Question 1

Most experts argue that in most organizations managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Accepted Answer

A) True 
 B)False

Question 2

When all employees earning over a threshold amount are automatically eligible for consideration for short-term incentives, this is called the criterion of

Accepted Answer

A)  key position.
B)  job evaluation.
C)  job clusters.
D)  salary grade.
E)  salary-level cutoff point.F) B) and D)
G) A) and D)

Question 3

A non-deductible formula is

Accepted Answer

A)  when all employees are earning over the threshold amount.
B)  a job-by-job review to identify the key formula.
C)  a short-term incentive fund that begins to accumulate only after the firm has met a specified level of earnings.
D)  a straight percentage used to create a short-term incentive fund.
E)  a long-term incentive that pays out on a straight-line basis with no deductible.F) C) and E)
G) A) and B) E

Question 4

Paying salespeople according to a plan that compensates them in direct proportion to their sales is called a

Accepted Answer

A)  commission plan.
B)  proportional compensation plan.
C)  direct compensation plan.
D)  straight salary plan.
E)  combination plan.F) A) and E)
G) B) and E)

Question 5

The term merit pay can apply to incentive raises given to any employees, but is most often used with respect to

Accepted Answer

A)  salespeople.
B)  white-collar employees.
C)  executives.
D)  blue-collar employees.
E)  hourly workers.F) All of the above
G) C) and D)

Question 6

Employees favour recognition from their ________ two-to-one over recognition from other sources.

Accepted Answer

A)  supervisor or manager
B)  subordinates
C)  customers
D)  peers
E)  mentorF) None of the above
G) B) and E)

Question 7

With a true individual incentive, it is the manager's individual effort and performance that are rewarded with a(n)

Accepted Answer

A)  individual wage.
B)  cost-of-living adjustment.
C)  bonus.
D)  salary.
E)  perquisite.F) B) and C)
G) A) and C)

Question 8

All of the following are reasons why merit pay plans can backfire except that

Accepted Answer

A)  supervisors often tend to minimize differences in employee performance when computing merit raises, to ensure that everyone gets a raise of at least the cost of living.
B)  supervisors often tend to minimize differences in employee performance when computing merit raises.
C)  the usefulness of the merit pay plan depends on the validity of the performance appraisal system; if performance appraisals are viewed as unfair, so too will the merit pay that is based on them.
D)  almost every employee thinks that he or she is an above-average performer, thus being paid a below-average merit increase can be demoralizing.
E)  only pay (or other rewards)  tied directly to performance can motivate improved performance.F) None of the above
G) B) and C)

Question 9

Stock options, once granted, allow an executive to buy stock

Accepted Answer

A)  in future years at a fixed discount rate depending on performance.
B)  in future years with a guaranteed return.
C)  at a price equivalent to the company's book value.
D)  in future years at a price determined when the stock option was issued.
E)  whenever they would like to do so at a price negotiated with the company board of directors.F) B) and C)
G) C) and D) D

Question 10

Piecework means basing compensation directly on the amount produced.

Accepted Answer

A) True 
 B)False

Question 11

There are several specific common-sense considerations in establishing any incentive plan.Of primary importance is

Accepted Answer

A)  pay-for-performance.
B)  superior business results.
C)  relationship building.
D)  line of sight.
E)  goal setting.F) A) and C)
G) All of the above

Question 12

Under this pay system, each worker receives the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour.This system is known as a

Accepted Answer

A)  piecework plan.
B)  minimum hourly wage plan.
C)  guaranteed piecework plan.
D)  gainsharing plan.
E)  straight piecework plan.F) A) and E)
G) A) and B)

Question 13

When a worker is rewarded by a percent premium that equals the percent by which his or her performance is above standard, this is known as

Accepted Answer

A)  the differential piece-rate plan.
B)  gainsharing.
C)  the percent incentive plan.
D)  the premium plan.
E)  the bonus hour plan.F) B) and D)
G) B) and E)

Question 14

A type of organization-wide incentive plan which usually involves having a corporation contribute shares of its own stock to a trust, and distributes the stock to employees on retirement or separation from service, is referred to as a(n)

Accepted Answer

A)  employee stock ownership plan.
B)  individual retirement plan.
C)  gainsharing plan.
D)  profit-sharing plan.
E)  employee trusteeship plan.F) B) and E)
G) A) and E)

Question 15

Executive compensation is more likely to be effective if it is appropriately linked to

Accepted Answer

A)  internal issues.
B)  a cost-reduction strategy.
C)  external issues.
D)  corporate strategy.
E)  job evaluation.F) B) and E)
G) C) and E) D

Question 16

The multiplier method is when a manager whose individual performance was poor might not even receive a company performance-based bonus, on the assumption that the bonus should be a product of individual and corporate performance.

Accepted Answer

A) True 
 B)False

Question 17

In some long-term incentive plans, shares are awarded without cost to the executive, but with certain restrictions imposed by the employer.These plans are called

Accepted Answer

A)  stock appreciation rights plans.
B)  restricted share unit plans.
C)  book value plans.
D)  stock options.
E)  phantom stock plans.F) A) and E)
G) C) and D)

Question 18

Helen is the director of human resources at a management consulting firm.She has been tasked with designing an annual bonus plan aimed at motivating the short-term performance of managers and executives.Discuss the issues she should consider in designing this plan.

Accepted Answer

Four points for eligibility -conduct job...

Question 19

Describe a piecework incentive plan using an example.Discuss at least two advantages and two disadvantages of piecework using your example.

Accepted Answer

Up to two points for accurate descriptio...

Question 20

All of the following are reasons to use team incentive plans except

Accepted Answer

A)  facilitating on-the-job training.
B)  reinforcing individual incentives.
C)  reinforcing group planning.
D)  reinforcing problem solving.
E)  helping ensure collaboration.F) All of the above
G) D) and E)

Exam 12: Pay-for-Performance and Financial Incentives

Most experts argue that in most organizations managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Correct AnswerverifiedShow Answer

When all employees earning over a threshold amount are automatically eligible for consideration for short-term incentives, this is called the criterion of

Correct AnswerverifiedShow Answer

A non-deductible formula is

Correct AnswerverifiedE

Paying salespeople according to a plan that compensates them in direct proportion to their sales is called a

Correct AnswerverifiedShow Answer

The term merit pay can apply to incentive raises given to any employees, but is most often used with respect to

Correct AnswerverifiedShow Answer

Employees favour recognition from their ________ two-to-one over recognition from other sources.

Correct AnswerverifiedShow Answer

With a true individual incentive, it is the manager's individual effort and performance that are rewarded with a(n)

Correct AnswerverifiedShow Answer

All of the following are reasons why merit pay plans can backfire except that

Correct AnswerverifiedShow Answer

Stock options, once granted, allow an executive to buy stock

Correct AnswerverifiedD

Piecework means basing compensation directly on the amount produced.

Correct AnswerverifiedShow Answer

There are several specific common-sense considerations in establishing any incentive plan.Of primary importance is

Correct AnswerverifiedShow Answer

Under this pay system, each worker receives the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour.This system is known as a

Correct AnswerverifiedShow Answer

When a worker is rewarded by a percent premium that equals the percent by which his or her performance is above standard, this is known as

Correct AnswerverifiedShow Answer

A type of organization-wide incentive plan which usually involves having a corporation contribute shares of its own stock to a trust, and distributes the stock to employees on retirement or separation from service, is referred to as a(n)

Correct AnswerverifiedShow Answer

Executive compensation is more likely to be effective if it is appropriately linked to

Correct AnswerverifiedD

The multiplier method is when a manager whose individual performance was poor might not even receive a company performance-based bonus, on the assumption that the bonus should be a product of individual and corporate performance.

Correct AnswerverifiedShow Answer

In some long-term incentive plans, shares are awarded without cost to the executive, but with certain restrictions imposed by the employer.These plans are called

Correct AnswerverifiedShow Answer

Helen is the director of human resources at a management consulting firm.She has been tasked with designing an annual bonus plan aimed at motivating the short-term performance of managers and executives.Discuss the issues she should consider in designing this plan.

Correct AnswerverifiedFour points for eligibility -conduct job...View AnswerShow Answer

Describe a piecework incentive plan using an example.Discuss at least two advantages and two disadvantages of piecework using your example.

Correct AnswerverifiedUp to two points for accurate descriptio...View AnswerShow Answer

All of the following are reasons to use team incentive plans except

Correct AnswerverifiedShow Answer

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E

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D

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D

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Four points for eligibility -conduct job...
View Answer

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Up to two points for accurate descriptio...
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Correct Answer
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