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1. Incentive pay is influential because the amount paid is linked to certain predefined
behaviors or outcomes.
2. Merit pay incentive system is usually used to attract employees who are more team-
oriented.
3. Piecework rates are most suited for routine, standardized jobs with output that is easy to
measure.
4. Standard hour plans are quality-oriented incentives for professional employees.
5. Merit increase grids display an organization's policies for linking the size and frequency of
pay increases to an individual's performance rating and position within the pay range.
6. From employers' perspective, an advantage of merit pay is that it is cheap.
7. Like merit pay, performance bonuses for individual performance are rolled into an
employee's base pay.
8. Retention bonuses are one-time incentives paid to top managers, engineers, top-
performing salespeople, and information technology specialists in exchange for remaining with the
company.
9. Gainsharing addresses the challenge of identifying appropriate performance measures for
complex jobs.
10. Successful gainsharing plans include employee stock ownership plans.
11. Group bonuses typically reward the performance of all employees in an organization.
12. Generally, team awards do not use cost savings as a performance measure.
13. Linking incentives to the organization's profits or stock price exposes employees to a high
degree of risk.
14. Profit sharing costs more when the organization experiences financial difficulties.
15. Under profit sharing, payments are a percentage of the organization's profits and become
part of the employees' base salary.
16. In stock ownership plans, employees may not see a strong link between their actions and
the company's stock price.
17. Employee stock ownership plan is an arrangement in which the organization distributes
shares of stock to all its employees by placing it in a trust.
18. Employees should exercise the stock options even if the stock price has decreased.
19. Stock options are best suited to motivate day-to-day effort or to attract and retain top
individual performers.
20. A balanced scorecard is a combination of performance measures directed toward the
company's long- and short-term goals.
21. ESOP does not give employees the right to participate in votes by shareholders even if the
stock is registered on a national exchange.
22. The balanced scorecard helps employees understand the organization's goals and how
they can contribute to these goals.
23. An organization should always communicate with employees when changing an incentive
plan.
24. The balanced-scorecard approach is not particularly useful in designing executive pay.
25. Incentive pay for executives lays the groundwork for significant ethical issues.
26. Pay specifically designed to energize, direct, or control employees' behavior is known as:
27. An effective incentive pay plan should:
28. Which of the following is a disadvantage of using incentive plans?
29. When designing incentives, managers should make sure that:
30. Which of the following types of incentive pay plans are used to reward individual
performance?
31. A company provides wages to its employees based on the amount workers produce. The
more employees produce, the more they earn. This type of plan is called:
32. A piecework rate plan is best suited for:
33. As an incentive to work efficiently, some organizations pay production workers a ____, a
wage based on the amount they produce.
