Chapter 5 Quiz

Question 1

1. Which of the following pay plans targets organizational-level performance?
   a. goal-sharing plans
   b. merit-pay plans
   c. special-purpose incentive pay plans
   d. profit-sharing plans

Answer 1

d. profit-sharing plans

Question 2

2. What is the most common form of performance pay used by medium to large Canadian firms?
   a. merit raises
   b. profit sharing
   c. merit bonuses
   d. commissions

Answer 2

a. merit raises

Question 3

3. Which of the following would NOT be an ideal scenario in which to consider using a piece rate plan?
   a. Quality standards can be monitored effectively.
   b. Significant teamwork is needed to complete a particular task.
   c. Each unit of production can be easily measured.
   d. Tasks tend to be fairly static over time.

Answer 3

b. Significant teamwork is needed to complete a particular task.

Question 4

4. In what way are piece rates and commissions similar to each other?
   a. Employees don’t have to worry about working themselves out of a job.
   b. They reduce the need for external control of employees through supervision.
   c. Both types are commonly used in conjunction with base pay.
   d. Both are popular systems widely used in the service sector.

Answer 4

b. They reduce the need for external control of employees through supervision.

Question 5

5. As a human resource specialist, you have been asked by your organization to lead a discussion on the merits of using internal promotions as a main reward mechanism. Which of the following point(s) would you most likely NOT raise?
   a. They are an expensive process, as promotions are typically associated with pay increases.
   b. They often carry both intrinsic and extrinsic rewards.
   c. They recognize contributions made by strong performers.
   d. They are often seen as a key motivation tool for employees.

Answer 5

a. They are an expensive process, as promotions are typically associated with pay increases.

Question 6

6. Which of the following is NOT a suitable condition for merit pay?
   a. Individual performance varies.
   b. Performance is not controllable by the individual.
   c. Individual performance can be separated out.
   d. Undesirable side effects are readily manageable.

Answer 6

b. Performance is not controllable by the individual.

Question 7

7. An automotive shop wants to reward employees for demonstrating creative customer service that leads to repeat business. A particular employee received a 10 percent bonus for suggesting that the company contact customers 24 hours after repairs to ensure customers are satisfied. What type of incentive would be the most appropriate in this scenario?
   a. merit-raise plans
   b. goal-sharing plans
   c. gain-sharing plans
   d. special-purpose plans

Answer 7

d. special-purpose plans

Question 8

8. From an employer’s point of view, what is the most attractive feature of gain-sharing plans?
   a. The plans are self-funding.
   b. Positive work group norms develop.
   c. The need for supervisory control is reduced.
   d. Employees monitor each other’s performance

Answer 8

a. The plans are self-funding.

Question 9

9. Which are the main types of profit sharing plans?
   a. current assessment plan, deferred plan, and blended plan
   b. deferred plan, cash plan, and group plan
   c. combination plan, deferred plan, and current distribution plan
   d. current distribution plan, combination plan, and employee plan

Answer 9

c. combination plan, deferred plan, and current distribution plan

Question 10

10. Your CEO is concerned that employees are not saving enough for their retirement. At the same, the CEO wants to have some of the company’s profits shared with all employees. To address these issues, your CEO asks you, a human resource compensation specialist, to recommend the most appropriate profit-sharing plan to address this retirement issue. Which of the following profit-sharing plans would you recommend?
    a. deferred profit sharing
    b. combination profit sharing
    c. current distribution
    d. cash plan

Answer 10

a. deferred profit sharing

Question 11

11. What do employees receive under an employee stock bonus plan?
    a. shares at no cost to themselves
    b. the cash value of phantom shares
    c. a bonus equivalent to the increase in their share value
    d. free financial advice on stocks

Answer 11

a. shares at no cost to themselves

Question 12

12. Which plans are set up so that a payout is contingent on the achievement of three- to five-year performance goals?
    a. pension plans
    b. long-term incentives
    c. deferred profit-sharing plans
    d. goal-sharing plan

Answer 12

b. long-term incentives

Question 13

13. Which of the following is normally seen as an advantage associated with long-term incentives plans?
    a. They may encourage a better understanding of the business.
    b. They tie rewards to the company’s ability to pay.
    c. They usually dilute shareholder equity for existing shareholders

Answer 13

a. They may encourage a better understanding of the business.