1. Historically, incentive plans have not been a major element of strategic compensation management.
a.
True
b.
False
2. The performance threshold in incentive plans is the name given to the amount awarded to an employer.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-1
3. Incentive plans can create an organizational environment of shared commitment since individuals contribute to
organizational success.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-1
4. Meshing compensation and organizational objectives help employees assume ownership of their jobs, thereby
improving their effort and overall job performance.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-1
False
Easy
5. More than 80 percent of companies globally are offering variable pay programs.
a.
True
b.
False
6. For incentive plans to work effectively, employees must see a clear connection between the incentive payments they
receive and their performance.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-1
7. Management must be careful to ensure that incentive payments are viewed as both a reward and an entitlement.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-1
8. Incentive plans may fail because employees have little ability to affect performance standards.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-1
9. Incentive plans based on productivity can reduce labor costs.
True
Easy
a.
True
b.
False
10. Organizational goals can impact choice of incentive plans.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
11. Employees receive a specified payment for each unit produced under a straight piecework program.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
12. Under a differential piece rate, employees whose production performance exceeds the standard output receive a higher
rate for all of their work than the rate paid to those who do not exceed the standard.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
13. Under a straight piecework plan, if five minutes is the standard time to produce one unit and the employee’s hourly
rate is $7.50. The piece rate is $1.50 per unit.
True
Easy
MGHR.SNEL.17.10-1
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
a.
True
b.
False
14. Major advantages of piecework systems are that the wage payment is simple to compute, and an organization can
predict labor costs with reasonable accuracy.
a.
True
b.
False
True
Moderate
MGHR.SNEL.17.10-2
15. Fixed pay is more flexible than variable pay.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-1
16. Piecework may be inappropriate where technology changes are frequent.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
17. Generally, a bonus plan does not become part of an employee’s base pay.
a.
True
False
Challenging
MGHR.SNEL.17.10-2
b.
False
18. The standard hour plan provides bonus payment for completing work in less than the specified time.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-2
19. Standard hour plans are based on specific production standards set for individual jobs.
a.
True
b.
False
False
Moderate
MGHR.SNEL.17.10-2
20. Standard hour plans are popular in service departments in automobile dealerships.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
21. A bonus is an incentive payment that is supplemental to base wages.
a.
True
b.
False
True
True
Easy
MGHR.SNEL.17.10-2
22. A spot bonus is usually given for some employee effort that is not directly tied to an established performance standard.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
23. Unlike a bonus, a merit raise may be perpetuated year after year even when performance declines.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
24. Merit pay plans have been criticized because the merit increase may not be sufficient to raise all employees’ base pay.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
25. Employees may not believe that their compensation is tied to effort and performance, and they may not be able to
differentiate between merit pay and other types of pay increases.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
26. Research clearly shows that noncash incentive awards are most effective as motivators when the award is combined
with a meaningful employee recognition program.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
27. The operation of a merit pay plan depends on the effectiveness of the performance appraisal system.
a.
True
b.
False
True
Moderate
28. Under the Scanlon plan or Improshare program, psychological ownership can play a stronger role than financial
ownership in employee performance.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-3
29. Employees do not actually buy shares in an employee stock exchange plan.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
30. Generally, an employee stock ownership plan is more likely to serve its intended purposes in privately held companies
than in publicly held ones.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-4
31. Sales incentives can be affected by external factors beyond a salesperson’s control.
a.
True
b.
False
True
Easy
32. An advantage of using a straight salary plan to compensate sales employees is that employees are paid for performing
only sales effort.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-2
33. Under a straight commission plan, compensation is based entirely on a percentage of sales.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
34. The percentage of cash compensation paid out in commissions is called a draw.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-2
35. Under a straight commission plan, sales people may be allowed a salary draw.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
36. An analysis of executive salaries shows that the largest portion of executive pay is received in long-term incentive
rewards and bonuses.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
37. Executive-base salaries represent between 10 and 20 percent of total annual compensation.
a.
True
b.
False
False
Easy
Easy
MGHR.SNEL.17.10-2
38. Straight commission plans may induce salespeople to grant price concessions.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-2
39. Annual bonuses represent the main element of executive short-term incentives.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
40. The principal reason guiding executive stock options as an incentive is for senior managers to have a significant stake
in the success of a business.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
41. Stock options are rights attached to the achievement of specific organizational objectives.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-5
MGHR.SNEL.17.10-5
42. A major criticism of short-term incentives for executives is that they place too much emphasis on short-term
performance, which may lead to negligence of long-term survival and growth objectives.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
43. Perquisites are special nonmonetary benefits given to executive employees.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
44. Compensation committees justify large executive salaries and bonuses in part because good executive talent is in high
demand.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-5
45. Team bonuses may be paid out equally to each team member, in proportion to their base pay, or in proportion to their
relative contribution to the team.
a.
True
b.
False
True
Easy
46. Gainsharing plans are designed to increase employee job satisfaction and improve customer awareness.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-3
47. The idea behind the Scanlon Plan is that employees should offer ideas to improve productivity and, in turn, be
rewarded for those ideas.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-3
48. The incentive payout under the Scanlon Plan is based upon increases in the sales volume of an organization’s products.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-3
49. Improshare plans promote interaction and support between management and employees.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-3
MGHR.SNEL.17.10-3
50. Enterprise incentive plans allow all organizational members to participate in the plan’s payout.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
51. In most profit-sharing plans, about 20 to 25 percent of net profits are shared with employees.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
52. A weakness of profit-sharing plans is that employees do not have total control over the profitability of an organization.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
53. Profit-sharing plans have limited motivational value as payments are only made once a year or deferred until
retirement.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
54. Stock options have become popular in service organizations but have lost favor in manufacturing firms.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-4
55. Most experts advocate abolition of stock options due to their failing popularity and media scandals.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-4
56. By using employee stock ownership plans, employers can provide retirement benefits for their employees at a
relatively low cost.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
57. Employers use stock ownership incentive plans to increase employee ownership in the company.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
58. ESOPs have been criticized because a pensioner can become dependent on the stock price.
a.
True
b.
False
True
Easy
MGHR.SNEL.17.10-4
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
59. Employees are comfortable with the employee stock ownership plan because the federally established Pension Benefit
Guaranty Corporation guarantees them their contribution to the plan.
a.
True
b.
False
False
Easy
MGHR.SNEL.17.10-4
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
60. The performance threshold in incentive pay programs is:
a.
the minimum level an employee must reach in order to qualify for fixed pay.
b.
the minimum level an employee must reach in order to qualify for variable pay.
c.
an organizational objective that signifies profitability.
d.
a customized incentive plan which measures employee output and rewards exceptional employee performance.
Easy
MGHR.SNEL.17.10-1
United States – OH – DISC: HRM
Bloom’s: Knowledge
61. Contemporary reasons given by organizations for implementing incentive plans are:
a.
improving or maintaining high levels of productivity.
b.
focusing employee efforts on specific performance targets.
c.
linking compensation rewards to the achievement of results.
d.
all of the above.
Easy
MGHR.SNEL.17.10-1
Bloom’s: Knowledge
62. Enterprise incentive plans include:
a.
b.
c.
d.
c
Easy
MGHR.SNEL.17.10-4
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
63. More than _____ of companies globally are offering variable pay programs.
a.
20 percent
b.
40 percent
c.
60 percent
d.
80 percent
Easy
MGHR.SNEL.17.10-1
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
64. Group incentive plans include:
a.
straight salary plan.
b.
Improshare.
c.
straight commission plan.
d.
sales incentives.
Easy
MGHR.SNEL.17.10-3
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
65. Which of the following is NOT an advantage of an incentive pay program?
a.
Incentives focus employee efforts on specific performance targets.
b.
Incentives are a way to increase equity and justice in an organization.
c.
Incentives are a way to distribute success among those not responsible for producing that success.
United States – OH – DISC: HRM
Bloom’s: Knowledge
d.
Incentives are a means to reward or attract top performers when salary budgets are low.
66. Which of the following is NOT a reason for variable pay plans to not achieve their proposed objectives or lead to
organizational improvements?
a.
Failure of incentive plans to satisfy employee expectations for pay gains
b.
Employment of employee and management committees to gain cost-reduction improvements
c.
Failure of management in giving adequate attention to the design and implementation of a plan
d.
Reduced liability of employees in affecting performance standards
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Comprehension
67. When setting performance measures for incentive systems, we can say that the best measures are those that:
a.
are quantitative, simple to understand, and show a clear relationship to improved performance.
b.
are qualitative, flexible, and create competition between employees.
c.
allow employers to “ratchet up” standards and base rewards on qualitative standards.
d.
reduce administrative costs, determine rewards based only on quantity, and reward only exceptional
employees.
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
68. According to Sammer, which of the following is NOT a characteristic of a successful incentive plan?
a.
Identify important organizational metrics that encourage employee behavior.
b.
Involve employees and have incentive programs that seem fair to employees.
c.
Find technically detailed, quantitative, and extremely thorough payout formulas.
d.
Establish a clear link between performance and payout.
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Comprehension
69. _____ describes the design of individual incentive plans.
a.
Motivation
b.
Comprehensiveness
c.
Flexibility
d.
Consistency
c
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
70. When employees receive a certain rate for each unit produced, they are working under the _____ incentive plan.
a.
differential piece rate
b.
standard piece rate
c.
straight piecework
d.
individual rate pay
c
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
71. When employees receive a higher rate of pay for all of their work and production exceeds a standard level of output,
they are working under the _____ incentive plan.
a.
differential piece rate
b.
standard piece rate
c.
exception bonus rate
d.
individual rate pay
a
Easy
MGHR.SNEL.17.10-2
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge
72. The standard time for producing one unit of work in a job paying $12.75 per hour was set at twelve minutes. The piece
rate would be ____ per unit.
United States – BUSPROG: Analytic
United States – OH – DISC: HRM
Bloom’s: Knowledge