Deck 12: Pay-For-Performance and Financial Incentives

Question 1

Which component in Vroom's theory of motivation emphasizes that people won't pursue rewards they find unattractive?

A)intrinsic motivation
B)valence
C)expectancy
D)probability
E)instrumentality

Answer 1

B

Question 2

Behavior modification is based upon the principles of rewards and punishments advanced by .

A)Frederick Herzberg
B)Frederick Taylor
C)Abraham Maslow
D)Edward Deci
E)B.F. Skinner

Answer 2

E

Question 3

Who distinguished between intrinsic motivation and extrinsic motivation?

A)Frederick Herzberg
B)Abraham Maslow
C)Edward Deci
D)David McClelland
E)Frederick Taylor

Answer 3

C

Question 4

Frederick Taylor referred to the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level as .

A)group shift
B)systematic soldiering
C)social loafing
D)human nature
E)group norms

Question 5

Which of the following terms refers to changing behavior through rewards or punishments that are contingent on performance?

A)personal development
B)intermittent pay
C)instrumentality
D)behavior modification
E)internal motivation

Question 6

Motivator factors affect a continuum that ranges from .

A)dissatisfaction to no dissatisfaction
B)satisfaction to no satisfaction
C)dissatisfaction to satisfaction
D)no dissatisfaction to no satisfaction
E)none of the above

Question 7

Herzberg's Hygiene-Motivator theory of motivation suggests that intrinsic factors like cause satisfaction.

A)friendships at work
B)pay
C)working conditions
D)achievement
E)incentive pay

Question 8

is a team or group incentive plan that ties pay to some measure of a firm's overall profitability.

A)Competency-based pay
B)Pay for performance
C)Variable pay
D)Intermittent pay
E)Profitability-based pay

Question 9

In Vroom's theory of motivation, motivation is equal to E * I * V, where V represents .

A)viral motivation
B)value
C)vigilance
D)victory
E)valence

Question 10

Hygiene factors affect a continuum that ranges from .

A)satisfaction to no satisfaction
B)no dissatisfaction to no satisfaction
C)dissatisfaction to satisfaction
D)dissatisfaction to no dissatisfaction
E)none of the above

Question 11

In Vroom's theory of motivation, motivation is equal to E * I * V, where E represents .

A)existence
B)energy
C)esteem
D)expectancy
E)extrinsic motivation

Question 12

The Hygiene-Motivator theory is also called the .

A)hierarchy of needs
B)theory of extrinsic motivation
C)two-factor theory
D)learned needs theory
E)equity theory

Question 13

Herzberg's Hygiene-Motivator theory of motivation suggests that extrinsic factors like cause dissatisfaction.

A)responsibility
B)advancement
C)recognition
D)working conditions
E)respect

Question 14

Vroom's expectancy theory states that a person's motivation to exert some level of effort is a function of all of the following except .

A)the amount of intrinsic motivation associated with the behavior
B)the probability that the effort will lead to performance
C)the perceive value of the reward
D)the perceived relationship between performance and obtaining the reward
E)all of the above affect a person's effort

Question 15

Who proposed a two-factor theory that explains how motivator factors relate to satisfaction and hygiene factors relate to dissatisfaction?

A)David McClelland
B)Abraham Maslow
C)Frederick Taylor
D)Edward Deci
E)Frederick Herzberg

Question 16

Rebecca's manager wants to acknowledge her outstanding service record for the past quarter. Her manager decides to give Rebecca a bonus of $1000 as a reward. This is an example of using to reinforce behavior.

A)recognition
B)intrinsic motivation
C)physiological needs
D)extrinsic motivation
E)extinction

Question 17

Which non-case incentive do employees most prefer?

A)electronics
B)season tickets to an entertainment venue of the employee's choice
C)a shopping spree at a store of the employee's choice
D)home improvement items
E)a trip to a destination of the employee's choice

Question 18

Instrumentality in Vroom's theory of motivation refers to the .

A)perceived value a person attaches to a reward
B)degree of optimism a person has
C)perceived relationship between successful performance and obtaining a desired reward
D)luck associated with each person
E)probability that effort will lead to success

Question 19

In Vroom's theory of motivation, motivation is equal to E * I * V, where I represents .

A)instrumentality
B)internalization
C)imperative action
D)intrinsic motivation
E)none of the above

Question 20

Expectancy could also be referred to as the .

A)perceived value a person attaches to a reward
B)degree of optimism a person has
C)perceived relationship between successful performance and obtaining a desired reward
D)luck associated with each person
E)probability that effort will lead to success

Question 21

The Scanlon plan includes all of the following features except .

A)a sharing of benefits formula
B)an emphasis on individual achievement
C)an involvement system
D)a philosophy of cooperation
E)identity

Question 22

Which profit-sharing plan provides tax advantages for employees by deferring income taxes, often until the employee retires?

A)cash plan
B)Lincoln incentive system
C)Jefferson incentive system
D)deferred profit-sharing plan
E)employee stock ownership plan

Question 23

Jamie's company is running a contest to encourage employees to work more hours than required. The employee with the most hours clocked at the end of the week wins a bonus of $400. Jamie is excited when she wins the contest by clocking 57 hours in the contest week instead of her normal 40, because it is a nice addition to the $6 per hour she makes. How much pay will Jamie earn for the week of the contest?

A)$1048
B)$640
C)$803
D)$1448
E)$240

Question 24

Which of the following is not a basic tenet of behavior modification?

A)Properly scheduled rewards can be used to encourage some behaviors.
B)Employees must understand the link between rewards and punishments and their behavior.
C)Behavior that appears to lead to punishment tends not to be repeated.
D)Properly scheduled punishments can be used to minimize some behaviors.
E)Behavior that leads to rewards tends to be repeated.

Question 25

Which plan uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement?

A)cash plan
B)Lincoln incentive system
C)Jefferson incentive system
D)deferred profit-sharing plan
E)employee stock ownership plan

Question 26

What type of profit-sharing plan involves the firm simply distributing a percentage of profits as profit shares to employees at regular intervals?

A)cash plan
B)Lincoln incentive system
C)Jefferson incentive system
D)deferred profit-sharing plan
E)employee stock ownership plan

Question 27

What type of profit-sharing plan involves the firm placing a predetermined portion of profits in each employee's account under a trustee's supervision?

A)cash plan
B)Lincoln incentive system
C)Jefferson incentive system
D)deferred profit-sharing plan
E)employee stock ownership plan

Question 28

According to the Sarbanes-Oxley Act of 2002, if a company must restate financial statements due to material noncompliance with a financial reporting requirement, the act requires that the CEO .

A)open his or her private records for investigation by an independent auditor
B)repay any bonuses received during the 12 months prior to the issuance of the financial statements in question
C)make a public apology to stock holders
D)resign from the position of CEO
E)all of the above

Question 29

Which of the following is a disadvantage of using straight salary to compensate salespeople?

A)It encourages prospecting.
B)It makes it easy to switch territories.
C)It encourages product training.
D)It encourages account servicing.
E)It isn't tied to results.

Question 30

What type of profit-sharing plan involves the firm distributing total annual profits each year among employees based on their merit rating?

A)cash plan
B)Lincoln incentive system
C)Jefferson incentive system
D)deferred profit-sharing plan
E)employee stock ownership plan

Question 31

What type of pay plan is being used when workers are paid a sum for each unit they produce?

A)piecework
B)competency-based pay
C)base pay
D)bonus
E)job-based pay

Question 32

Which of the following is an advantage of using a combination of salary and commission as compensation for salespeople?

A)eliminates some incentive value
B)rewards only for results
C)completely tied to performance
D)provides a guaranteed minimum for the salespeople
E)complicated to administer

Question 33

Under the Fair Labor Standards Act, which bonus below would not be included in overtime pay computations?

A)bonus promised to new hires
B)Christmas bonus
C)bonus provided for in a union contract
D)bonus announced to induce employees to work more
E)all of the above would be included

Question 34

Companywide plans in which a corporation contributes shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees are called .

A)cash plans
B)Lincoln incentive systems
C)Jefferson incentive systems
D)deferred profit-sharing plans
E)employee stock ownership plans

Question 35

is any salary increase the firm awards to an individual employee based on his or her individual performance.

A)Variable pay
B)Merit pay
C)Competency-based pay
D)Piecework
E)Job-based pay

Question 36

All of the following are advantages of team incentives except that .

A)jealousy is reduced
B)problem solving is encouraged
C)collaboration is encouraged
D)worker's pay may not be proportional to his or her efforts
E)team planning is reinforced

Question 37

Which of the following is true of recognition programs?

A)They have a positive impact on performance.
B)They are expensive to administer.
C)They reduce intrinsic motivation.
D)They reduce extrinsic motivation.
E)a and b

Question 38

Which of the following methods is not used to pay using group incentive plans?

A)All members receive pay earned by the lowest producer.
B)All members receive pay equal to the average pay earned by the group.
C)All members receive the same pay based on the piece rate for the group's job.
D)All members receive the pay earned by the highest producer.
E)all of the above are possible methods

Question 39

Behavior modification is also known as .

A)expectancy theory
B)reinforcement theory
C)hygiene-motivator theory
D)attribution theory
E)leader-member exchange

Question 40

How does merit pay differ from a bonus?

A)A bonus becomes part of an employee's base pay, but merit pay does not.
B)Merit pay is linked to individual performance, while a bonus is not.
C)Merit pay becomes part of an employee's base pay, but a bonus does not.
D)A bonus is a type of gift.
E)A bonus is linked to individual performance, while merit pay is linked to company performance

Question 41

The second step in implementing a gainsharing plan is to .

A)choose specific performance measures
B)decide how often to pay bonuses
C)develop an involvement system
D)decide on a funding formula
E)establish general plan objectives

Question 42

The Scanlon plan is an incentive plan that .

A)involves the firm distributing total annual profits each year among employees based on their merit rating
B)focuses on the sharing of benefits between employer and employees
C)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
D)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
E)provides tax advantages for employees by deferring income taxes, often until the employee retires

Question 43

How often do most firms computer labor productivity measures used in gainsharing plans?

A)annually
B)monthly
C)quarterly
D)weekly
E)B and C

Question 44

The Lincoln incentive system is an incentive plan that .

A)uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement
B)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
C)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
D)provides tax advantages for employees by deferring income taxes, often until the employee retires
E)involves the firm distributing total annual profits each year among employees based on their merit rating

Question 45

Which of the following is not a type of involvement system commonly used in gainsharing plans?

A)steering committees
B)update meetings
C)newsletters
D)coordinators
E)pep rallies

Question 46

Plans that put some portion of the employee's weekly pay at risk to encourage goal attainment are called pay plans.

A)Improshare
B)Rucker
C)Scanlon
D)at-risk variable
E)Lincoln

Question 47

Identity in the Scanlon plan refers to a focus on .

A)the clear articulation of the company mission and vision
B)a high level of competence from employees at all levels
C)a philosophy of cooperation
D)improvement suggestions from employees
E)sharing benefits that result from improvement suggestions

Question 48

A(n)plan is an incentive plan that engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company.

A)variable pay
B)gainsharing
C)Lincoln incentive
D)Scanlon
E)ESOP

Question 49

The first step in implementing a gainsharing plan is to .

A)decide on a funding formula
B)choose specific performance measures
C)develop an involvement system
D)establish general plan objectives
E)decide how often to pay bonuses

Question 50

Deferred profit-sharing is an incentive plan that .

A)uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement
B)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
C)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
D)provides tax advantages for employees by deferring income taxes, often until the employee retires
E)involves the firm distributing total annual profits each year among employees based on their merit rating

Question 51

Which incentive plan is based on a philosophy that managers and employees must cooperate together?

A)Lincoln incentive system
B)employee stock ownership plan
C)Scanlon plan
D)cash plan
E)deferred profit-sharing plan

Question 52

Gainsharing is an incentive plan that .

A)uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement
B)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
C)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
D)provides tax advantages for employees by deferring income taxes, often until the employee retires
E)involves the firm simply distributing a percentage of profits as profit shares to employees at regular intervals

Question 53

What type of gainsharing plan uses the formula sales value minus materials and supplies all divided into payroll expenses to determine employee bonuses?

A)Improshare
B)Scanlon
C)Rucker
D)Lincoln
E)all of the above

Question 54

Sharing of benefits in the Scanlon plan refers to a focus on .

A)improvement suggestions from employees
B)sharing benefits that result from improvement suggestions
C)a high level of competence from employees at all levels
D)a philosophy of cooperation
E)the clear articulation of the company mission and vision

Question 55

An employee stock ownership plan is an incentive plan that .

A)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
B)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
C)focuses on the sharing of benefits between employer and employees
D)involves the firm distributing total annual profits each year among employees based on their merit rating
E)provides tax advantages for employees by deferring income taxes, often until the employee retires

Question 56

What is the most common form of payment in gainsharing plans?

A)preferred stock
B)electronics
C)common stock
D)vacation time
E)cash

Question 57

Cash profit-sharing is an incentive plan that .

A)uses a trust to hold stock in individual employee accounts and distributes it to employees upon retirement
B)engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company
C)contributes company shares of its own stock or cash to be used to purchase company stock to a trust established to purchase shares of the firm's stock for employees
D)provides tax advantages for employees by deferring income taxes, often until the employee retires
E)involves the firm simply distributing a percentage of profits as profit shares to employees at regular intervals

Question 58

How often do most firms tend to compute financial performance measures used in gainsharing plans?

A)annually
B)weekly
C)monthly
D)bi-annually
E)quarterly

Question 59

Competence in the Scanlon plan refers to a focus on .

A)improvement suggestions from employees
B)sharing benefits that result from improvement suggestions
C)the clear articulation of the company mission and vision
D)a high level of competence from employees at all levels
E)a philosophy of cooperation

Question 60

What type of gainsharing plan uses the formula payroll expenses divided by total sales to determine employee bonuses?

A)Scanlon
B)Rucker
C)Lincoln
D)Improshare
E)all of the above

Question 61

award shares of stock for the achievement of predetermined financial targets such as profit or growth in earnings per share.

A)Nonqualified stock options
B)Stock appreciation rights
C)Performance achievement plans
D)Phantom stock plans
E)Restricted stock plans

Question 62

Herzberg's Hygiene-Motivator theory is based on Maslow's hierarchy of needs.

Question 63

permit the recipient to exercise the stock option or to take any appreciation in the stock price in cash, stock, or some combination of these.

A)Nonqualified stock options
B)Stock appreciation rights
C)Performance achievement plans
D)Phantom stock plans
E)Restricted stock plans

Question 64

Robert Katz popularized the use of financial incentives for workers whose production exceeds some predetermined standard.

Question 65

Phantom stock plans refer to stock plans that provide .

A)shares of stock for the achievement of predetermined financial targets such as profit or growth in earnings per share
B)shares without cost to the executive so that the employee can sell the stock but is restricted from do so for a set period of time
C)units instead of shares of company stock. Then at some point in the future, they receive value (usually in cash)equal to the appreciation of the units they own
D)permit the recipient to exercise the stock option or to take any appreciation in the stock price in cash, stock, or some combination of these
E)the option to purchase stock at a stated price, usually the fair market value at the time of the grant

Question 66

With the form of stock options, the exercise price is higher than the stock's closing price on the date of the grant.

A)discount priced options
B)nonqualified stock options
C)indexed options
D)key employee programs
E)premium priced options

Question 67

Herzberg's Hygiene-Motivator theory states that satisfaction is the direct opposite of dissatisfaction.

Question 68

In Herzberg's Hygiene-Motivator theory, hygiene factors refer to extrinsic motivators and motivators refer to intrinsic sources of motivation.

Question 69

Under , executives receive units instead of shares of company stock. Then at some point in the future, they receive value (usually in cash)equal to the appreciation of the units they own.

A)nonqualified stock options
B)stock appreciation rights
C)performance achievement plans
D)Phantom stock plans
E)restricted stock plans

Question 70

With the form of stock options, the option is to purchase stock at a stated price, usually the fair market value at the time of the grant.

A)premium priced options
B)key employee programs
C)discount priced options
D)indexed options
E)nonqualified stock options

Question 71

What term describes payments companies make in connection with a change in ownership or control of a company?

A)pension
B)consulting fee
C)retirement bonus
D)golden parachute
E)none of the above

Question 72

With a , the firm usually awards shares without cost to the executive so that the employee can sell the stock but is restricted from do so for a set period of time.

A)nonqualified stock options
B)stock appreciation rights
C)performance achievement plans
D)Phantom stock plans
E)restricted stock plans

Question 73

Managers should consider the work of motivation experts when designing incentive pay plans.

Question 74

Intrinsic motivation is oriented towards rewards and control.

Question 75

With the form of stock options, the option's exercise price fluctuates with the performance of something like a market index.

A)indexed options
B)nonqualified stock options
C)key employee programs
D)discount priced options
E)premium priced options

Question 76

According to the two-factor theory, good working conditions will prevent dissatisfaction but will not lead to feelings of satisfaction.

Question 77

According to the two-factor theory, a lack of challenge at a job will result in dissatisfaction.

Question 78

People tend to react similarly to incentives.

Question 79

Intrinsically motivated behaviors are those behaviors that are motivated by the underlying need for competency and self-determination.

Question 80

The right to purchase a specific number of shares of company stock at a specific price during a specified period of time with a goal of buying future shares at the current price is called a.

A)at-risk variable plans
B)gainsharing plan
C)deferred profit-sharing plan
D)stock option
E)Scanlon plan