Deck 5: Performance Pay Choices

Question 1

Profit sharing plans can reduce the need for employee supervision.

Answer 1

True

Question 2

Merit bonuses represent a permanent increase to base pay.

Answer 2

False

Question 3

Which of the following best explains why,despite their motivational potential,piece rate systems often do not motivate maximum effort?

A) Work group norms define acceptable rates of production.
B) Piece rates are used in conjunction with base pay.
C) Workers may be tempted to cut corners on quality.
D) Workers are more concerned with production than safety.

Answer 3

A

Question 4

The use of long-term incentive plans is of little value to most firms.

Question 5

The three types of profit sharing plans are the current distribution plan,the deferred payout plan,and the amortization plan.

Question 6

When should the proportion of base pay relative to commission be higher?

A) The more that each salesperson works independently of others.
B) The shorter the length of the sales cycle.
C) The greater the concern for high turnover.
D) The higher the degree of persuasive skills required.

Question 7

Individual performance pay plans generally focus on promoting which type of behaviour?

A) Organizational citizenship
B) Membership
C) Task
D) Citizenship and membership

Question 8

Which of the following terms is used to describe pay that is geared only to the volume of sales or transactions,with no base pay component?

A) Sales commission
B) Leverage selling
C) New market selling
D) Straight commission

Question 9

In what way is piece rates and commissions similar to each other?

A) Employees don't have to worry about working themselves out of a job.
B) They reduce the need for external control of employees through supervision.
C) Both types are commonly used in conjunction with base pay.
D) Both are popular systems widely used in the service sector.

Question 10

All things being equal,goal sharing programs are thought to be less motivational than gain sharing programs.

Question 11

Employee stock plans are simpler to implement in privately-held rather than publicly-traded corporations.

Question 12

If an organization has a "promote from within" policy,it doesn't really need any other rewards to motivate behaviour.

Question 13

Which of the following pay plans is geared to individual performance?

A) Profit sharing
B) Competency-based
C) Gain-sharing
D) Piece rates

Question 14

What can you offer your employees to balance out the self-centered perspective,caused by your piece rate system,and encourage citizenship behaviour?

A) Perks
B) Employee stock ownership
C) Merit bonuses
D) Suggestion system

Question 15

What is the most common form of performance pay used by medium to large Canadian firms?

A) Merit raises
B) Profit sharing
C) Merit bonuses
D) Commissions

Question 16

To qualify as having an employee profit sharing plan a firm must have a formal program in which payments based on profits are made to a wide cross section of employees.

Question 17

Which of the following terms is used to describe a pay system in which an employee receives regular advances against future commissions to smooth out income fluctuations?

A) Sale stipend system
B) Draw system
C) Pay advance system
D) Security income

Question 18

A typical tree planter should be able to plant thirty trees in an hour.You have determined the average amount of money a worker with the skills and abilities to plant trees should earn hourly is $18.What is the straight piece rate paid to your employees?

A) $30
B) $1.66
C) $0.60
D) $18

Question 19

Attendance programs are less risky for organizations in which intrinsic motivation is low in the first place.

Question 20

The three main types of employee stock plans are: stock bonus plans,stock purchase plans and stock option plans.

Question 21

Which of the following plans allows you to defer a portion of your annual profit sharing bonus to help build your retirement income?

A) Deferred profit sharing
B) Combination profit sharing
C) Current distribution
D) Cash plan

Question 22

Which of the following statements best describes a merit raise?

A) A promise of future payments
B) A permanent pay raise that recognizes past performance
C) An increase that is tax exempt
D) A lump sum reward for past performance that does not increase base pay

Question 23

When is profit sharing most important to a company?

A) When the company's share value is very high.
B) When the employees are unionized.
C) When the company is privately owned.
D) When the firm has a high need for cooperation.

Question 24

These plans are set up so that a payout is contingent on the achievement of three- to five-year performance goals.

A) Pension plans
B) Long-term incentives
C) Deferred profit-sharing plans
D) Goal-sharing plans

Question 25

According to the Peter Principle when will employees stop being promoted?

A) When they reach their level of incompetence.
B) When promotions are limited to family members.
C) When technical tracks are not available.
D) When fewer upper-level vacancies exist.

Question 26

In what circumstance are special-purpose incentives least appropriate?

A) Intrinsic motivation does not already exist.
B) Both intended and unintended behaviours are easy to observe.
C) No other alternatives for inducing desired behaviour are feasible.
D) The company is using a high-involvement managerial strategy.

Question 27

What differentiates merit pay from other types of performance pay,such as piece rates,sales commissions,and target incentives?

A) Merit pay can be used as a substitute for time-based pay.
B) Merit pay is based on specific aspects of performance.
C) Merit pay is rarely used in combination with base pay.
D) Merit pay is generally based on appraised performance.

Question 28

Which of the following are main types of profit sharing plans?

A) Current assessment plan, delayered plan, and blended plan
B) Deferred plan, cash plan, and group plan
C) Combination plan, deferred plan, and current distribution plan
D) Current distribution plan, combination plan, and delayered plan

Question 29

In general,individual performance pay fits best with which managerial strategy?

A) Classical
B) Human relations
C) High involvement
D) Hybrid

Question 30

Which of the following is an advantage of goal-sharing plans?

A) Each employee establishes his/her own goals.
B) Cost savings are quantified and shared.
C) Management establishes outcomes for each employee.
D) They are less complex to develop than gain sharing.

Question 31

Which of the following managerial practices,combined with an employee stock plan,will increase the performance effects of employee ownership?

A) Sharing financial information about the company
B) The use of work teams
C) Training and development
D) Employee participation in decision making

Question 32

Which of the following is not a suitable condition for merit pay?

A) Individual performance that varies
B) Performance that is not controllable by the individual
C) Individual performance can be separated out
D) Undesirable side effects are readily manageable

Question 33

As the owner of a real estate firm with multi-office operations,you provide a bonus to all sales personnel in the highest-producing office each month.What type of performance pay plan are you using?

A) Goal-sharing
B) Competitive bonus
C) Pooled performance
D) Group commissions

Question 34

From an employer's point of view,what is the most attractive feature of gain-sharing plans?

A) The plans are self-funding.
B) Positive work group norms develop.
C) The need for supervisory control is reduced.
D) Employees monitor each other's performance.

Question 35

From an employee's perspective,why are merit bonuses seen as less valuable than merit raises?

A) Employees have little confidence in the results of performance appraisal.
B) Bonuses can cause poor relations with supervisors and coworkers.
C) Bonuses are given in lump sum payments and apply only for one year.
D) Bonuses are not suited for work that depends on collaboration and cooperation.

Question 36

For employees,what is the main concern with a stock plan?

A) Stock plans are difficult to understand.
B) There are too many variations on their execution.
C) They pose too much of a tax burden.
D) Share value is unpredictable.

Question 37

Your employer is considering tying the bonus pool to the firm's profitability and then allocating this amount to employees based on individual merit.With reference to expectancy theory,which component of the merit system will be weakened and thus make it less motivational for you as an employee?

A) Valence
B) Expectancy
C) Instrumentality
D) Effort

Question 38

Your instructor has offered class members bonus marks for volunteering as campus tour guides. This is referred to as which type of performance pay plan?

A) Goal sharing
B) Merit
C) Special-purpose incentive
D) Commission

Question 39

Which of the following statements refers to a targeted incentive?

A) A payment to work teams if they achieve a certain goal
B) Aimed at a specific individual
C) Intended to reduce compensation costs
D) Focused on a specific behaviour

Question 40

What do employees receive under an employee stock bonus plan?

A) Shares at no cost to themselves
B) The cash value of phantom shares
C) A bonus equivalent to the increase in their share value
D) Free financial advice on stocks

Question 41

Identify and briefly explain the nature of individual performance pay plans.

Question 42

Discuss the nature of suggestion systems and some of the problems you need to be aware of.

Question 43

Identify and briefly define each of the three types of employee stock plans.

Question 44

Explain the difference between goal sharing and gain sharing plans.

Question 45

There are three types of profit sharing plans discussed in the text.Identify and briefly explain each of them.