Deck 9: Pay-For-Performance: the Evidence

Question 1

According to expectancy theory,effort level depends on which of these factors?
(1)expectancy
(2)valence
(3)instrumentality
(4)reward
(5)goals

A) 1,2,3
B) 2,3,4
C) 1,4,5
D) 2,5,4

Answer 1

A

Question 2

When an organization's performance has regular and large swings and individual performance is unclear and hard to measure,the most effective compensation mix is to offer _____.

A) base pay with low incentives and a variety of rewards
B) monetary rewards with large incentives
C) large base and low-incentive pay
D) a wide range of rewards and significant incentives

Answer 2

A

Question 3

_____ involves identifying what is important to a person and offering it to them in exchange for some desired behavior.

A) Conditioning
B) Goal setting
C) Empathy
D) Motivation

Answer 3

D

Question 4

Which of the following best supports a culture of flexibility and innovation?

A) A flexible benefits package
B) A strong commitment to job security
C) High base wage
D) Stock options

Question 5

Compensation should reinforce all but which of the following behaviors?

A) Attracting and hiring good employees
B) Keeping turnover to nearly zero
C) Encourage skill development
D) Motivate high job performance

Question 6

In _____ theory,incentive pay is motivating if it helps an employee gain a sense of achievement,recognition or approval.

A) Herzberg's two-factor
B) equity
C) Maslow's
D) Reinforcement

Question 7

The motivation triangle includes _____.

A) selection
B) organization design
C) culture
D) organization development

Question 8

Which of the following theories is least relevant to merit pay?

A) Herzberg's theory
B) Expectancy theory
C) Equity theory
D) Reinforcement theory

Question 9

_____ is the belief that when a specified level of job performance is attained,the employee will receive a specified reward.

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

Question 10

Which theories would support a higher minimum wage?

A) Reinforcement and agency
B) Goal setting and equity
C) Maslow and Herzberg's two-factor
D) Expectancy and agency

Question 11

When employee performance is easily measured and the organization's performance is fairly stable over time,the most effective type of compensation is to offer _____.

A) large base and low-incentive pay
B) variety of rewards and base pay
C) a variety of rewards with significant incentive pay
D) monetary rewards with large incentives

Question 12

The ability triangle includes _____.

A) selection
B) performance management
C) compensation
D) organization development

Question 13

A key factor in increasing trust in top management is _____.

A) an acceptable appraisal system
B) high base pay
C) stock options
D) a well-designed piece rate system

Question 14

The primary guiding force that determines needed employee behaviors is _____.

A) corporate goals
B) organization strategy
C) strategic business unit goals
D) department/team goals

Question 15

For which motivation theory is it important for organizations to pay attention to the training and development needs of their employees?

A) Equity
B) Expectancy
C) Goal setting
D) Reinforcement

Question 16

Line of sight is an important pay implication for which theory or theories?

A) Agency
B) Equity
C) Agency and reinforcement
D) Expectancy and goal setting

Question 17

A business has a centralized structure and a compensation system that rewards sales volume.However,sales volumes are low compared to competitors who respond more quickly to changes in consumer demand.Which of the following is the most likely source of the low sales performance?

A) A poorly designed compensation program
B) An ineffective recruitment and selection program
C) An inappropriate organization design
D) A poorly designed performance management program

Question 18

The key ingredient in _____ is careful cost analysis to make sure the dollar cost of the package an employee selects meets employer budgetary limits.

A) gain-sharing plans
B) individual incentive plans
C) success-sharing plans
D) cafeteria-style compensation

Question 19

_____ theory contends that success-sharing plans will be motivating but at-risk plans will be de-motivating.

A) Equity
B) Expectancy and agency
C) Herzberg's two-factor
D) Agency

Question 20

When developing a flexible compensation system,which theory or theories would be most useful?

A) Expectancy theory
B) Equity theory and agency theory
C) Maslow's theory and Herzberg's theory
D) Goal setting

Question 21

A(n)____ requires annually "re-earning" the added pay.

A) success sharing plan
B) lump-sum bonus
C) profit-sharing plan
D) individual incentive plan

Question 22

There is evidence that every 10 percent increase in the bonus paid to employees yields a _____ percent increase in ROA to the firm.

A) 1
B) 1.5
C) 5
D) 15

Question 23

_____ is an individual level form of performance pay.

A) Risk sharing
B) Gain sharing
C) Lump-sum bonus
D) Success sharing

Question 24

Compared to other incentive plans,line of sight is lowest in _____.

A) profit sharing
B) gain sharing
C) risk sharing
D) success sharing

Question 25

Which among the following components of a reward system is a dimension of empowerment?

A) Work importance
B) Control
C) Feedback
D) Advancement

Question 26

Available evidence indicates managers believe the most important factor for pay increases is _____.

A) effort
B) nature of the job
C) seniority
D) performance

Question 27

The key to designing a pay-for-performance system rests on standards.Specifically,managers need to be concerned about the:

A) objectives,structure,eligibility,and funding.
B) strategy,measures,structure,and equity.
C) structure,efficiency,equity,and funding.
D) objectives,measures,eligibility,and funding.

Question 28

The most obvious sorting factor is _____.

A) seniority
B) ability
C) experience
D) educational qualification

Question 29

Theories dealing with exchange include _____.

A) Maslow and Herzberg
B) equity and agency
C) expectancy and reinforcement
D) goal setting and equity

Question 30

As per the _____ theory,relative pay is important as employees evaluate their pay-effort balance in comparison to other employees.

A) equity
B) expectancy
C) agency
D) reinforcement

Question 31

Growing evidence suggests that the major effect of skill-based pay is _____.

A) high productivity
B) reduced labor costs
C) high quality products
D) low training costs

Question 32

_____ theory argues that performance-based pay is best for complex jobs where monitoring employee performance is difficult.

A) Reinforcement
B) Goal setting
C) Agency
D) Expectancy

Question 33

Company X pays for performance.Allan,an employee of the company,is not in favor of this reward system and,therefore,leaves Company X in search of another company with different rules for getting rewards.This is an example of the:

A) design effect.
B) compensation effect.
C) sorting effect.
D) incentive effect.

Question 34

The amount of fairness given to employees refers to _____.

A) total justice
B) quantitative justice
C) procedural justice
D) distributive justice

Question 35

A person with low self-esteem is likely to seek _____.

A) an organizations with pay plans based upon individual not group performance
B) an organizations with a significant amount of pay based upon performance
C) a small organization with large benefits
D) a large,decentralized organization with little performance-based pay

Question 36

_____ theory contends that we choose to do those things that we believe are most likely to lead to desired rewards.

A) Expectancy
B) Reinforcement
C) Agency
D) Equity

Question 37

Research suggests that for employees to notice and work hard to perform behaviors desired by the organization,incentives need to be _____ percent.

A) 5-8
B) 8-10
C) 15-20
D) 25-30

Question 38

Turnover tends to be highest among _____.

A) poor performers
B) good performers
C) single women with children
D) ethnic minorities

Question 39

Which of the following is not true?

A) More companies are using pay based upon individual,group and organization performance.
B) Workers with high security needs may accept lower pay for pay security.
C) Workers may need higher pay to stay and perform in an at-risk pay company.
D) Companies are moving back to entitlement-oriented pay to reduce turnover.

Question 40

When moving from an individual to a group incentive plan,you would expect _____.

A) high turnover among high performers
B) an increase in instrumentality
C) an increase in the output of high performers
D) an increase in perceived equity

Question 41

Cafeteria-style compensation is based on the idea that the organization knows what package of rewards would best suit individual employees' needs.

Question 42

Maslow's theory suggests that performance-based pay can be de-motivating.

Question 43

Agency theory argues that employees prefer risky pay since rewards can be greater than a salary.

Question 44

Additional authority,control and autonomy are always positively motivating job factors for workers.

Question 45

In the formula (behavior = f (M,A,E)),M standards monetary incentives.

Question 46

Incentive pay systems are an effective way to motivate workers to perform a variety of tasks in changing situations.

Question 47

According to agency theory,because employees prefer a salary,they demand higher total pay if performance-based pay is used.

Question 48

When pay raises are based on events over which employees lack significant control,they are likely to regard the system as unfair.

Question 49

Work load and work variety are both components of a total reward system.

Question 50

The point of the behavior = f (M,A,E)model is that,though very important,compensation alone cannot change employee behavior.

Question 51

In today's organizations,socialization,the culture and training rather than compensation packages are typically used to direct employees to desired behaviors.

Question 52

Goal setting theory argues that employees' performance in maximized when performance targets are stated as "do your very best".

Question 53

Gain sharing poses greater risk to individual employees than profit sharing.

Question 54

Identifying desired behaviors is the emphasis of agency theory.

Question 55

Security in terms of compensation refers to the predictability of one's paycheck from one time to another.

Question 56

Line of sight is highest in individual incentive plans.

Question 57

An important implication of reinforcement theory is that when employees receive pay is important.

Question 58

Line of sight means that employees believe they can influence performance targets.

Question 59

Lump-sum bonuses have less risk for workers than merit pay.

Question 60

Many employees are not satisfied with compensation at risk plans because they do not understand the process used to determine their pay.

Question 61

Explain the expectancy theory of motivation.

Question 62

What are the behaviors that compensation ought to enforce?

Question 63

What is a cost-of-living-increase?

Question 64

What are the implications for performance-based pay based on the theory of reinforcement?

Question 65

What are stay bonuses?

Question 66

Explain how personality characteristics can influence an employee's preference for rewards.

Question 67

Evidence suggests that skill-based pay may not increase productivity.

Question 68

Blue-collar workers feel pay increases should be based upon performance.

Question 69

Briefly explain the concept of cafeteria-style or flexible compensation.

Question 70

What predictions can be made about performance-based pay based on Maslow's theory?

Question 71

Both pay level and pay system characteristics affect applicants decisions to accept a job.

Question 72

Risk-sharing plans include a provision for cuts in base pay that are only recaptured in years when the organization meets performance objectives.

Question 73

Incentive effect means pay can motivate people to perform better.

Question 74

Eligibility refers to who in the organization may participate in an incentive pay program.

Question 75

Generally,team-based incentives are more attractive than individual incentives.

Question 76

Compare risk sharing and success-sharing plans.

Question 77

What are the four standards managers need to focus on when designing a pay-for-performance system?

Question 78

Managers have more control over distributive justice than procedural justice.

Question 79

A problem with incentive pay plans is workers focus exclusively on behaviors that are rewarded.

Question 80

An individual incentive pay system is associated with high turnover of high performers.