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Q:
__________ deals with perceptions of equity in the allocation of reward or penalties given by the organization.
A) Defined justice
B) People (employee) justice
C) Distributive justice
D) Procedural justice
E) Demanded justice
Q:
An employee who is upset because the bonus he thought he earned was awarded to someone who he believes has lower performance would have an issue with procedural justice.
Q:
The ADEA has limited the use of mandatory retirement in the United States.
Q:
An on line employee survey is one of the external forces governing the justice present in an employee-employer relationship.
Q:
Given the choice between a voluntary exit from an organization and a forced exit, from the companys perspective, the forced exit involves less risk.
Q:
The more you introduce an employee to the culture of the company before their first day of work the more confused they will be. It is best to wait until the first day of work to begin orientation.
Q:
If the organization is very small, it may be more efficient to rely primarily upon individualized socialization.
Q:
Permanent part-time work is an innovative work arrangement that allows employees to work fewer days during the week, with longer hours per day.
Q:
One way to calculate a turnover rate is to consider the number of employees who leave as a percentage of the total number of employees.
Q:
Failure to follow organizational policy or procedure is one of the reasons a company may choose to terminate an employee.
Q:
An employee handbook can be a supplement to employee orientation.
Q:
An employer can terminate an employee for engaging in activities that are deemed to be beneficial to the public welfare.
Q:
The decision to retire can be influenced by both economic conditions and personal characteristics.
Q:
Organizations utilizing hiring freeze and early retirement packages could be left with fewer vacancies in key areas in addition to fewer workers in functions and jobs considered redundant.
Q:
One alternative to layoffs is work-sharing programs, in which employees voluntarily reduce the number of hours or days per week they work in order to cut labor costs while maintaining their gainful employment.
Q:
Downsizing refers to the tactical, physical action of eliminating redundant skills in the organization.
Q:
One of the guidelines for writing a handbook is that the written policies must conform to local, state, and federal laws.
Q:
The USERRA establishes the rights of reservists and members of the National Guard to return to work at the end of their service.
Q:
Covenant of nondisclosure are contractual arrangements with employees that restrict their acceptance of employment with an industry competitor upon voluntarily leaving the current organization.
Q:
The defamation exception stipulates that an employer cannot publish an untrue statement about an employee to a third party.
Q:
The public policy exception, which is a common exception to employment-at-will, covers four categories. Refusing to commit illegal or unethical acts is one of them.
Q:
Employment-at-will exists even when there is either a contract (implied or explicit) or a collective bargaining agreement or the employee works for a public agency.
Q:
Institutionalized socialization is formal and involves providing each member of the organization with the same, sequential, fixed information upon organizational entry.
Q:
Ethical thinking programs emphasize evaluating a situation objectively and evaluating the anticipated and unintended consequences of each possible action.
Q:
Distributive justice results from a perception of fair rules, laws, or policies that allocate valued rewards and punishments.
Q:
True/False Questions
Q:
List the factors to be considered in designing a gain-sharing program.
Q:
What are the advantages of Scanlon and Rucker plans over IMPROSHARE?
Q:
How is gain sharing plans different from profit sharing?
Q:
What are the limitations of the individual and group-based pay plans?
Q:
What are the three major questions to be answered for designing a PFP system?
Q:
Discuss the implications for employee stock option plans (ESOPs)
Q:
Compare and contrast the three types of individual pay-for-performance plans.
Q:
Discuss some of the reasons for past failures of Pay-For-Performance (PFP) systems.
Q:
Compare and contrast the Scanlon and IMPROSHARE group incentive plans.
Q:
Compare and contrast the straight piecework and standard hourly rate plan.
Q:
Which reward is best suited to the following situation: Production workers making close to minimum wage; the manager wants to introduce a pay for performance plan that will increase production numbers. Work is interdependent. Production output is measured daily.
A) Individual bonus based on a percentage of company profits, paid at the end of the year.
B) Group incentive; reward is a grocery store gift certificate of $100 awarded weekly.
C) Merit increase determined annually and typically 1 to 3% of base pay.
D) Individual incentive, reward is two tickets to Disney World awarded at the end of the year.
E) Group incentive; reward is ten cent increase to base pay for the next years pay.
Q:
A current trend is to develop individual pay for performance plans where the incentive pay is:
A) Based on current performance, and not permanently tied to base pay
B) Linked to an absolute percentage of a the employees base pay
C) A variable percentage of the employees base pay.
D) A percentage of base pay budgeted a the beginning of the year and provides a permanent increase to an individuals salary
E) Determined by the board of directors for all employees, similar to executive compensation.
Q:
A manager on a construction site wants to encourage safety on the job to minimize accidents. What sort of pay for performance system would you recommend?
A) Increase the employees base pay.
B) Introduce a behavioral encouragement plan.
C) Change workers pay from base pay to a draw commission plan.
D) Implement a piece rate reward plan.
E) Increase the level of benefits offered to all employees.
Q:
You have announced a pay for performance system, however, your budget is not large enough to truly differentiate between your top performers and your marginal performers. What is a possible outcome?
A) You may end up with high turnover among your marginal performers because of perceived inequity
B) All employees will be more motivated to achieve the new performance goals.
C) Employees will be motivated to work together in teams to increase the likelihood of rewards.
D) The composition of the workforce will shift to employees who thrive in high-risk situations.
E) Your top performers will perceive the plan as inequitable and may leave the company
Q:
As the manager of a sales team, you want to establish a pay for performance system. Currently they receive 100% commission in the form or cash. You want to diversify the pay and control the budget while offering value to your staff. Which of the following would you not consider?
A) Grant stock options for increases in repeat customer business.
B) Offer gift certificates to the gym, owned by the company, for sales above quota.
C) Increase their commission dollars per sale when they sell as a team.
D) Present a trip to the Bahamas, on the company yacht, to the team with the highest sales.
E) Award tickets for the companys box seats at the local music amphitheatre.
Q:
Which of the following is not a factor to be considered in designing a gain sharing program?
A) Potential for employee efforts
B) Organized employee suggestion system
C) Workforce interdependence.
D) Workforce composition.
E) Key organizational factors that affect the pay system
Q:
Which of the following statements is FALSE regarding short-term and long-term incentives?
A) Short-term incentives are usually additional salary rewards that an employee can receive on a quarterly or yearly basis.
B) Short-term incentives are based on meeting short-run objectives such as a quarterly sales or a production goal.
C) Long-term rewards focus on future profitability.
D) Stock options are a common short-term incentive.
E) Long-term incentives are usually best for upper-level executives who have a wider area of discretion in making decisions that affect the firm.
Q:
Research on Employee Stock Ownership Plans (ESOPs) shows:
A) ESOPs work better when combined with extensive employee involvement.
B) They have little effect on profitability.
C) Decrease in employee absenteeism under ESOPs.
D) ESOPs work better when the price of the stock is stable.
E) Restricted company flexibility in a competitive environment.
Q:
The Scanlon Plan:
A) uses standard hours rather than labor costs to determine incentive pay.
B) motivates the worker through rights to stock a fixed price which may be lower than the current stock market value.
C) is based on incentive pay based on units produced.
D) provides for less employee involvement than the Rucker Plan.
E) provides for a high level of employee participation through labor-management committees.
Q:
Which of the following is TRUE regarding group incentive plans?
A) Increased interest in PFP has resulted in a declining number of group incentive plans.
B) The use of group plans is particularly effective when cooperation and teamwork are less essential.
C) Group plans are most useful when tasks are so interrelated that it is difficult to identify a measure of individual output.
D) There is increasing evidence that group incentives do NOT increase productivity.
E) Individual plans are generally preferable to group plans when tasks are interrelated and teamwork is essential.
Q:
All of the following statements are true regarding profit sharing plans EXCEPT:
A) they are often used as a means of reducing turnover.
B) they have been criticized as being remote and unrelated to performance.
C) they were designed to motivate cost savings.
D) the group that saves the most money receives the bonus.
E) they provide long-term incentives.
Q:
Acme Shoe Company is expanding nation-wide, and they wish to develop an incentive plan for their door-to-door salespeople. Which of the following plans is most appropriate?
A) Piece-rate plan
B) Commission plan
C) Profit sharing plan
D) Straight salary
E) Scanlon plan
Q:
The Standard Hourly Rate:
A) pays the worker an incentive based on units of production.
B) relies on countable results as a basis for setting the PFP rate.
C) uses a formula to determine the employees share of cost savings.
D) uses a production standard that is expressed in time units.
E) is usually folded into the base pay of the recipient and is usually granted as a percentage of a workers base pay.
Q:
Which of the following is associated with Taylors differential rates?
A) There are two outcomes related to pay: one for performing below standard and the other for meeting or exceeding the standard.
B) They are used to pay a higher ranked worker more than one who is lower ranked.
C) The rate is based on a productivity index called labor contribution to value added.
D) They involve higher levels of employee involvement.
E) They are generally tied to company profits.
Q:
Why do Deming and other quality experts think PFP is a bad idea?
A) Performance appraisal diverts attention away from the systems related to the quality of the product or service.
B) PFP places too much emphasis on getting employees to do their jobs right the first time.
C) PFP links rewards valued by the employee to organizational outcomes valued by the employer.
D) Performance appraisal decreases the intensity of competition among individual workers.
E) PFP only enhances organizational performance.
Q:
The individual incentive plan in which the worker is paid solely per unit of production is known as __________.
A) differential rate plan
B) straight piecework plan
C) standard hourly rate plan
D) Halsey plan
E) Rucker plan
Q:
When forced distribution is used to reduce leniency bias, this can cause __________ if a PFP system is in place.
A) increased trust in the organization
B) increased trust between employees
C) increased theft in the organization
D) decreased trust between employees
E) decreased trust in the organization
Q:
Each of the following is true regarding individual PFP plans EXCEPT:
A) Individual PFP plans can be divided into merit pay systems and incentive systems tied to production rates.
B) For a merit pay plan, performance is generally measured through performance appraisal.
C) Incentive plans rely on some countable result as a basis for setting the PFP rate.
D) The greatest strength of the merit pay plan is its ability to create a clear linkage between employee performance and pay.
E) Incentive pay is based on units produced and provides the closest connection between performance and pay.
Q:
In which of the following ways do incentive plans differ from merit pay plans?
A) They rely on countable results as basis for setting PFP rate.
B) They use performance appraisal data as the basis for the increase.
C) They use standard hours rather than labor costs to determine incentive pay.
D) They have less union support.
E) Are illegal under the Fair Labor Standards Act.
Q:
When is a group pay for performance plan more effective than an individual plan?
A) When tasks are independent
B) When cooperation and teamwork are essential
C) When it is difficult to measure an employees specific contributions
D) Both A and B
E) Both B and C
Q:
Which of the following plans calls for a distribution of pay based on an appraisal of a workers performance?
A) Merit pay plan
B) Incentive plan
C) Halsey plan
D) Commission plan
E) Profit sharing plan
Q:
When there is relatively little differential pay associated with using merit pay systems, one of the major problems that arise is:
A) company has a problem tracking payroll costs.
B) best performers perceive it as inequitable.
C) middle performers complain.
D) poor performers become worse.
E) top management takes the opportunity to give itself raises.
Q:
Each of the following is a reason for the failure of PFP systems EXCEPT:
A) poor conceived connection between performance and pay.
B) the level of performance-based pay is too low relative to base pay.
C) lack of objective, countable results for most jobs, requiring the use of performance ratings.
D) faulty performance appraisal systems.
E) union support for PFP systems.
Q:
Your company has jobs that are highly interrelated and strategic in focus. You want to provide a pay for performance incentive with relatively long measures of performance. The best option would be to design a:
A) Merit pay plan
B) Commission pay plan
C) Profit Sharing plan
D) Piece rate plan
E) Behavioral modification plan
Q:
PFP is a High Performance Work Characteristic and is linked to a firms performance particularly when the:
A) CEO pay is a lower base pay with the majority of compensation coming from incentive plans.
B) PFP system is closely aligned with the companys strategic objectives.
C) company has both profit sharing and employee stock option plans established.
D) performance is measurable.
E) size of the award is sufficient to stimulate increased effort.
Q:
When formulating a pay for performance system it is important to strike a balance between individual, team and business based incentives.
Q:
Clawback provisions allow a company to grant an executive stock and then increase their stock gains by manipulating the price of the stock through corporate buy back programs.
Q:
Pay for performance plans are most effective when managers set the goals and have control over the pace of work.
Q:
In general, pay for performance systems are more effective when specific worker contributions can be clearly measured.
Q:
A pay for performance plan negates the need to manage an employees performance. The manager need only focus on the distribution of rewards in order to generate appropriate employee behaviors.
Q:
Workforce interdependence is one of the factors to be considered in designing a gain sharing program.
Q:
IMPROSHARE is similar to Scanlon except that the IMPROSHARE ratio uses labor costs rather than standard hours.
Q:
Profit sharing is a group incentive system that gives participating employees an incentive allocation based on improvements in quality measurements.
Q:
The flaw with a bonus incentive system is that due to the repetition of payments, it can be difficult to manage from a budgetary perspective.
Q:
The three major types of group-based incentive plans, profit sharing, gain sharing, and employee stock option plans, are all designed to establish a link between pay and performance.
Q:
A draw, in a sales incentive plan, is essentially an interest-free loan to the salesperson, repayable when commissions are below the draw limit.
Q:
Winsharing combines gain sharing with profit sharing.
Q:
Considering the procedure to calculate the standard rate, if the standard time for a task is two hours and the fair hourly wage is $10, the standard rate is $20.
Q:
The piece-rate approach is recommended if individual performance can be accurately measured and teamwork or worker collaboration is not important for the desired performance outcomes.
Q:
The standard hourly rate is calculated by dividing the base wage by the standard.
Q:
The piece-rate system and the standard hourly rate, as the two types of individual incentive systems, are based on rated output.
Q:
Merit pay plans are also known as piece-rate systems.
Q:
Team-based PFP is a better approach when it is part of a comprehensive team-based model of HRM and compensation.
Q:
Incentives that are not permanently tied to an individuals base pay are easier to manage in terms of budgets when performance declines.