Question 1

A piecework rate plan is best suited for

Accepted Answer

A)  HR professionals. 
B)  executives. 
C)  production workers. 
D)  managers. 
E)  knowledge workers.

Question 2

Leonard, the manager of a manufacturing firm, wants the organization to perform better. He expects his employees to think more like owners, taking a broad view of what they need to do in order to make the organization more effective. In this case, Leonard should

Accepted Answer

A)  pay his employees per piece that is manufactured. 
B)  create a balanced scorecard. 
C)  reorganize the departments in the organization. 
D)  implement a profit-sharing incentive plan. 
E)  hire new employees and pay them above the market rate.

Question 3

A standard hour incentive plan is likely to be successful if

Accepted Answer

A)  most or all of a salesperson's compensation is in the form of commissions. 
B)  employers keep labor costs to a minimum. 
C)  the pay increase is linked to ratings on performance appraisals. 
D)  employees want the extra money more than they want to work at a pace that feels comfortable. 
E)  the organization values employee satisfaction, product quality, and customer service more than profits.

Question 4

For five years, Mainstream Production Systems offered $500 bonuses to individuals who identified ways to reduce costs by at least $1,000 per year. In the first year of that incentive program, 23 employees earned the bonus, but last year, only 7 submitted ideas, and only two of the ideas would actually save more than a few dollars. The company's HR director suggests that the company is likely to see more improvement if it replaces individual incentives with a gainsharing plan. Which statement best supports this argument?

Accepted Answer

A)  Gainsharing succeeds regardless of whether employees understand how performance is measured. 
B)  Gainsharing is likely to succeed under almost any organizational conditions. 
C)  Gainsharing broadens employees' horizons beyond the range of activities they can influence. 
D)  Gainsharing measures oversimplify the complex responsibilities of production work. 
E)  Gainsharing expands employees' thinking beyond their individual interests.

Question 5

For incentive pay to motivate employees to contribute to the organization's success, the pay plans must be well designed. Which statement describes a characteristic of a well-designed plan?

Accepted Answer

A)  Performance measures are to be linked to the individual's goals. 
B)  Employees are given unattainable performance standards. 
C)  Employees value the rewards or incentives that are being offered. 
D)  Employees are given limited resources to meet their goals. 
E)  The pay plan takes into account that employees will accept all goals irrespective of their rewards.

Question 6

An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as

Accepted Answer

A)  commissions. 
B)  the Scanlon plan. 
C)  merit pay. 
D)  gainsharing. 
E)  profit sharing.

Question 7

Which of the following is a long-term incentive?

Accepted Answer

A)  sales commission 
B)  group bonus 
C)  merit pay 
D)  stock option 
E)  piece rate

Question 8

Employee stock ownership plans (ESOPs) are attractive to employers. Along with tax and financing advantages, ESOPs give employers a way to build pride in and commitment to the organization. Which statement weakens this argument?

Accepted Answer

A)  Employees are not allowed to participate in general body meetings as shareholders. 
B)  The stocks within the trust are too widely diversified to earn high returns. 
C)  The stock earnings are taxed at high rates. 
D)  Employees are forced to return the stock profits to the organization. 
E)  Risks involved will directly affect employees' retirement income.

Question 9

Merit pay is a system of linking pay increases to ratings on performance appraisals.

Accepted Answer

A) True 
 B)False

Question 10

How does the balanced scorecard help organizations deal with unethical behaviors of executives?

Accepted Answer

A)  It allows companies to deduct executive pay that exceeds $1 million. 
B)  It ensures that by rewarding the achievement of a variety of goals, temptation on the executive's part to gain bonuses by manipulating data are reduced. 
C)  It encourages executives to hold on to their stock options when the company is undergoing financial problems. 
D)  It forces executives to focus on the company's long-term success because ESOP funds are guaranteed by the Pension Benefit Guarantee Corporation. 
E)  It mandates that an ESOP invest at least 51 percent of its assets in the company's own stock.

Question 11

Elaborate on how gainsharing can be successful as a form of group incentive.

Accepted Answer

The answer of Elaborate on how gainsharing can be successful...

Question 12

To make merit increases consistent, administrators of merit pay programs must closely monitor the compa-ratio and the

Accepted Answer

A)  number of grades in the pay structure. 
B)  individual's performance ratings. 
C)  number of new hires in the company. 
D)  company's stock price in the current financial year. 
E)  average pay of the area where the organization is based.

Question 13

Employee participation in pay-related decisions can be part of a general move toward

Accepted Answer

A)  employee empowerment. 
B)  centralized decision making. 
C)  self ownership. 
D)  high power distance. 
E)  federalism.

Question 14

The Henry-Bell organization uses the Scanlon plan to provide incentives to its employees. The workers produce electrical components worth $5 million. The target ratio set by the organization is 30 percent. The employees will be given a bonus if the actual labor costs are less than

Accepted Answer

A)  $0.5 million. 
B)  $1 million. 
C)  $1.5 million. 
D)  $2 million. 
E)  $2.5 million.

Question 15

What are the different types of piecework rates? Explain each of them.

Accepted Answer

The answer of What are the different types of piecework...

Question 16

A multinational organization uses a gainsharing program in which employees receive a bonus if the ratio of labor costs to the sales value of production is below a set standard. This incentive plan is referred to as

Accepted Answer

A)  a group bonus. 
B)  merit pay. 
C)  the Scanlon plan. 
D)  a piecework rate. 
E)  a team award.

Question 17

A pay structure specifically designed to energize, direct, or control employees' behavior is known as

Accepted Answer

A)  monthly salary. 
B)  wage. 
C)  incentive pay. 
D)  annual salary. 
E)  fixed pay.

Question 18

A feature of an effective incentive pay plan is that it should

Accepted Answer

A)  have performance measures based on employees' requirements. 
B)  not be provided as a direct percentage of employees' performance. 
C)  encourage group performance and sideline individual achievements. 
D)  be the same for all employees in the organization. 
E)  have performance measures linked to the organization's goals.

Exam 13: Recognizing Employee Contributions With Pay