Chapter 9 Flashcards
A study finds that the best way to retain superior employees is to \_\_\_\_\_\_\_ A) raise their wage level. B) provide innovative benefits C) offer flex-time D) provide bonuses
Provide bonuses
Assume you are a competent, hard working employee; which of the following wage components would most likely give you the largest additional pay? A) merit B) individual incentive C) profit sharing D) gain sharing
individual incentive
___________ theory would argue that a policy of pay secrecy is likely to lead to employee dissatisfaction.
equity
A practical implication of ____________ theory is that when using performance-based pay, there should be opportunities to earn high pay.
agency
T/F According to a study of 200 companies, the variable portion of pay had a larger impact on individual and organizational performance than the level of base pay.
TRUE
When an organization’s performance has low variability but individual employee work is unstable with changing objectives, the compensation system that is likely to be most effective is an emphasis on _________________
A) base pay with low incentives and a variety of rewards
B) monetary rewards with a large base and small incentive pay component
C) monetary rewards and a large incentive component
D) a variety of rewards and a large incentive component
a variety of rewards and a large incentive component
All of the following are behaviors compensation should reinforce except \_\_\_\_\_\_\_\_ A) attracting applicants. B) retaining employees. C) prevent theft. D) motivating skill development.
prevent theft.
Evidence suggests that high ability people are more likely to seek employment at organizations with a strong link between pay and performance.
A) TRUE
B) FALSE
True
Research shows that for every \_\_\_\_\_ percent increase in the bonus paid to employees, there is a \_\_\_\_\_ percent increase in ROA. A) 1.5, 10 B) 10, 1.5 C) 3.5, 15 D) 15, 3.5
10, 1.5
In the model of behavior and human resource practices, which of the following is not an environmental obstacle?
organizational design
The environmental obstacle triangle includes \_\_\_\_\_. A) performance management B) recruitment C) culture D) HR planning
D) HR planning
When an organization’s performance is fairly stable and individual performance is unclear and hard to measure, the most effective compensation mix is to offer _____.
A) base pay with low incentives and a variety of rewards
B) monetary rewards with large incentives
C) large base and low-incentive pay
D) a wide range of rewards beyond just money and significant incentives
D)a wide range of rewards beyond just money and significant incentives
Which among the following wage components focuses on exceeding a cost index such as scrap cost? A) Risk sharing B) Gain sharing C) Profit sharing D) Success-sharing
B)Gain sharing
Risk-averse individuals are more likely to seek _____.
A) an organization with pay plans based upon individual not group performance
B) an organization with a significant amount of pay based upon performance
C) a small organization with large benefits
D) less performance-based pay
D)less performance-based pay
\_\_\_ are generally lump-sum or installment bonuses designed specifically to retain key employees during and after a Chapter 11 restructuring. A) Stay bonuses B) Retention incentives C) Continuation benefits D) Extension settlements
A)Stay bonuses
Lack of employee control translates into perceptions of unfair treatment if pay is tied to these uncontrollable things.
A) True
B) False
A)True
As per the expectancy theory, smaller incentive payments are better than larger ones.
A) True
B) False
B)False
Lump-sum bonuses are added into base pay.
A) True
B) False
B)False
Group incentive plans may lead to more turnover of poor performers.
A) True
B) False
B)False
The sorting effect means people sort themselves into or out of organizations based on a preference for being paid based on personal performance or some something else.
A) True
B) False
A)True
In the formula Behavior=f(M,A,E), what do M, A, and E represent?
M=motivation, A=ability, E=environment
What are 3 elements of motivation?
- what’s important to a person
- offering it in exchange for some
- Desired behavior
What are predictions about performance based pay with Maslow’s need hierarchy theory?
- Base pay must be set high to provide for basic needs.
- At risk program will not be motivating
- success sharing plans may be motivating if they cause employees to pursue higher order needs.
What are predictions about performance based pay with Herzberg’s 2 factor theory?
- High base pay to meet hygiene needs
- Performance obtained through rewards.
- Performance based pay is rewarding if satisfies need for recognition, etc.
- Other factors (interpersonal atmosphere, responsibility, type of work) influence efficacy of performance based pay
What are the 3 perceptions in Expectancy Theory?
- Expectancy
- Instrumentality
- Valence
What are predictions about performance based pay with Expectancy Theory?
- Job tasks clearly defined
- Pay-performance link critical=LINE OF SIGHT
- Performance based pay rewards must be large enough to be considered rewards.
- People choose behavior that leads to greatest reward
What are the features of Agency Theory?
- pay directs and motivates performance
- Employees prefer salary to performance based pay
- if performance can be monitored, payments should be based on satisfactory completion of work duties
- if performance can’t be monitored, pay should be aligned with achieving organizational objectives
What are the 13 components to a total reward system?
- Compensation
- Benefits
- Social Interaction
- Security
- Status/Recognition
- Work variety
- Workload
- Work Importance
- Authority/control/autonomy
- Advancement
- Feedback
12 Work Conditions - Development opportunities
How does compensation attract employees?
Employees look for reward systems that fit their personalities: talented employees want compensation with a strong link between pay and performance
What 3 things is an effective Pay for Performance plan dependent on?
- Efficiency
- Equity
- Compliance
