Question 1

An executive's average incentive payout is about _____ percent of base pay compared to the average technical/professional's incentive payout of 8 percent.

Accepted Answer

A)  200 
B)  100 
C)  30 
D)  50 
E)  25

Question 2

What challenges does a multinational company face in using performance-based pay?

Accepted Answer

A)  Differences in laws, tax regulations, and cultural values all affect the applicability of performance-based pay. 
B)  Any incentive system developed in the parent country would immediately become policy in the host country. 
C)  Compensation for incentive systems is always paid in the currency of the host country. 
D)  Stock option plans are typically more valued by employees working in host countries as they are by employees working in the parent country. 
E)  Compensation for incentive systems is always paid in the currency of the parent country.

Question 3

List four types of performance-based pay.

Accepted Answer

The answer of List four types of performance-based pay....

Question 4

The general pattern is that proportionately less incentive pay is used for employees higher in the hierarchy.

Accepted Answer

A) True 
 B)False

Question 5

Gain-sharing plans are premised on the assumption that:

Accepted Answer

A)  all employees deserve to be rewarded 
B)  costs can be reduced and productivity improved by eliminating wasted materials and labor, developing new or better products, or working smarter 
C)  if top management is highly motivated to succeed, then the organization will naturally follow suit 
D)  performance-based pay must be closely linked with organizational strategy for the pay system to be effective 
E)  positive reinforcement is superior to negative reinforcement

Question 6

_____ are used to determine which employees are covered by various components of a total pay plan.

Accepted Answer

A)  Rules of earnings dispensation 
B)  Eligibility rules 
C)  Equal Pay Act guidelines 
D)  Rules for qualification 
E)  The principles of pay equity

Question 7

Which of the following is a highly popular indicator used to evaluate the effectiveness of performance-based pay?

Accepted Answer

A)  employee productivity 
B)  employee retention 
C)  employee surveys 
D)  labor costs 
E)  profits

Question 8

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

Accepted Answer

A)  Under merit pay plans, performance is usually measured objectively. 
B)  Traditional merit pay plans entail considerable risk for employees. 
C)  With merit pay plans, base pay is set at the market rate. 
D)  Merit pay raises will be removed if performance declines. 
E)  The size of merit pay adjustments is typically greater than that awarded under the incentive and earnings-at-risk plans.

Question 9

Under a merit pay system with a small merit pool, it is likely that _____ will be dissatisfied with their raises.

Accepted Answer

A)  poor performers 
B)  average performers 
C)  high performers 
D)  new employees making the entry level rate 
E)  employees being paid at market rate

Question 10

In the chapter opening vignette "Managing Human Resources at the United States Postal Service", the success of the USPS's approach to performance-based pay is due to:

Accepted Answer

A)  the support it has from top-level managers 
B)  the use of clear and specific performance targets 
C)  rewards that are clearly linked to performance 
D)  pay consequences that are large enough to make a difference to employees 
E)  all of the above

Question 11

By definition, there will be discrimination between employees in performance based pay plans. Rewards awarded contingently cause low performers to improve and high performers to be more satisfied. Which of the following answers the question "How can you do this fairly?"

Accepted Answer

A)  Make sure performance measures are subjective 
B)  You can not be fair and discriminate at the same time 
C)  Let the person closest to the performance - the immediate supervisor - make the reward size decision 
D)  Apply the same reward decision rules to all employees 
E)  As long as you do not reward on the basis of gender, you are being fair.

Question 12

How is the base pay set when merit pay plans are used?

Accepted Answer

The answer of How is the base pay set when...

Question 13

Profit-sharing plans:

Accepted Answer

A)  typically have clear strategic objectives 
B)  have a proven motivational impact on employees, even in the deferred version 
C)  are designed to pay out incentives when the organization is most able to afford them 
D)  often include employees in their administration 
E)  are accurately described by all of the above

Question 14

A requirement of implementing a pay for performance system is to eliminate nonmonetary rewards at an organization.

Accepted Answer

A) True 
 B)False

Question 15

As a compensation expert in the HR department, you have been assigned the responsibility for reviewing the company's reward system developing a performance-based pay system (PBPS) system. All of the following are your responsibilities, except:

Accepted Answer

A)  working with line managers to establish the strategic objectives of the PBPS 
B)  fairly implementing the PBPS 
C)  monitoring the effects of the PBPS on employees and organizational outcomes 
D)  develop and deliver training about PBPS to line managers and employees 
E)  ensure the PBPS is consistent with other areas of HR

Question 16

By paying for performance, a company signals that it is interested in employees who want to be paid for good performance.

Accepted Answer

A) True 
 B)False

Question 17

_____ are among the oldest and most popular forms of incentive pay.

Accepted Answer

A)  Earnings at risk 
B)  Profit sharing 
C)  Individual incentives 
D)  Team stock options 
E)  Gain sharing

Question 18

What are the three levels of aggregation for performance-based pay?

Accepted Answer

The answer of What are the three levels of aggregation...

Question 19

Stock option plans:

Accepted Answer

A)  give an employee the right to buy stock during a specified period of time or under other specified conditions. 
B)  are being considered too hazardous after the Enron collapse in 2002 
C)  are restricted to executives 
D)  are always based on individual performance 
E)  all of the above are true

Question 20

_____ have spurred many organizations to reevaluate their use of merit raises.

Accepted Answer

A)  Value analyses 
B)  Future cost considerations 
C)  Governmental inquiries 
D)  Legislative changes 
E)  Social audits

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

An executive's average incentive payout is about _____ percent of base pay compared to the average technical/professional's incentive payout of 8 percent.

What challenges does a multinational company face in using performance-based pay?

List four types of performance-based pay.

The general pattern is that proportionately less incentive pay is used for employees higher in the hierarchy.

Gain-sharing plans are premised on the assumption that:

_____ are used to determine which employees are covered by various components of a total pay plan.

Which of the following is a highly popular indicator used to evaluate the effectiveness of performance-based pay?

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

Under a merit pay system with a small merit pool, it is likely that _____ will be dissatisfied with their raises.

In the chapter opening vignette "Managing Human Resources at the United States Postal Service", the success of the USPS's approach to performance-based pay is due to:

By definition, there will be discrimination between employees in performance based pay plans. Rewards awarded contingently cause low performers to improve and high performers to be more satisfied. Which of the following answers the question "How can you do this fairly?"

How is the base pay set when merit pay plans are used?

Profit-sharing plans:

A requirement of implementing a pay for performance system is to eliminate nonmonetary rewards at an organization.

As a compensation expert in the HR department, you have been assigned the responsibility for reviewing the company's reward system developing a performance-based pay system (PBPS) system. All of the following are your responsibilities, except:

By paying for performance, a company signals that it is interested in employees who want to be paid for good performance.

_____ are among the oldest and most popular forms of incentive pay.

What are the three levels of aggregation for performance-based pay?

Stock option plans:

_____ have spurred many organizations to reevaluate their use of merit raises.