Deck 9: Pay-For-Performance: the Evidence

Question 1

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

Answer 1

A

Question 2

________ theory argues line of sight is a critical part of performance-based pay systems.

A) Agency
B) Maslow's
C) Reinforcement
D) Expectancy

Answer 2

D

Question 3

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

Answer 3

B

Question 4

Research shows that all of the following except ______ are in the top three aspects of pay systems desired by workers.

A) team-based pay
B) changes in cost of living
C) pay at market rate
D) seniority

Question 5

_____ 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

Question 6

_____ 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 7

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 8

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 9

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 10

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

Question 11

Desired employee behaviors are influenced by ________

A) motivation.
B) ability.
C) environment.
D) ability, motivation and environment.

Question 12

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 13

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 14

The ability triangle includes _____.

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

Question 15

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 16

When an organization's performance has frequent highs and lows and individual performance is fairly stable and performance measures are clear,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

Question 17

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 18

When employee performance measures are ambiguous and vary from time to time 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 19

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 20

The motivation triangle includes _____.

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

Question 21

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 22

_____ is an individual level form of performance pay.

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

Question 23

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

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

Question 24

Employees' assessment of their ability to perform required job is called ____________

A) equity.
B) instrumentality
C) expectancy
D) reinforcement

Question 25

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 26

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

Question 27

_____ 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 28

Theories dealing with exchange include _____.

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

Question 29

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 30

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 31

If you worked in a cyclical industry such autos,which set of pay components would be least desirable?

A) gain sharing and lump-sum bonus
B) merit pay and base wage
C) profit sharing and lump-sum bonus
D) cost of living and base wage

Question 32

According to _________ theory,ensuring fairness and consistency of performance-based pay across employees is important.

A) equity.
B) instrumentality
C) expectancy
D) reinforcement

Question 33

_____ 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 34

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 35

The two theories emphasizing line of sight are __________.

A) equity and reinforcement.
B) Maslow and Two-Factor.
C) expectancy and goal-setting.
D) agency and equity.

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

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 38

Turnover tends to be highest among _____.

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

Question 39

All of the following except ____ require periodically "re-earning" the added pay.

A) success sharing plan
B) lump-sum bonus
C) profit-sharing plan
D) cost of living

Question 40

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 41

Growing evidence suggests HR practices affect employee perception of their employer which influences organization performance.

Question 42

The amount of fairness given to employees refers to _____.

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

Question 43

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

Question 44

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

Question 45

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

Question 46

When employees earn a lot from sales incentives,customer service will also be very good.

Question 47

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 48

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

Question 49

The text authors argue compensation has more influence on performance than selection or performance management.

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

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

Question 52

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 53

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

Question 54

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 55

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

Question 56

p.309)Herzberg's Two-factor theory argues success-sharing plans will be motivating while at-risk plans will be demotivating.

Question 57

The most obvious sorting factor is _____.

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

Question 58

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 59

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

Question 60

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 61

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

Question 62

Line of sight is highest in individual incentive plans.

Question 63

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

Question 64

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

Question 65

The trend today is toward less stable and less secure compensation packages.

Question 66

Evidence suggests that talented people are motivated to join organizations with strong links between performance and pay.

Question 67

The authors argue that a system of flexible compensation could lead to more desirable employee behaviors at a lower total cost.

Question 68

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

Question 69

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

Question 70

Group incentive pay increases turnover of better performers while individual incentive increases turnover of poorer performers.

Question 71

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

Question 72

Identifying desired behaviors is the emphasis of agency theory.

Question 73

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

Question 74

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

Question 75

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

Question 76

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

Question 77

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

Question 78

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

Question 79

Incentive effect means pay can motivate people to perform better.

Question 80

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