Chapter 10

Question 1

Growing interest in variable pay has been attributed to greater foreign competition and changes in compensation and tax laws.
A) TRUE
B) FALSE

Answer 1

FALSE

Question 2

All of the following are true regarding merit pay except _______
A) it has a small, but significant effect on performance
B) removal of merit pay lowers satisfaction and performance
C) departments and units with merit pay show higher performance
D) merit pay tends to cause higher performers to quit

Answer 2

merit pay tends to cause higher performers to quit

Question 3

The incentive system with two rates, one for above production standard and one for below standard is the \_\_\_\_\_ plan.
	A)	Taylor
	B)	Merrick
	C)	Rowan
	D)	Gantt

Answer 3

Taylor

Question 4

Disadvantages of individual incentive plans include all but _________
A) reduced ability to predict labor costs
B) increases complaints about equipment maintenance
C) increased turnover among new employees
D) greater conflict between management and workers

Answer 4

reduced ability to predict labor costs

Question 5

Historically, the most commonly used performance indicator for group incentive plans has been \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
	A)	customer-focused measures.
	B)	human resource capabilities.
	C)	financially focused measures.
	D)	resource utilization measures

Answer 5

financially focused measures.

Question 6

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ is used to both attract quality employees to organizations with uncertain futures and retain employees.
	A)	Cash profit sharing
	B)	Deferred profit sharing
	C)	Stock ownership or options
	D)	The balanced scorecard

Answer 6

Stock ownership or options

Question 7

All but which of the following is a problem with team compensation?
A) there are many types of teams
B) some team compensation plans are too simple
C) the level problem
D) control of outcomes

Answer 7

some team compensation plans are too simple

Question 8

Gain sharing plans include a split of the savings between management and workers.
A) TRUE
B) FALSE

Answer 8

TRUE

Question 9

The purpose of \_\_\_\_\_\_\_\_\_\_ is to support a major productivity or quality initiative.
	A)	stock options
	B)	gainsharing
	C)	cash profit sharing
	D)	team incentives

Answer 9

gainsharing

Question 10

A gain-sharing plan that has proven easy to administer and communicate, which identified the expected hours required to produce an acceptable level of output is the \_\_\_\_\_\_\_\_\_\_\_\_\_\_
	A)	Scanlon plan
	B)	Improshare
	C)	Rucker plan
	D)	deferred profit sharing plan

Answer 10

Improshare

Question 11

Employers like \_\_\_\_\_\_\_\_\_\_ plans, and most employees would prefer \_\_\_\_\_\_\_\_\_\_ plans.
	A)	success-sharing, risk-sharing
	B)	risk-sharing, risk-sharing
	C)	risk-sharing, success sharing
	D)	success-sharing, success-sharing

Answer 11

risk-sharing, success sharing

Question 12

A \_\_\_\_\_ system links increases in base pay to how highly employees are rated on a subjective performance evaluation.
	A)	variable pay system
	B)	subjective ranking
	C)	merit pay
	D)	rating

Answer 12

C)merit pay

Question 13

The _____ was proposed some years ago to introduce pay for performance into the white-collar pay system.
A) National Labor Relations Board
B) Office of Personnel Management
C) Federal Commission on Management
D) Equal Employment Opportunity Commission

Answer 13

B)Office of Personnel Management

Question 14

After the fact, someone in the organization alerts top management to the exceptional performance. If the company is large, there may be a formal mechanism for this recognition, and perhaps some guidelines on how to administer it. What is likely discussed here?
	A)	Bonuses
	B)	Lump sum payments
	C)	Incentives
	D)	Spot awards

Answer 14

D)Spot awards

Question 15

Instead of timing an entire task, a \_\_\_\_\_ requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action.
	A)	piecework system
	B)	Bedeaux plan
	C)	standard hour plan
	D)	Hasley 50-50 plan

Answer 15

B)Bedeaux plan

Question 16

Sylvester's teammates have recognized a pattern in his behavior. Every time some task is assigned to the team, Sylvester lazes around and fails to put in his bit. But when the rewards are distributed he claims equal share. This problem is referred to as:
	A)	black sheep syndrome.
	B)	piggybacking.
	C)	the free-rider problem.
	D)	reverse discrimination.

Answer 16

C)the free-rider problem.

Question 17

In Scanlon plans, incentives are derived as a function of the ratio between labor costs and sales value of production.
A) True
B) False

Answer 17

A)True

Question 18

In a success-sharing plan, base pay is reduced by some amount relative to the level that would be offered in a risk-sharing plan.
A) True
B) False

Answer 18

B)False

Question 19

Group pay-for-performance plans are gaining popularity while individual plans are stable or declining in interest.
A) True
B) False

Answer 19

A)True

Question 20

Evidence suggests that stock ownership is likely to increase rapid external diversification, rather than internal growth.
A) True
B) False

Answer 20

B)False

Question 21

BBOPs are stock grants in which the company gives employees shares of stock over a designated time period.
A) True
B) False

Answer 21

A)True

Question 22

What are some types of pay for performance plans?

Answer 22

Incentive plans
Variable pay
Compensation at risk
Earnings at risk
success sharing
risk sharing

Question 23

Which plan has 3 piecework rates: high, medium and low?

Answer 23

Merrick

Question 24

What are 5 reasons group incentive plans fail?

Answer 24

1. Teams are varied
2. “level problem”
3. complexity
4. Control
5. Communication