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, if true, undermines the argument that Ryobi should discontinue all merit raises?

Accepted Answer

A) If Ryobi managers have noticed productivity improvements among employees who receive merit raises, then the system is most likely effective and should not be discontinued. If employees want stock options instead of raises, or managers lack the necessary training to conduct performance appraisals, then merit raises should be discontinued.

Question 2

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 ________.

Accepted Answer

A) Supplemental unemployment benefits are cash payments that supplement the employee's unemployment compensation, to help the person maintain his or her standard of living while out of work. They generally cover three contingencies: layoffs, reduced workweeks, and facility relocations.

Question 3

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 ________.

Accepted Answer

D) Employee stock ownership plans (ESOPs) are company-wide plans in which the employer contributes shares of its own stock to a trust established to purchase shares of the firm's stock for employees. The firm generally makes these contributions annually in proportion to total employee compensation, with a limit of 15% of compensation.

Question 4

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

Accepted Answer

B) The features of most gainsharing plans include a philosophy of cooperation, identity, competence, an involvement system, and a sharing of benefits formula. The plan does not call for focusing on individual achievement.

Question 5

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.

Accepted Answer

C) Gainsharing 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 gains shared among employees and the company.

Question 6

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

Accepted Answer

B) Federal law requires that employers provide workers' compensation, but disability insurance, personal leave, health insurance, and pensions are optional for employers.

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?

Accepted Answer

B) With deferred profit-sharing plans, the employer puts cash awards into trust accounts for the employees' retirement. Here the employer generally distributes the awards based on a percentage of the employee's salary, or some measure of the employee's contribution to company profits.

Question 8

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

Accepted Answer

A) Pay for time not worked-also called supplemental pay benefits-is the most costly benefit. Common time-off-with-pay periods include holidays, vacations, jury duty, funeral leave, military duty, personal days, sick leave, sabbatical leave, maternity leave, and unemployment insurance payments for laid-off or terminated employees.

Question 9

How does merit pay differ from a bonus?

Accepted Answer

A) 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 10

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

Accepted Answer

C) The main reason that ESOPs are popular is that a firm gets a tax deduction equal to the fair market value of the shares it transfers to the trustee and can claim an income tax deduction for dividends paid on ESOP-owned stock. Employees are taxed when they receive a distribution from the trust, usually at retirement.

Question 11

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

Accepted Answer

D) Benefits-indirect financial and nonfinancial payments employees receive for continuing their employment with the company-are an important part of just about everyone's compensation. They include things like health and life insurance, pensions, time off with pay, and child care assistance.

Question 12

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?

Accepted Answer

C) Unemployment insurance provides benefits if a person is unable to work through no fault of his or her own. Workers' compensation is for on-the-job injuries, and supplemental unemployment benefits provide a guaranteed annual income when certain industries are forced to shut down temporarily.

Question 13

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?

Accepted Answer

D) In order for merit raises to be effective, there should be a clear and consistent connection between productivity and merit pay. Gainsharing plans and high-performing managers are less relevant to the decision. Different types of merit raises do not exist.

Question 14

What type of profit-sharing plan involves the firm simply distributing a percentage of profits as profit shares to employees at regular intervals?

Accepted Answer

A) There are several types of profit-sharing plans. With current profit-sharing or cash plans, employees share in a portion of the employer's profits quarterly or annually. In cash plans, the firm simply distributes a percentage of profits (usually 15% to 20%) as profit shares to employees at regular intervals.

Question 15

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?

Accepted Answer

B) Private employers of 50 or more employees must provide eligible employees (women or men) up to 12 weeks of unpaid leave for their own serious illness, the birth or adoption of a child, or the care of a seriously ill child, spouse, or parent.

Question 16

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

Accepted Answer

B) Surveys find that firms most frequently use employee recognition programs to motivate employees. Merchandise, special events, travel, training, and variable pay are used less frequently to motivate employees.

Question 17

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

Accepted Answer

B) Gainsharing plans are characterized by a philosophy assumes that managers and workers must rid themselves of the "us" and "them" attitudes that normally inhibit employees from developing a sense of ownership in the company.

Question 18

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?

Accepted Answer

C) In order for merit raises to be effective, the performance appraisals need to be consistent and fair. Enterprise management systems, social recognition programs, and monthly sales quotas are less relevant to the decision.

Question 19

Malcolm is interviewing for a new job and he is evaluating the quality of the pension plans offered for each company he is considering. One company offers a pension plan in which the company will make all contributions to the plan and will base his pension benefit on a formula linked to his pay at the time of retirement and the number of years he works for the firm. This pension plan could be classified as a ________.

Accepted Answer

C) The employee contributes to the contributory pension plan, while the employer makes all contributions to non-contributory plans. With defined benefit pension plans, employees know ahead of time the pension benefits they will receive (the benefit is "defined" or specified by amount or formula). Defined contribution pension plans specify what contribution the employee and/or employer will make to the employee's retirement or savings fund. Therefore, Malcolm has a non-contributory, defined benefit pension plan.

Question 20

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

Accepted Answer