Question 1

Which of the following statements about earnings-at-risk pay plans is true?

Accepted Answer

A)  Earnings-at-risk plans involve upside risk for the employer. 
B)  Earnings-at-risk plans set base pay at or above the market rate. 
C)  Salespeople who work on straight commissions are paid through at earnings-at-risk plan. 
D)  Earnings-at-risk plans all have caps that prevent the employer from having to pay above a certain predetermined level. 
E)  Employees prefer earnings-at-risk plans to all other performance-based pay plans 
A)  Earnings-at-risk plans involve upside risk for the employer. 
B)  Earnings-at-risk plans set base pay at or above the market rate. 
C)  Salespeople who work on straight commissions are paid through at earnings-at-risk plan. 
D)  Earnings-at-risk plans all have caps that prevent the employer from having to pay above a certain predetermined level. 
E)  Employees prefer earnings-at-risk plans to all other performance-based pay plans

Question 2

Employees oppose the implementation of performance-based pay plans especially if:

Accepted Answer

A)  such change generally precede mergers 
B)  a change in pay plans typically indicates a change in job descriptions 
C)  such plans typically reward only a small percentage of the work force 
D)  pay practices put earnings at risk. 
E)  employees are not concerned about the financial future of their employers 
A)  such change generally precede mergers 
B)  a change in pay plans typically indicates a change in job descriptions 
C)  such plans typically reward only a small percentage of the work force 
D)  pay practices put earnings at risk. 
E)  employees are not concerned about the financial future of their employers

Question 3

Which of the following statements about incentive pay plans is true?

Accepted Answer

A)  Unlike merit pay plans, base pay is set at the market rate for incentive plans. 
B)  With incentive pay, high performers earn more but no permanent adjustment is made to an employee's base pay. 
C)  Once earned, the incentive pay becomes a part of the employee's base pay. 
D)  Caps are used to keep incentive pay levels even with the industry pay level. 
E)  There is no difference between how merit pay plans and how incentive pay plans are used to reward employee performance 
A)  Unlike merit pay plans, base pay is set at the market rate for incentive plans. 
B)  With incentive pay, high performers earn more but no permanent adjustment is made to an employee's base pay. 
C)  Once earned, the incentive pay becomes a part of the employee's base pay. 
D)  Caps are used to keep incentive pay levels even with the industry pay level. 
E)  There is no difference between how merit pay plans and how incentive pay plans are used to reward employee performance

Question 4

Substantial research supports the conclusion that performance-based pay can improve productivity. However, other research also shows that under some conditions, performance- based pay has no effect or even detrimental effects. Discuss why this could occur.

Accepted Answer

Compensation specialist Alfie Kohn has b

Question 5

In what four domains do proponents of balanced scorecards argue that organizations should monitor their performance?

Accepted Answer

Proponents of balanced scorecards argue

Question 6

Since performance can be measured at the individual, work team, department, plant, strategic business unit, or organizational level, how does a company specify the level of aggregation for reward distribution?

Accepted Answer

The choice of what level of aggregation

Question 7

The Scanlon and Rucker plans for gain sharing are based on the principle that:

Accepted Answer

A)  individuals can evaluate ideas better than committees 
B)  employees are more likely to make suggestions when the suggestion system is informal 
C)  management should adopt a philosophy of employee participation 
D)  employees should not be made to participate in gain sharing unless they want to 
E)  management takes responsibility for implementing all change and employees do the actual implementation; that way both are rewarded through gain sharing 
A)  individuals can evaluate ideas better than committees 
B)  employees are more likely to make suggestions when the suggestion system is informal 
C)  management should adopt a philosophy of employee participation 
D)  employees should not be made to participate in gain sharing unless they want to 
E)  management takes responsibility for implementing all change and employees do the actual implementation; that way both are rewarded through gain sharing

Question 8

In setting up a combined payment plan for salespeople, the most critical question for an organization to answer is,"

Accepted Answer

A)  "What percentage of total compensation should be salary and what percentage should be commission?" 
B)  "How much of the salesperson's time should be spent selling and how much in nonselling activities?" 
C)  "How can the sales program compensation plan be devised so as not to cause other employees to become unmotivated?" 
D)  "How long will the plan be operational before it needs to be evaluated?" 
E)  "What is the strategic basis for the plan and how will its implementation be monitored?" 
A)  "What percentage of total compensation should be salary and what percentage should be commission?" 
B)  "How much of the salesperson's time should be spent selling and how much in nonselling activities?" 
C)  "How can the sales program compensation plan be devised so as not to cause other employees to become unmotivated?" 
D)  "How long will the plan be operational before it needs to be evaluated?" 
E)  "What is the strategic basis for the plan and how will its implementation be monitored?"

Question 9

Broad-based stock option plans

Accepted Answer

A)  are easy to develop because performance measures are easy to locate and quantify 
B)  seldom include cash payments 
C)  always relate incentives to the attainment of corporate or strategic business unit goals 
D)  seldom put earnings at risk. 
E)  are accurately defined by none of the above 
A)  are easy to develop because performance measures are easy to locate and quantify 
B)  seldom include cash payments 
C)  always relate incentives to the attainment of corporate or strategic business unit goals 
D)  seldom put earnings at risk. 
E)  are accurately defined by none of the above

Question 10

What are two disadvantages of merit pay?

Accepted Answer

One major disadvantage of merit pay is t

Question 11

The type of pay that the lowest percentage of employers ranked as most effective for achieving the stated goal of achieving key strategic goals was:

Accepted Answer

A)  Base pay 
B)  Deferred compensation 
C)  Short-term bonuses 
D)  Long-term bonuses 
E)  Indirect compensation 
A)  Base pay 
B)  Deferred compensation 
C)  Short-term bonuses 
D)  Long-term bonuses 
E)  Indirect compensation

Question 12

Decisions about how to design pay systems should follow a careful consideration of all of the possible consequences associated with alternative forms of pay. Which of the following is the most important reason for organizations to adopt the performance-based pay approach to compensating its employees?

Accepted Answer

A)  to reward top management 
B)  to keep up with competitors 
C)  to motivate employees 
D)  to help achieve their strategic objectives 
E)  to integrate the pay system with the organizational mission 
A)  to reward top management 
B)  to keep up with competitors 
C)  to motivate employees 
D)  to help achieve their strategic objectives 
E)  to integrate the pay system with the organizational mission

Question 13

Performance based pay recognizes that people working in the same job can contribute to the organization at a different level in terms of value and seeks to provide an incentive for maximizing their contribution.

Accepted Answer

A) True 
 B)False

Question 14

What criticism can be leveled against merit pay?

Accepted Answer

Critics of merit pay contend t

Question 15

Henry was able to bring his project to retool the plant to completion 10-days ahead of schedule. For this achievement, Henry received (as promised) a payment of $1,000 per day for each day he saved, plus an all-expense-paid one-week trip to Paris for him and his significant other. Which of the following is true?

Accepted Answer

A)  the monetary payment is performance-based pay, the trip is a benefit 
B)  the monetary payment is performance-based pay, the trip is a perk 
C)  the monetary payment is performance-based pay, the trip is a performance-based nonmonetary reward 
D)  Neither of these qualifies as performance-based pay/rewards because Henry is a manager, not a production employee. 
A)  the monetary payment is performance-based pay, the trip is a benefit 
B)  the monetary payment is performance-based pay, the trip is a perk 
C)  the monetary payment is performance-based pay, the trip is a performance-based nonmonetary reward 
D)  Neither of these qualifies as performance-based pay/rewards because Henry is a manager, not a production employee.

Question 16

When designed appropriately, team-based incentives offer four major advantages when compared with individual incentive systems. Which of the following statements describes one of those advantages?

Accepted Answer

A)  The performance of one group member can serve as a model, encouraging other team members to imitate successful behavior. 
B)  The mere presence of team members who have control over rewards evokes more vigorous and persistent behavior than is evidenced when individuals work alone. 
C)  The strength of the team-based incentive reward is increased since it is now paired with group-administered rewards such as praise and camaraderie. 
D)  The likelihood that peer pressure will evoke counterproductive control over behavior is reduced. 
E)  All of the above statements describe advantages inherent in the team-based incentive plans. 
A)  The performance of one group member can serve as a model, encouraging other team members to imitate successful behavior. 
B)  The mere presence of team members who have control over rewards evokes more vigorous and persistent behavior than is evidenced when individuals work alone. 
C)  The strength of the team-based incentive reward is increased since it is now paired with group-administered rewards such as praise and camaraderie. 
D)  The likelihood that peer pressure will evoke counterproductive control over behavior is reduced. 
E)  All of the above statements describe advantages inherent in the team-based incentive plans.

Question 17

Which of the following statements about specifying and measuring performance is true?

Accepted Answer

A)  Many firms rely heavily on financial performance measures 
B)  One of the easiest to use measures for employee performance is a qualitative measure such as customer satisfaction. 
C)  Organizations should look for ways to measure employee results not employee behavior. 
D)  Organizations should take the same approach to measuring performance whether taking a long-term or short-term perspective. 
E)  Traditional commissions focus on long-term performance. 
A)  Many firms rely heavily on financial performance measures 
B)  One of the easiest to use measures for employee performance is a qualitative measure such as customer satisfaction. 
C)  Organizations should look for ways to measure employee results not employee behavior. 
D)  Organizations should take the same approach to measuring performance whether taking a long-term or short-term perspective. 
E)  Traditional commissions focus on long-term performance.

Question 18

Carmen is in the first quartile (bottom) of the pay range and she has displayed superior performance this year. Hugo is in the fourth quartile (top) of the pay range and he has also displayed superior performance this year. In terms of percentage of pay:

Accepted Answer

A)  Carmen will receive a higher raise than Hugo 
B)  Hugo and Carmen will receive equal raises 
C)  Hugo will receive a higher raise than Carmen 
D)  Carmen will receive the same raise as Hugo, but she will be promoted to the second quartile. 
E)  None of the above are correct. 
A)  Carmen will receive a higher raise than Hugo 
B)  Hugo and Carmen will receive equal raises 
C)  Hugo will receive a higher raise than Carmen 
D)  Carmen will receive the same raise as Hugo, but she will be promoted to the second quartile. 
E)  None of the above are correct.

Question 19

As one approach to implementing performance-based pay plans, indexed stock options:

Accepted Answer

A)  allow employees to buy stock at a premium price 
B)  are also called premium-priced options 
C)  are used more often than any other plan 
D)  are designed to ensure that employees are not punished with the economy takes a downturn 
E)  are accurately described by all of the above 
A)  allow employees to buy stock at a premium price 
B)  are also called premium-priced options 
C)  are used more often than any other plan 
D)  are designed to ensure that employees are not punished with the economy takes a downturn 
E)  are accurately described by all of the above

Question 20

What are the advantages and disadvantages of delaying payout of performance-based pay, rather than paying the reward immediately?

Accepted Answer

The main advantage of delaying payouts i

Which of the following statements about earnings-at-risk pay plans is true?

Employees oppose the implementation of performance-based pay plans especially if:

Which of the following statements about incentive pay plans is true?

Substantial research supports the conclusion that performance-based pay can improve productivity. However, other research also shows that under some conditions, performance- based pay has no effect or even detrimental effects. Discuss why this could occur.

In what four domains do proponents of balanced scorecards argue that organizations should monitor their performance?

Since performance can be measured at the individual, work team, department, plant, strategic business unit, or organizational level, how does a company specify the level of aggregation for reward distribution?

The Scanlon and Rucker plans for gain sharing are based on the principle that:

In setting up a combined payment plan for salespeople, the most critical question for an organization to answer is,"

Broad-based stock option plans

What are two disadvantages of merit pay?

The type of pay that the lowest percentage of employers ranked as most effective for achieving the stated goal of achieving key strategic goals was:

Performance based pay recognizes that people working in the same job can contribute to the organization at a different level in terms of value and seeks to provide an incentive for maximizing their contribution.

What criticism can be leveled against merit pay?

When designed appropriately, team-based incentives offer four major advantages when compared with individual incentive systems. Which of the following statements describes one of those advantages?

Which of the following statements about specifying and measuring performance is true?

Carmen is in the first quartile (bottom) of the pay range and she has displayed superior performance this year. Hugo is in the fourth quartile (top) of the pay range and he has also displayed superior performance this year. In terms of percentage of pay:

As one approach to implementing performance-based pay plans, indexed stock options:

What are the advantages and disadvantages of delaying payout of performance-based pay, rather than paying the reward immediately?

Managing Human Resources

Understanding the External and Organizational Environments

Ensuring Fair Treatment and Legal Compliance

HR Planning for Alignment and Change

Using Job Analysis and Competency Modeling

Recruiting and Retaining Qualified Employees

Selecting Employees to Fit the Job and the Organization

Training and Developing a Competitive Workforce

Conducting Performance Management

Developing an Approach to Total Compensation

Providing Benefits and Services

Promoting Safety, Health, and Well-Being in the Workplace

Understanding Unionization and Collective Bargaining

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Exam 11: Using Performance-Based Pay to Achieve Strategic Objectives

Which of the following statements about earnings-at-risk pay plans is true?

Employees oppose the implementation of performance-based pay plans especially if:

Which of the following statements about incentive pay plans is true?

Substantial research supports the conclusion that performance-based pay can improve productivity. However, other research also shows that under some conditions, performance- based pay has no effect or even detrimental effects. Discuss why this could occur.

In what four domains do proponents of balanced scorecards argue that organizations should monitor their performance?

Since performance can be measured at the individual, work team, department, plant, strategic business unit, or organizational level, how does a company specify the level of aggregation for reward distribution?

The Scanlon and Rucker plans for gain sharing are based on the principle that:

In setting up a combined payment plan for salespeople, the most critical question for an organization to answer is,"

Broad-based stock option plans

What are two disadvantages of merit pay?

The type of pay that the lowest percentage of employers ranked as most effective for achieving the stated goal of achieving key strategic goals was:

Performance based pay recognizes that people working in the same job can contribute to the organization at a different level in terms of value and seeks to provide an incentive for maximizing their contribution.

What criticism can be leveled against merit pay?

When designed appropriately, team-based incentives offer four major advantages when compared with individual incentive systems. Which of the following statements describes one of those advantages?

Which of the following statements about specifying and measuring performance is true?

Carmen is in the first quartile (bottom) of the pay range and she has displayed superior performance this year. Hugo is in the fourth quartile (top) of the pay range and he has also displayed superior performance this year. In terms of percentage of pay:

As one approach to implementing performance-based pay plans, indexed stock options:

What are the advantages and disadvantages of delaying payout of performance-based pay, rather than paying the reward immediately?

Managing Human Resources

Understanding the External and Organizational Environments

Ensuring Fair Treatment and Legal Compliance

HR Planning for Alignment and Change

Using Job Analysis and Competency Modeling

Recruiting and Retaining Qualified Employees

Selecting Employees to Fit the Job and the Organization

Training and Developing a Competitive Workforce

Conducting Performance Management

Developing an Approach to Total Compensation

Providing Benefits and Services

Promoting Safety, Health, and Well-Being in the Workplace

Understanding Unionization and Collective Bargaining

Filters