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Recently, the company held its annual conference and awarded all those employees who were in
the top five percent with substantial monetary rewards. Their performance was evaluated on the
basis of target achievement, client feedback, and quality ratings. Employees whose performance
had not changed drastically were given a minor raise and those who fared badly received no
incentives. Many employees blamed the company for creating differences among employees
because they felt that it would harm the company in the long run, but Daichi Inc. truly believes
that to retain and motivate its best performers, a large incentive is a good step. Daichi Inc. is
using a(n) ________ here.
A) piece-rate plan
B) employee stock ownership plan
C) modular plan
D) merit-based plan
E) flexible benefits plan
78) Which of the following represents a pay plan that rewards employees for recent performance
rather than historical performance?
A) bonus
B) flexible benefits
C) modular plans
D) cafeteria plans
E) base salary
79) What is an advantage of bonuses over merit-based pay plan?
A) Employees don't view bonuses as a part of their salary.
B) Bonuses improve flexibility of the workforce.
C) Bonuses are paid based on a formula.
D) Bonuses improve performance of the group as a whole.
E) Employees are rewarded for recent performance.
80) Which of the following statements is true regarding a merit-based pay plan?
A) It bases pay levels on how many skills employees have or how many jobs they can do.
B) It is also called competency-based pay plan.
C) High performers can get bigger raises.
D) It distributes compensation based on an established formula designed around a company's
profitability.
E) A typical merit-based pay plan provides no base salary and pays the employee only for what
he or she produces.
81) A ________ plan distributes compensation based on some established formula designed
around revenue of the company.
A) piece-rate
B) merit-based
C) skill-based
D) profit-sharing
E) competency-based
82) Which of the following is not supported by studies in regard to profit-sharing plans?
A) Organizations with profit-sharing plans have higher levels of profitability than those without
them.
B) Profit-sharing plans create advanced levels of employee decision making.
C) Profit-sharing plans are linked to higher levels of employee commitment.
D) Profit-sharing plans appear to have positive impacts on employee attitudes.
E) Profit-sharing plans appear to general a greater feeling of ownership.
83) At Esco Retail, all employees are constantly driven to work hard. The company places
maximum emphasis on stocking high quality goods and providing high quality service to retain
the edge they have in the retail industry. To promote organizational commitment further, the
company incentivizes employees by enabling them to purchase company shares at below-market
prices as a part of their benefits. This mode of providing incentives represents the use of
________.
A) flexible benefits plans
B) merit-based plans
C) modular plans
D) employee stock ownership plans
E) core-plus plans
84) Which of the following statements is true regarding an employee stock ownership plan
(ESOP)?
A) Under this plan, employees acquire company shares, often at below-market prices.
B) There exists a strong correlation between ESOPs and employee performance.
C) The financial stake in the company is adequate to use ESOPs as an effective means to
motivate employees.
D) ESOPs are effective because, like bonuses, they reward recent performance.
E) ESOPs are also called competency-based pay plans.
85) For employee stock ownership plans to be effective in improving performance, they must
________.
A) be based solely on productivity like gainsharing plans
B) be implemented such that employees psychologically experience ownership
C) be determined on the basis of performance appraisals and recent performance
D) be planned such that they are unaffected by company profitability
E) be based on the market compensation philosophy
86) Profit-sharing plans distribute compensation based subjectively on management's discretion
87) Extraverted and emotionally stable individuals tend to be more receptive to and perform
better under pay for performance, whereas conscientious employees are not as receptive.
88) Internal equity refers to the worth of the job to the organization.
89) A variable-pay program bases a portion of an employee's pay on some individual and/or
organizational measure of performance.
90) The chief concern of both individual and team piece-rate workers is financial risk.
91) When the profits of Emm Corp. rose steadily over two quarters three years back, the
employees of the company were given the offer of purchasing the company's shares at subsidized
rates. Many of the employees who bought the shares have become extremely rich after the
phenomenal growth Emm Corp. has had in the following years. This is an example of a bonus.
92) List and describe different variable-pay programs.
93) Describe the aspects of a company bonus plan.
94) Compare and contrast the benefits of intrinsic rewards, such as recognition, and extrinsic
rewards, such as pay, as forms of motivation.
95) Individualized rewards that allow each employee to choose the compensation package that
best satisfies his or her current needs and situation are called ________.
A) variable pay programs
B) standardized benefits packages
C) employee recognition programs
D) employee involvement programs
E) flexible benefits plans
96) Which of the following statements is true regarding flexible benefits?
A) Flexible benefits are awarded through uniform packages to cover the requirements of a
married couple with two children.
B) Flexible benefits are in accordance with the belief that employees have identical needs that
must be rewarded identically.
C) Profit-sharing plans are a major type of flexible benefit.
D) Flexible benefits can be altered to meet employee needs based on age, marital status, and
number and age of dependents.
E) Flexible benefits are given based on an employee's skills, competence, and productivity.
97) A flexible benefits package is designed for a male with a wife and two children at home.
98) Flexible benefits plans are available worldwide.
99) Almost all major corporations in the United States offer flexible benefit plans.
100) The percentage of Canadian major corporations that offer flexible benefits plans is
decreasing.
101) Which of the following is an example of an intrinsic reward?
A) bonus
B) profit-sharing plan
C) employee stock option
D) employee recognition
E) gainsharing
102) Jack Holmes is a middle-aged, lower-level employee at an automobile service center.
Though he is not paid very well, he loves his job. His supervisor speaks to him with respect, and
he is the favored candidate for mentoring new employees because of the vast experience he holds
in the job. Based on this information, which of the following is most likely to be the reason Jack
likes his job?
A) recognition
B) prospects of growth
C) salary
D) flextime
E) job sharing
103) Which of the following statements is true regarding employee recognition?
A) Employee recognition is an extrinsic reward.
B) Critics argue that employee recognition programs are highly susceptible to political
manipulation by management.
C) Employee recognition programs are expensive.
D) Centralized programs across multiple offices in different countries can hinder the process of
employee recognition programs.
E) Employee stock option is a more powerful workplace motivator than recognition.
104) On an organizational level, job design and the extrinsic rewards of pay and benefits are the
only ways to motivate employees.
105) Research suggests that financial incentives may be more motivating in the short-run, but in
the long-run, non-financial incentives work best.
