23) Which incentive plan is based on a philosophy that managers and employees must cooperate
together?
A) cash plan
B) gainsharing plan
C) deferred profit-sharing plan
D) employee stock ownership plan
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
24) A(n) ________ plan is an incentive plan that engages many or all employees in a common
effort to achieve a company’s productivity objectives with any resulting cost-savings shared
among employees and the company.
A) stock gain plan
B) merit pay plan
C) gainsharing
D) ESOP
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
25) A straight salary for salespeople is most appropriate when the main tasks involve ________.
A) selling technical products
B) exceeding sales quotas
C) finding new clients
D) selling real estate
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
11
26) What is the primary disadvantage of using the straight salary approach to pay salespeople?
A) relying on annual profits
B) discouraging staff loyalty
C) preventing territory changes
D) failing to link effort with reward
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
27) What is a disadvantage of straight commission plans?
A) Payments are complicated to calculate.
B) Salespeople spend too much time on servicing.
C) Salespeople neglect selling hard-to-sell products.
D) The company’s fixed sales costs are proportionately high.
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
28) What is the main benefit of paying salespeople a combination of salary and commission?
A) limiting the firm’s risk of overly high commissions
B) aligning employee goals and company strategy
C) providing simple salary administration
D) clearly linking pay with performance
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
12
29) What should be the central focus of a firm’s executive reward packages?
A) employing top-quality management experts
B) accomplishing the firm’s strategic goals
C) ensuring ethical and legal accountability
D) encouraging long-term accountability
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
30) The Sarbanes-Oxley Act was most likely enacted to ________.
A) provide financial insight
B) decrease the corporate tax rate
C) monitor the distribution of stock shares
D) increase the accountability of top executives
AACSB: Ethical understanding and reasoning
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
31) According to research, most firms use ________ to motivate the short-term performance of
managers.
A) work-life benefits
B) annual bonuses
C) variable pay
D) training
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
13
32) All of the following are factors that influence an annual bonus EXCEPT ________.
A) eligibility
B) commission
C) size of the fund
D) individual performance
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
33) Which term refers to the right to purchase a stated number of shares of a company stock at
today’s price at some time in the future?
A) stock option
B) gainsharing plan
C) multiplier method
D) at-risk variable plan
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
34) Which of the following would most likely be used by a firm that wants to retain the services
of a top manager for a specified period of time?
A) restricted stock plan
B) golden parachute plan
C) stock appreciation rights
D) performance-contingent restricted stock
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
14
35) Marie, a top manager at Levon Marketing, will receive 500 shares of the firm’s stock if the
firm’s sales increase by 5% in the next quarter. Which of the following was Marie most likely
given?
A) phantom stock
B) stock appreciation rights
C) restricted stock plan
D) performance-contingent restricted stock
AACSB: Application of knowledge
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Application
36) An executive who receives a ________ stock receives units instead of shares of company
stock. The units will be equated to cash in the future if appreciation occurs.
A) phantom
B) restricted
C) premium
D) nonqualified
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
37) Which term refers to payments a firm makes related to changes in company ownership?
A) pension plan
B) annual bonus
C) golden parachute
D) retirement perks
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
15
38) Which of the following involves setting a production standard for a specific work group and
then paying incentives to the group members if they exceed the standard?
A) team incentive plan
B) group profit-sharing plan
C) employee stock ownership plan
D) organization-wide incentive plan
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
39) What is the most likely reason that firms are implementing group incentive plans?
A) stricter regulations regarding team bonus plans
B) heavy reliance on teams to manage work
C) expected loss of older workers
D) rising cost of health benefits
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
40) All of the following are examples of organization-wide incentive plans EXCEPT ________.
A) employee stock ownership plans
B) gainsharing plans
C) golden parachute
D) profit sharing
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
16
41) Which gainsharing plan involves employees working on a guaranteed piecework basis?
A) current profit-sharing
B) deferred profit-sharing
C) Lincoln incentive system
D) earnings-at-risk pay plan
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
42) An earnings-at-risk pay plan bases employee pay and bonuses on ________.
A) maximizing organizational performance
B) generating additional long-term sales
C) engaging in strategic objectives
D) achieving departmental goals
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
43) Broad-based stock option plans are intended to ________.
A) motivate all employees at a firm
B) encourage management retention
C) monitor the decisions of executives
D) distribute earnings to boards of directors
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
17
44) Enterprise incentive management software is used by managers to ________.
A) motivate employees to meet and exceed departmental goals
B) quantify correlations between pay and performance
C) select and develop mission-critical employees
D) monitor training and development needs
AACSB: Application of knowledge
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
45) Upon being hired as a marketing representative at Argo Pharmaceuticals, Shelly agreed to
forego 5% of her normal pay if she failed to meet performance goals. In return, Shelly will
receive a 10% bonus if she exceeds her goals. In what type of plan does Shelly most likely
participate?
A) earnings-at-risk pay plan
B) variable risk sharing plan
C) at-risk gainsharing plan
D) risk-reward stock plan
AACSB: Application of knowledge
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Application
46) Which of the following is the LEAST relevant characteristic of an effective incentive plan?
A) Incentives are based on industry standards.
B) Rewards are attractive to targeted employees.
C) Incentives are linked to effort and performance.
D) Goals are specific, achievable, and challenging.
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
18
47) Gainsharing plans involve putting some portion of an employee’s weekly pay at risk for the
opportunity to earn incentives if the employee meets or exceeds his or her goals.
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Concept
48) What are the advantages of employee stock ownership plans?
AACSB: Application of knowledge
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Application
49) What is a stock option? What are some of the problems associated with rewarding managers
with stock options?
AACSB: Reflective thinking
Chapter: 11
LO: 11.2: Name and define the most popular organization-wide incentive plans.
Skill: Critical Thinking
19
50) The indirect financial and nonfinancial payments employees receive for continuing
employment with the company are called ________.
A) reimbursement
B) employee compensation
C) salary
D) benefits
Chapter: 11
LO: 11.4: List and discuss the main pay for time not worked and insurance benefits.
Skill: Concept
51) Which of the following benefits is required by federal or state law?
A) disability insurance
B) workers’ compensation
C) paid time off
D) pensions
Chapter: 11
LO: 11.4: List and discuss the main pay for time not worked and insurance benefits.
Skill: Concept
52) Which of the following terms refers to benefits for time not worked such as unemployment
insurance, vacation and holiday pay, and sick pay?
A) supplemental pay benefits
B) employee assistance
C) financial incentives
D) merit pay
Chapter: 11
LO: 11.4: List and discuss the main pay for time not worked and insurance benefits.
Skill: Concept
20