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Q:
Straight commission plans are plans that
A) provide a straight salary to employees.
B) are useful when the organization wants salespeople to concentrate on listening to customers.
C) are used to attract risk-averse employees.
D) are common among insurance and real estate agents.
E) are uncommon among car salespeople.
Q:
When an employee's pay is calculated as a percentage of sales, it is referred to as
A) commissions.
B) gainsharing.
C) a merit plan.
D) a variable wage plan.
E) profit sharing.
Q:
When Airborne Aircraft acquired Bell Airplanes, the executives of the two companies identified key employees they needed for the combined companies' success. One of them was Patrick, the vice president of engineering. The executives offered Patrick a one-time bonus of $25,000 if he stayed with the company for 12 months following the acquisition. In this scenario, Patrick's $25,000 represents
A) a commission.
B) a retention bonus.
C) stock options.
D) merit pay.
E) a differential piece rate.
Q:
Retention bonuses refer to
A) the special reward programs used to satisfy the lower- and middle-level managers.
B) the bonuses provided to union members to withhold a strike.
C) the bonuses provided to employees who take long leaves without pay.
D) annual incentives paid to daily wage workers to remain in the organization.
E) one-time incentives paid in exchange for remaining with the company.
Q:
Which statement is true of a performance bonus?
A) It is designed to reward group performance.
B) It should be re-earned by employees during each performance period.
C) It is rolled into base pay and provided yearly or monthly.
D) It lacks flexibility and hence it is less popular.
E) It is exclusively linked to subjective ratings, rather than objective performance measures.
Q:
What is a disadvantage of a merit pay system?
A) It does not relate the rewards to economic conditions.
B) It cannot be used effectively with performance appraisals.
C) Comparative pay is not considered in its evaluation.
D) It does not provide rewards for performance in all the dimensions measured in the organization's performance management system.
E) It can quickly become expensive for the company.
Q:
________ provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system.
A) Differential piece rate
B) Standard hour plan
C) Merit pay
D) Piece rate
E) Commission
Q:
Souped Inc., a firm that manufactures ready-to-eat soups, offers incentives based on an employee's performance rating and the employee's compa-ratio. Which payment plan is exemplified in this scenario?
A) piecework plan
B) merit pay
C) standard hour plan
D) differential plan
E) skill-based plan
Q:
In a company's merit pay program, an individual's compa-ratio represents
A) the individual's pay relative to the individual's performance rating.
B) the individual's pay relative to company's average pay for that position.
C) the individual's worth versus that of others in the organization.
D) the ratio of the individual's pay to benefits.
E) the average worth of the skills possessed by the individual.
Q:
To make merit increases consistent, administrators of merit pay programs must closely monitor the compa-ratio and the
A) number of grades in the pay structure.
B) individual's performance ratings.
C) number of new hires in the company.
D) company's stock price in the current financial year.
E) average pay of the area where the organization is based.
Q:
Julie, the HR manager at Forge Corp., wants to ensure that incentive pay rewards the individuals who contribute the most to the organization and whose contributions have grown since their pay rates were originally set. She determines that she can best accomplish these goals by paying an incentive amount based on individuals' performance ratings and compa-ratios. In this scenario, Julie would be applying the system of
A) merit pay.
B) piecework pay.
C) standard hour pay.
D) commissions.
E) attendance bonus.
Q:
An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as
A) commissions.
B) the Scanlon plan.
C) merit pay.
D) gainsharing.
E) profit sharing.
Q:
A standard hour incentive plan is likely to be successful if
A) most or all of a salesperson's compensation is in the form of commissions.
B) employers keep labor costs to a minimum.
C) the pay increase is linked to ratings on performance appraisals.
D) employees want the extra money more than they want to work at a pace that feels comfortable.
E) the organization values employee satisfaction, product quality, and customer service more than profits.
Q:
Which statement is true about standard hour plans?
A) They encourage employees to focus exclusively on customer service.
B) They succeed only for employees who are not motivated by money.
C) They encourage employees to focus mainly on quality.
D) In terms of their pros and cons, they are very different from piecework plans.
E) They encourage employees to work as fast as they can.
Q:
Saturn Systems, an information technology company, determines that most problems handled by employees at its help desk can be resolved within 20 minutes. The company sets 20 minutes as the standard time for resolving a customer problem. If an employee solves a customer's problem in less than 20 minutes, the employee still earns 20 minutes' worth of wages. Which payment method does this scenario illustrate?
A) piecework plan
B) differential plan
C) standard hour plan
D) merit pay
E) performance bonus
Q:
Trent owns and manages a small electronics repair store. He determines the time required by his employees to complete each task assigned by him. When employees complete the repairs in less time, they receive an amount of pay equal to that time determined by him. In this scenario, Trent is using a
A) standard hour plan.
B) differential piecework plan.
C) merit pay plan.
D) straight piecework plan.
E) Scanlon plan.
Q:
A piecework rate plan is best suited for
A) HR professionals.
B) executives.
C) production workers.
D) managers.
E) knowledge workers.
Q:
Piecework rate plans are most suited for
A) innovative tasks.
B) non-standard jobs.
C) managerial jobs.
D) jobs with difficult-to-measure output.
E) routine jobs.
Q:
Tucked Inc. is an envelope manufacturer based in Fort Worth. The employees of the organization receive pay based on the amount of work produced. If the output of an employee is more than the average production volume, then the organization pays more for the work performed. In this case, which incentive is offered by Tucked Inc.?
A) differential piecework rate
B) minimum wage
C) merit pay
D) retention bonus
E) group bonus
Q:
The differential piece rate system refers to
A) an incentive pay plan in which the employer pays the rate per piece based on the difference in performance of employees.
B) a system that gives employees a bonus if the ratio of labor costs to the sales value of production is below a set standard.
C) an incentive pay in which the piece rate is higher when a greater amount is produced.
D) a system of linking pay increases to ratings on performance appraisals.
E) an incentive pay plan where employees are paid different wages based on the skills they possess.
Q:
________ refers to incentive pay in which the wage paid is higher when a greater amount is produced.
A) Profit sharing
B) Differential piece rate
C) Gainsharing
D) Scanlon pay
E) Merit pay
Q:
An employee at CellWorld who produces 10 phone components in an hour earns $9 ($0.90 10) per hour, while another employee who produces 15 components earns $13.50 ($0.90 15). This is an example of a
A) commission plan.
B) differential piece rate plan.
C) direct commission plan.
D) profit-sharing plan.
E) straight piecework plan.
Q:
Wayne Inc., a health insurance company, pays clerks an incentive based on the average amount of work completed per hour. Wayne pays $10 for processing 20 invoices per hour. An employee who processes 30 invoices would earn $15 per hour. Hence, Wayne pays the same rate per invoice no matter how many invoices an employee processes per hour. Which type of incentive pay does this scenario illustrate?
A) straight piecework plan
B) falling differential
C) rising differential
D) standard hour plan
E) straight commission plan
Q:
As an incentive to work efficiently, some organizations pay production workers ________, a wage based on the amount they produce.
A) merit pay
B) a sales commission
C) standard hour pay
D) a piecework rate
E) a special bonus
Q:
Jewels & Co., a watch manufacturing company, provides wages to its employees based on the number of watches the workers assemble. The more the employees assemble, the more they earn. This type of plan is called a
A) piecework rate plan.
B) merit pay plan.
C) Scanlon plan.
D) profit-sharing plan.
E) rapid hour plan.
Q:
Which type of incentive plans are used to reward individual performance?
A) gainsharing
B) merit pay
C) Scanlon plan
D) profit sharing
E) stock ownership
Q:
In the process of designing incentives, managers should make sure that
A) all the employees are paid the same amount.
B) even the lowest performing employees are rewarded.
C) employees focus only on completing the task quickly.
D) employees believe that the pay plan is fair.
E) they hire employees who consider earning money as the sole reason to perform well.
Q:
For incentive pay to motivate employees to contribute to the organization's success, the pay plans must be well designed. Which statement describes a characteristic of a well-designed plan?
A) Performance measures are to be linked to the individual's goals.
B) Employees are given unattainable performance standards.
C) Employees value the rewards or incentives that are being offered.
D) Employees are given limited resources to meet their goals.
E) The pay plan takes into account that employees will accept all goals irrespective of their rewards.
Q:
A feature of an effective incentive pay plan is that it should
A) have performance measures based on employees' requirements.
B) not be provided as a direct percentage of employees' performance.
C) encourage group performance and sideline individual achievements.
D) be the same for all employees in the organization.
E) have performance measures linked to the organization's goals.
Q:
Vroom Motors, an automobile company, ties individual performance, profits, and other measures of employees' success to a particular form of pay. This form of pay is influential because the amount paid is linked to certain predefined behaviors or outcomes. What pay structure is exemplified in this scenario?
A) minimum wage
B) overtime pay
C) incentive pay
D) piecework rates
E) salary
Q:
A pay structure specifically designed to energize, direct, or control employees' behavior is known as
A) monthly salary.
B) wage.
C) incentive pay.
D) annual salary.
E) fixed pay.
Q:
Incentive pay for executives lays the groundwork for significant ethical issues.
Q:
An organization should keep information, such as changes made to its incentive plan, confidential from its employees.
Q:
A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals.
Q:
Stock options are best suited to motivate day-to-day effort or to attract and retain top individual performers.
Q:
An employee stock ownership plan denies employees the right to participate in votes by shareholders even if the stock is registered on a national exchange.
Q:
An employee stock ownership plan is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust.
Q:
Employees who receive stock options as incentive pay must exercise the stock options even if the stock price decreases.
Q:
In larger organizations that have stock ownership plans, the employees may not see a strong link between their actions and the company's stock price.
Q:
Under profit sharing, payments are a percentage of the organization's profits and become part of the employees' base salary.
Q:
Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.
Q:
Under the team awards type of group incentive, cost savings is excluded as a performance measure.
Q:
Group bonuses typically reward the performance of all employees in an organization.
Q:
The Scanlon plan of gainsharing gives employees a bonus if the ratio of labor costs to the sales value of production is below a set standard.
Q:
Retention bonuses are one-time incentives paid to top managers, engineers, top-performing salespeople, and information technology specialists in exchange for remaining with the company.
Q:
From employers' perspective, an advantage of merit pay is that it is cheap.
Q:
A merit pay incentive system is used to attract employees who are more team-oriented.
Q:
Merit pay is a system of linking pay increases to ratings on performance appraisals.
Q:
Standard hour plans are quality-oriented incentives for professional employees.
Q:
Under incentive pay, piecework rates are most suited for routine, standardized jobs with output that is easy to measure.
Q:
Incentive pay is specifically designed to energize, direct, or control employees' behavior and is influential because the amount paid is linked to certain predefined behaviors or outcomes.
Q:
According to equity theory, employees evaluate job outcomes such as compensation in terms of outputs.
Q:
Organizations use pay surveys to benchmark compensation.
Q:
The pay offered by an organization is not limited by its presence in a product market.
Q:
In a product market, different organizations have exclusive customer bases.
Q:
Under the Davis-Bacon Act of 1931 and the Walsh-Healy Public Contracts Act of 1936, employees of federal contractors must receive rates less than the prevailing wages in the area.
Q:
Under the FLSA, children aged 14 and 15 may not be employed outside school hours.
Q:
If state laws specify minimum wages, in addition to the federal level, employees are entitled to receive whichever rate is higher.
Q:
The laws governing equal employment opportunity guarantee equal pay for all employees of an organization.
Q:
A pay structure helps an organization achieve goals related to cost control.
Q:
Pay level is the total amount an employee pays to the organization.
Q:
List three limitations of using a job-based pay structure.
Q:
Define hourly wage, piecework rate, and salary.
Q:
What is a pay policy line? What is its relevance?
Q:
What is benchmarking?
Q:
Define job structure, pay level, and pay structure.
Q:
How does equity theory explain how workers are likely to interpret the high pay of CEOs?
Q:
How do organizations compare actual pay to pay structure?
Q:
What is skill-based pay? What are its advantages and disadvantages?
Q:
How do employees judge the fairness of a pay structure?
Q:
Discuss the three major provisions of the Fair Labor Standards Act (FLSA).
Q:
Executive pay has drawn public scrutiny in recent years. Which statement best explains the reason?
A) Top executives' pay is much higher than average workers' pay.
B) Most of the top executives' pay is in the form of a salary.
C) Top executives come under the category of exempt employees.
D) Top executives are paid in the form of commissions.
E) Executives are denied short-term or long-term incentives with their pay.
Q:
The ________ requires employers to make jobs available to their workers when they return after fulfilling military duties for up to five years.
A) Uniformed Services Employment and Reemployment Rights Act
B) Fair Labor Standards Act
C) Equal Employment Opportunity Act
D) National Labor Relations Board
E) Family and Medical Leave Act
Q:
At Methods Corp., a maker of premium art pencils, the human resource department is evaluating its pay structure. A compensation specialist computes the compa-ratio of the designers and determines that it is 1.9. What problem is most likely to result from a compa-ratio of this size?
A) The company may have difficulty keeping costs under control.
B) The company may have difficulty attracting and keeping qualified employees.
C) The company may be in violation of the Fair Labor Standards Act.
D) The company may have misclassified these employees as exempt when they are nonexempt.
E) The company may not have met minimum-wage requirements.
Q:
Fresher Inc. is a whole-foods distributor. Its human resource department gathers the following data for computing compa-ratios of some positions. Based on the data, for which position is Fresher Inc. most likely underpaying for human resources?
A) shipping clerks: average salary of $22,000, range midpoint of $24,000
B) inventory clerks: average salary of $20,000, range midpoint of $30,000
C) order packers: average salary of $24,000, range midpoint of $22,000
D) purchasing agents: average salary of $30,000, range midpoint of $25,000
E) warehouse workers: average salary of $20,000, range midpoint of $20,000
Q:
Compa-ratio
A) is defined as the ratio of average pay to the midpoint of the pay range.
B) is defined as the ratio of the average pay for the grade divided by the minimum pay for the grade.
C) can range from 0 to 100 percent.
D) uses data from market-pay surveys.
E) measures the degree to which new skills learned are consistent with the increases in pay.
Q:
Which statement is true about skill-based pay?
A) Skill-based pay provides a way to ensure that employees can use their new skills.
B) Gathering market data about skill-based pay is easy.
C) Skill-based pay ensures that the employer pays the employee for learning skills that benefit the employer.
D) Skill-based pay does not necessarily provide an alternative to the bureaucracy and paperwork of traditional pay structures.
E) Skill-based pay does not require records related to skills, training, and knowledge acquired.
Q:
What is a disadvantage of skill-based pay systems?
A) It makes organizations inflexible.
B) It reduces employee empowerment.
C) It may result in paying employees for skills they don't use.
D) It reduces opportunities for promoting employees.
E) It limits the number of pay levels by delayering.
Q:
Heightened Homes is a real estate firm based in Texas. The company ensures that employees' pay is dependent on what they are capable of doing. The company also supports efforts to empower its employees by encouraging them to be independent and to make decisions in various areas. This, in turn, ensures job enrichment. Based on this information, identify the pay structure being utilized by Heightened Homes.
A) straight piecework plan
B) skill-based pay systems
C) merit pay system
D) differential piece rates
E) standard hour plan
Q:
What is a disadvantage of broad bands?
A) They reduce managers' flexibility in making assignments.
B) They always result in pay decreases.
C) They increase the number of levels in the organization's job structure.
D) They reduce the opportunities for promoting employees.
E) They discourage employees from gaining valuable experience through lateral career moves.