Deck 4: Organizational Context: Reward Systems

Question 1

Gain-sharing plans are designed to share with the group or team the net gains from productivity improvements.

Answer 1

True

Question 2

Organizations use rewards to motivate employee performance and encourage their loyalty,but it is not effective in retention of these employees.

Answer 2

False

Question 3

In the social cognitive theory,the reward consequences play an important role in organizational behavior.

Answer 3

True

Question 4

Agency theory involves a new approach to understanding behavior by individuals and groups both inside and outside the organization.

Question 5

Pay is inversely proportional to morale.

Question 6

The motivational effect of the group incentive plans,on a day-to-day performance basis,may be very large.

Question 7

One of the disadvantages of a merit pay is that the criteria for determining merit are often nebulous since organizations do not clearly mention the conditions for earning the pay.

Question 8

Owners are usually risk averse and may prefer conservative courses of action that minimize their chances of loss.

Question 9

The compensation theory seeks to explain how managers differ from owners in using pay and other forms of compensation to effectively run the organization.

Question 10

Base pay is often determined by productivity.

Question 11

Money is associated with achievement and recognition,status and respect,and power but not with achievement and recognition.

Question 12

As organizations seek to determine the effectiveness of pay on performance,the huge pay package most CEO's of large firms received is justified with the performance of their firms.

Question 13

When the decision taken by a manager is incorrect,the impact may be less than it would be on the owners,and thus,the manager's willingness to take risks is usually undiminished.

Question 14

Owners may have longer time horizons because their goal is to maximize their value over time.

Question 15

Under the employee stock ownership plan,the employees gradually gain a major stake in the ownership of the firm.

Question 16

Bonuses and stock options reward systems are practical only when performance can be easily and objectively measured.

Question 17

Intrinsic motivation is usually measured in the laboratory by time spent on a task following the removal of the reward.

Question 18

The pay-for-performance plans have the ability to punish low performance.

Question 19

The option of a 'drawing account' is available for employees under the group incentive plan.

Question 20

The base pay form of compensation is as competitive at the entry level as it is thereafter.

Question 21

Agency theory seeks to explain:

A) how owners and managers may vary in their approach to risk taking.
B) how owners are more effective than managers in using pay and other forms of compensation to effectively run the organization.
C) differences in time horizons between managers and lower-level employees.
D) how owners and managers are similar while making decisions during a high stress situation.

Question 22

The pay package of several CEOs of large companies are not reflected in their performance.To counter this,a growing number of corporate shareholders have proposed resolutions that tie a CEO's pay to a multiple of the _____ pay.

A) equilateral
B) performance oriented
C) mid-range worker's
D) lowest worker's

Question 23

The skill pay approach rewards the more abstract knowledge or competencies of employees,such as those related to technology,the international business context,customer service,or social skills.

Question 24

Which of the following has been recognized as being central to competitive advantage in the new paradigm shift?

A) Financial capital
B) Market value
C) Intellectual/human capital
D) Technology

Question 25

According to Kerr,which one of the following is NOT mentioned as a consideration for an organization that is planning an effective pay system for rewarding people?

A) The organization must ask itself what outcomes it is seeking.
B) The organization must plan to sustain the improved results,if any.
C) The organization must tie its rewards to these outcomes.
D) The enterprise must be able to measure these results.

Question 26

Which of the following theory is concerned with the diverse interests and goals that are held by a corporation's stakeholders and the methods by which the enterprise's reward system is used to align these interests and goals?

A) Social cognition theory
B) Behavioral theory
C) Classical management theory
D) Agency theory

Question 27

When may an organization find it difficult to hire and retain many of their personnel?

A) When the organization seeks to internally train their employees.
B) When the merit pay is not in line with the market rate.
C) When the base pay is not in line with the market rate.
D) When the job requirements include specifications to able to deal with dynamism.

Question 28

Groups such as the National Association for Employee Recognition have concluded that human resource professionals and managers have realized the importance of recognition in motivating employees to achieve goals.

Question 29

Which among the following is a potentially powerful,and importantly,much less expensive form of organizational reward systems?

A) Affiliation
B) Recognition
C) Benefits
D) Money

Question 30

The efficiency wage theory is particularly useful in explaining the importance of offering benefits that appeal to and are needed by today's employees to make them satisfied,stress free,and productive.

Question 31

Most of the management literature dealing with money has focused on money as pay and the ways in which pay affects all of the following EXCEPT:

A) job attitudes.
B) work ethics.
C) motivation.
D) retention.

Question 32

Which one of the following is considered as a criterion for money to be effective in the organizational reward system?

A) The system must be uniform.
B) The system must be as objective as possible.
C) The system must be administered contingently on the employee's exhibiting critical performance behaviors.
D) The system must be administered contingently on the employee's experience.

Question 33

Life-cycle benefits are based on a person's stage of life and include things such as child care and elder care.

Question 34

Under the flexible,cafeteria-style benefits arrangement,the organization will establish a budgeted amount that it is willing to spend per employee,and the individual is then allowed to decide how to spend this money.

Question 35

Behavioral performance management focuses on social recognition as an effective contingent reinforcer that supervisors/ managers can use as a style in interpersonal relations.

Question 36

When Steve Kerr,noted that "Nobody refuses it,nobody returns it,and people who have more than they could ever use do dreadful things to get more," what was he referring to?

A) Power
B) Recognition
C) Money
D) Control

Question 37

According to the text,which of the following is given as one of the major reason for the recent economic crisis?

A) The owners of a corporation minimize costs and work to increase the stock value of the enterprise.
B) Managers have much shorter time horizons and their bonuses or merit pay may be tied closely to how well they performed in the last four quarters.
C) Managers are willing to accept losses in return for the increased opportunity for greater profits and market share.
D) Managers are more interested in expending corporate resources on activities that do not directly contribute to owner wealth.

Question 38

Which of the following is NOT a disadvantage associated with merit pay?

A) The criteria for determining merit are often nebulous.
B) It is difficult to quantify merit pay criteria.
C) It can end up being "catch-up" pay.
D) It allows the employer to differentiate pay given to high performers.

Question 39

Which one of the following theories equates money as being only as important as the most basic requirements of employees?

A) Classical management theory
B) Classical motivational theory
C) Maslow's hierarchy theory
D) Organizational theory

Question 40

Apart from social security,another major category of traditional benefits consists of life-cycle benefits.

Question 41

Which of the following is the practice of collapsing the traditional large number of salary levels into a small number of salary grades with broad pay ranges?

A) Broad-banding
B) Skill pay
C) Commissions based beyond sales to customers
D) Rewarding leadership effectiveness

Question 42

Which of the following plans were particularly popular during the height of the scientific management movement over a hundred years ago?

A) Individual incentive pay plan
B) Base pay plan
C) Merit pay plan
D) Group incentive pay plan

Question 43

The _____ bonus is one of the biggest incentives for athletes and upper-level managers.

A) signing
B) profit sharing
C) performance
D) retention

Question 44

What is the basic idea behind the stock option plan in relation to the value of the company's stock?

A) The executives can be held accountable for the decrease in value of the stock.
B) The executives are guaranteed participation in the board meetings.
C) The executives will strive to increase organizational performance.
D) The company can hold on to the executives for as long as it is necessary.

Question 45

Which of the following factors have led many companies to institute a combination payment plan where the individual receives a guaranteed amount of money,regardless of how the person performs?

A) Uncertain economy
B) Aggressive union demands
C) Labor laws
D) Excessive competition

Question 46

Which of the following are designed to share with the group or team the net gains from productivity improvements?

A) Gain-sharing
B) ESOPs
C) Spot bonus awards
D) Group sales commissions

Question 47

The stock option plan allows senior-level managers to buy company stock in the future at a/ the _____ price.

A) predetermined fixed
B) spot
C) current
D) future market

Question 48

Which of the following approach involves giving an employee an option to take money and then repay it out of the commissions?

A) Impromptu loan
B) Current account
C) Over-draw account
D) Drawing account

Question 49

Which of the following approach rewards competencies of the employees such as those related to the international business context,social skills etc?

A) Broad-banding
B) Skill pay
C) Competency pay
D) Pay for knowledge workers in teams

Question 50

Today's individual incentive plans pay people based on two factors,namely:

A) behavior or quality.
B) quality or education.
C) output or quality.
D) performance or skills.

Question 51

The logic behind gain-sharing plans is that:

A) reward systems such as pay for performance are practical only when performance can be easily and objectively measured.
B) those who are making lower salaries get larger percentage increases,whereas those earning higher salaries get a flat raise.
C) if everyone works to reduce cost and increase productivity,the organization will become more efficient and have more money to reward its personnel.
D) individuals who do superior work can be given increases greater than the rest of their colleagues.

Question 52

In which of the following system,besides sales volume,the reward is determined by customer satisfaction and sales team outcomes such as meeting revenue or profit goals?

A) Commissions based beyond sales to customers
B) Rewarding new goals
C) Pay for knowledge workers in teams
D) Competency pay

Question 53

Which of the following focuses on social recognition as an effective contingent reinforcer that supervisors/managers can use as a style in interpersonal relations?

A) Social cognition
B) Behavioral performance management
C) Classical management
D) Efficiency wage theory

Question 54

Which of the following typically involves the company taking out a loan to buy a portion of its own stock in the open market?

A) Employee stock ownership plan
B) The use of stock options
C) Profit sharing group incentive plan
D) Current profit sharing

Question 55

Which of the following approach includes an employee-satisfaction measure to recognize a manager's people-management skills?

A) Skill pay
B) Pay for knowledge workers in teams
C) Rewarding leadership effectiveness
D) Competency pay

Question 56

Which of the following is NOT a characteristic or method of paying out a profit sharing group incentive plan?

A) The amount from the profit-sharing pool is distributed immediately.
B) The amount from the profit-sharing pool is distributed annually.
C) The amount from the escrow account is invested until employee retirement.
D) The amount from the escrow account is increased by personal contributions from all the employees.

Question 57

According to the text,which of the following is proving unpopular in education compensations?

A) Merit pay plan
B) Group incentive pay plan
C) Stock options
D) Bonuses

Question 58

With the increased use of teams,pay is being linked to professional employees who are being organized into all of the following types of teams EXCEPT:

A) virtual.
B) product development.
C) inter-functional.
D) inter-dependent.

Question 59

All of these are disadvantages of the group incentive plan EXCEPT:

A) it de-emphasizes individual performance and rewards the non-productive as well.
B) the rewards may be realized decades later reducing the day-to-day performance motivation.
C) it focuses the group on specific performance targets.
D) employees may come to regard the quarterly or annual group rewards as part of their base salary and expect them every year.

Question 60

All of the following can be accomplished by the new pay techniques EXCEPT:

A) satisfied employees.
B) customer satisfaction.
C) new competencies.
D) promotions.

Question 61

Summarize the potential limitations of group incentive plans.

Question 62

Two of the most popular types of accounts of _____ include the individual retirement accounts (IRAs)and 401(k).

A) life,disability,and health insurance
B) pension benefit
C) time-off benefit
D) life insurance

Question 63

Explain gain-sharing plans and the steps involved in putting a gain-sharing plan into effect.

Question 64

Summarize the reasons why recognition may be as important as,or even more important than,money as a reward for today's employees.

Question 65

Which of the following holds that firms can save money and become more productive if they pay higher wages and better benefits because they are able to hire and leverage the best talent?

A) Classical management theory
B) Behavioral performance management
C) Efficiency wage theory
D) Agency theory

Question 66

Which of the following covers individuals who suffer from job-related illness or accidents?

A) Economic Recovery Act of 1981
B) Life Insurance
C) Worker's compensation
D) Social Security

Question 67

A growing number of firms that have implemented a well-structured,formal recognition system have experienced a dramatic improvement in the _____ of their best employees.

A) productivity
B) ethical behavior
C) feedback
D) retention

Question 68

Explain the employee stock ownership plan or ESOP.

Question 69

Under which of the following arrangement does an organization establish a budgeted amount that it is willing to spend per employee,and the individual is then allowed to decide how to spend this money?

A) Flexible,cafeteria-style benefits
B) Noninsured benefit programs
C) Prepaid legal plans
D) Concierge services

Question 70

Describe agency theory.How is it significant?

Question 71

What are the different steps that need to be followed to effectively manage a formal and informal recognition program?

Question 72

Summarize the potential limitations of the individual incentive pay plans.

Question 73

The Old Age Survivors and Disability Insurance Program provides limited income to retired people to supplement all of the following EXCEPT:

A) personal savings.
B) individual retirement account.
C) part-time work earnings.
D) private pensions.

Question 74

Describe the traditional methods of administrating pay and their major problems.

Question 75

Which of the following allows employees to make tax-deductible contributions to a pension,savings,or an individual retirement account (IRA)?

A) Economic Recovery Act of 1981
B) Employee Retirement Income Security Act of 1974
C) Family and Medical Leave Act of 1993
D) Civil Rights Act of 1991

Question 76

Describe private pension plans.

Question 77

The Employee Retirement Income Security Act of 1974 is characterized by all of the following EXCEPT:

A) compulsory setting up of a pension fund for its employees.
B) guidelines restricting the firm's freedom to take money out of the fund.
C) guidelines providing formulas for employee vesting.
D) guidelines providing formulas for portability.

Question 78

List the important symbolic attributes associated with money.

Question 79

List and describe five of the new pay approaches discussed in the text.

Question 80

_____ are a special type of benefit program that focuses on keeping employees from becoming physically and/or mentally ill.

A) Immunization programs
B) Wellness programs
C) Nutritional programs
D) Cardiovascular programs