Deck 12: Incentive Pay

Question 1

A disadvantage of __________ is that 'many jobs have no direct output.'

A)Individual incentives
B)Executive incentives
C)Benefits
D)Group incentives
E)Professional incentives

Answer 1

A

Question 2

Angela has decided that she wants to provide an incentive program to reinforce the collective actions of all of her subordinates in the returns department team.Which incentive option would most likely be used by Angela?

A)Variable incentive
B)Executive incentive
C)Individual incentive
D)Group incentive
E)Combination incentive

Answer 2

D

Question 3

Autonomy and direct,measurable individual outcomes are two primary criteria for what type of incentive?

A)Executive incentive
B)Group incentive
C)Professional incentive
D)Variable incentive
E)Individual incentive

Answer 3

E

Question 4

Research studies over many years (since at least the 1940s) reveal that employees most want _______ from a job.

A)A yearly bonus
B)A raise
C)Benefits
D)Full appreciation for work done
E)More time off

Question 5

Variable pay is:

A)compensation based on the reduction of the company's variable costs.
B)compensation that varies based on the number of hours an employee works.
C)a payment made to a supplier in multiple installments.
D)compensation awarded on the basis of individual results or performance.
E)a payment made to employees based on willingness to work overtime.

Question 6

Which group incentive ultimately allows at least part of the stock in the company to be given to employees over a period of time based on some formula?

A)Employee stock ownership plan
B)Stock options plan
C)Employee stock provision plan
D)Stock purchasing plan
E)An executive level retirement plan

Question 7

An impartial agent is:

A)a shareholder in a firm
B)a subsidiary of the firm itself
C)someone who acts on the owners' (shareholders') behalf
D)a manager within the firm who supports his/her employees above all else
E)someone who acts in their own best interest instead of the owners' best interest

Question 8

Merit pay:

A)is a percentage of customer sales paid to the sales person
B)is a lump sum bonus payment
C)is pay for tenure (or length of service) in the organization
D)is a type of bonus that is based on a time period and not on individual performance
E)increases the annual wages of top performers and carries over from year to year

Question 9

One advantage of a ________ is that it 'broadens individual outlook?'

A)Group incentive
B)Executive incentive
C)Individual incentive
D)Professional incentive
E)Benefit

Question 10

What is the final step in the Giving Praise Model?

A)Pause for a moment of silence
B)Remind the employee that you really want them to be happy
C)Tell the employee why the behavior is important
D)Tell the employee exactly what was done correctly
E)Encourage repeat performance

Question 11

Which of the following is a true statement about Agency Theory?

A)A strong organizational culture will increase productivity within a firm
B)Segmenting the organization into agencies allows freedom to perform at higher levels
C)Non-managerial employees require more incentives than managerial employees in order to feel like they are a part of the firm
D)Agents will act in a way that provides the most benefit to them and not the owners of the firm,unless we provide the agent with incentives to act in ways to benefit the owners
E)Agents will always act in a way that benefits the owners unless there are incentives in place to act in a way that benefits themselves more

Question 12

Giving out service awards is an example of which non-monetary incentive?

A)Recognition
B)Standard hour plan
C)ESOPs
D)Giving praise
E)Piece-rate plans

Question 13

When employees feel they have a right to receive compensation from the company,this is called a(n):

A)individual incentive
B)employee stock option plan
C)motivator
D)entitlement
E)option

Question 14

What are profit sharing programs?

A)An individual incentive plan that provides a bonus based on that employee's profitability
B)A program that provides a portion of company proceeds over a specific amount of time to the employees of the firm through a bonus payment
C)An example of giving praise
D)Incentives typically based on improvements in workplace safety of material savings
E)Pretty much the same as a gain sharing program

Question 15

One advantage of ______ is 'promoting the link between performance and results.'

A)Professional incentives
B)Individual incentives
C)Group incentives
D)Benefits
E)Executive incentives

Question 16

A lump sum payment,typically given to an individual at the end of a period is a(n):

A)commission
B)merit pay
C)bonus
D)exit pay
E)stock option

Question 17

In which type of individual incentive program does each task have an assigned amount of time for completion?

A)Straight piece-rate plan
B)Differential piece-rate plan
C)Standard hour plan
D)Individual bonus plan
E)Merit payment plan

Question 18

Social loafers:

A)Give 100% both individually and in a group setting
B)Are shy and reserved in company social settings
C)Strive to be recognized as an outstanding performer in a group setting
D)Avoid exerting maximum effort in group settings because it is difficult to pick out individual performance
E)Usually cause group infighting by intentionally creating conflict.

Question 19

A 'golden parachute' provides:

A)stock options to executives instead of a higher salary
B)executive incentives to improve long-term organizational performance
C)a company funded retirement plan for senior level executives
D)a large lump sum payment to executives who are dismissed from a merged or acquired firm
E)a mechanism to calculate executive bonuses based on both short and long term company goals

Question 20

Which type of incentive program is easier to develop?

A)Individual incentive
B)Variable incentive
C)Group incentive
D)Combination incentive
E)Executive incentive

Question 21

Most short term incentives for executives tend to be based on _______,while long term incentives are usually based on _________.

A)Bonuses; stock ownership
B)Stock ownership; bonuses
C)Bonuses; merit pay
D)Commissions; stock ownership
E)Merit pay; gainsharing

Question 22

Larry produced 40 pressed inner fenders out of sheet metal per hour and got paid $24 per hour ($0.60 x 40) but Michelle only produced 30 inner fenders per hour and got paid $18.00 ($0.60 x 30).What type of compensation program are Larry and Michelle working under?

A)Commission
B)Merit pay
C)Straight piece rate
D)Bonus
E)Pay differential

Question 23

Pay that is specifically designed to reinforce past behaviors in anticipation that such reinforcement will cause positive future behaviors is called:

A)Executive compensation
B)Reinforcing pay
C)Variable pay
D)Participation compensation
E)Empowerment pay

Question 24

_______________ allow an individual employee to buy a certain amount of stock in the company at a specified future point.

A)Stock purchasing plans
B)Stock options plans
C)Employee stock ownership plans
D)Employer stock sales plans
E)Company funded retirement funds

Question 25

_______________ and _______________ are the keys to successful piece-rate plans.

A)Bonuses; feedback
B)Standards; feedback
C)Standards; bonuses
D)Feedback; recognition
E)Recognition; motivation

Question 26

A common advantage of group incentives is that:

A)the best performers will maximize their efforts to make up for free riders.
B)they broaden the individual outlook of group members.
C)they encourage team members to compete with each other.
D)they always equally reward the performance of all employees.
E)there is very little chance of infighting or conflict with group incentives.

Question 27

Harold is paid based on a percentage of the value of the products and services he sells.He is being paid by:

A)bonus
B)base pay
C)value pay
D)commission
E)merit

Question 28

More than any other employees,_______________ drive performance levels within an organization.

A)Incentives
B)Non-managerial positions
C)Executives
D)Human resource leaders
E)Team leaders

Question 29

_______________ is a breakdown of communication and/or cooperation between individuals in a group.

A)Social loafing
B)Autonomy
C)Conversion deficit
D)Group infighting
E)Ringelmann Effect

Question 30

A _______________ is a payment typically provided to a salesperson for selling an item to a customer and is usually paid as a percentage of the price of an item that is sold.

A)Commission
B)Employee stock option
C)Merit pay
D)Piece rate
E)Bonus

Question 31

The link between individual employee actions and the incentives paid to them is most difficult to establish in which type of incentive plan?

A)Bonus
B)Commission
C)Merit pay
D)Piece rate
E)Profit sharing

Question 32

What is 'do only what you get paid for syndrome'?

A)Employees feel entitlement to bonuses for the work that they do
B)Employees do only what gets rewards that they desire and is measured by the company
C)Employees only do what they are specifically told to do by a manager
D)Employees focus on getting side jobs that pay them extra
E)Social loafing in a group

Question 33

Which of the following is not true concerning performance bonuses?

A)They do not automatically carry over from one time period to the next.
B)Effective bonus systems are based on specific,measurable and attainable goals.
C)They are generally used as an individual incentive,but in some cases can be used for groups.
D)Bonus payment should be paid immediately upon reaching the goal,not based on time.
E)They should be given on an ongoing,annualized basis in order to create entitlement.

Question 34

_______________ let qualifying employees purchase shares of stock in the company at any time and usually at a discount.

A)Stock options plans
B)Employee stock ownership plans
C)Company funded retirement funds
D)Employer divestiture plans
E)Stock purchasing plans

Question 35

Valued returns to the individual in exchange for doing something that the organization desires of the employee are known as _______________.

A)Superior rewards
B)Extrinsic rewards
C)Intrinsic rewards
D)Autonomous rewards
E)Internal rewards

Question 36

Angelique is paid a flat rate of $2 per pair of pants that she sews at work.Angelique is being paid on a(n):

A)bonus rate basis
B)merit pay basis
C)differential piece rate system
D)level piece system
E)straight piece rat system

Question 37

To make merit pay a true incentive,managers must:

A)limit the number of people in the company's executive management team.
B)pay attention to the company's stock price and market capitalization.
C)pay out merit pay to every employee every year (to build up value over time).
D)avoid giving "all A's" so that everyone can get a merit increase.
E)pay out a maximum of about 2% as a merit pool each year.

Question 38

When a person does something because they like it,it is interesting and personally satisfying,and they want to do it,they are receiving _______________.

A)Intrinsic rewards
B)External rewards
C)Altruistic rewards
D)Autonomous rewards
E)Extrinsic rewards

Question 39

Individual incentives:

A)may motivate undesirable behaviors in the workforce.
B)assist in maximizing teamwork.
C)do not promote a link between performance and results.
D)require less supervision than group incentives.
E)are easier to develop than group incentives.

Question 40

_______________ placed some significant limits on executive pay in public corporations and added new requirements for both reporting of compensation and of shareholder involvement with executive compensation.

A)Executive Compensation and Shareholder Involvement Act of 2010
B)The Madison Avenue Wall Street Reform and Consumer Protection Act of 2008
C)The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
D)The Wall Street Compensation and Shareholder Involvement Act of 2008
E)The Wagner-Tate Executive Reporting Act of 2009

Question 41

Giving praise:

A)is a cheap way to get out of paying people more
B)doesn't do very much to encourage repeat performance of effective behaviors
C)is a much better motivator than giving a raise
D)requires lots of managerial time and effort
E)has been proven not to work for getting good results from employees

Question 42

In the 1940s,a survey revealed that what employees want most from a job is ____________________.

A)a bigger paycheck.
B)professional development.
C)to retire as soon as possible
D)full appreciation for work done

Question 43

The term "claw back" means to:

A)take back incentive programs previously provided to employees.
B)remove merit pay as an incentive program,because it requires too much conflict between employees.
C)pull back bonus payments if the company has a bad profit year.
D)take away previously paid incentives from executives if the company misses certain revenue or profitability objectives.
E)take away ESOP programs by paying the employee shareholders at least a 10% premium on the shares that they hold.

Question 44

One disadvantage of group incentives is that individual high-performers may be pressured to ___________ their output to conform to group norms.

A)lower
B)raise
C)retract
D)forget about

Question 45

Gainsharing plans are:

A)basically the same thing as profit sharing plans.
B)based on any organization factor whose costs can be calculated,where a share of the gain is provided to the employees.
C)based on employee stock ownership at a level of at least 50% ownership in the firm,where employees provide gains to the company through ownership.
D)direct ownership plans that transfer value of the company to employees based on gains in productivity over the course of each year.
E)individual incentives that measure employee weight gain or loss and pay employees who lose weight an incentive payment.

Question 46

A routine component of executive compensation,common "perks" include all of the following except:

A)stock options.
B)use of company cars and aircraft.
C)home security systems.
D)club memberships.
E)tax planning assistance.

Question 47

When we need people to cooperate,we should use ____________.

A)individual incentives
B)group incentives
C)pay secrecy
D)performance evaluations

Question 48

Incentive pay systems usually fail for one or more of the following reasons,except one.Which one?

A)Employees can't affect the desired outcomes
B)Poor management
C)Employees don't know how they are doing
D)Simplistic programs
E)The plan provides insignificant rewards

Question 49

___________________ are designed to cause everyone in the company to focus on total organizational profitability.

A)Profit-sharing programs
B)Reward systems
C)Individual incentives
D)Praise factors

Question 50

Any incentive system designed to improve employee productivity and satisfaction:

A)must minimize peer and management pressure on individual employees.
B)should provide a significant reward to top performers but avoid rewarding non-performers.
C)must create goals that are almost impossible to reach so that employees will stretch to meet the goals.
D)should make employee satisfaction a much more significant factor than employee productivity - weighted about 2-to-1.
E)should work to avoid any possible negative consequences for non-performance by making sure everyone has some merit increase each year.

Question 51

According to the text,3M company has become famous for its:

A)Merit pay program
B)Strategic goals tied to incentive programs
C)Non-monetary incentives
D)Annual bonuses
E)Gainsharing programs

Question 52

When individual contributions are difficult to identify,we should use ____________.

A)individual incentives
B)group incentives
C)pay secrecy
D)performance evaluations

Question 53

People have to know how they are doing compared to the program goals,or else the incentive plan ___________.

A)will grow too large
B)will be compromised
C)will fail
D)will be rewritten

Question 54

____________________ are a tool that will allow us to provide greater rewards to the best people in the organization.

A)Variables
B)Motivators
C)Compensators
D)Incentives

Question 55

According to a 2010 survey,the average pay for CEOs in the U.S.is _____ times the average employee's pay.

A)50
B)200
C)5.4
D)20.5
E)110

Question 56

Variable pay:

A)shifts some monetary risk from the employee to the company.
B)is being much more closely managed by companies since the recession of 2007 and 2008.
C)even when structured correctly,rarely improves employee motivation and satisfaction.
D)appears to be shrinking as a percentage of overall compensation over the past ten years.
E)minimizes the flexibility in company compensation systems.

Question 57

Of all the incentive plans mentioned in the chapter,only ___________ permanently increases the employee's base pay.

A)merit pay
B)commissions
C)bonuses
D)development pay

Question 58

One of the most common problems in incentive systems design is:

A)creating a set of goals instead of focusing on just one goal at a time.
B)picking an expedient goal that is easy to measure,but doesn't aim at the company's strategic goals.
C)designing incentive goals that are capable of being affected by the targeted employee or group of employees.
D)completely separating the incentives from base pay.
E)making the incentive goals difficult to achieve.

Question 59

ESOPs motivate employees because _______________.

A)employees will get something for nothing
B)employees will act more like owners
C)employees can reduce their work schedule
D)employees can expect higher base pay

Question 60

Incentive programs need to be consistent with the ___________________.

A)stock market
B)reward structure
C)organizational culture
D)quarterly report

Question 61

Employees will _____________ an incentive program provided only to management.

A)resist
B)accept
C)ignore
D)forget

Question 62

At the beginning of the quarter,Marcus sat down with his manager and set three goals for the next three months.The achievement of each goal will depend on Marcus.No one else in his work group can affect the work toward the goal.Which advantage of individual incentives does this illustrate?

A)easy to evaluate employee's affect on team
B)ability to match rewards to employee desires
C)promotes the link between performance and results
D)may motivate less productive employees to work harder

Question 63

At the beginning of the quarter,Sara sat down with her manager and set three goals.If Sara achieves those three goals in the next three months,she will receive a $1,000 bonus.Which advantage of individual incentives does this illustrate?

A)easy to evaluate individual employees
B)ability to match rewards to employee desires
C)promotes the link between performance and results
D)may motivate less productive employees to work harder

Question 64

With the introduction of an individual incentive program,Caitlin has begun spending an hour each day documenting her employees' outcomes.Which disadvantage of individual incentives does this illustrate?

A)many jobs have no direct output
B)may motivate undesirable employee behaviors
C)record-keeping burden is high
D)may not fit organizational culture

Question 65

Jacob sat down with his supervisor at the beginning of the quarter and set a goal to reduce defects on the assembly line from 5 percent to 2 percent.If he achieves this goal by the end of the quarter,he will receive a ________ of $4,000.

A)bonus
B)commissions
C)merit pay
D)piecework

Question 66

With the introduction of an individual incentive program,Alexander feels like he is competing with the other members of his team instead of working together with them.While the individual incentive plan could mean more money for some members of the team,most members of the team feel the same way Alexander does.They wish they could go back to working together for a group incentive.Which disadvantage of individual incentives does this illustrate?

A)many jobs have no direct output
B)may motivate undesirable employee behaviors
C)record-keeping burden is high
D)may not fit organizational culture

Question 67

Now that his team is working toward a group incentive,Steven does not leave work early or take long lunches.He feels that doing so would let down his group members.He has started working harder and slacking off less to help make the group successful.Which advantage of group incentives does this illustrate?

A)promotes better teamwork
B)broadens individual outlook
C)requires less supervision
D)is easier to develop than individual incentive programs

Question 68

Much fanfare was made about Anthony's latest bonus in the office.He has always been a high performer.However,this year he received an extra-large bonus.His co-worker Hannah got a little tired of hearing about Anthony's bonus and decided that next year she would win some of the bonus money.Which advantage of individual incentives does this illustrate?

A)easy to evaluate individual employees
B)ability to match rewards to employee desires
C)promotes the link between performance and results
D)may motivate less productive employees to work harder

Question 69

Brian offered his team a bonus if the team completes the project one week ahead of time.Brian is using ________ as an incentive

A)piecework plan
B)variable pay
C)commission
D)profit sharing

Question 70

_____________________________ includes informing all of our employees about the program: how to participate; what their goals are; any assistance that is available to help them meet those goals; and how their performance ties in with the others in the company.

A)Goal conformity
B)Interpersonal decision making
C)Differential incentive rationale
D)Understandable and accurate communication

Question 71

As a product promoter,Emily receives a commission on every sale made as a result of her presentations.However,part of her job also is to keep the area around her display neat and to return the items she promotes to their correct locations following demonstrations.Since Emily does not get a bonus for cleaning up,she leaves her area messy and does not return products following demonstrations.Which disadvantage of individual incentives does this illustrate?

A)many jobs have no direct output
B)may motivate undesirable employee behaviors
C)record-keeping burden is high
D)may not fit organizational culture

Question 72

_____________ can include: providing the ability to choose between work assignments,providing training and learning opportunities,allowing flexible schedules,providing extra paid time off,or recognition at an awards ceremony.

A)Allowances
B)Challenges
C)Barriers
D)Incentives

Question 73

Naoyuki is a surgical technologist at a hospital.His job involves helping out during surgeries.Among other things,he hands supplies to surgeons and surgeons' assistants,holds retractors and other instruments,and performs various tasks requested by the surgeon.An individual bonus plan would not work for Naoyuki because of which disadvantage of individual incentives?

A)many jobs have no direct output
B)may motivate undesirable employee behaviors
C)record-keeping burden is high
D)may not fit organizational culture

Question 74

Andrew showed up to every team meeting late and did not complete his part of the project.The rest of the team had to pick up the slack to complete the project on time.Despite his lack of contribution,Andrew received the same group incentive as everyone else on the team.Which disadvantage of group incentives does this illustrate?

A)social loafing may occur
B)individual output may be discounted
C)outstanding performers may slacken efforts
D)group infighting may arise

Question 75

Ever since the organization began a group incentive program,John has noticed that his team appears more loyal to one another than they were before the group incentive program began.Which advantage of group incentives does this illustrate?

A)promotes better teamwork
B)broadens individual outlook
C)requires less supervision
D)is easier to develop than individual incentive programs

Question 76

When she is not working,Shelby trains to run marathons.She wishes she had more time to travel to various races but work keeps her busy.Kevin does not want time off work.He needs to earn as much overtime as possible to pay off his college loans.The company recently offered either a week's pay or a week off as the bonus to the salesperson who made the most sales.Both Shelby and Marcus worked hard to win.Which advantage of individual incentives does this illustrate?

A)easy to evaluate individual employees
B)ability to match rewards to employee desires
C)promotes the link between performance and results
D)may motivate less productive employees to work harder

Question 77

Nancy always completed her work ahead of schedule.She was known as a fast and accurate worker.When group incentives were initiated,the rest of her work team could not keep pace with Nancy.Many members of the team told Nancy to stop making them look bad.Eventually,Nancy matched her work pace to the rest of the team.Which disadvantage of group incentives does this illustrate?

A)social loafing may occur
B)individual output may be discounted
C)outstanding performers may slacken efforts
D)group infighting may arise

Question 78

Stock incentives,long term bonuses,and perks are all common _____________ to help the "agent" act in manners favorable to the firm.

A)executive incentives
B)equity incentives
C)pay differentials
D)administration benefits

Question 79

Now that his team is working toward a group incentive,Matthew is paying more attention to what others in the organization do and how their actions affect his group.Which advantage of group incentives does this illustrate?

A)promotes better teamwork
B)broadens individual outlook
C)requires less supervision
D)is easier to develop than individual incentive programs

Question 80

_____________________ have the potential to lead to unethical actions.

A)Incentive payments
B)Pay differentials
C)Floater holidays
D)Program sales