Question 1

What is meant by backdating a stock option?

Accepted Answer

A)  Reaping windfall in the stock market by selling stock based on company's nonpublic information 
B)  Falsifying numbers in the company's annual report to hide losses and inflate the stock prices 
C)  Buying company's stock just before the date of key product launch 
D)  Changing the price in the original option agreement so that the option holder can buy stock at a bargain price 
E)  Re-evaluating a company's stocks to adjust it to a previous date so that the shareholders and employees minimize the losses

Question 2

Incentive pay for executives lays the groundwork for significant ethical issues.

Accepted Answer

A) True 
 B)False

Question 3

How does linking executive pay to stock performance lead to unethical behavior?

Accepted Answer

A)  Executives can use the advantage of knowing the company's inside information to buy or sell stock and create huge personal gains. 
B)  Executives can roll in the stock price into their base pay to avoid paying a huge tax. 
C)  Executives do not inflate the stock price in order to enjoy bonuses. 
D)  Executives can use the employee stock ownership plan to buy their company if it is experiencing financial problems. 
E)  The executives can obtain as many shares as they need at a price that is much lower than the market rate.

Question 4

Profit sharing costs more when the organization experiences financial difficulties.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an advantage of group incentives?

Accepted Answer

A)  Group incentives always use a broad range of performance measures. 
B)  Groups try to outdo one another in satisfying customers and therefore create healthy competition. 
C)  They encourage employees to achieve their goals irrespective of the cooperation of team members. 
D)  They reward the performance of all the employees at a facility. 
E)  They always result in cooperation among team members without any competition.

Question 6

Standard hour plans are quality-oriented incentives for professional employees.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is a reason for ESOPs' popularity?

Accepted Answer

A)  Earnings of the trust holdings are exempt from income taxes. 
B)  ESOPs provide very high risk-free retirement income. 
C)  Employees can use ESOPs to buy their company during financial crises. 
D)  ESOPs require companies to invest 51 percent in the company's own stocks. 
E)  The employees are provided with many more stocks than they actually own.

Question 8

Which of the following is true about standard hour plans?

Accepted Answer

A)  They always encourage employees to focus on customer service. 
B)  They succeed only for employees who are not motivated by money. 
C)  They encourage employees to focus mainly on quality. 
D)  In terms of their pros and cons, they are very different from piecework plans. 
E)  They encourage employees to work as fast as they can.

Question 9

Merit increase grids display an organization's policies for linking the size and frequency of pay increases to an individual's performance rating and position within the pay range.

Accepted Answer

A) True 
 B)False

Question 10

What are the implications of designing pay for organizational performance?

Accepted Answer

The answer of What are the implications of designing pay...

Question 11

Retention bonuses refer to:

Accepted Answer

A)  the special reward programs used to satisfy the lower and middle level managers. 
B)  the bonuses provided to union members to withhold a strike decision. 
C)  the bonuses provided to employees who take long leaves without pay. 
D)  annual incentives paid to daily wage workers to remain in the organization. 
E)  one-time incentives paid in exchange for remaining with the company.

Question 12

An organization uses Scanlon plan to provide incentives to employees.The workers produce parts worth $5 million.The target ratio set by the organization is 30%.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 13

Pay 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 14

From employers' perspective,an advantage of merit pay is that it is cheap.

Accepted Answer

A) True 
 B)False

Question 15

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)  power system approach. 
E)  federalism.

Question 16

Which of the following is a disadvantage of using incentive plans?

Accepted Answer

A)  The goals of an incentive plan may interfere with other management goals. 
B)  The goals of incentive plans cannot be linked to particular outcomes or behaviors. 
C)  Incentive plans cannot be used to promote group and organizational performance. 
D)  Incentive plans cause dissatisfaction among the non-performing employees in the organization. 
E)  Incentive plans are not very effective for jobs other than sales and service.

Question 17

The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals.

Accepted Answer

A) True 
 B)False

Question 18

Group bonuses typically reward the performance of all employees in an organization.

Accepted Answer

A) True 
 B)False

Question 19

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Accepted Answer

A) True 
 B)False

Question 20

Stock options have their greatest motivational potential during periods of:

Accepted Answer

A)  high unemployment. 
B)  downturns in the economy. 
C)  high economic growth. 
D)  low inflation. 
E)  slowdown in the company's growth.

Exam 12: Recognizing Employee Contributions With Pay

What is meant by backdating a stock option?

Incentive pay for executives lays the groundwork for significant ethical issues.

How does linking executive pay to stock performance lead to unethical behavior?

Profit sharing costs more when the organization experiences financial difficulties.

Which of the following is an advantage of group incentives?

Standard hour plans are quality-oriented incentives for professional employees.

Which of the following is a reason for ESOPs' popularity?

Which of the following is true about standard hour plans?

Merit increase grids display an organization's policies for linking the size and frequency of pay increases to an individual's performance rating and position within the pay range.

What are the implications of designing pay for organizational performance?

Retention bonuses refer to:

An organization uses Scanlon plan to provide incentives to employees.The workers produce parts worth $5 million.The target ratio set by the organization is 30%.The employees will be given a bonus if the actual labor costs are less than:

Pay specifically designed to energize,direct,or control employees' behavior is known as:

From employers' perspective,an advantage of merit pay is that it is cheap.

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

Which of the following is a disadvantage of using incentive plans?

The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals.

Group bonuses typically reward the performance of all employees in an organization.

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Stock options have their greatest motivational potential during periods of: