Fundamentals of Human Resource Management, 4e (Dessler)
Chapter 11 Pay for Performance and Employee Benefits
1) Which of the following is the most commonly used tool for motivating employees?
A) merchandise incentives
B) recognition programs
C) special events
D) variable pay
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
2) Which of the following terms refers to any salary increase the firm awards to an individual
employee based on his or her individual performance?
A) merit pay
B) variable pay
C) competency-based pay
D) incentive pay
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
3) How does merit pay differ from a bonus?
A) Merit pay becomes part of an employee’s base pay, but a bonus does not.
B) A bonus becomes part of an employee’s base pay, but merit pay does not.
C) Merit pay is linked to individual performance, while a bonus is linked to profits.
D) A bonus is linked to individual performance, while merit pay is linked to profits.
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
1
4) Ryobi is a large, international power tool manufacturer that develops affordable, high-quality
products such as drills, circular saws, and routers for both homeowners and craftspeople. As the
company continues to grow, its top executives want to ensure that employees are appropriately
paid for their performance and that financial incentives are both fair and effective. Currently, the
firm provides merit raises based on performance appraisals; however, executives are considering
changing the current incentive plan.
Which of the following, if true, best supports the argument that Ryobi should eliminate all merit
raises?
A) Ryobi uses an enterprise incentive management system to automate compensation.
B) Motivation among Ryobi engineers has been improved through social recognition programs.
C) Performance appraisals at Ryobi occur annually, and standards vary from manager to
manager.
D) The commission percentage for Ryobi sales people is based on the ability to meet monthly
quotas.
AACSB: Analytical Thinking
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Critical Thinking
2
5) Ryobi is a large, international power tool manufacturer that develops affordable, high-quality
products such as drills, circular saws, and routers for both homeowners and craftspeople. As the
company continues to grow, its top executives want to ensure that employees are appropriately
paid for their performance and that financial incentives are both fair and effective. Currently, the
firm provides merit raises based on performance appraisals; however, executives are considering
changing the current incentive plan.
Which of the following, if true, undermines the argument that Ryobi should discontinue all merit
raises?
A) Ryobi managers have noticed significant productivity improvements among employees who
receive merit raises.
B) Ryobi managers have not received significant training about conducting performance
appraisals.
C) Ryobi’s top competitor is considered a high-performance work system within the industry.
D) Ryobi employees have expressed that they would prefer stock options to merit raises.
AACSB: Analytical Thinking
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Critical Thinking
3
6) Ryobi is a large, international power tool manufacturer that develops affordable, high-quality
products such as drills, circular saws, and routers for both homeowners and craftspeople. As the
company continues to grow, its top executives want to ensure that employees are appropriately
paid for their performance and that financial incentives are both fair and effective. Currently, the
firm provides merit raises based on performance appraisals; however, executives are considering
changing the current incentive plan.
Which of the following questions is most relevant to the decision by Ryobi executives to
discontinue all merit raises?
A) What are the guidelines for implementing a gainsharing plan?
B) What types of merit raises are effective for high-performing managers?
C) What organization-wide incentive plans are used by other manufacturing firms?
D) What is the connection between merit pay increases and employee productivity?
AACSB: Analytical Thinking
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Critical Thinking
7) Which term refers to any plan that ties pay to productivity or profitability?
A) piecework
B) variable pay
C) merit pay
D) overtime pay
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
4
8) Workers at a t-shirt shop are paid a sum for each t-shirt they produce. Which incentive plan is
most likely used by the employer?
A) merit pay
B) piecework
C) standard hour
D) variable pay
AACSB: Application of knowledge
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Application
9) Which term refers to an incentive plan in which a person is paid a sum for each item sold, with
a strict proportionality between results and rewards regardless of output?
A) standard merit pay
B) straight hourly pay
C) straight piecework
D) variable pay
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
10) Tyrone, a data entry clerk, is paid a basic hourly rate. He receives an extra percentage of his
rate when his productivity is above normal. Which incentive plan is most likely used by Tyrone’s
employer?
A) standard merit pay
B) standard hour plan
C) straight piecework
D) variable pay
AACSB: Application of knowledge
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Application
5
11) Angelo, a process engineer with Global Semiconductor, is following a technical path rather
than a management path at the firm. Which of the following has most likely been implemented
by Global Semiconductor?
A) dual-career ladder
B) competency-based pay
C) flexible family benefits
D) social recognition program
AACSB: Application of knowledge
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Application
12) Every month, Angela, a manager at a manufacturing facility, meets briefly with each of her
subordinates and shows them a graph of their productivity on the assembly line. Which term best
describes Angela’s activity?
A) exit interview
B) social recognition
C) performance feedback
D) performance appraisal
AACSB: Application of knowledge
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Application
6
13) An employer would most likely use an enterprise incentive management system to
________.
A) calculate overtime pay
B) automate award programs
C) monitor employee engagement
D) track performance appraisals
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
14) According to research, which of the following has a significant impact on employee
engagement?
A) performance reviews
B) variable pay plans
C) job design
D) awards
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
15) Merit raises typically become part of an employee’s base salary.
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees.
Skill: Concept
7
16) You are the CEO of Blue Bay Motor Boat Company, a mid-size firm that manufactures speed
boats. What incentive plan would you implement for the firm’s engineers? What incentive plan
would you implement for the firm’s managers? What benefits are you required by law to
provide? What types of discretionary benefits would you make available to all employees?
AACSB: Reflective thinking
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees. 11.4: List and discuss the main
pay for time not worked and insurance benefits.
Skill: Synthesis
17) During difficult economic times, employers have to cut costs. What are some strategies for
minimizing the costs associated with employee health care? What no-cost or low-cost methods
are available to employers who want to recognize and reward hard-working employees?
AACSB: Analytical Thinking
Chapter: 11
LO: 11.1: Discuss the main incentives for individual employees. 11.4: List and discuss the main
pay for time not worked and insurance benefits.
Skill: Synthesis
8
18) What type of profit-sharing plan involves the firm simply distributing a percentage of profits
as profit shares to employees at regular intervals?
A) current profit-sharing
B) Lincoln incentive system
C) Jefferson incentive system
D) employee stock ownership plan
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
19) Tanner’s employer puts a predetermined portion of profits into a trust account for Tanner’s
retirement. Which of the following is most likely the type of profit-sharing plan used by Tanner’s
employer?
A) Jefferson incentive system
B) deferred profit-sharing plan
C) gainsharing plan
D) cash plan
AACSB: Application of knowledge
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Application
9
20) Plans in which a corporation contributes shares of its own stock to a trust established to
purchase shares of the firm’s stocks for employees are known as ________.
A) cash plans
B) Jefferson incentive systems
C) deferred profit-sharing plans
D) employee stock ownership plans
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
21) Which of the following is the primary benefit of employee stock ownership plans?
A) Employees have voting rights in firm decisions.
B) Firms pay distribution taxes for employees prior to retirement.
C) Firms may borrow against employee stock held in trust.
D) Employees are able to diversify their investments.
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
22) Most gainsharing plans include all of the following features EXCEPT ________.
A) a philosophy of cooperation
B) a focus on individual achievement
C) sharing of benefits formula
D) an involvement system
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
10