Deck 11: Rewarding Performance

Question 1

The "do only what you get paid for" syndrome is a potential problem tied to which of the following conditions?

A) Companies do not use a pay-for-performance strategy.
B) Employees help develop a pay-for-performance strategy.
C) Pay is closely tied to specific performance indicators.
D) Employee intrinsic drives are reinforced.

Answer 1

C

Question 2

In most firms,pay-for-performance compensation systems experience a credibility gap among approximately ________ of employees.

A) 15%
B) 25%
C) 50%
D) 75%

Answer 2

D

Question 3

Which of the following best explains the findings of the Kaiser Permanente Northern California study?

A) External rewards decrease internal motivation and performance.
B) Nonmonetary rewards are less motivating than monetary rewards.
C) Incentive plans increase productivity but lower overall job satisfaction.
D) Employee performance increases linearly with increased monetary rewards.

Answer 3

A

Question 4

Pay-for-performance has little effect on employees' effort level and commitment to the organization.

Question 5

Research suggests that pay-for-performance raises productivity but decreases job satisfaction.

Question 6

David is frustrated at his company's inability to maintain a single system of pay-for-performance and is finding it difficult to adapt to new policies.David is probably:

A) encountering dissonance with his psychological contract.
B) recognizing an increase in his short-term intrinsic drives.
C) suffering from the "do only what you get paid for" syndrome.
D) receiving only financial rewards rather than nonfinancial rewards.

Question 7

A key assumption behind pay-for-performance compensation is that:

A) the importance of the job needs to be weighed in figuring the incentive.
B) the organization's performance depends on individuals' performance.
C) teams are not suitable "vehicles" for most corporate incentive programs.
D) accurate job evaluations and market surveys are critical to calculate incentives.

Question 8

Nearly 95% of U.S.companies are expected to use pay-for-performance plans by 2014.

Question 9

Pay-for-performance is likely to enhance the spirit of cooperation in an organization,as employees will work to help one another improve their job performance.

Question 10

Most employees at Sterling Enterprises work on a team.The firm is considering the implementation of a pay for performance plan.Which of the following would be the most likely challenge of such a plan?

A) Establishing an HR scorecard for each team
B) Isolating individual control over work processes
C) Separating individual contributions from team contributions
D) Creating a psychological contract between teams and the firm

Question 11

What is the most common type of pay for performance used by firms?

A) Perks
B) Bonuses
C) Stock options
D) Nonmonetary rewards

Question 12

The experience of Century Telephone Company clearly showed that pay-for-performance programs may promote:

A) problems linking group and individual incentives.
B) ethical violations that led to employee lawsuits.
C) increases in employee conflicts and stress.
D) excessive union involvement.

Question 13

Pay-for-performance or incentive compensation systems are built on the assumption that individual employees and work teams differ in how much they contribute to the firm.

Question 14

It is most likely true that the use of pay-for-performance systems is:

A) increasing rapidly around the world.
B) declining due to implementation problems.
C) failing to motivate employees as employers had expected.
D) increasing slowly among small businesses in the high-tech industry.

Question 15

What is the primary concern about physicians receiving incentives from pharmaceutical firms and state governments?

A) Doctors and nurses lacking time to see the most needy patients.
B) Doctors placing financial gain ahead of patient care.
C) Private health insurance becoming unaffordable.
D) Medicare and Medicaid running out of money.

Question 16

Resources,Inc.has recently increased its emphasis on pay-for-performance.Within the last several months,there has been a sharp increase in employee competition and the sabotaging of projects.The incentive plan has most likely:

A) expanded the credibility gap.
B) decreased personal motivation.
C) discouraged employee cooperation.
D) diminished managerial powers over subordinates.

Question 17

One advantage of pay-for-performance compensation systems is the relative ease of accurately assessing an employee's actual contribution to the company.

Question 18

Camara and Jose always ask the professor in their American Government class exactly what will be on the next exam.They ask this question so that they can study for no more than they absolutely must.This is an example of:

A) the negative effects of pay-for-performance on the spirit of cooperation.
B) the "do only what you get paid for" syndrome.
C) negative psychological contracts.
D) an increase of intrinsic drives.

Question 19

Blair and Jose always ask the professor in their American Government class exactly what will be on the next exam.They ask this question so that they can study for no more than they absolutely must.This is an example of the "do only what you get paid for" syndrome.

Question 20

If a firm frequently changes the basis of its pay-for-performance system,it will most likely:

A) diminish its credibility gap.
B) violate its psychological contract with employees.
C) generate fear among employees due to a lack of control.
D) increase employees' intrinsic drive to perform beyond expectations.

Question 21

To minimize problems,a pay-for-performance plan should:

A) appropriately link pay and performance.
B) use pay-for-performance as a stand-alone program.
C) downplay the rewards to avoid an over-focus on productivity.
D) use a single-layer, simple program.

Question 22

A(n)________ is a system that rewards employees on the assumptions that (1)individual employees and work teams differ in how much they contribute to the firm; (2)the firm's overall performance depends to a large degree on the performance of individuals and groups within the firm; and (3)to attract,retain,and motivate high performers and to be fair to all employees,the firm needs to reward employees on the basis of their relative performance.

Question 23

If managers increase employee involvement in the design of an incentive compensation system,which of the following will most likely occur?

A) Employees will be more committed to the plan.
B) Managers will spend more time in conflict resolution.
C) Employees' intrinsic drives will be sharply reduced.
D) Managers will be better able to evaluate performance.

Question 24

What are the most common challenges of implementing a successful pay-for-performance system? Describe four challenges and offer a solution for each.

Question 25

If a team is paid based on meeting its production goals,and each member of the team must contribute a minimal percentage toward that goal to share in the team award,then the pay-for-performance system is:

A) promoting increased employee involvement in corporate growth.
B) promoting the belief that performance makes a difference.
C) using other HRM programs at the same time.
D) using multiple layers of rewards.

Question 26

What is the main requirement for the successful implementation of a piece-rate plan?

A) Training managers on the employee's work process.
B) Limiting labor union influences and regulations.
C) Giving employees control of work pace and quality.
D) Outsourcing most tasks to overseas organizations.

Question 27

Healthy living incentives most likely benefit employers in all of the following ways EXCEPT by:

A) lowering health insurance premiums.
B) reducing absenteeism.
C) receiving tax breaks.
D) reducing worker stress.

Question 28

Piece-rate pay-for-performance would most likely work well with:

A) secretaries who also fill in as receptionists paid for the amount of correspondence they type each day.
B) police officers paid for the number of arrests they make for drunk driving during a single month.
C) school teachers paid on the basis of the number of students who have passed standardized tests.
D) sewing machine operators paid for the number of pairs of pants they sew in a given work day.

Question 29

Which of the following would most likely enhance the perceived fairness of a pay-for-performance system?

A) Employees receiving variable and base pay
B) Employees making final decisions on the system design
C) Managers implementing a process for making appeals
D) Managers strictly limiting the amount of employee input

Question 30

Public and nonpublic praise,honorary titles,and expanded job responsibilities are all examples of:

A) financial rewards.
B) lump-sum payments.
C) nonfinancial rewards.
D) employee services.

Question 31

________ is an increase in base pay,normally given once a year.

Question 32

What is the most popular incentive given by employers?

A) Company cars
B) Exotic vacations
C) Restaurant gift cards
D) Consumer electronics

Question 33

A compensation system in which employees are paid per unit produced is referred to as a(n)________.

Question 34

Which of the following is LEAST likely to cause the failure of a pay-for-performance program?

A) HR hiring unskilled employees
B) High-tech firms using piece-rate plans
C) Employees failing to receive adequate training
D) Managers lacking performance appraisal training

Question 35

Marianne is binding biology notes at a university bookstore.She is paid based upon the number of note packs she binds in a day.Marianne is compensated on a:

A) gainsharing system
B) bonus reward system.
C) merit pay system.
D) piece-rate system.

Question 36

When seeking to increase employee involvement in rewarding performance,it is important to allow them some control in the dispensation of the rewards.

Question 37

Richland Manufacturing uses an individual-based pay-for-performance plan for employees.
Manager input in the form of performance evaluations primarily determines individual employee rewards. Performance appraisals at Richland are used for multiple purposes including compensation, training, and work planning. Since implementing the plan, many managers have noticed that employees tend to play it safe by setting modest rather than challenging goals for themselves. Employees have also been avoiding important tasks, such as satisfying the needs of customers and keeping work areas neat. In addition, most employees express disbelief that pay and performance are actually linked. As a result, Richland is considering making modifications to the system.
The HR Director wants a system that will reward all employees based on the entire company's performance because he wants to increase employee commitment. The VP of Operations wants to reward specific productivity and quality improvements with a simply structured system that considers labor costs as well as other production expenses. The VP of Operations also believes that labor and management should work together to allocate the rewards.
Refer to Additional Case 11.2.Which of the following would most likely meet the demands of managers,the HR Director,and the VP of Operations?

A) A profit sharing plan
B) A multiple-layers-of-rewards system
C) A plantwide plan
D) A team-based pay-for-performance plan

Question 38

When implementing pay-for-performance,it is best to provide a single type of incentive.This leads to less confusion and better results.

Question 39

Employees' intrinsic drives are based upon their desire to receive promised rewards and benefits.

Question 40

A significant part of any pay-for-performance system is using nonfinancial incentives as well as financial incentives.

Question 41

Which of the following is most likely true about individual-based compensation systems?

A) They facilitate performance measurement.
B) They provide tax advantages to manufacturers.
C) They promote independence from supervision.
D) They match the individualistic culture of the U.S.

Question 42

Individual-based pay-for-performance is most likely to:

A) provide employees with a broader understanding of an organization.
B) significantly enhance trust between management and labor.
C) give organizations compensation flexibility.
D) work against TQM at an organization.

Question 43

Expectancy theory claims that:

A) people are usually consistent in their performance.
B) people tend to perform activities that will be rewarded.
C) individuals who do not set goals are more intrinsically motivated than those who do set goals.
D) employers that reward employees may not gain any increase in quality or efficiency in productivity.

Question 44

Pay-for-performance plans are more likely to succeed when:

A) cooperation is critical to success.
B) an employee's job demands autonomy.
C) a firm utilizes cross-functional teams.
D) customers complete service questionnaires.

Question 45

All of the following are disadvantages associated with team-based pay-for-performance plans EXCEPT:

A) difficulties identifying meaningful groups.
B) diminishing quality goals.
C) the free-riding effect.
D) intergroup competition.

Question 46

Which of the following is the most likely problem of using team-based pay-for-performance plans?

A) Employees' retirement funds are put at risk.
B) Group cohesiveness is severely limited.
C) Intergroup competition causes a performance decline.
D) Managers have difficulty appraising group performance.

Question 47

Which of the following is LEAST associated with the failure of individual-based pay-for-performance systems?

A) Performance appraisals are used for only one purpose.
B) Supervisors manipulate employee ratings.
C) Managers and employees disagree on the evaluation.
D) The job is primarily knowledge-based.

Question 48

A firm is offering a one-time tangible prize to the employee who receives the highest customer service evaluation in a particular month.This company is using a(n)________ incentive.

A) bonus
B) award
C) promotion
D) merit increase

Question 49

Perry wants employees with unique skills and backgrounds to be able to tackle common projects.Flexibility in work assignments is also very important to his firm.Perry's best choice of an incentive program,based on these factors,would be a(n):

A) individual-based plan.
B) team-based plan.
C) plantwide plan.
D) corporate-based plan.

Question 50

When implementing a team-based compensation plan,a firm would most likely:

A) allow team members to distribute rewards.
B) reward the best performer on each team.
C) assess performance with narrow criteria.
D) use bonuses or noncash rewards.

Question 51

Which of the following is an advantage of individual-based pay-for-performance plans?

A) Quality goals and production goals are accomplished.
B) Rewarded performance is likely to be repeated.
C) Flexibility is enhanced among supervisors.
D) Equity is relatively easy to achieve.

Question 52

You want to foster group cohesiveness and facilitate performance measurement.An incentive program that would most likely help you do this would be:

A) gainsharing.
B) a plantwide plan.
C) a corporate-based plan.
D) a team-based plan.

Question 53

A firm should most likely use merit pay as an element of a(n):

A) team-based compensation plan.
B) plantwide compensation plan.
C) equity-based compensation plan.
D) individual-based compensation plan.

Question 54

Merit pay differs from bonus programs in what way?

A) Merit pay raises the employee's base pay permanently; bonuses do not.
B) Bonuses are nonfinancial rewards; merit pay is a financial reward.
C) Merit pay is disbursed several times a year; bonuses are given on a yearly basis.
D) Bonuses are used much less often than merit pay in individual-based pay plans.

Question 55

An individual-based incentive compensation system has a number of disadvantages,such as:

A) fostering social pressure to limit performance.
B) failing to address production goals.
C) placing employees at financial risk.
D) promoting too narrow of a job focus.

Question 56

Bowen Productions wants to increase the flexibility of its workforce while increasing productivity and cooperation.Bowen would be best served by a(n):

A) individual-based plan.
B) team-based plan.
C) plantwide plan.
D) corporate-based plan.

Question 57

Which of the following best explains why individual-based incentive plans work?

A) Equity theory
B) Maslow's hierarchy
C) Expectancy theory
D) Achievement theory

Question 58

Dan,Laura,and Chuck are preparing a poster presentation for an upcoming business conference.Laura and Chuck have each dedicated over 10 hours to the task.Dan has contributed about 2 hours to the project,but he will receive equal credit with Laura and Chuck for the project's completion.In HR terms,Dan is:

A) a free-rider.
B) experience deficient.
C) a lesser-contributor.
D) negligent.

Question 59

In any group,some individuals put in more effort than others.On occasion,the contribution is markedly less than the average of the rest of the team.The most appropriate term for this is:

A) limited group cohesiveness.
B) the free-riding effect.
C) single-mindedness.
D) job autonomy.

Question 60

Which of the following is an advantage of team-based pay-for-performance plans?

A) They encourage independence among employees.
B) They make performance measurement easier.
C) They encourage individual productivity.
D) They allow for financial flexibility.

Question 61

Reservation Specialists are able to speed up their turnaround time with customers by suggesting that customers put their questions/complaints in writing.This results in the specialists beating their productivity "numbers," but has buried the correspondence specialists in paperwork,destroying their productivity.This is an example of the team-based compensation plan drawback of:

A) the difficulties of identifying meaningful groups.
B) the social pressure to limit performance.
C) the free-riding effect.
D) intergroup competition.

Question 62

When gainsharing is first implemented:

A) efficient plants are likely to post higher gains than inefficient plants.
B) inefficient plants are likely to post higher gains than efficient plants.
C) employees are likely to suffer from effects of psychological contracts.
D) cooperation between employees decreases significantly.

Question 63

Team-based incentive plans work best when:

A) the goal is encouraging innovation within groups.
B) individual employees are performance-goal oriented.
C) the contributions of individuals can be accurately isolated.
D) cooperation is less important than internal competition.

Question 64

Liz wants to begin a plantwide incentive compensation plan.She is setting up employee-management committees to solicit and screen cost-saving ideas.Liz is considering a variety of elements in the cost-savings calculation,not just labor costs.Her best choice of plan would be:

A) a Scanlon plan.
B) a Rucker plan.
C) an Improshare plan.
D) a profit-sharing plan.

Question 65

Gainsharing works best when:

A) the organization is a large, global conglomerate.
B) the firm relies heavily on supervisors.
C) technology is used to gain efficiency.
D) product demand fluctuates.

Question 66

Which of the following is a disadvantage of plantwide incentive programs?

A) Increased team competition
B) Complex formulas for determining bonuses
C) Protection of low performers
D) Disbelief that pay and performance are linked

Question 67

An ESOP-based incentive compensation plan:

A) is based entirely on productivity and quality gains.
B) resembles an Improshare plan that distributes corporate savings to workers.
C) is based on the entire company's performance and rewards employees with stock.
D) combines the best features of an individual-based plan and a team-based incentive plan.

Question 68

Casey wants a pay-for-performance incentive program that will increase both productivity and quality and that has few performance measurement difficulties.Her best choice is a(n):

A) individual-based incentive plan.
B) piece rate incentive plan.
C) team-based incentive plan.
D) gainsharing plan.

Question 69

________ is a plantwide pay-for-performance plan which returns a portion of company savings to employees as a lump-sum bonus.

A) Gainsharing
B) A team-based plan
C) A merit increase
D) A profit-sharing plan

Question 70

A firm that wants a gainsharing program that is easy to administer and communicate,and based on an agreed-on level of output should most likely use a(n)________ plan.

A) Improshare
B) Rucker
C) Scanlon
D) McGregor

Question 71

Profit sharing is one type of:

A) team-based pay-for-performance plan.
B) corporate-wide incentive pay plan.
C) plantwide incentive pay plan.
D) gainsharing plan.

Question 72

Unlike individual-based incentive plans,gainsharing:

A) accepts people's intrinsic motivations.
B) often leads to decreases in productivity.
C) accepts that people are externally motivated.
D) supports the idea that pay incentives motivate production.

Question 73

Kari is the VP of a mid-sized plant.Employees are able to see how their work affects the plant's performance.The corporation is relatively flat and the market for the product is quite stable.Which of the following would be the best choice of a pay-for-performance plan?

A) Individual-based pay
B) Merit-based pay
C) A gainsharing plan
D) A team-based plan

Question 74

Profit sharing differs from gainsharing in that profit sharing:

A) doesn't reward productivity improvements.
B) accepts that people are extrinsically motivated.
C) often leads to decreases in productivity.
D) maintains individual equity.

Question 75

In order for a firm to benefit the most from plantwide pay-for-performance plans,managers should:

A) encourage competition between employees.
B) encourage independence among employees.
C) reward employees with mostly nonfinancial rewards.
D) encourage employees to work for the plant's common good.

Question 76

Plantwide pay-for-performance plans are built on the assumption that:

A) employees are motivated to be productive by financial rewards.
B) firms are more productive when employees are team players.
C) competition between work teams is an optimal goal.
D) profits should be reinvested in the firm.

Question 77

Felix Enterprises has relatively few levels of hierarchy,and the firm's technology lends itself to breaking employees into self-contained groups.The workforce is highly committed and intrinsically motivated by their work.These conditions most likely lend themselves to a:

A) plantwide incentive program.
B) gainsharing incentive program.
C) team-based incentive program.
D) corporate-based incentive program.

Question 78

In most cases,plantwide incentive programs:

A) exclude salaried workers.
B) exclude low performers.
C) reward only the best performing teams.
D) improve labor-management relationships.

Question 79

How does plantwide pay-for-performance work?

A) Employees are rewarded for quality improvements.
B) Employees receive a portion of the firm's cost savings.
C) Employees are divided into teams that receive rewards based on team performance.
D) Employees receive bonuses based on the corporation's stock market performance.

Question 80

Which of the following plantwide plans incorporates the ideas of employees,union leaders,and top managers to generate cost-saving ideas?

A) Improshare
B) Rucker plan
C) Scanlon plan
D) McGregor plan