Question 1

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

Accepted Answer

The Lincoln plan involves the company subcontracting work to work groups.

Question 2

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

Accepted Answer

In unionized firms, the wages for a particular job are typically established by collective bargaining and are often assigned a single, flat rate. This is because the union negotiates for a standard wage rate for all workers in that job classification. However, there may be variations within that rate based on factors such as experience, seniority, or performance.

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.

Accepted Answer

Pay differentials are necessary for recognizing different levels of contribution and skills, and without them, it would violate internal equity norms. Pay differentials also allow employers to communicate change in emphasis on job roles. However, there is no evidence to suggest that pay differentials reduce employee satisfaction or make it harder to retain employees. In fact, if the pay system is viewed as fair and just, pay differentials can increase motivation and retention.

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

Accepted Answer

A total compensation approach includes base pay, variable pay, and indirect pay (such as benefits and perquisites). Seniority pay is a specific type of compensation based on length of service, but it is not always included in a total compensation approach.

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.

Accepted Answer

Credential-based pay is based on an individual's qualifications or credentials, such as a diploma or license, or passing an exam from a third-party professional or regulatory agency.

Question 6

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

Accepted Answer

Skill-based pay systems can apply to any job that requires specific skills, including blue-collar and manual labor 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.

Accepted Answer

All of the choices should be included when calculating variable pay, as each type of award reflects a different aspect of employee performance and contribution. Individual incentive awards allow for recognition of exceptional individual performance, whereas team awards recognize collaborative efforts and foster a sense of teamwork. Scheduled lump-sum awards may be used to acknowledge long-term commitment or loyalty, and can serve as a retention tool. Including all types of awards in the variable pay calculation ensures that employees are recognized for their unique contributions and encourages a well-rounded approach to performance management.

Question 8

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

Accepted Answer

Gainsharing incentives encourage employees to work together and improve processes, leading to increased teamwork and collaboration within the organization.

Question 9

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

Accepted Answer

Commissions paid to sales employees are directly tied to their individual performance and sales targets, making them a clear example of an individual incentive.

Question 10

Rucker plans are based on employees' involvement and suggestions.

Accepted Answer

Rucker plans to involve employees in the planning process and encourages them to suggest ideas.

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

Accepted Answer

Hidden linkage to employees' efforts is not a key design factor of a variable pay system. The other options - management support, employee acceptance, and supportive organizational culture - are all important factors to consider when designing a variable pay system.

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.

Accepted Answer

A guaranteed annual wage plan relies on a stable workplace environment and consistent product demand, both of which require a healthy relationship between employees and management. If labor relations are poor or demand fluctuates too much, it can be difficult to sustain the plan's financial stability.

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

Accepted Answer

If the awards are too easy to obtain, employees may not feel that they are truly earning the merit pay and may not be motivated to increase their performance. However, the other options are all common reasons for the failure of merit pay systems. Employees may not see the connection between pay and performance if the criteria for earning the merit pay is unclear or the goals are not well-defined. If the reward is kept secret, other employees may feel that it is unfair and that they are not being recognized for their own hard work. Finally, if the merit pay is too small, it may not be seen as a significant enough incentive to increase performance.

Question 14

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

Accepted Answer

Pay compression refers to the situation where there is a smaller than expected difference in pay between employees regardless of their skills, experience, or job responsibilities, often leading to dissatisfaction among more experienced or skilled employees.

Question 15

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

Accepted Answer

Profit-sharing plans are more effective as incentives when the time between performance and payoff is short, as this helps employees see a clear link between their efforts and rewards.

Question 16

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

Accepted Answer

Research has shown that while merit increases can be motivating, it is not always the case that increases above the 6 to 7 percent level are more motivating than smaller increases. Factors such as perceived fairness, transparency, and frequency of increases can also impact the motivation levels of employees.

Question 17

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

Accepted Answer

In a balanced compensation system, pay is an important part but it is not the only factor that determines the total reward package. Other factors such as benefits, career development opportunities, work-life balance, and recognition are also taken into consideration. A balanced compensation system aims to create a fair and attractive total reward package that can attract, retain, and motivate employees.

Question 18

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

Accepted Answer

Successful gainsharing plans can be implemented in organizations of various sizes, not limited to those with more than 500 employees. They depend more on the design of the plan and the organizational culture than on the size of the unit.

Question 19

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

Accepted Answer

Incentive systems that promote individual or group competition can often lead to political gamesmanship, where individuals or groups engage in manipulative and strategic behavior to gain an advantage over their competitors. This can harm the overall effectiveness and productivity of the organization or team.

Question 20

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

Accepted Answer

Variable pay is a type of pay structure where a portion of an employee's earnings is based on meeting specific performance or business goals. If these goals aren't met, the employee's payout can be reduced or eliminated. Therefore, a percentage of an employee's paycheck is put at risk if business goals aren't met.

Quiz 11: Compensation: Methods and Policies