Deck 11: Compensation: Methods and Policies

Question 1

Under the Lincoln plan,the company basically subcontracts the work to work groups.

Answer 1

True

Question 2

In a unionized firm where wages are established by collective bargaining,a particular job is usually assigned a single,flat rate.

Answer 2

True

Question 3

Which of the following statement is false?

A) Pay differentials allow firms to recognize employees who make substantially different contributions to meeting organizational goals.
B) Pay differentials allow employers to communicate a changed emphasis on job roles,skills,knowledge,and so on.
C) Without differentials,the pay system violates the internal equity norms of most employees.
D) Pay differentials reduce satisfaction with pay and make it harder to retain employees.

Answer 3

D

Question 4

A total compensation approach includes all of the following elements except:

A) Base pay
B) Seniority pay
C) Variable pay
D) Indirect pay

Question 5

Credential-base pay rests on the fact that the individual must have a diploma or license,or must pass an examination from a third-party professional or regulatory agency.

Question 6

Most skill-based pay systems focus on white-collar or administrative jobs.

Question 7

_______________ should be included when calculating variable pay.

A) Individual incentive awards
B) Scheduled lump-sum awards
C) Team awards
D) All of the choices are correct.

Question 8

Gainsharing incentive systems have proven to be exceptionally effective in enhancing organization wide teamwork.

Question 9

Commissions paid to sales employees are a type of individual incentive.

Question 10

Rucker plans are based on employees' involvement and suggestions.

Question 11

All of the following are key design factors of a variable pay system except:

A) Hidden linkage to employees' efforts
B) Management support
C) Employee acceptance
D) Supportive organizational culture

Question 12

For a guaranteed annual wage plan to work,general employee-management relations must be good,and the demand for the product or service must be steady.

Question 13

Which of the following is not one of the reasons that many merit pay systems fail to increase performance?

A) Employees fail to make the connection between pay and performance
B) The secrecy of the reward is perceived by other employees as inequity
C) The awards are too easy to obtain
D) The merit award is too small to impact performance

Question 14

Pay compression occurs when employees perceive too large a difference between their own pay and that of their colleagues.

Question 15

The incentive value of profit-sharing plans increases as the time between performance and payoff increases.

Question 16

Research shows that merit increases above the 6 to 7 percent level are always motivating.

Question 17

In a "balanced" compensation system,pay is a reasonable part of the total reward package.

Question 18

Successful gainsharing plans are usually found in organizational units with more than 500 employees.

Question 19

In individual and group incentive systems,competition can result in political gamesmanship.

Question 20

With variable pay,a percentage of an employee's paycheck is put at risk if business goals aren't met.

Question 21

The bureaucratic job-based approach used in determining pay will not be the major format used to design pay systems in the future.Instead,the new designs will be _______________ based.

A) production
B) profit
C) people
D) technology

Question 22

Traditional gainsharing plans,like the Scanlon plan,are not designed to address many of the complex issues facing companies today.Their shortcomings include all of the following except:

A) They require too much time and effort to administer
B) They have a tendency to become institutionalized
C) They are not flexible enough to reward "star performers"
D) Service-sector firms are unable to isolate or measure gains in productivity

Question 23

Under the Scanlon and Rucker gainsharing plans,payouts go to employees on a _______________ basis.

A) daily
B) weekly
C) monthly
D) semi-annual

Question 24

Winsharing awards are funded by work teams' contributions to _______________.

A) job satisfaction
B) productivity
C) profitability
D) customer satisfaction

Question 25

Today,the individual incentive plan takes all of the following forms except.

A) Piecework
B) Production bonuses
C) Commissions
D) Annual merit raises

Question 26

The _______________ plan is a combination suggestion,group incentive,and employee participation scheme that has been adopted by many small and medium-sized manufacturing firms.

A) Lincoln Electric
B) Scanlon
C) Rucker
D) Improshare

Question 27

Which among the following is not a variant of people-based pay?

A) Productivity-based
B) Skill-based
C) Knowledge-based
D) Credential-based

Question 28

Which of the following plans has the most impact on management style?

A) Lincoln Electric
B) Scanlon
C) Rucker
D) Improshare

Question 29

In the Scanlon plan,a steering committee evaluates _______________.

A) suggestions
B) budgets
C) employee performance
D) priorities

Question 30

The Taylor Plan is based on two _______________ rates;one for those who produce below or up to standard,and another for those who produce above standard.

A) commission
B) piecework
C) efficiency
D) bonus

Question 31

Under the Lincoln plan,all of the following are prohibited except:

A) Paid holidays
B) Sick leaves
C) Unions
D) Pay for piecework

Question 32

_______________ plans offer two distinct advantages: They do not require elaborate cost-accounting systems to calculate awards,and they are easily implemented by companies of any size.

A) Gainsharing
B) Spot gainsharing
C) Profit-sharing
D) Winsharing

Question 33

Suggestion systems generally do all of the following except:

A) Improve employee relations
B) Foster high-quality products
C) Increase costs
D) Increase revenue

Question 34

Organizations with successful gainsharing plans have all the following characteristics in common except:

A) Above average use of overtime
B) Seasonal stability of sales or production
C) Few product changes in near past or near future
D) Willingness on the part of management to disclose corporate financial results to employees.

Question 35

_______________ incentive plans are one of the newest and fastest-growing reward strategies.

A) Straight commission
B) Piecework
C) Small-group
D) Standard-hour

Question 36

Competency-based pay is a combination of all of the following except:

A) Skill-based pay
B) Knowledge-based pay
C) Credential-based pay
D) Feedback pay

Question 37

Which of the following is the least likely to contribute to the success of an individual incentive plan?

A) The number of tasks covered by the incentive
B) The nature of the tasks covered by the incentive
C) Supervisors who reinforce and support the system
D) Incentives that are large enough to induce increased output

Question 38

Average compensation for top executives is now more than _______________ the wage of an average worker.

A) 50% higher
B) 40 times
C) 340 times
D) 530 times

Question 39

ESOP stands for _______________.

A) Earned Stock Opportunity Plan
B) Early Stock Opportunity Plan
C) Employee Stock Ownership Plan
D) Equitable Stock Ownership Plan

Question 40

All of the following employee characteristics are associated with successful gainsharing plans except:

A) Technically knowledgeable
B) Highly educated
C) Motivated by financial incentives
D) Motivated by participation

Question 41

The Rucker plan has almost the same participatory elements as the Scanlon plan,_____________.

A) but in smaller degrees
B) and uses them to similar degrees
C) but in larger degrees
D) None of the above,the Rucker plan does not consider participatory elements.

Question 42

Unions may insist on ignoring performance differentials for many reasons.They contend that performance measures are _______________.

A) inequitable
B) unnecessary as workers produce equally
C) illegal
D) Both A and B are correct.

Question 43

In many institutions and organizations,pay ranges and even an individual's pay are open to the public and fellow employees.

A) This method is called an open system
B) This approach is standard in when using the Scanlon plan.
C) This approach is standard in the Improvement Plus Plan
D) Both A and B are correct.

Question 44

Straight commission is the equivalent of _____________.

A) a Taylor plan
B) production bonus
C) straight piecework
D) gainsharing

Question 45

In time of layoff,the basic security for most employees is their _______________.

A) attitude
B) skill level
C) seniority
D) personal relationship with their manager

Question 46

A sewing mill that has set an hourly standard for machine operators of sewing 25 shirts per hour.Wages are calculated by multiplying the number of shirts completed by the piece rate for one shirt.Employees who exceed the standard of 25 shirts per hour make higher wages based on the additional piece rate per unit completed.The mill is using a __________ play plan.

A) merit
B) differential piece rate
C) straight piecework
D) Deming

Question 47

___________ pay plans emphasize a shared focus on organizational success,broadens opportunities for incentives to nontraditional and operates outside the base pay increase system.

A) "New"
B) Focused
C) Variable
D) Neobase

Question 48

ImproShare ties economic rewards to performance __________________.

A) based on employee participation
B) without any attempt at meaningful participation by employees.
C) based upon implementation of employee suggestions
D) using the same linkages developed in the Taylor plan

Question 49

___________ systems pay an employee an hourly rate plus a bonus when the employee exceeds the standard.

A) Merit
B) Production bonus
C) Straight piecework
D) Scalon

Question 50

In order to implement successful variable pay systems,companies must be sure their plans are based on all of the following except:

A) Clear goals
B) Unambiguous measurements
C) Inflation adjustments
D) Visible linkage to employees' efforts

Question 51

A(n)_____________ is a formal method of obtaining employees' advice about improvements in organizational effectiveness;it includes some kind of reward based on the successful application of the idea.

A) Taylor plan
B) suggestion system
C) employee contribution system
D) employee advice system

Question 52

Which among the following is not one of the reasons cited in the text for excessive executive compensation?

A) Many boards of directors are passive
B) Thorough and intense arm's length bargaining is missing
C) Incentives that align managers' and shareholders' interests are missing
D) CEOs are often allowed to formulate their own compensation packages

Question 53

A COLA is a _______________.

A) Cost Over Line Adjustment
B) Company Over Line Adjustment
C) Cost of Living Adjustment
D) Cost of Living Amendment

Question 54

Bonus is determined by the formula Sales/Payroll in the ________ plan.

A) Lincoln Electric plan
B) Scanlon
C) Rucker
D) Lincoln Electric

Question 55

Bonuses are calculated using a base productivity factor in which of the following systems?

A) Scanlon plans
B) Rucker Plans
C) ImproShare
D) Improvement Plus Plan

Question 56

A(n)__________ is simply a variation of a stock bonus or stock bonus/money purchase plan that is designed to invest primarily in employer stock.

A) Scanlon plans
B) ESOP
C) Option
D) Improvement Plus Plan

Question 57

The most successful gainsharing or productivity sharing plan at a single company is the ___________.

A) Lincoln Electric plan
B) Hallmark plan
C) Baron Manufacturing plan
D) Rucker plan

Question 58

Heneman defines ________ pay as "individual pay increases based on the rated performance of individual employees in a previous time period," or a reward based on how well an employee has done the job.

A) merit
B) performance based
C) traditional
D) reward

Question 59

Methods for paying employees on the basis of output are usually referred to as __________ forms of compensation.

A) new
B) piecework
C) output
D) incentive

Question 60

In many organizations,the employer provides an income bridge from employment to unemployment and back to employment.This is known as _______________ pay.

A) severance
B) bridge
C) comprehensive
D) cross-over

Question 61

Pay is usually adjusted upward through four types of increases.What are they?

Question 62

________ distribute a fixed percentage of total organizational profit to employees in the form of cash bonuses or deferred bonus amounts.

A) Fixed payment plans
B) ESOPS
C) Profit-sharing plans
D) InfoShare plans

Question 63

___________ pay is defined as a variation that rewards employees for acquiring additional knowledge both within the current job category and in new job categories.

A) Degree-based
B) Credential-based
C) Skill-based
D) Knowledge-based

Question 64

What is a stock option?

Question 65

What are pay levels in a skill-based pay system based on?

Question 66

In the ______ approach,the employer adds to unemployment compensation payments to help the employee achieve income security

A) GAW
B) SUB
C) COLA
D) "Full Wage"

Question 67

What does the standard-hour plan base wages on?

Question 68

How does spot gainsharing differ from gainsharing?

Question 69

Characteristics associated with successful gainsharing plans include all of the following except:

A) Organizational unit of no less than 500 employees.
B) Stable productivity and costs for a few years.
C) Simple financial measures of productivity and costs.
D) Growing or expandable market for the firm's products or services.

Question 70

Rewarding the best performers with the largest pay is suppose to be a powerful motivator.However,this premise has two flawed assumptions.What are they?

Question 71

In what circumstances do merit plans work best?

Question 72

When are stock options taxed?

Question 73

Commonly used organization wide gainsharing plans include all of the following except:

A) Lincoln Electric
B) Scanlon
C) Rucker
D) InfoShare

Question 74

____________ occurs when employees perceive too narrow a difference between their own pay and that of their colleagues.

A) Wage restriction
B) Pay narrowing
C) Pay compression
D) System failure

Question 75

What is the most widely used plan for managing individual performance?

Question 76

Organization-wide incentive payments are usually based on the net profit that is generated in one of two ways.What are these ways?

Question 77

____________ pay rests on the fact that the individual must have a diploma or license or must pass one or more examinations from a third-party professional or regulatory agency.

A) Degree-based
B) Credential-based
C) Skill-based
D) Job-based

Question 78

Those who are exempt from regulations of the Fair Labor Standards Act and do not receive overtime pay receive ____________.

A) salaries
B) wages
C) per federal law,a minimum of five days of vacation after one year of service
D) Both B and C are correct.

Question 79

Managers take the role of Idea coordinators in which form of gainsharing plan?

A) Lincoln Electric
B) Scanlon
C) Rucker
D) InfoShare

Question 80

Nonexempt employees who are covered by overtime and reporting provisions of the Fair Labor Standards Act are paid _________.

A) salaries
B) wages
C) regardless of hours worked
D) Both B and C are correct.