Human Resource Management, 14e, Global Edition (Dessler)
Chapter 12 Pay for Performance and Financial Incentives
1) Frederick Taylor referred to the tendency of employees to work at the slowest pace possible
and to produce at the minimum acceptable level as ________.
A) social loafing
B) systematic soldiering
C) work shifting
D) group logrolling
2) Which of the following terms refers to financial rewards paid to workers whose production
exceeds some predetermined standard?
A) indirect financial payments
B) merit payments
C) hardship allowances
D) financial incentives
3) A management approach based on improving work methods through observation and analysis
is known as ________.
A) strategic management
B) scientific management
C) management by objectives
D) performance management
4) Who proposed a two-factor theory that explains how motivator factors relate to satisfaction
and hygiene factors relate to dissatisfaction?
A) Frederick Taylor
B) Abraham Maslow
C) Frederick Herzberg
D) David McClelland
5) Which of the following is a true statement about Herzberg’s Hygiene-Motivator theory?
A) Highly motivated workers rely equally on lower-level and higher-level needs.
B) Assigning workers to teams can eliminate job-associated stress and frustration.
C) Providing employees with feedback and challenge satisfies their lower-level needs.
D) Managers can create a self-motivated workforce by providing feedback and recognition.
6) According to Herzberg’s Hygiene-Motivator theory, which of the following factors will most
likely satisfy employees’ higher-level needs?
A) base salary
B) achievement
C) incentive pay
D) co-worker relationships
7) Which of the following found that extrinsic rewards could detract from an employee’s intrinsic
motivation?
A) Frederick Taylor
B) Frederick Herzberg
C) David McClelland
D) Edward Deci
8) Rebecca’s manager wants to acknowledge her outstanding service record for the past quarter.
The manager decides to give Rebecca a bonus of $1000 as a reward. According to Edward Deci,
which of the following will most likely occur as a result?
A) The bonus will encourage Rebecca to work harder than before.
B) The bonus will detract from Rebecca’s inner desire to work hard.
C) Rebecca’s bonus will satisfy her higher-level needs and increase her motivation.
D) Rebecca will feel inadequate because the bonus fails to address hygiene factors.
9) According to Victor Vroom, expectancy could also be referred to as the ________.
A) probability that effort will lead to success
B) relationship between performance and reward
C) perceived value a person attaches to a reward
D) employer’s strategy for motivating employees
10) The perceived relationship between successful performance and obtaining the reward is
referred to by Vroom as ________.
A) instrumentality
B) valence
C) expectancy
D) optimism
11) In Vroom’s theory of motivation, motivation is equal to E * I * V, where E represents
________.
A) existence
B) expectancy
C) esteem
D) energy
12) In Vroom’s theory of motivation, motivation is equal to E * I * V, where I represents
________.
A) intrinsic needs
B) internalization
C) instrumentality
D) incentives
13) In Vroom’s theory of motivation, which of the following terms refers to the perceived value a
person attaches to a reward?
A) valence
B) instrumentality
C) expectancy
D) variable pay
14) According to Vroom’s theory, when managers design incentive plans they should do all of
the following EXCEPT ________.
A) focus on behavior modification methods
B) make incentive plans easy to understand
C) provide training and support to employees
D) boost the confidence level of employees
15) Behavior modification is based upon the principles of rewards and punishments advanced by
________.
A) Frederick Taylor
B) Frederick Herzberg
C) B.F. Skinner
D) Edward Deci
16) Which of the following terms refers to changing behavior through rewards or punishments
that are contingent on performance?
A) behavior modification
B) personal development
C) instrumentality
D) internal motivation
17) Which of the following is NOT a basic tenet of behavior modification?
A) Behavior that leads to rewards tends to be repeated.
B) Properly scheduled rewards can be used to encourage some behaviors.
C) Properly scheduled punishments can be used to minimize some behaviors.
D) Employees must understand the link between rewards, punishments, and behavior.
18) Which of the following terms refers to an incentive plan that ties a group’s pay to the firm’s
profitability?
A) piecework
B) variable pay
C) pay-for-performance
D) merit pay
19) Under the Fair Labor Standards Act, which of the following would NOT be included in
overtime pay computations?
A) bonus for new hires
B) Christmas bonus
C) efficiency bonus
D) union contract bonus
20) What type of pay plan is being used when workers are paid a sum for each unit they
produce?
A) competency-based pay
B) job-based pay
C) piecework
D) bonus
21) Which of the following terms refers to an incentive plan in which a person is paid a sum for
each item he or she makes or sells, with a strict proportionality between results and rewards?
A) variable pay
B) straight piecework
C) straight hourly pay
D) standard hour plan
22) In which of the following do workers receive a basic hourly rate plus a premium equal to the
percent by which their performance exceeds the standard?
A) variable pay
B) straight piecework
C) standard hour plan
D) standard piecework
23) All of the following are disadvantages associated with piecework plans EXCEPT that
workers ________.
A) resist attempts to modify production standards
B) focus on production quantity instead of quality
C) view the plans as unfair and complicated
D) dislike new technology or processes
24) Which of the following is the primary advantage of piecework plans?
A) powerful incentive to workers
B) workers earn efficiency bonuses
C) firms save on overtime wages
D) entices independent contractors
25) 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) competency-based pay
B) variable pay
C) merit pay
D) base pay
26) 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.
27) Studies indicate that in order for merit pay to be most effective, it should be linked to
________.
A) company profits
B) annual base salary
C) employee overtime
D) employee performance
28) 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, supports the argument that Ryobi should eliminate all merit
raises?
A) Performance appraisals at Ryobi occur annually, and standards vary from manager to
manager.
B) Ryobi employees have the option of accepting lump-sum raises or traditional merit raises.
C) Ryobi recently began using an enterprise incentive management system to automate
compensation.
D) The commission percentage for Ryobi salespeople is based on the ability to meet monthly
quotas.
29) 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 employees have expressed that they would prefer stock options to merit raises.
B) Ryobi managers have not received significant training about conducting performance
appraisals.
C) Ryobi managers have noticed significant productivity improvements among employees who
receive merit raises.
D) Ryobi’s top executives receive a combination of base salary and stock options to encourage
them to focus on the firm’s strategic goals.
30) 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 type 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?
31) Which of the following is the most commonly used reward for motivating employees?
A) individual travel
B) recognition programs
C) training programs
D) variable pay
32) Craig is a line manager at a paper supply company. All of the following are methods that
Craig should most likely implement to motivate his subordinates EXCEPT ________.
A) recognizing an employee’s contribution
B) encouraging workers to earn overtime pay
C) gaining agreement on goals with employees
D) using positive reinforcement on a daily basis
33) Enterprise incentive management systems enable firms to ________.
A) compare corporate incentive programs
B) accurately calculate sales commissions
C) efficiently administer employee incentive programs
D) create a matrix of merit awards and incentive options
34) A straight salary is most appropriate when a salesperson’s primary duties involve ________.
A) finding new clients
B) meeting sales quotas
C) pushing hard-to-sell items
D) fostering relationships with customers
35) Using a straight salary to compensate salespeople is most likely ineffective because it
________.
A) discourages sales flexibility
B) lacks connection to performance
C) makes it hard to switch territories
D) depends on annual corporate profits
36) All of the following are disadvantages of straight commission plans EXCEPT ________.
A) salespeople avoid pushing hard-to–sell items
B) salespeople fail to service small accounts
C) payments are complicated to calculate
D) significant variations in pay exist
37) Which of the following is the primary advantage of using a combination of salary and
commission as compensation for salespeople?
A) provides a guaranteed minimum salary
B) all freedom of work activities
C) completely links to performance
D) offers simple administration
38) Edward is the new sales manager at Wilson Auto Mart. The previous sales manager set
commission rates informally without considering how much each sale covered expenses. As a
result, Wilson Auto Mart barely breaks even on each car sale once commissions are paid.
Edward wants to motivate his sales force but avoid having excessive commissions.
All of the following questions are relevant to developing an effective sales compensation plan
EXCEPT ________.
A) How much time does each Wilson salesperson spend with qualified prospects?
B) What are the motivation and skill levels of Wilson sales team members?
C) What is the average annual bonus received by Wilson’s CEO?
D) What is Wilson’s desired profit for each car sale?
39) Edward is the new sales manager at Wilson Auto Mart. The previous sales manager set
commission rates informally without considering how much each sale covered expenses. As a
result, Wilson Auto Mart barely breaks even on each car sale once commissions are paid.
Edward wants to motivate his sales force but avoid having excessive commissions.
Which of the following, if true, supports the argument that Edward should pay his sales team a
combination of salary plus commission?
A) Wilson Auto Mart’s sales team consists of high-performing, experienced salespeople.
B) Wilson Auto Mart has successfully implemented a “one price no hassle” pricing program.
C) Each Wilson Auto Mart salesperson is encouraged to sell at least ten vehicles each month.
D) Wilson Auto Mart salespeople are primarily asked to find new clients and service current
accounts.
40) Which of the following terms refers to the right to purchase a stated number of shares of a