Deck 1: Pay-For-Performance: The Evidence

Question 1

Among employers that provide health insurance, the cost to provide family coverage per year per employee is approximately _____.

A)$4,000
B)$9,000
C)$16,000
D)$22,000

Answer 1

C

Question 2

Which form of pay does not permanently increase labor costs?

A)Incentive
B)Merit pay
C)Cost-of-living adjustments
D)Base pay

Answer 2

A

Question 3

Which of the following is an example of a relational return?

A)Short-term incentives
B)Employment security
C)Long-term incentives
D)Income protection

Answer 3

B

Question 4

Which of the following companies is taking efforts to improve the work/life balance of its employees?

A)MH Corp.increases the number of paid holidays given to its senior employees.
B)Kay Corp.increases the transport allowance for its employees by 10 percent.
C)Haywire Corp.allows its employees to buy company stocks at a reduced price of $30 per share.
D)Halo Corp.increases the variable pay for its employees.

Question 5

A difference between incentives and merit increases is that incentives:

A)do not increase the base wage, whereas merit increases the base wage.
B)cannot be tied to the performance of an individual, whereas merit increases can be tied to the performance of an individual.
C)rely on a subjective measure of performance, whereas merit increases rely on an objective measure of performance.
D)are relational returns, whereas merit increases are part of the total compensation.

Question 6

Hourly compensation costs for production workers in manufacturing are higher in _____ than in the United States.

A)Germany
B)Czech Republic
C)Mexico
D)China

Question 7

Incentives do not permanently increase labor costs because:

A)they rely on a subjective rating of performance.
B)they are given based on the past performances of the employees.
C)they increase the base wage.
D)they are one-time payments.

Question 8

The degree to which pay influences individual and aggregate motivation among employees at any point in time is referred to as a(n):

A)sorting effect.
B)incentive effect.
C)turnover effect.
D)directional effect.

Question 9

One of the reasons why 8 in 10 of the uninsured in the United States are from working families is that _____.

A)many larger employers do not offer health insurance as it does not guarantee an increase in productivity levels
B)health insurance is more costly for larger employers
C)many small employers are much less likely than larger employers to offer health insurance to their employees
D)most workers decline health insurance when offered by their employers

Question 10

Recent surveys show that, on average, an outstanding performer receives a _____ merit increase, an average performer a _____ merit increase, and a poor performer a 0.4% merit increase.

A)10.5%; 7%
B)8.4%; 5.2%
C)6.7%; 4.2%
D) 4.4%; 2.8%

Question 11

_____ refers to comparisons among jobs or skills inside a single organization.

A)External competitiveness
B)Internal alignment
C)Compliance
D)Merit increase

Question 12

Robert, the CEO of GameTrack Corp., wants to restructure the pay plan without increasing the labor costs in the long run.He is most likely to achieve this, while retaining his top employees, by:

A)increasing base pay and decreasing variable pay.
B)increasing incentive pay and decreasing base pay.
C)hiring more employees and reducing the marginal product output requirements.
D)providing across-the-board increases on a monthly basis.

Question 13

Which of the following is given as an increment to the base pay in recognition of past work behavior?

A)Base pay
B)Long-term incentive
C)Merit pay
D)Short-term incentive

Question 14

Which of the following is a policy, and NOT an objective, in the pay model?

A)Ethics
B)Competitiveness
C)Efficiency
D)Fairness

Question 15

GreenRain Corp.faces an increase in employee turnover rate.The CEO calls for a board meeting with the senior executives to discuss the issue.Who among the following suggests increasing the relational returns that employees receive to reduce the turnover rate at GreenRain?

A)Tom suggests increasing the decision-making authorities given to the employees to make work more challenging.
B)Deena suggests providing more work/life balance for the employees by increasing the number of paid leaves.
C)Syed suggests increasing the medical insurance coverage offered to the employees.
D)Liam suggests increasing merit bonuses.

Question 16

Which of the following is often the largest component in an executive pay package?

A)Base pay
B)Stock options
C)Merit pay
D)Perks

Question 17

Which of the following programs introduced by Congress includes restrictions on executive pay that are designed to discourage executives from taking "unnecessary and excessive risks"?

A)Corporate Welfare Program
B)Employee Welfare Program
C)Troubled Asset Relief Program
D)Corporate Liability Relief Program

Question 18

Variable pay may also be called _____.

A)relational returns
B)pensions
C)stock options
D)incentives

Question 19

Which of the following is a fundamental objective, and NOT a policy, in the pay model?

A)Fairness
B)Competitiveness
C)Contributions
D)Alignment

Question 20

Incentives and merit guidelines are techniques of the _____ policy of the pay model.

A)internal alignment
B)external competitiveness
C)employee contributions
D)management of the pay system

Question 21

When unemployment increases, the proportion of the population covered by health insurance decreases.

Question 22

Most U.S.firms use merit pay increases.

Question 23

According to the text, which of the following decisions should be made jointly?

A)Internal alignment and management decisions
B)External competitiveness and employee contribution decisions
C)Employee contribution and internal alignment decisions
D)Management and external competitiveness decisions

Question 24

The degree to which pay influences individual and aggregate motivation among employees is called the sorting effect.

Question 25

Commissions are an example of incentives.

Question 26

A measure of how changes in one variable are related to changes in another variable is the:

A)standard deviation
B)analysis of variance
C)correlation coefficient
D)mean deviation

Question 27

In the context of pay relationships, which of the following is illegal in the United States?

A)Paying on the basis of the nature of jobs
B)Paying on the basis of pay comparisons with competitors
C)Paying on the basis of one's age
D)Paying on the basis of one's skill level

Question 28

You are an HR manager, and your boss has told you to find the best way to raise job performance.After some research, you find that _____ have the greatest instrumental value.

A)job responsibilities
B)training and skill development programs
C)goal setting and job enrichment
D)monetary incentives

Question 29

Procedural fairness suggests that the way a pay decision is made is of less importance to employees than the results of the decision.

Question 30

Which of the following is NOT a question to ask for determining if research has value?

A)Is the research useful?
B)Can alternative explanations be ruled out?
C)Was the research conducted by PhD researchers?
D)Is correlation separated from causation?

Question 31

Managers seek internal alignment within their organization by:

A)matching the competitors' pay rates.
B)following FLSA guidelines.
C)using fair merit increases.
D)paying on the basis of similarities among jobs.

Question 32

Base wage reflects both the value of the work and individual employee skills and experience.

Question 33

Which of the following policy decisions directly affects employees' attitudes and work behaviors?

A)Employee contributions
B)Internal alignment
C)External competitiveness
D)Management

Question 34

If the objective is to increase customer satisfaction, then incentive programs and merit pay might be used to pay for performance.

Question 35

Pension and health benefits are a very large component of total compensation for many large companies such as American Airlines and GM.

Question 36

The decisions to implement pay for performance, flat rate pay, and profit sharing are examples of _____ policy decisions.

A)internal alignment
B)efficiency
C)employee contributions
D)management

Question 37

Compensation policy choices that affect the pay level relative to other companies are most closely associated with the _____ aspect of the pay model.

A)internal alignment
B)external competitiveness
C)employee contributions
D)pay system management

Question 38

A major challenge facing most employers is the rising cost of health care benefits.

Question 39

The best way to establish _____ is to account for competing explanations, either statistically or through control groups.

A)causation
B)profitability
C)correlation coefficient
D)internal alignment

Question 40

Base wage is the overtime pay given to employees who are exempt from regulations of the Fair Labor Standards Act.

Question 41

Internal alignment refers to comparisons among jobs or skill levels inside a single organization.

Question 42

Describe the various returns received from work.

Question 43

What are the different ways in which pay can influence employee motivation and behavior?

Question 44

Even if the federal compensation laws change, it is unnecessary to change pay systems to ensure continued compliance.

Question 45

A study found that only a very small amount of change in CEO pay is related to changes in company performance.

Question 46

Describe the perspective of stockholders on compensation.

Question 47

Management and HR research has conclusively shown that goal setting and job enrichment produce the largest and most reliable increases in job performance.

Question 48

Explain the basic compensation objectives of pay systems.

Question 49

Objectives guide the design of pay systems and provide the standards for evaluating their effectiveness.

Question 50

Causality is one of the most difficult questions to answer and continues to be an important and sometimes perplexing problem for researchers.

Question 51

The R², which is an output from a regression analysis, is different from correlation in that it tells us what percentage of the variation is accounted for by the variables we are using to predict or explain.

Question 52

Since HR research contains information useful to managers, most managers read research in HR management, and compensation journals.

Question 53

Monetary incentives produce the biggest increases in job performance.

Question 54

List the basic elements of the pay model.

Question 55

A study of IBM showed that its long-standing policy of no layoffs was the major cause of its strong profits.