Question 1

Craig was born in 1961. According to the Social Security Act, what is Craig's full retirement age?

Accepted Answer

C) "Full retirement age"-the usual age for receiving your full social security benefit-used to be 65. However, full retirement age to collect Social Security rose gradually over the years. It is now 67 for those born in 1960 or later. Social Security benefits are funded by a tax on earnings that the employer and employee share.

Question 2

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

Accepted Answer

C) Straight salaries make sense when the main task involves prospecting (finding new clients) or account servicing (such as participating in trade shows). Commissions are more likely to motivate going beyond sales quotas.

Question 3

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

Accepted Answer

B) Annual bonuses are being used by more firms to motivate the short-term performance of managers. Annual bonuses are tied to company profitability.

Question 4

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

Accepted Answer

C) The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires most private employers to make available to terminated or retired employees and their families continued health benefits for a period of time, generally 18 months. If the former employee chooses to continue these benefits, he or she must pay for them, as well as a small fee for administrative costs.

Question 5

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?

Accepted Answer

C) Piecework generally implies straight piecework, which entails a strict proportionality between results and rewards regardless of output. The term variable pay refers to incentive plans that tie a group's or individual's pay to the firm's profitability or productivity.

Question 6

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?

Accepted Answer

B) Piecework involves paying the worker a sum (called a piece rate) for each unit he or she produces. Merit pay or a merit raise is any salary increase the firm awards to an individual employee based on his or her individual performance.

Question 7

________ 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.

Accepted Answer

A) Preferred provider organizations (PPOs) let employees select providers who agree to provide price discounts and submit to certain utilization controls, such as the number of diagnostic tests that can be ordered. The HMO is a medical organization consisting of numerous specialists operating out of a community-based health care center.

Question 8

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

Accepted Answer

B) The executives' reward package must align with the goal of achieving the company's strategic aims. Each pay component should help focus the manager's attention on the behaviors required to achieve the company's strategic goals.

Question 9

What is a disadvantage of straight commission plans?

Accepted Answer

C) With straight commission plans, some salespeople neglect selling hard-to-sell items. However, sales costs are proportionate to sales rather than fixed, so the company's fixed sales costs are thus lower. It's a plan that's easy to understand and compute.

Question 10

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?

Accepted Answer

C) Performance feedback means providing quantitative or qualitative information on task performance to change or maintain performance; showing workers a graph of their performance trend is an example. A performance appraisal may involve showing productivity graphs but would involve more time and occur less frequently.

Question 11

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

Accepted Answer

A) Most companies pay salespeople a combination of salary and commissions. Such plans cushion the salesperson's downside risk (of earning nothing), while limiting the risk that the commissions could get out of hand from the firm's point of view. However, the plans are more complex to administer than straight commission.

Question 12

All of the following are Social Security benefits EXCEPT ________.

Accepted Answer

D) There are three types of Social Security benefits. First are the familiar retirement benefits, which provide an income if the employee retires at age 62 or thereafter and is insured under the Social Security Act. Second, death benefits provide monthly payments to dependents regardless of the employee's age at death, again assuming the employee was insured under the Social Security Act. Finally, disability payments provide monthly payments to an employee and his or her dependents if the employee becomes totally disabled for work and meets specified work requirements.

Question 13

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

Accepted Answer

C) Although not usually considered an "incentive," job design can significantly influence employee motivation and retention. One study concluded that job responsibility and feedback from a job were the fifth and seventh most important drivers of employee engagement.

Question 14

Jenny's pension plan encourages her to contribute at least 5% of her annual salary in addition to the set amount that her company contributes. She is given choices regarding how the money is invested. When she retires, the amount she has available will depend on how much she invested herself, and the rate of return on the investments she chose. This pension plan would be classified as ________.

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, Jenny has a contributory, defined contribution plan.

Question 15

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

Accepted Answer

B) The term variable pay refers to incentive plans that tie a group's or individual's pay to the firm's profitability or productivity. Piecework is a type of incentive plan that bases pay on output.

Question 16

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

Accepted Answer

D) The main disadvantage of straight salary for salespeople is that it may not motivate high performers who thrive on a link between performance and pay. However, the approach makes it easier to switch territories or to reassign salespeople, and it can foster sales staff loyalty.

Question 17

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

Accepted Answer

B) 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 18

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?

Accepted Answer

B) A standard hour plan is a plan by which a worker is paid a basic hourly rate but is paid an extra percentage of his or her rate for production exceeding the standard per hour or per day. It is similar to piecework payment but based on a percent premium.

Question 19

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

Accepted Answer

D) Congress passed the Sarbanes-Oxley Act of 2002 to inject more responsibility into executives' and board members' decisions. It makes them personally liable for violating their fiduciary responsibilities to their shareholders.

Question 20

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?

Accepted Answer

A) Dual-career ladders are a way to manage professionals' pay. At many employers, a bigger salary requires rerouting from engineering to management. However, not all professionals want such paths. Therefore, many employers institute one path for managers, and another for technical experts, allowing the latter to earn higher pay without switching to management.

Quiz 11: Pay for Performance and Employee Benefits