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a.
$1.95
b.
$2.55
c.
$2.95
d.
$3.15
73. A study on bonus versus actual pay raises showed that improving one’s pay through merit increases by 1 percent
would increase future performance by ____ percent.
a.
2
b.
5
c.
8
d.
10
74. Research shows that a merit increase in the range of _____ is necessary to serve as a pay motivator.
a.
3 to 5 percent
b.
7 to 9 percent
c.
11 to 13 percent
d.
15 to 17 percent
75. Rate busting refers to:
a.
an increase in productivity due to external competition.
b.
an increase in output that results in the disapproval of fellow employees.
c.
setting incentive performance standards for employees.
d.
a decrease in productivity due to lack of motivation.
76. Piecework is appropriate when:
a.
technology changes are frequent.
b.
quality is more important than quantity.
c.
productivity standards are difficult to develop.
d.
a job is fairly standardized.
77. An incentive given for a special employee contribution not directly tied to a performance standard is a:
a.
piece rate plan.
b.
differential piece rate.
c.
merit pay.
d.
spot bonus.
78. If an employee's pay is based not on the actual amount of time it takes him or her to complete a job but instead on a
predetermined amount of time for completing the job, he or she is working under the _____.
a.
piece rate plan
b.
standard hour plan
c.
time division plan
d.
completion pay system
79. An appropriate reward for a consumer service representative who worked long hours to fill a new customer’s large
order is a:
a.
piece rate.
b.
differential piece rate.
c.
merit pay.
d.
spot bonus.
80. In 2011, a study by the American Psychological Association found that _____ of employees feel they receive
inadequate nonmonetary awards and recognition for their contributions at work.
a.
16 percent
b.
25 percent
c.
34 percent
d.
43 percent
81. _____ are a group of individuals who are over the age of 60 and are less likely to spend money on themselves.
a.
Members of generation X
b.
Members of generation Y
c.
Boomers
d.
Traditionalists
82. To minimize the problems of merit raises, organizations should use:
a.
labor market comparisons.
b.
employee input.
c.
merit guidelines.
d.
the opinions of several managers.
83. _____ are individuals between the ages of 25 and 41 who value a balanced lifestyle of work and play.
a.
Members of Generation X
b.
Members of Generation Y
c.
Traditionalists
d.
Boomers
84. The straight commission plan is limited by all of the following disadvantages EXCEPT that:
a.
salespeople will stress low-priced products.
b.
customer service after the sale is likely to be neglected.
c.
earnings tend to fluctuate widely between good and poor periods of business.
d.
salespeople are tempted to grant price concessions.
85. A grant of units equal in value to fair market value or book value of a share of stock is known as:
a.
stock appreciation rights.
b.
a stock purchase.
c.
restricted stock.
d.
phantom stock.
86. A cash or stock award determined by increase in stock price during any time chosen by the executive in the option
period, which does not require executive financing is known as:
a.
phantom stock.
b.
stock appreciation rights.
c.
restricted stock.
d.
performance shares.
87. In most profit-sharing plans, about _____ of the net profit is shared.
a.
5 to 10 percent
b.
10 to 15 percent
c.
15 to 20 percent
d.
20 to 25 percent
88. Performance of sales people can be affected by all of the following external factors EXCEPT:
a.
the sales territory.
b.
changes in demand.
c.
changes in the sales volume standard.
d.
seasonal fluctuations.
89. A sales incentive plan that permits salespeople to be paid for performing various duties not reflected immediately in
their sales volume is known as a:
a.
merit plan.
b.
straight salary plan.
c.
lump-sum merit pay.
d.
standard hour plan.
90. According to the National Center for Employee Ownership, in 2013 approximately _____ organizations have
employee stock ownership plans (ESOP) for their employees.
a.
3,500
b.
11,000
c.
17,500
d.
24,500
91. A compensation plan that compensates sales employees based on a percentage of sales is known as a:
a.
straight ratio plan.
b.
straight salary plan.
c.
straight commission plan.
d.
straight bonus plan.
92. Which of the following is NOT one of the simple rules for maintaining motivation among professionals?
a.
Provide clear goals
b.
Provide the ability to develop new skills
c.
Reward performance quickly
d.
Eliminate autonomy in work
93. Executive compensation consists of all of the following EXCEPT:
a.
base salary.
b.
proficiency adjustments.
c.
perquisites.
d.
short-term incentives.
94. Executive base salaries represent between _____ percent of the total annual compensation.
a.
10 and 20
b.
20 and 30
c.
30 and 40
d.
40 and 50
95. The greatest influence on executive base salary is most likely:
a.
the amount of short-term incentives received.
b.
the amount of long-term incentives received.
c.
the levels of competitive salaries in the job market.
d.
the time spent in the occupation.
96. When computing executive pay, many organizations are tying _____ to traditional financial gauges.
a.
performance markers
b.
global standards
c.
application rewards
d.
balanced scorecards
97. Management should guard against incentive payments being seen as _____.
a.
too competitive
b.
equitable
c.
permanent
d.
an entitlement
98. Long-term incentive plans in which rights are granted to executives to purchase shares of their company's stock at a
fixed price for a fixed period of time are known as:
a.
stock options.
b.
stock grants.
c.
restricted stocks.
d.
performance shares.
99. Which plan provides opportunities for executives to purchase shares of their organization’s stock valued at full market
or a discounted price?
a.
Stock options
b.
Stock appreciation rights
c.
Stock purchase
d.
Phantom stock
100. Which of the following is an individual type of incentive plan?
a.
Improshare
b.
Lump sum merit pay
c.
Stock options
d.
Employee stock ownership plans
101. Special benefits given to executive employees, such as assigned chauffeurs, country club memberships, and special
vacation policies, are known as:
a.
executive rewards.
b.
perquisites.
c.
golden parachutes.
d.
assigned benefits.
102. Compensation committees justify large executive compensation packages in the following ways EXCEPT:
a.
effective executives create shareholder value.
b.
good executive talent is in great demand.
c.
the pay gap between the CEO and employees builds credibility.
d.
large incentives reward superior performance.
103. A major concern of executive compensation involves:
a.
timing of the bonus.
b.
the amount of compensation.
c.
lack of perquisites.
d.
lack of objective market data.
104. Group incentive plans do all of the following EXCEPT:
a.
enabling employees to share the benefits of improved efficiency.
b.
encouraging cooperation.
c.
reducing free-ride effect.
d.
rewarding employees for total contribution to organizational performance.
105. A problem with creating team incentive plans is that:
a.
they encourage negativity rather than cooperative behavior.
b.
not all teams that are created are alike.
c.
they don't enable employees to share efficiency gains..
d.
they pay only when agreed-upon standards are met or exceeded.
106. Team incentive bonuses may be paid out in all of the following ways EXCEPT by distributing it:
a.
equally among team members.
b.
proportion to each member's base pay.
c.
proportion to each member's relative contribution to the team.
d.
on the basis of individual performance appraisal.
107. Common output measures for productivity include:
a.
sales.
b.
materials.
c.
labor costs.
d.
total costs.
108. _____ is a bonus incentive plan which uses employee and management committees to gain cost-reduction
improvements.
a.
Piecework
b.
The Rucker Plan
c.
The Scanlon Plan
d.
Improshare
109. The philosophy behind the Scanlon Plan is that:
a.
employees should make suggestions to improve performance and be rewarded for their contributions.
b.
organizational profits should improve through sales efforts.
c.
managers and employees should establish quality and quantity goals for optimum organizational performance.
d.
rewards should be shared with employees based on improved profits.
110. When the determination of a bonus includes both production employees and nonproduction employees and this
bonus is based on overall group productivity, which type of gainsharing program is being used?
a.
Profit sharing
b.
The Rucker Plan
c.
Improshare
d.
The Scanlon Plan
111. Profit sharing refers to any procedure by which an employer pays employees:
a.
an incentive based on their merit.
b.
an incentive based on labor cost savings.
c.
a bonus based on the overall productivity of their particular work group.
d.
current or deferred sums based on the organization's financial performance.
112. The purpose of a profit-sharing plan is to:
a.
allow workers to contribute specific knowledge to improving the organization.
b.
give employees the opportunity to increase their earnings.
c.
enable workers to share in labor cost savings.
d.
instill commitment to the employee's immediate work group.
113. The success of the Lincoln Electric Company profit-sharing plan rests largely on:
a.
contributions by employees.
b.
objective standards.
c.
comparison data between departments.
d.
economics of the review period.
114. The disadvantages of profit sharing include all of the following EXCEPT that:
a.
payments may lose their motivational value as they are made only once a year.
b.
plans may not pay off for several years in a row.
c.
effective profit sharing plans require a second HR program.
d.
employee morale could drop during time periods after no bonus has been given.
115. The use of _____ is a popular and prevalent method used in different industries for motivating and compensating
hourly, salaried, and executive personnel.
a.
bonuses
b.
stock options
c.
benefits
d.
perquisites
116. ESOPs can qualify as tax-exempt employee trusts under section _____ of the Internal Revenue Code.
a.
402(a)
b.
457(k)
c.
401(a)
d.
407(k)
117. The advantages of employee stock ownership plans include all of the following EXCEPT that:
a.
employers are able to provide retirement benefits to employees at a relatively low cost.
b.
employees' pensions are less vulnerable due to diversification.
c.
employee stock ownership plans can increase employees' pride of ownership.
d.
employee stock ownership plans can provide an incentive for employees to increase productivity.
118. A major problem of employee stock ownership plans is that:
a.
motivation of employees is rarely achieved.
b.
employees view it as a form of management control.
c.
it places employees' pensions at risk.
d.
it can be damaging to the financial well-being of an organization.
119. According to one budget survey, _____ percent of reporting organizations use variable pay.
a.
100
b.
80
c.
60
d.
40
120. Noncash incentive rewards are most effective as motivators when the award is:
a.
a complete surprise to the recipient.
b.
combined with a meaningful employee recognition program.
c.
increased every year it is given.
d.
tailored to individual employees.
121. Compensation specialists recognize all the following generations of employees EXCEPT:
a.
Generation X.
b.
Generation Y.
c.
Boomers.
d.
Synthesizers.
122. The most widely used sales incentive program is the _____ plan.
a.
straight salary
b.
straight commission
c.
combined salary and commission
d.
commission plus bonus
123. Briefly discuss three individual incentive plans.
124. Discuss the problems identified with merit raises. As a manager what should one do to insure that merit raises fulfill
their intended value?
125. Identify the principal methods for compensating salespersons and the advantages of each method.
126. Briefly describe the Scanlon Plan.
127. What are the pros and cons of high executive pay?
128. Discuss the advantages of incentive pay programs.
