Deck 12: Pay-For-Performance and Financial Incentives

Question 1

What does Frederick Herzberg call factors that satisfy lower-level needs?

A) Hygienes
B) Satisfiers
C) Motivators
D) Basics
E) Incentives

Answer 1

A

Question 2

Which psychologist warned that extrinsic rewards could at times actually detract from the person's intrinsic motivation?

A) Edward Deci
B) Frederick Herzberg
C) Frederick Taylor
D) Victor Vroom
E) Douglas McGregor

Answer 2

A

Question 3

An important prerequisite for effective variable pay plans is referred to as "line of sight." What does this refer to with respect to the employee?

A) Relating daily work to the achievement of social needs
B) Relating daily work to the achievement of personal needs
C) Relating daily work to the achievement of overall corporate goals
D) Relating daily work to how society is impacted
E) Relating daily work to other employee efforts to ensure equity is achieved

Answer 3

C

Question 4

Employers continue to increase their use of variable pay plans while holding salary increases or fixed compensation at modest levels.

Question 5

According to Frederick Herzberg what kind of factor is working conditions?

A) Hygiene
B) Motivator
C) High-level
D) Intrinsic
E) Premium

Question 6

What is Victor Vroom's term for the perceived value that a person attaches to the reward?

A) Motivation
B) Valence
C) Hygiene
D) Expectancy
E) Instrumentality

Question 7

Amy is part of a team of four software developers.Upon completion of a major client project,she and each of her team members received a set amount in addition to their base salary.What is this most likely an example of?

A) Group incentive program
B) Gainsharing program
C) Individual incentive plan
D) Spot bonus plan
E) Profit-sharing plan

Question 8

According to the textbook,what is the fundamental premise of variable pay plans?

A) Workers should only be paid for the work that they complete.
B) Top performers must get top pay to secure their commitment to the organization.
C) Create incentives for customers to purchase the company's products.
D) Enable the organization to reduce labour costs when profits decline.
E) Accommodate the different needs of workers.

Question 9

Victor Vroom says an employee must value the reward from higher performance in order to be motivated.If valence is zero,then there will be no motivation.

Question 10

What is Victor Vroom's term for when a worker believes that his or her effort will lead to performance?

A) Motivation
B) Valence
C) Hygiene
D) Expectancy
E) Instrumentality

Question 11

What is the term used to describe compensation that is independent of the performance level of the individual,group,or organization?

A) Competency-based pay
B) Piecework pay
C) Variable pay
D) Pay-for-performance
E) Fixed pay

Question 12

Accurate ________ are required for effective pay-for-performance plans.

A) wage curves
B) training programs
C) performance appraisals
D) salary curves
E) development programs

Question 13

According to Frederick Herzberg what kind of factor is salary?

A) Hygiene
B) Motivator
C) High-level
D) Intrinsic
E) Premium

Question 14

Any plan that ties pay to productivity or profitability is called

A) competency-based pay.
B) base pay.
C) variable pay.
D) salary pay.
E) fixed pay.

Question 15

Frederick Herzberg encourages the use of cash bonuses and pay increases as the best way to motivate workers to higher levels of performance.

Question 16

What is Victor Vroom's term for the perceived relationship between successful performance and actually obtaining the reward?

A) Motivation
B) Valence
C) Hygiene
D) Expectancy
E) Instrumentality

Question 17

George works for a small start-up that develops educational apps.His company offers a bonus of up to 20% of his salary which is contingent on his performance as well as the company's performance.This type of compensation plan is also known as

A) fixed pay.
B) gainsharing.
C) perquisite.
D) incentive pay.
E) benefit pay.

Question 18

________ represents compensation that provides for income stability whereas ________ is tied to the company and/or individual's performance.

A) Variable pay; fixed pay
B) Perquisite; fixed pay
C) Fixed pay; variable pay
D) Commission; variable pay
E) Variable pay; commission

Question 19

Describe how Frederick Herzberg defined motivation.

Question 20

What motivation is derived from the pleasure that someone gets from doing the job or task?

A) Hygiene motivation
B) Intrinsic motivation
C) Extrinsic motivation
D) Psychological motivation
E) High-level motivation

Question 21

Under this pay system,each worker receives the minimum hourly wage plus an incentive for each unit produced above a set number of units per hour; this system is known as a

A) process piecework plan.
B) straight piecework plan.
C) gainsharing piecework plan.
D) guaranteed piecework plan.
E) differential piecework plan.

Question 22

Under which pay system does each worker receive a set payment for each item produced or processed in a factory or shop when there is no guaranteed minimum wage and no extra percentage premium?

A) Process piecework plan
B) Straight piecework plan
C) Gainsharing piecework plan
D) Guaranteed piecework plan
E) Differential piecework plan

Question 23

A plan in which a production standard is set for a specific work group and its members are paid extra if the group exceeds the production standard,is known as a team or group

A) incentive plan.
B) standard hour plan.
C) gainsharing plan.
D) indirect pay plan.
E) merit plan.

Question 24

Paula reviews her company's financial reports to ensure that revenues exceed expenses before distributing a percentage of the resulting difference amongst her company's employees; what is this most likely an example of?

A) Group incentive plan
B) Semi-variable incentive plan
C) Individual incentive plan
D) Profit-sharing plan
E) Gainsharing plan

Question 25

Which of the following are the three criteria mentioned in the textbook for determining eligibility for a short-term incentive program for senior managers and executives?

A) Key position, professional membership, and salary grade
B) Length of service, key position, and professional membership
C) Key position, salary grade, and length of service
D) Salary grade, professional membership, and salary level
E) Key position, salary level, and salary grade

Question 26

Which plan rewards a worker by a premium that equals the percentage by which his or her performance exceeds the standard per hour or per day?

A) The differential piece-rate plan
B) The gainsharing plan
C) The percent incentive plan
D) The premium plan
E) The guaranteed piecework plan

Question 27

Which is the most commonly used and oldest type of incentive plan system of pay and is based on the number of items processed by each individual worker in a unit of time?

A) Standard hour plan
B) Item plan
C) Piecework plan
D) Process plan
E) Gainsharing plan

Question 28

Which incentive for operations employees includes a premium that equals the percentage by which the employee's performance exceeds the standard?

A) Process piecework plan
B) Straight piecework plan
C) Gainsharing piecework plan
D) Guaranteed piecework plan
E) Differential piece-rate plan

Question 29

A cash plan,which distributes a percentage of profits as profit shares at regular intervals,is an example of a type of which of the following compensation plans?

A) Profit-sharing plans
B) Lump-sum bonus plans
C) Gainsharing plans
D) Merit raise plans
E) Piece-rate production plans

Question 30

A group incentive plan's chief advantage is that each worker's rewards are no longer based solely on his or her own effort.

Question 31

According to the textbook,merit pay is most often used with respect to which one of the following employee groups?

A) Temporary employees
B) White-collar employees
C) Contract workers
D) Blue-collar employees
E) Part-time employees

Question 32

Piecework means that earnings are tied directly to the worker's production levels.

Question 33

One approach to using the team or group incentive plan is to set work standards for each member of the group and maintain a count of the output of each member.

Question 34

Describe a piecework incentive plan using an example.Discuss at least two advantages and two disadvantages of piecework using your example.

Question 35

How is a merit raise different from a merit bonus?

A) A merit raise represents a continuing increment, whereas the bonus represents a one-time payment.
B) A merit bonus represents a continuing increment, whereas the raise represents a one-time payment.
C) A merit raise is based exclusively on group performance, whereas the bonus is based exclusively on individual performance.
D) A merit raise is based exclusively on individual performance, whereas the bonus is based exclusively on group performance.
E) A merit raise is based exclusively on organizational performance, whereas the bonus is based exclusively on group performance.

Question 36

According to the textbook,which of the following is the cornerstone of executive compensation because it is the element on which the other compensation package elements are based?

A) Benefits
B) Gainsharing
C) Salary
D) Profit-sharing
E) Incentives

Question 37

Amanda received a salary increase based on her individual performance as a Marketing Manager over the past year.Which type of compensation did Amanda receive?

A) Merit bonus
B) Equity incentive
C) Special award
D) Individual bonus
E) Merit pay

Question 38

Which type of incentive plan engages many or all employees in a common effort and is designed to reward those employees for improvements in productivity?

A) An employee share purchase plan
B) An employee stock ownership plan
C) A profit-sharing plan
D) A performance bonus plan
E) A gainsharing plan

Question 39

The oldest and most commonly used type of incentive plan for operations employees is the standard hour plan.

Question 40

According to the textbook,the chief disadvantage of group incentive plans is that

A) each worker's rewards are no longer based just on his or her own effort.
B) group incentive plans usually lead to conflict between group members.
C) group incentive plans do not facilitate on-the-job training.
D) team plans do not help with ensuring that collaboration takes place.
E) project team jobs are rarely interrelated.

Question 41

What is the term used to refer to a target bonus that is set for each eligible position and then adjustments are made for greater or less than targeted performance?

A) A lump-sum bonus
B) Retirement income
C) Team or group incentive plan
D) An individual award
E) Gainsharing

Question 42

To determine eligibility in a short-term incentive program for senior managers and executives,a job-by-job review is conducted in order to identify the key jobs that have a measurable impact on profitability; this is called the criterion of

A) salary grade.
B) position level.
C) key position.
D) salary level.
E) professional membership.

Question 43

According to the textbook,what long-term incentive is most often reserved for senior executives but has more recently begun to be extended to employees at lower organizational levels?

A) Performance achievement plans
B) Book value plans
C) Capital accumulation programs
D) Stock value programs
E) Stock rights programs

Question 44

There has been a definite movement away from the extremes of straight commission or fixed salary for salespeople.What has there been a movement towards in order to compensate salespeople?

A) Pay-for-performance
B) Combination plans
C) Variable pay
D) Incentive plans
E) Merit pay

Question 45

The stock option is currently the most popular long-term incentive in Canada.

Question 46

A waiting period in order to ensure that the employee has contributed to any increase in stock price is referred to as which of the following?

A) Strategic period
B) Corporate period
C) Investing period
D) Vesting period
E) Engagement period

Question 47

The study of extroverted salespeople discussed in the textbook found that extroverts only sold more than those less extroverted when what occurred?

A) Selling included a presentation in front of groups of buyers
B) Their total compensation was in the form of guaranteed payouts
C) Their compensation was all salary based
D) Their rewards were contingent on their performance
E) They were given a listing of high potential buyers

Question 48

According to the textbook,sales compensation plans have typically relied heavily on which form of incentive for salespeople?

A) Profit-sharing
B) Stock appreciation rights
C) Gainsharing
D) Sales commissions
E) Stock options

Question 49

In some long-term incentive plans,shares are promised to the executive,but are forfeited if the executive leaves the company before a vesting period; what are these plans called?

A) Stock appreciation rights plans
B) Restricted share unit plans
C) Book value plans
D) Stock option plans
E) Phantom stock plans

Question 50

For short-term incentives,what does the term fund size refer to?

A) The specific amount that each employee will receive from productivity gains
B) The total amount of bonus money that will be available to be paid out
C) The percentage of the company's operating loss to be paid out
D) The specific base salary increases for each employee
E) The percentage of variable pay that will be available in the following year

Question 51

One drawback to the split-award method is that it pays too much to the marginal performer who,even if his or her own performance is mediocre,at least gets the second,company-based bonus.What is one way to get around this problem?

A) Use the lump-sum bonus method
B) Use the individual award system method
C) Use the group incentive plan method
D) Use the individual bonus method
E) Use the multiplier method

Question 52

According to the textbook,many experts argue that,in most organizations,managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Question 53

Revlex Inc.has implemented a refinement of the salary cut-off approach to short-term incentive eligibility,which assumes that all managers should be eligible for short-term incentives; this criterion is referred to as which of the following?

A) Salary grade
B) Performance appraisal
C) Gainsharing
D) Key position
E) Profit-sharing

Question 54

What is a non-deductible formula as it relates to short-term incentives for senior managers and executives?

A) Compensation paid over a threshold amount
B) A formula incorporating years of service and value to the company
C) The fund that begins to accumulate after a specified level of earnings
D) A straight percentage (usually of the company's net income used to create a short-term incentive fund
E) A long-term incentive that pays out on a straight-line basis with no deductible

Question 55

According to the textbook,what is the main disadvantage associated with having salary plans for salespeople?

A) They tend to only motivate recently hired salespeople.
B) They do not depend on results.
C) They are hard to keep track of.
D) Salespeople do not know in advance what their income will be.
E) A short-term perspective is encouraged.

Question 56

Under what terms can an executive buy stock in a stock option plan?

A) In future years at a fixed discount rate depending on individual performance
B) In future years with a guaranteed return
C) At a price equivalent to the company's current book value
D) In future years at a price determined when the stock option was issued
E) At any date but the transaction must be approved by the Board of Directors

Question 57

When all senior management and executive-level employees earning over a threshold amount are automatically eligible for consideration for short-term incentives,this criterion is referred to as which of the following?

A) Key position
B) Job evaluation
C) Job clusters
D) Salary grade
E) Salary-level cut-off point

Question 58

Compensation plans for salespeople have typically relied heavily on incentives,such as sales commissions.

Question 59

According to the textbook,which combination is the most prevalent approach for compensating salespeople?

A) Salary and stock options
B) Commission and stock options
C) Salary and commissions
D) Commissions and profit-sharing
E) Salary and profit-sharing

Question 60

The right to purchase a specific number of shares of company stock at a specific price at some point in the future is called a

A) book value plan.
B) stock appreciation right.
C) phantom stock plan.
D) stock option plan.
E) restricted stock plan.

Question 61

Incentive plans work best under all of the following conditions except

A) when units of output can be measured.
B) when the job is standardized.
C) the workflow is regular.
D) delays are few.
E) when performance expectations are unclear.

Question 62

High performers are driven by internal motivation and look to reward programs to add fuel to their achievements.

Question 63

Effective recognition needs to be all of the following except

A) immediate.
B) personal.
C) spontaneous.
D) specific.
E) unclear.

Question 64

Lack of recognition and praise is the number one reason that employees leave an organization.

Question 65

You have been asked by your CEO to identify the conditions under which incentive pay programs work best.List and explain three conditions.

Question 66

According to the textbook,what has been the traditional role of employee recognition plans?

A) Set benchmarks for employee productivity
B) Foster loyalty in new workers
C) Ensure salespeople receive the greatest rewards
D) Reward employees for long service
E) Ensure executive receive the greatest rewards

Question 67

Describe five important points to consider when implementing an incentive plan.

Question 68

Line managers are not at all important in the success of recognition programs.

Question 69

Incentive plans have the potential for reducing teamwork by encouraging individuals (or individual groups)to blindly pursue financial rewards for themselves.

Question 70

When should an employee be introduced to a company's corporate culture?

A) When they resign
B) On their first day
C) After six months
D) After their probationary period
E) When they are promoted

Question 71

Andrew leads a small team of employees in a retail store.Following a busy weekend,he sends an email to the team recognizing their hard work.This is an example of

A) incentive pay.
B) gainsharing.
C) employee recognition.
D) fixed pay.
E) profit-sharing.