Deck 11: Pay for Performance and Employee Benefits

Question 1

Ryobi is a large,international power tool manufacturer that develops affordable,high-quality products such as drills,circular saws,and routers for both homeowners and craftspeople.As the company continues to grow,its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective.Currently,the firm provides merit raises based on performance appraisals; however,executives are considering changing the current incentive plan. Which of the following questions is most relevant to the decision by Ryobi executives to discontinue all merit raises?

A) What are the guidelines for implementing a gainsharing plan?
B) What types of merit raises are effective for high-performing managers?
C) What organization-wide incentive plans are used by other manufacturing firms?
D) What is the connection between merit pay increases and employee productivity?

Answer 1

D
Explanation: In order for merit raises to be effective, there should be a clear and consistent connection between productivity and merit pay. Thus, rather than focus on what incentive plans other manufacturing firms provide, the focus should be on Ryobi's productivity goals and linked merit pay. Gainsharing plans and high-performing managers are less relevant to the decision.

Question 2

How does merit pay differ from a bonus?

A) Merit pay becomes part of an employee's base pay, but a bonus does not.
B) A bonus becomes part of an employee's base pay, but merit pay does not.
C) Merit pay is linked to individual performance, while a bonus is linked to profits.
D) A bonus is linked to individual performance, while merit pay is linked to profits.

Answer 2

A
Explanation: Merit pay is any salary increase the firm awards to an individual employee based on his or her individual performance. It is different from a bonus in that it usually becomes part of the employee's base salary, whereas a bonus is a one-time payment.

Question 3

An employer would most likely use an enterprise incentive management system to ________.

A) calculate overtime pay
B) automate award programs
C) monitor employee engagement
D) track performance appraisals

Answer 3

B
Explanation: Tracking the performance of dozens or hundreds of measures and then computing individual employees' incentives is time consuming. As one solution, vendors provide enterprise incentive management (EIM) systems. These automate the planning, analysis, and management of incentive compensation plans.

Question 4

Merit raises typically become part of an employee's base salary.

Question 5

According to research,which of the following has a significant impact on employee engagement?

A) performance reviews
B) variable pay plans
C) job design
D) awards

Question 6

Ryobi is a large,international power tool manufacturer that develops affordable,high-quality products such as drills,circular saws,and routers for both homeowners and craftspeople.As the company continues to grow,its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective.Currently,the firm provides merit raises based on performance appraisals; however,executives are considering changing the current incentive plan. Which of the following,if TRUE,undermines the argument that Ryobi should discontinue all merit raises?

A) Ryobi managers have noticed significant productivity improvements among employees who receive merit raises.
B) Ryobi managers have not received significant training about conducting performance appraisals.
C) Ryobi's top competitor is considered a high-performance work system within the industry.
D) Ryobi employees have expressed that they would prefer stock options to merit raises.

Question 7

Tanner's employer puts a predetermined portion of profits into a trust account for Tanner's retirement.Which of the following is most likely the type of profit-sharing plan used by Tanner's employer?

A) Jefferson incentive system
B) deferred profit-sharing plan
C) gainsharing plan
D) cash plan

Question 8

In a ________,the executive receives his or her shares only if he or she meets the preset performance targets.

A) performance-contingent restricted stock plan
B) stock appreciation rights (SARs) plan
C) restricted stock plan
D) phantom stock plan

Question 9

During difficult economic times,employers have to cut costs.What are some strategies for minimizing the costs associated with employee health care? What no-cost or low-cost methods are available to employers who want to recognize and reward hard-working employees?

Question 10

Ryobi is a large,international power tool manufacturer that develops affordable,high-quality products such as drills,circular saws,and routers for both homeowners and craftspeople.As the company continues to grow,its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective.Currently,the firm provides merit raises based on performance appraisals; however,executives are considering changing the current incentive plan. Which of the following,if TRUE,best supports the argument that Ryobi should eliminate all merit raises?

A) Ryobi uses an enterprise incentive management system to automate compensation.
B) Motivation among Ryobi engineers has been improved through social recognition programs.
C) Performance appraisals at Ryobi occur annually, and standards vary from manager to manager.
D) The commission percentage for Ryobi sales people is based on the ability to meet monthly quotas.

Question 11

Workers at a t-shirt shop are paid a sum for each t-shirt they produce.Which incentive plan is most likely used by the employer?

A) merit pay
B) piecework
C) standard hour
D) variable pay

Question 12

Tyrone,a data entry clerk,is paid a basic hourly rate.He receives an extra percentage of his rate when his productivity is above normal.Which incentive plan is most likely used by Tyrone's employer?

A) standard merit pay
B) standard hour plan
C) straight piecework
D) variable pay

Question 13

Which of the following is the most commonly used tool for motivating employees?

A) merchandise incentives
B) recognition programs
C) special events
D) variable pay

Question 14

Which term refers to any plan that ties pay to productivity or profitability?

A) piecework
B) variable pay
C) merit pay
D) overtime pay

Question 15

Which term refers to an incentive plan in which a person is paid a sum for each item sold,with a strict proportionality between results and rewards regardless of output?

A) standard merit pay
B) straight hourly pay
C) straight piecework
D) variable pay

Question 16

Plans in which a corporation contributes shares of its own stock to a trust established to purchase shares of the firm's stocks for employees are known as ________.

A) cash plans
B) Jefferson incentive systems
C) deferred profit-sharing plans
D) employee stock ownership plans

Question 17

Angelo,a process engineer with Global Semiconductor,is following a technical path rather than a management path at the firm.Which of the following has most likely been implemented by Global Semiconductor?

A) dual-career ladder
B) competency-based pay
C) flexible family benefits
D) social recognition program

Question 18

Every month,Angela,a manager at a manufacturing facility,meets briefly with each of her subordinates and shows them a graph of their productivity on the assembly line.Which term best describes Angela's activity?

A) exit interview
B) social recognition
C) performance feedback
D) performance appraisal

Question 19

Which of the following terms refers to any salary increase the firm awards to an individual employee based on his or her individual performance?

A) merit pay
B) variable pay
C) competency-based pay
D) incentive pay

Question 20

You are the CEO of Blue Bay Motor Boat Company,a mid-size firm that manufactures speed boats.What incentive plan would you implement for the firm's engineers? What incentive plan would you implement for the firm's managers? What benefits are you required by law to provide? What types of discretionary benefits would you make available to all employees?

Question 21

What is a disadvantage of straight commission plans?

A) Payments are complicated to calculate.
B) Salespeople spend too much time on servicing.
C) Salespeople neglect selling hard-to-sell products.
D) The company's fixed sales costs are proportionately high.

Question 22

The Sarbanes-Oxley Act was most likely enacted to ________.

A) provide financial insight
B) decrease the corporate tax rate
C) monitor the distribution of stock shares
D) increase the accountability of top executives

Question 23

Which incentive plan is based on a philosophy that managers and employees must cooperate together?

A) cash plan
B) gainsharing plan
C) deferred profit-sharing plan
D) employee stock ownership plan

Question 24

Which of the following involves setting a production standard for a specific work group and then paying incentives to the group members if they exceed the standard?

A) team incentive plan
B) group profit-sharing plan
C) employee stock ownership plan
D) organization-wide incentive plan

Question 25

An executive who receives a ________ stock receives units instead of shares of company stock.The units will be equated to cash in the future if appreciation occurs.

A) phantom
B) restricted
C) premium
D) nonqualified

Question 26

A straight salary for salespeople is most appropriate when the main tasks involve ________.

A) selling technical products
B) exceeding sales quotas
C) finding new clients
D) selling real estate

Question 27

A(n)________ plan is an incentive plan that engages many or all employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings shared among employees and the company.

A) stock gain plan
B) merit pay plan
C) gainsharing
D) ESOP

Question 28

What should be the central focus of a firm's executive reward packages?

A) employing top-quality management experts
B) accomplishing the firm's strategic goals
C) ensuring ethical and legal accountability
D) encouraging long-term accountability

Question 29

What is the primary disadvantage of using the straight salary approach to pay salespeople?

A) relying on annual profits
B) discouraging staff loyalty
C) preventing territory changes
D) failing to link effort with reward

Question 30

All of the following are factors that influence an annual bonus EXCEPT ________.

A) eligibility
B) commission
C) size of the fund
D) individual performance

Question 31

Which term refers to payments a firm makes related to changes in company ownership?

A) pension plan
B) annual bonus
C) golden parachute
D) retirement perks

Question 32

According to research,most firms use ________ to motivate the short-term performance of managers.

A) work-life benefits
B) annual bonuses
C) variable pay
D) training

Question 33

Most gainsharing plans include all of the following features EXCEPT ________.

A) a philosophy of cooperation
B) a focus on individual achievement
C) a sharing of benefits formula
D) an involvement system

Question 34

What is the most likely reason that firms are implementing group incentive plans?

A) stricter regulations regarding team bonus plans
B) heavy reliance on teams to manage work
C) expected loss of older workers
D) rising cost of health benefits

Question 35

Which term refers to the right to purchase a stated number of shares of a company stock at today's price at some time in the future?

A) stock option
B) gainsharing plan
C) multiplier method
D) at-risk variable plan

Question 36

Marie,a top manager at Levon Marketing,will receive 500 shares of the firm's stock if the firm's sales increase by 5% in the next quarter.Which of the following was Marie most likely given?

A) phantom stock
B) stock appreciation rights
C) restricted stock plan
D) performance-contingent restricted stock

Question 37

What is the main benefit of paying salespeople a combination of salary and commission?

A) limiting the firm's risk of overly high commissions
B) aligning employee goals and company strategy
C) providing simple salary administration
D) clearly linking pay with performance

Question 38

Which of the following would most likely be used by a firm that wants to retain the services of a top manager for a specified period of time?

A) restricted stock plan
B) golden parachute plan
C) stock appreciation rights
D) performance-contingent restricted stock

Question 39

Which of the following is the primary benefit of employee stock ownership plans?

A) Employees have voting rights in firm decisions.
B) Firms pay distribution taxes for employees prior to retirement.
C) Firms may borrow against employee stock held in trust.
D) Employees are able to diversify their investments.

Question 40

All of the following are examples of organization-wide incentive plans EXCEPT ________.

A) employee stock ownership plans
B) gainsharing plans
C) golden parachute
D) profit sharing

Question 41

Which of the following is a discretionary benefit?

A) unemployment insurance
B) disability insurance
C) FMLA leaves
D) Social Security

Question 42

Which gainsharing plan involves employees working on a guaranteed piecework basis?

A) current profit-sharing
B) deferred profit-sharing
C) Lincoln incentive system
D) earnings-at-risk pay plan

Question 43

Gainsharing plans involve putting some portion of an employee's weekly pay at risk for the opportunity to earn incentives if the employee meets or exceeds his or her goals.

Question 44

Elizabeth works at an auto firm,which recently shut down for five weeks to change machinery.However,during the shutdown,Elizabeth was able to maintain her standard of living because of the firm's ________.

A) supplemental unemployment benefits
B) workers' compensation insurance
C) supplemental health benefits
D) disability insurance

Question 45

________ are groups of health care providers that contract with employers,insurance companies,or third-party payers to provide medical care services at a reduced fee.

A) PPOs
B) HMOs
C) DMOs
D) Hospitals

Question 46

Upon being hired as a marketing representative at Argo Pharmaceuticals,Shelly agreed to forego 10% of her normal pay if she failed to meet performance goals.In return,Shelly will receive a 10% bonus if she meets her goals and 13% if she exceeds her goals.In what type of plan does Shelly most likely participate?

A) earnings-at-risk pay plan
B) variable risk sharing plan
C) at-risk gainsharing plan
D) risk-reward stock plan

Question 47

What is a stock option? What are some of the problems associated with rewarding managers with stock options?

Question 48

Eric has worked full-time for a large manufacturing company for over 3 years.Eric and his wife have recently adopted a baby,and Eric wants to take time off from work to care for the child.Which of the following laws most likely applies to Eric's situation?

A) Pregnancy Discrimination Act
B) Family and Medical Leave Act
C) Title VII of the Civil Rights Act
D) Newborn Mother's Protection Act

Question 49

Keith works as a construction foreman,and he is viewed as a reliable,competent employee.Keith was recently injured in a car accident while on vacation,and his injuries are so severe that he will not be able to return to work.Which of the following would most likely provide Keith with benefits?

A) supplemental unemployment benefits
B) workers' compensation insurance
C) unemployment insurance
D) group life insurance

Question 50

An earnings-at-risk pay plan bases employee pay and bonuses on ________.

A) maximizing organizational performance
B) generating additional long-term sales
C) engaging in strategic objectives
D) achieving departmental goals

Question 51

An employer's unemployment tax rate depends on the employer's ________.

A) total payroll costs
B) policy on retirements
C) supplemental pay benefits
D) rate of employee terminations

Question 52

The indirect financial and nonfinancial payments employees receive for continuing employment with the company are called ________.

A) reimbursement
B) employee compensation
C) salary
D) benefits

Question 53

Health insurance,life insurance,pensions,and child care assistance are best categorized as ________.

A) compensation
B) incentives
C) benefits
D) rewards

Question 54

Which of the following terms refers to benefits for time not worked such as unemployment insurance,vacation and holiday pay,and sick pay?

A) supplemental pay benefits
B) employee assistance
C) financial incentives
D) merit pay

Question 55

What are the advantages of employee stock ownership plans?

Question 56

Which of the following is the LEAST relevant characteristic of an effective incentive plan?

A) Incentives are based on industry standards.
B) Rewards are attractive to targeted employees.
C) Incentives are linked to effort and performance.
D) Goals are specific, achievable, and challenging.

Question 57

According to the Comprehensive Omnibus Budget Reconciliation Act,how long are most employers required to make health benefits available to terminated or retired employees?

A) 6 months
B) 12 months
C) 18 months
D) 24 months

Question 58

Which of the following benefits is required by federal or state law?

A) disability insurance
B) workers' compensation
C) paid time off
D) pensions

Question 59

Broad-based stock option plans are intended to ________.

A) motivate all employees at a firm
B) encourage management retention
C) monitor the decisions of executives
D) distribute earnings to boards of directors

Question 60

Enterprise incentive management software is used by managers to ________.

A) motivate employees to meet and exceed departmental goals
B) quantify correlations between pay and performance
C) select and develop mission-critical employees
D) monitor training and development needs

Question 61

The Comprehensive Omnibus Budget Reconciliation Act requires the government to provide health insurance to terminated or retired employees and their families through the Medicare system.

Question 62

The Family and Medical Leave Act provides for leave,but it mandates only unpaid leave.Therefore,several states have implemented their own paid family leave laws.

Question 63

Unemployment insurance laws do not require that everyone dismissed receive unemployment benefits-only those dismissed through no fault of their own.

Question 64

Employees frequently use sick leave to take care of family problems and personal issues.How can firms address this costly problem?

Question 65

Which condition must be met for an injured employee to receive workers' compensation benefits?

A) The injury occurred during an overtime or nighttime shift.
B) The employee was wearing adequate protection.
C) The injury was not the fault of the employee.
D) The employee was injured while on the job.

Question 66

Pooled paid leave plans combine sick leave,vacation,and personal days into a single leave pool and have been blamed for increasing employee absenteeism.

Question 67

Disability insurance provides income protection for salary loss due to illness or accident.

Question 68

Athena,a sales representative,was terminated from her position at Ross Manufacturing.On Athena's last day of work,she was given a check for $5,000.What did Athena most likely receive from Ross Manufacturing?

A) disability pay
B) annual bonus
C) severance pay
D) unemployment insurance

Question 69

Portability makes it easy for employees who leave one firm to work for another firm to take their accumulated pension funds with them.

Question 70

The American Disabilities Act makes it illegal for employers to discriminate against women by providing benefits of a lower amount or duration for pregnancy,childbirth,or related medical conditions.

Question 71

Employers offer gig workers benefits.

Question 72

A manager can best control the cost of unemployment insurance by ________.

A) eliminating supplemental pay benefits for part-time employees
B) documenting the poor performance of dismissed employees
C) establishing a pooled paid leave plan for workers
D) investigating all workers' compensation claims

Question 73

Women affected by pregnancy and childbirth are eligible for the same benefits as disabled employees.

Question 74

Which of the following is NOT a true statement about the Family and Medical Leave Act?

A) The law applies to all public and private employers regardless of size.
B) Eligible employees have worked for the employer for at least one year.
C) Leave may be taken for personal illness or the birth of a child.
D) Eligible employees must be granted up to 12 weeks of leave.

Question 75

According to surveys,what will most employers do in response to the Patient Protection and Affordable Care Act (Obamacare)?

A) decrease the time allowed for family leave
B) decrease workers' compensation benefits
C) increase employee contributions for dependents
D) increase sponsorships of retiree medical coverage

Question 76

Why is controlling workers' compensation costs important? How can costs be controlled by employers?

Question 77

What is the primary cause of rising unemployment tax rates?

A) outsourced workers
B) unsafe workplaces
C) executive perquisites
D) economic recessions

Question 78

Why do employers provide severance pay to employees? What should firms consider when designing a severance plan?

Question 79

Which group contributes to workers' compensation funds?

A) employers
B) state governments
C) federal government
D) insurance providers

Question 80

If an employee is injured at work due to a blatant disregard for company safety policies,the company is not required to pay workers' compensation.