Question 1

Merit increase grids display an organization's policies for linking the size and frequency of pay increases to an individual's performance rating and position within the pay range.

Accepted Answer

A) True 
 B)False

Question 2

What is the difference between bonuses and team awards?

Accepted Answer

A)   Bonuses are for bigger work groups whereas team awards are for small teams.
B)   Bonuses reward individual performance whereas team awards encourage cooperation.
C)   Bonuses are usually given to employees who meet deadlines whereas team awards are given only when the team as a whole meets the targets.
D)   Bonuses encourages competition among individuals whereas team awards only foster cooperation.
E)   Bonuses reward attainment of goals measured in terms of physical output whereas team awards reward performance in terms of cost savings.F) C) and E)
G) A) and D)

Question 3

When an employee's pay is calculated as a percentage of sales,it is referred to as:

Accepted Answer

A)   commission.
B)   gain sharing.
C)   merit plan.
D)   variable wage plan.
E)   profit sharing.F) A) and B)
G) All of the above

Question 4

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.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an incentive plan that is intended to improve the overall performance of an organization?

Accepted Answer

A)   Profit sharing
B)   Gainsharing
C)   Merit pay
D)   Group bonus
E)   Scanlon planF) C) and D)
G) B) and E)

Question 6

Piecework rate plans are most suited for _____.

Accepted Answer

A)   innovative tasks
B)   non-standard jobs
C)   managerial jobs
D)   jobs with difficult-to-measure output
E)   routine, standardized jobsF) A) and E)
G) A) and D)

Question 7

An organization wants to provide its employees information about what its goals are and what it expects employees to accomplish.It is planning to implement an incentive plan that helps employees understand the organization's goals.Which of the following should be used by this organization?

Accepted Answer

A)   Profit sharing plan
B)   Piecework rates
C)   Merit pay system
D)   Scanlon plan
E)   Balanced scorecardF) B) and E)
G) D) and E)

Question 8

How does the balanced scorecard help organizations deal with unethical behaviors of executives?

Accepted Answer

A)   It allows companies to deduct executive pay that exceeds $1 million.
B)   Rewarding the achievement of a variety of goals reduces temptation on the executive's part to gain bonuses by manipulating data.
C)   It encourages executives to hold on to their stock options when the company is undergoing financial problems.
D)   It forces executives to focus on company's long-term success because funds in ESOP are guaranteed by the Pension Benefit Guarantee Corporation.
E)   In a balance scorecard, maximum points are given to ethical behavior.F) C) and D)
G) B) and C)

Question 9

From employers' perspective,an advantage of merit pay is that it is cheap.

Accepted Answer

A) True 
 B)False

Question 10

Generally,team awards do not use cost savings as a performance measure.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a disadvantage of using group bonuses?

Accepted Answer

A)   Physical outputs are not rewarded.
B)   It reduces the level of cooperation between the members of the group.
C)   The performance measures used are narrow.
D)   It could result in competition among groups.
E)   It cannot be used to promote specific goals.F) None of the above
G) D) and E)

Question 12

An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as:

Accepted Answer

A)   commission.
B)   a Scanlon plan.
C)   merit pay.
D)   gain sharing.
E)   profit sharing.F) C) and D)
G) None of the above

Question 13

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.

Accepted Answer

A) True 
 B)False

Question 14

_____ provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system.

Accepted Answer

A)   Differential piece rate
B)   Standard hour plan
C)   Merit pay
D)   Piece rate
E)   CommissionF) A) and C)
G) C) and D)

Question 15

What is the function of a merit increase grid?

Accepted Answer

A)   To make the merit increases consistent
B)   To further increase the pay for those whose pay is relatively higher for their job
C)   To increase the employees' compa-ratio
D)   To stabilize economic conditions
E)   To increase incentives on an year-by-year basisF) None of the above
G) D) and E)

Question 16

Stock options have their greatest motivational potential during periods of:

Accepted Answer

A)   high unemployment.
B)   downturns in the economy.
C)   high economic growth.
D)   low inflation.
E)   slowdown in the company's growth.F) B) and D)
G) None of the above

Question 17

Which of the following is an advantage of using balanced scorecard?

Accepted Answer

A)   It eliminates the need to communicate the details of the plan to the employees.
B)   It eliminates managerial effort when providing incentives to employees.
C)   It provides more pay to all employees in the organization.
D)   It reduces employee stress as it does not focus on financial targets.
E)   It helps employees understand the organization's goals.F) A) and B)
G) A) and C)

Question 18

In 2003,a company employee received an option to purchase the company's stock at $45 per share.If the stock is trading at $40 a share in 2005,the employee will most likely:

Accepted Answer

A)   exercise the option, receiving a gain of $5.
B)   exercise the option, receiving a gain of $40.
C)   would not bother to exercise the options.
D)   be eligible to obtain a price $45 per share.
E)   sell the shares to a third party slightly above the market price.F) C) and D)
G) All of the above

Question 19

How do employee stock ownership plans differ from stock options?

Accepted Answer

Stock options give employees the right t...

Question 20

Paying most or all of a salesperson's compensation in the form of commissions encourages the salesperson to focus on:

Accepted Answer

A)   closing the sale.
B)   developing customer goodwill.
C)   working as a team member.
D)   building a relationship with the customer.
E)   improving the quality of customer experience.F) A) and B)
G) A) and D)

Exam 12: Recognizing Employee Contributions With Pay

Stock options have their greatest motivational potential during periods of:

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What is the difference between bonuses and team awards?

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When an employee's pay is calculated as a percentage of sales,it is referred to as:

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What is the function of a merit increase grid?

Correct AnswerverifiedShow Answer

_____ provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system.

Correct AnswerverifiedShow Answer

An organization wants to provide its employees information about what its goals are and what it expects employees to accomplish.It is planning to implement an incentive plan that helps employees understand the organization's goals.Which of the following should be used by this organization?

Correct AnswerverifiedShow Answer

Piecework rate plans are most suited for _____.

Correct AnswerverifiedShow Answer

In 2003,a company employee received an option to purchase the company's stock at $45 per share.If the stock is trading at $40 a share in 2005,the employee will most likely:

Correct AnswerverifiedShow Answer

Which of the following is an incentive plan that is intended to improve the overall performance of an organization?

Correct AnswerverifiedShow Answer

Merit increase grids display an organization's policies for linking the size and frequency of pay increases to an individual's performance rating and position within the pay range.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Paying most or all of a salesperson's compensation in the form of commissions encourages the salesperson to focus on:

Correct AnswerverifiedShow Answer

An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as:

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Generally,team awards do not use cost savings as a performance measure.

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Which of the following is an advantage of using balanced scorecard?

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How do employee stock ownership plans differ from stock options?

Correct AnswerverifiedStock options give employees the right t...View AnswerShow Answer

How does the balanced scorecard help organizations deal with unethical behaviors of executives?

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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.

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Which of the following is a disadvantage of using group bonuses?

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From employers' perspective,an advantage of merit pay is that it is cheap.

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Stock options give employees the right t...
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