three years in the future.

TRUE

81. (T/F) A combination plan often favored by CEOs who don't like to make payouts when the company loses money is a completely self-funding plan.

TRUE

16. Standard hour plan is to Rowan plan as straight piecework is to ______________ plan.

Taylor or Merrick plan

22. Hoarding star performers, reluctance to accept new team members and resistance to transferring team members are examples of which team-related compensation problem?

Level

9. A penalty for poor performance rather than reward for good is an example of:

a reverse incentive plan.

26. All of the following are human resource capabilities performance indicators used for group incentive plans except:

accuracy/error rates.

32. The variable pay plan with the highest instrumentality is _____.

gain sharing

24. The two most commonly used team incentive performance standards are:

productivity and customer satisfaction.

3. Variable pay as a percent of payroll is __ percent.

12

14.In which of the following incentive pay plans does the wage rate not increase for production above the standard?A. Standard hour plan B. Rowan plan C. Taylor plan D. Merrick plan

A. Standard hour plan

6. Which of the following is not true of lump-sum bonuses? A. They help maintain competitive pay position relative to competitors. B. They are less expensive than merit pay. C. Employees dislike them. D. They are a more visible reward than merit pay.

A. They help maintain competitive pay position relative to competitors.

37. More complex gain sharing plans create needs for: A. higher levels of trust among participants and more effective communication. B. greater variety of incentives and more effective communication. C. revisions in the management worker split and revisions to the scope of the formula. D. more effective communication and greater variety of incentives.

A. higher levels of trust among participants and more effective communication.

40. Which gain sharing plan is most similar to the standard hour plan? A. Scanlon B. Improshare C. Rucker D. Cash profit sharing

B. Improshare

43. The trend in recent variable-pay design is to combine the best of _____ and _____ plans. A. individual, group B. gain-sharing, profit-sharing C. short-term, long-term D. long-term, short-term

B. gain-sharing, profit-sharing

4. All of the following are true regarding merit pay except: A. it has a small, but significant effect on performance. B. removal of merit pay lowers satisfaction but not performance. C. departments and units with merit pay show higher performance. D. merit pay has a sorting effect.

B. removal of merit pay lowers satisfaction but not performance.

35. A team leader with a free rider problem could maximize performance by: A. instructing them to do their best. B. specifying performance levels and due dates. C. assigning another team member to monitor their performance. D. punishing free riders who fail to meet standards.

B. specifying performance levels and due dates.

15. A _____ plan divides a task into simple actions and determines the time an average worker takes to complete each action

Bedeaux

38. Labor costs are to value added as pay roll costs are to: A. total standard value hours B. production costs minus scrap C. SVOP D. customer satisfaction

C. SVOP

23. A team works on a project with specific performance level goals and time deadlines, but weather problems cause the team to miss the deadline. What is the key factor affecting how the team feels about their incentive? A. The incentive was as promised B. The incentive was less than promised C. The team's perception of reward fairness D. The timing of the incentive

C. The team's perception of reward fairness

11 Which of the following does not use the time period per unit of production to determine the rate? A. Gantt plan B. Rowan plan C. Halsey 50-50 method D. Merrick system

D. Merrick system

45. (T/F) The percent of companies using some form of variable pay is declining because many employees prefer base wages.

FALSE

53. (T/F) The method of rate determination for incentives for short cycle jobs is typically the time it takes to complete one unit.

FALSE

54. (T/F) Individual incentives never include financial penalties for poor performance.

FALSE

55. (T/F) Jobs with short cycle tasks normally have a rate based upon a time period per unit of production.

FALSE

56. (T/F) A job involving production of many parts each hour would have a rate based upon a time period per unit of production.

FALSE

82. (T/F) Broad-based option plans are usually limited to managerial and professional employees.

FALSE

19. Compensation security is highest for workers who fail to complete tasks within the standard time under the _____ plan?

Gantt

17. An incentive system with three piecework rates is the _____ plan.

Merrick

27. _____ have (has) advantages of having minimal impact on the company's financial statements.

Stock options

29. _____ has the disadvantage that employees may be required to spend money to obtain the incentive.

Stock options

46. (T/F) Pay-for-performance plans are used for more than three-quarters of all exempt, clerical, and administrative employees.

TRUE

76. (T/F) A major problem of group incentive plans is performance targets are not correctly set.

TRUE

77. (T/F) A good solution to the problem of production variability is to set gain sharing goals based upon industry norms.

TRUE

28. _____ offer(s) a reward pool based upon achieving performance targets and communicates organizational priorities.

The balanced scorecard

10.The common feature to all types of incentive plans is:

a standard of performance to determine magnitude of incentive pay.

31. The best variable pay plan for employees when company financial performance is poor is _____.

gain sharing

25. When a firm is _____ on business risk and outcomes are _____, corporate performance is higher without any incentive plans.

high, uncertain

7. Usually _____ are awarded for exceptional performance, often on special projects or for performance that so exceeds expectations as to be deserving of an add-on bonus.

individual spot awards

2. Surveys show the most popular type of variable pay plan is ____________

special recognition

18.If you had repair work done on your car, the compensation system the shop uses to pay the mechanics is most likely the ________ plan.

standard hour

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

straight piecework.

13. The most frequently used incentive system is the:

straight piecework.

5. The authors argue that for merit pay to live up to its potential, all of the following should be done except _________

use more peer than supervisor raters.

1. It is observed that _____ is/are commanding a larger share of the total compensation for all employee groups.

variable pay

41. All of the following factors except _____ have been associated with success of Scanlon/Rucker plans. A. the presence of a union B. managers open to criticism C. competent supervision D. cooperative union-management attitudes

A. the presence of a union

8.Which of the following is not true about individual spot awards? A. Smaller companies may be more casual about recognition. B. Someone in the organization alerts top management to the exceptional performance. C. A majority of companies do not feel that these awards are effective. D. Smaller companies are more subjective about deciding the size of the award

C. A majority of companies do not feel that these awards are effective.

44. Which of the following is not an advantage of group incentive pay plans? A. Performance measures are easier to develop than for individual plans B. Cooperation within and across groups is encouraged C. Compensation risk to income stability is reduced D. Employee participation in decision-making increases

C. Compensation risk to income stability is reduced

21.Which of the following is not a problem with team compensation?A. Complexity B. Control C. Consistency D. Communications

C. Consistency

33. Which of the following is not an advantage of team incentives? A. Stimulates problem solving B. May better reflect how work is performed C. Encourages competition between teams D. Minimizes distinctions between team members

C. Encourages competition between teams

42. Which of the following is not a long-term incentive plan? A. ESOPs B. Broad-based option plans (BBOPs) C. Improshares D. Performance plans

C. Improshares

20. Advantages of individual incentive plans include all of the following except: A. lowered production costs. B. less direct supervision. C. greater trust between workers and management. D. higher productivity.

C. greater trust between workers and management.

30. The purpose of this variable pay plan is to foster a "one for all" culture and to educate employees about business.

Cash profit sharing

39. Components identified as vital to the success of both Scanlon and Rucker plans are: A. top management support and employee acceptance. B. a flexible and accepted pay out formula. C. union and top management support. D. a productivity norm and effective worker committees.

D. a productivity norm and effective worker committees.

36. In gain sharing plan formulas, _____ is/are the numerator and _____ the denominator. A. productivity measures, inputs B. productivity measures, labor inputs C. costs and scrap rate, revenues D. labor inputs, productivity measures

D. labor inputs, productivity measures

34. All of the following are conditions supporting use of individual incentives except: A. task accomplishment is independent of others. B. the worker has a strong commitment to their profession. C. production methods and labor mix are stable. D. presence of a union

D. presence of a union

47. (T/F) Merit pay differs from other forms of incentive pay in that it must be "earned" every year.

FALSE

49. (T/F) Recently, the private sector has shown more interest and innovation using merit pay than the public sector.

FALSE

51. (T/F) Individual spot awards are an example of an incentive plan.

FALSE

60.(T/F) The Rowan plan uses a standard that is purposefully set high requiring high performance levels.

FALSE

62. (T/F) Individual incentive systems are growing in popularity.

FALSE

64. (T/F) Costing and budgetary control are more difficult using individual incentives than under time-based pay.

FALSE

67. (T/F) The focus of team incentive plans is work groups or teams and does not include divisions or an entire company.

FALSE

70. (T/F) Advantages of the balanced scorecard are that it is easily understood by employees and has low administrative costs.

FALSE

72. (T/F) The free-rider problem is common in firms using individual incentive plans.

FALSE

73. (T/F) Unions prefer individual to group incentive pay plans since members can earn more money.

FALSE

75. (T/F) Gain sharing plans tend not to use a historical standard to set productivity standards since environmental conditions can change quickly.

FALSE

78. (T/F) An advantage of group incentives is turnover may be higher among poorer performers because they hurt group performance.

FALSE