Deck 11: Incentives and Rewards

Question 1

Since ABC Corp instituted a quarterly bonus to each department that meets the goal of zero product waste their rework costs have declined substantially. This is an example of:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Answer 1

C

Question 2

Erin is a medical records reviewer and is required to complete 10 charts each day. As part of her annual performance evaluation a development plan was created that has increased her chart review requirement to 14 charts per day. To provide an incentive for Erin to reach this goal she will be paid a performance bonus each month if she reaches her goal every workday during that month. This is an example of:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Answer 2

B

Question 3

All of the following are accurate in regard to using a standard hour plan EXCEPT:

A) it encourages employees to work as quickly as they can to complete their tasks.
B) they should be used with jobs that are very standardized.
C) complex jobs work well with this type of incentive plan.
D) quality may suffer as a result of using this type of plan.
E) the employee controls their take home pay based on how motivated they are to work beyond their goals.

Answer 3

B

Question 4

Typically, RJS Industries gives employee an increase to their base rate based on the score they receive on their performance evaluation. However, if an employee is red circled, rather than an increase to their hourly rate they receive a bonus equivalent to what the increase would have been. RJS uses which of the following incentive plans?

A) Merit pay increase
B) Lump sum merit bonus
C) Standard hour plan
D) Both A and B
E) All of the above

Question 5

Jodi's evaluation score was a 70% which meant she was eligible for a 3.00% increase to her base hourly rate. This is an example of a:

A) merit pay increase.
B) lump sum merit bonus.
C) straight piecework plan.
D) differential piecework plan.
E) standard hour plan.

Question 6

If George's region increases their sales by 15% over the next 12 months, he and his staff will each receive a profit sharing bonus equivalent to 1% of the new sales they generate. This is an example of:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Question 7

Last year Kevin was expected to bring on 12 new clients within 12 months. Kevin easily reached that objective so his supervisor is requiring him to bring on 18 new clients this year. Kevin's supervisor is using:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Question 8

Employee motivation is primarily influenced by all of the following factors EXCEPT:

A) instrumentality.
B) expectancy.
C) ownership.
D) valence.
E) goal setting.

Question 9

When designing an incentive system an organization must decide:

A) what types of incentives to use.
B) what results the incentives will be based on.
C) if individual performance will be rewarded.
D) if organizational performance will be used to determine the incentives.
E) all of the above.

Question 10

Clay works for a local car dealership as a salesperson and earns 3% on every car he sells as his incentive plan and he receives no other compensation. This is an example of a:

A) straight commission plan.
B) straight salary plan.
C) mixed salary/commission plan.
D) straight piecework plan.
E) differential piecework plan.

Question 11

The primary goal of incentives is to ________ employees.

A) compensate
B) train
C) evaluate
D) motivate
E) recruit

Question 12

When Amanda arrived late for work during the week her supervisor required her to stay late every Friday to make up the time she had missed. Soon Amanda started to arrive on time every day. Amanda's supervisor was using:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Question 13

In regard to piecework incentive plans, which of the following statements is most accurate?

A) Performance measures are subjective and can be altered by any bias that may be present.
B) Piecework plans are complex and difficult to communicate to employees.
C) Employees know exactly what is expected of them in order to earn the incentive.
D) Piecework plans encourage teamwork and cooperation among coworkers.
E) Jobs which have a wide scope and a variety of tasks performed in short time frames work best with piecework plans.

Question 14

Giving an employee who is a vegetarian a free turkey during the holidays is an example of an incentive that has no:

A) expectancy.
B) valence.
C) ownership.
D) goal setting.
E) merit.

Question 15

A visiting nurse is expected to visit 6 patients per day during an 8 hour day. She receives an hourly rate of $25.00, or $200.00 per day. If she visits the 6 patients in 7 hours she is still paid as though she worked a full 8 hour shift. This is an example of a:

A) merit pay increase.
B) differential piecework plan.
C) straight piecework plan.
D) standard hour plan.
E) straight commission plan.

Question 16

Which of the following jobs would be most suitable for a piecework incentive plan?

A) Postal carrier
B) Toy inspector
C) Deli clerk
D) Car mechanic
E) Pharmacist

Question 17

When employees feel that their increased performance will result in a reward that they want this is an example of:

A) expectancy theory.
B) goal setting theory.
C) reinforcement theory.
D) agency theory.
E) piecework theory.

Question 18

Norma receives $0.50 per hour for each bag of candy she boxes and ships per hour. If she packages over 20 bags per hour her rate increases to $0.60 per hour per bag. This is an example of a:

A) merit pay increase.
B) differential piecework plan.
C) straight piecework plan.
D) standard hour plan.
E) straight commission plan.

Question 19

Vince's department had no injuries or accidents for 6 consecutive months so his director gave each employee 8 hours of vacation to add to their vacation bank. This is an example of a/an:

A) Improshare plan.
B) Scanlon plan.
C) straight commission.
D) spot award.
E) lump sum merit bonus.

Question 20

When considering whether to use merit pay increases or merit lump sum bonuses, an organization should consider that:

A) Bonuses generally cost the organization less because the payout doesn't permanently increase labor costs.
B) Merit pay increases occur once and do not have a lasting impact on the employee's compensation.
C) A lump sum bonus increases the employee's compensation each year.
D) Bonuses must be given to everyone in order to be fair, and not just those who reach certain objectives.
E) Merit pay increases look forward in order to provide an incentive for the employee to perform in the future.

Question 21

By encouraging employees to produce a greater quantity of output in less time, the ________ plan can be compared to the individual incentive plan known as a ________.

A) Improshare; standard hour plan
B) Improshare; commission
C) Scanlon; merit increase
D) Scanlon; Improshare plan
E) Scanlon; spot award

Question 22

Carrie works in a factory that produces pillows. Production standards state that on a typical fully staffed shift 5000 pillows should be produced. Carrie's shift was able to produce 5000 pillows in 7 hours and 15 minutes. The labor costs that they facility saved for those 45 minutes were shared amongst the employees on that shift. This is an example of a/an:

A) lump sum merit bonus.
B) commission.
C) Scanlon plan.
D) Improshare plan.
E) profit sharing.

Question 23

The Vice President of an organization is offered the option to buy 1000 shares of the organization's stock at $25.00 per share for the next five years. This type of incentive is known as a/an:

A) ownership plan.
B) gainsharing plan.
C) profit sharing plan.
D) mixed level plan.
E) team incentive plan.

Question 24

Organizations use stock related incentive plans in order to:

A) provide a set level of income to employees.
B) encourage employees to think like owners.
C) eliminate free riders.
D) make employees feel more in control of their overall compensation.
E) diversify employee retirement plans.

Question 25

In broadbased stock option plans over what percentage of a company's non-executive employees are included?

A) 25%
B) 50%
C) 66%
D) 75%
E) 90%

Question 26

Incentive plans which are related to company ownership or profit sharing can most closely be related to which of the following motivation theories?

A) Reinforcement theory
B) Expectancy theory
C) Goal Setting theory
D) Agency theory
E) Valence theory

Question 27

Which of the following statements best explains why an organization may want to use a team incentive plan rather than an individual incentive plan?

A) The efforts of a team are more difficult to monitor than each employee's behavior.
B) Team incentives work best when jobs can function independently.
C) Free rider issues can be avoided by using team based incentives.
D) If individual incentives are overlooked, team performance will decrease.
E) Team incentives encourage employees to focus on communicating and cooperating with each other.

Question 28

When an organization contributes shares of its stock to a trust set up for its employees this is known a/an:

A) stock option plan.
B) broad based stock option plan.
C) employee stock ownership plan.
D) leveraged employee stock ownership plan.
E) profit sharing plan.

Question 29

All of the following are important criteria if an incentive plan is to be most effective EXCEPT:

A) Create clear standards of performance for an employee to try to meet.
B) Focus on having employees excel at one piece of their job.
C) Be sure employees understand how to reach the incentive.
D) Ensure the incentive has valence to the employee.
E) The incentive must support the goal the organization is trying to achieve.

Question 30

All of the following are examples of components of an executive compensation package EXCEPT:

A) fitness club membership.
B) social security.
C) stock options.
D) health insurance.
E) profit sharing bonus.

Question 31

All of the following are examples of team or group incentive plans EXCEPT:

A) Scanlon plan
B) Profit sharing
C) ESOP
D) Merit pay increase
E) Improshare plan

Question 32

All of the following may be reasons not to pursue a profit sharing incentive plan EXCEPT:

A) Employees may not see an incentive right away.
B) Employees may come to expect the profit sharing and count on it as a regular part of their income.
C) The lag time between the work and actual reward may actually de-motivate employees.
D) Profit sharing is paid only when the organization is doing well which helps save labor costs.
E) Employees may be doing excellent work but the organizational objectives may still not be met.

Question 33

Which of the following incentive programs gives all employees in an organization a percentage fo the cost savings that result from a work group's suggestion?

A) Lump sum merit bonus
B) Commission
C) Scanlon plan
D) Improshare plan
E) Profit sharing

Question 34

In Bruce's work as a sales representative, he not only sells the product to customers but he provides technical assistance by helping with set up and troubleshoots problems. The best incentive plan for Bruce would be a:

A) straight commission plan.
B) differential piecework plan.
C) straight salary plan.
D) mixed salary/commission plan.
E) standard hour plan.

Question 35

Gina's company recently instituted an Improshare plan in order to improve the timeliness of production and decrease the cost per unit of product. The organization explained to each employee that they had to now inspect and assemble 25 parts in one hour rather than just 20 parts. Gina felt this was a reasonable goal knowing that there were days where she had been able to work ahead and produce more than expected. However Gina's manager did not explain how the time savings would be translated into a dollar amount of a bonus for each employee. Therefore employees in Gina's work area were not producing at the required level, as they did not understand the impact on their wages. This is an example of not meeting which criteria of an effective incentive plan?

A) Be attainable.
B) Have clear standards.
C) Be easy to understand.
D) Link to the company's objective.
E) Provide meaningful incentives.

Question 36

When an individual's efforts are less likely to be noticed when they are part of a team's results and the individual becomes less motivated this is known as:

A) being a free rider.
B) interactional injustice.
C) procedural injustice.
D) backdating.
E) social loafing.

Question 37

If your company's objective is to produce high volumes of product in a short period of time which incentive plan(s) may work best?

A) Differential piecework
B) Straight commission
C) Merit increase
D) Standard hours plan
E) Both A and D

Question 38

Which example best defines what is meant by a "free rider"?

A) Amy missed her sales goal this month by only 2 sales because she was not motivated to stay and complete extra cold calls to generate more clients.
B) Sam and John came up with an idea of how to run the production line more efficiently and both of them, as well as Mike, who did not contribute to the work, received a bonus for working on the idea.
C) Eric is paid for a minimum of 3 hours even if a service call only takes him 30 minutes. He usually cuts corners to get his work done in less time.
D) Olivia must work overtime each week because she is not able to perform her job efficiently. This causes additional overtime costs and cuts into her departments level of profit sharing each month.
E) Bob is a satisfactory employee but he does not offer to work extra hours when needed, he does not ask coworkers if they need his help when they appear to be having difficulty, and he often calls off sick they day after profit sharing checks are handed out.

Question 39

Labor force trends affect incentive programs because:

A) organizations must put in place ways to reward employees which support diversity in the workforce.
B) the type of incentives offered are driven by the make up of an organization's workforce.
C) rewards should not be determined by the make up of the workforce in order to avoid discrimination charges.
D) merit increases generally work for all minorities in the workforce as it most fairly increases their base compensation.
E) Both A and B are correct.

Question 40

Gainsharing plans are intended to foster:

A) competency development.
B) higher compensation levels.
C) a participative work environment.
D) a quality focus rather than quantity focus.
E) an enhanced safety awareness by employees.

Question 41

One way of the best ways to impact how employees view executive compensation is to:

A) offer executives lump sum merit bonuses rather than an annual merit increase.
B) have the executives be paid as part of a commission program.
C) link executive compensation directly to the organization's performance.
D) give executives spot awards in front of other employees.
E) require executives to participate in a Scanlon Plan.

Question 42

All of the following statements regarding the backdating of stock options is accurate EXCEPT:

A) This practice ensures that the recipient automatically realizes a profit.
B) It takes away from the purpose of stock options, which is to incent future performance.
C) Company performance does not have to improve in order for the stockholder to make a profit.
D) The date when the stock option was priced higher is to be considered the date of the award.
E) It does not motivate executives to perform well because they are guaranteed a profit.

Question 43

Paying $0.50 for every part inspected would be an appropriate method of compensation for a company who was in the early stages of development and couldn't afford to pay high salaries.

Question 44

When designing an incentive program in a global organization all of the following should b e considered EXCEPT:

A) the culture of a host country can impact what type of behavior warrants a reward.
B) the different operational goals in each country should guide how an incentive program is designed.
C) a country whose people are individualistic will prefer a gainsharing plan.
D) the standard of living in a country will impact an incentives valence.
E) both what is rewarded and how acceptable the reward is, impact whether global employees will see the value of an incentive program.

Question 45

All of the following are examples of diversity efforts tat could be rewarded EXCEPT:

A) convincing a number of Baby Boomers to retire in order to make room for some promising Generation X employees.
B) promoting a certain number of women in your department.
C) recruiting a certain number of Hispanics into your organization.
D) mentoring a number of Generation Y employees who become successful professionals.
E) decreasing your departments turnover of African-American employees.

Question 46

Which type of incentive program would be most beneficial if you are managing a telecommuting employee?

A) Merit increase
B) Straight commission
C) Lump sum merit bonus
D) Spot award
E) Improshare plan

Question 47

All of the following are impacts that technology can have on incentive programs EXCEPT:

A) online incentives limit recognition to set time frames such as monthly or quarterly.
B) recognition can happen sooner when technology is used.
C) online incentive programs are effective for managing a service award type of recognition.
D) tracking of incentives is more easily managed.
E) the valence of incentives offered online tends to be higher.

Question 48

In a gainsharing plan, such as a broad based stock option plan, the organization gives all employees the right to purchase shares of the companies stock.

Question 49

Piecework incentive plans work best in jobs which are narrow in scope and have clear cut objectives.

Question 50

A manager could impact their ROA by doing all of the following EXCEPT:

A) recycle a used part that may not meet safety standards.
B) choosing to offer a stock option incentive plan.
C) run a production line with two less people than required.
D) terminate a highly paid employee with little documentation to support the reason for their discharge.
E) order a lesser quality and cheaper shipping carton which does not pack the product as securely.

Question 51

An organization's culture has little impact on incentive programs as long as employees receive some type of incentive.

Question 52

Commission based pay plans help employees focus on improving efficiency in how the work is done.

Question 53

If an employee believes they are capable of performing a task and reaching a goal then they will be motivated by expectancy.

Question 54

A lump sum merit bonus would be appropriate to use in an organization whose culture emphasizes teamwork in order to achieve organizational goals.

Question 55

Stock options would be an example of a short term incentive which encourages top executives to work to improve the organizations performance.

Question 56

A gainsharing plan may be best utilized by an organization that emphasizes the use of teams , such as assembly lines.

Question 57

Knowing that what is rewarded might not always lead to ethical behavior, organizations should keep in mind that:

A) commission programs foster teamwork, cooperation, and positive behavior.
B) monitoring management performance based on financial outcomes ensures managers will be focused on improving revenues.
C) focusing on ROA discourages managers from altering assets to make themselves look good.
D) using safety and quality standards helps to ensure that productivity numbers are not the only concern.
E) piecework plans lead to both top quality and high volume work.

Question 58

When considering the differences among the generations in regard to the type of incentives tat would be most effective all of the following may be applicable EXCEPT:

A) Gen Y prefers richer time off plans.
B) Gen X prefers more work/life balance programs.
C) Baby Boomers are focused on individual incentives such as merit increases or bonuses.
D) Gen X is most concern with incentives that help them achieve their career goals.
E) Gen Y are more open to stock option plans than Baby Boomers.

Question 59

To help eliminate bias and discrimination as part of incentive programs, organizations must:

A) ensure that all employees have equal access to the incentive program.
B) design systems to reward employees based on job-related or performance criteria.
C) create programs with the least amount of subjectivity as possible.
D) do both A and B.
E) do all of the above.

Question 60

An organization which follows a cost leadership strategy should implement incentive programs that reward efficiency.

Question 61

If an employee is given a gift card for a poplar Italian restaurant but they do not like Italian food then the reward has no ________ to the employee.

Question 62

In order to be consistent and reward performance or behavior the same way, a global company should provide they same types of incentive plans throughout the organization.

Question 63

An employee who is part of the Baby Boom generation would appreciate incentives focused around work/life balance rather than around compensation.

Question 64

When employees make decisions regarding how to act at work based on what behaviors they believe will lead to their most valued work-related rewards and outcomes this is known as ________ theory.

Question 65

Labor force trends impact the type of incentives an organization should offer because the valence of incentives can be determined by each individual's age, race, and ethnicity.

Question 66

Using more longer term incentives for executives that link their pay to company performance can help improve the perception employees have about executive compensation.

Question 67

Using online incentive systems may decrease the valence of rewards and increase employee motivation.

Question 68

To avoid ethical issues, piecework systems should contain a criteria related to quality or safety so that employees are not producing high volumes of substandard products.

Question 69

The level of risk associated with an incentive program will impact how the employees view the incentive based on the history of the organization.

Question 70

A manager could improve a company's return on assets by using less employees to produce the product in order to save labor costs, but this may impact safety, and thereby cause a legal or ethical issue.

Question 71

Backdating a stock option increases an executives motivation to perform well because they are not guaranteed a profit.

Question 72

Discrimination rarely comes into play with performance based incentive plans because they are generally offered to all employees in the same job category.

Question 73

The idea that if, for example, an employee receives a bonus for meeting a certain production quota they are more likely to achieve that quota again, is known as the ________ theory.

Question 74

If an expatriate works in a collectivism type of culture he may want to consider using a type of gainsharing plan as an incentive system.

Question 75

Setting annual goals which are challenging and motivational to employees supports the theory of ________.

Question 76

Sara, who telecommutes and does transcription work from her home, would be best compensated using a piecework system based on the number of lines of transcription she submits each day.

Question 77

If you want to increase the speed with which you are able to provide recognition to employees, using online incentive programs is not a good solution.

Question 78

When there is a direct connection between achieving a goal and receiving a reward then the incentive has ________.

Question 79

If employees perceive there is no instrumentality to the incentive plan they will feel as though there is no distributional justice in regard to the plan.

Question 80

It is recommended that company's reward managers for creating and supporting a diverse workforce by including it as a performance criteria when evaluating them.