Question 1

What is the fundamental premise of variable pay plans?

Accepted Answer

A)   Workers should only be paid for the work they complete.
B)   Top performers must get top pay to secure their commitment.
C)   Create incentive for commission paid workers to maximize their efforts.
D)   Enable the organization to reduce labour costs when profits decline.
E)   Accommodative the different needs of workers.F) C) and E)
G) A) and B)

Question 2

What is Victor Vroom's term for the perceived relationship between successful performance and obtaining the reward?

Accepted Answer

A)   Motivation
B)   Valence
C)   Hygiene
D)   Expectancy
E)   InstrumentalityF) A) and C)
G) C) and E)

Question 3

Which type of incentive plan is an organization-wide pay plan designed to reward employees for improvements in organizational productivity?

Accepted Answer

A)   A group incentive program
B)   Variable pay
C)   A profit-sharing plan
D)   Performance bonus plan
E)   A gainsharing planF) D) and E)
G) A) and B)

Question 4

Compensation plans for salespeople have typically relied heavily on incentives in the form of sales commissions.

Accepted Answer

A) True 
 B)False

Question 5

What is the cornerstone of executive compensation?

Accepted Answer

A)   Benefits
B)   Gainsharing
C)   Salary
D)   Profit-sharing
E)   IncentivesF) A) and D)
G) A) and E)

Question 6

Describe a piecework incentive plan using an example. Discuss at least two advantages and two disadvantages of piecework using your example.

Accepted Answer

Up to two points for accurate descriptio...

Question 7

What has been the traditional role of employee recognition plans?

Accepted Answer

A)   Set benchmarks for employee productivity
B)   Foster loyalty in new workers
C)   Ensure salespeople receive the greatest rewards
D)   Reward employees for long service
E)   Provide a reward in lieu of promotions or pay increasesF) D) and E)
G) A) and B)

Question 8

Under this pay system, each worker receives the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour. This system is known as a

Accepted Answer

A)   process piecework plan.
B)   straight piecework plan.
C)   gainsharing piecework plan.
D)   guaranteed piecework plan.
E)   differential piecework plan.F) All of the above
G) A) and C)

Question 9

What is Victor Vroom's term for the perceived value a person attaches to the reward?

Accepted Answer

A)   Motivation
B)   Valence
C)   Hygiene
D)   Expectancy
E)   InstrumentalityF) All of the above
G) A) and E)

Question 10

What is the term related to a target bonus that is set for each eligible position and then adjustments are made for greater- or less-than-targeted performance?

Accepted Answer

A)   A lump-sum bonus
B)   Retirement income
C)   An annual bonus
D)   An individual award
E)   GainsharingF) B) and D)
G) All of the above

Question 11

To determine eligibility in a short-term incentive program, a job-by-job review is conducted to identify the key jobs (typically of line jobs)  that have measurable impact on profitability. This is called the criterion of

Accepted Answer

A)   salary grade.
B)   position level.
C)   key position.
D)   salary level.
E)   professional membership.F) All of the above
G) B) and D)

Question 12

A stock option is the right to purchase a specific number of shares of company stock at a specific price during a period of time.

Accepted Answer

A) True 
 B)False

Question 13

Frederick Herzberg encourages the use of cash bonuses and pay increases to motivate workers most effectively to higher levels of performance.

Accepted Answer

A) True 
 B)False

Question 14

Victor Vroom says an employee must value the reward from higher performance to be motivated. If that does not occur then motivation will be zero.

Accepted Answer

A) True 
 B)False

Question 15

What is a non-deductible formula as it relates to incentives?

Accepted Answer

A)   Compensation paid over a threshold amount
B)   The key formula incorporating years of service and value to the company
C)   The fund that begins to accumulate after a specified level of earnings
D)   A straight percentage used to create a short-term incentive fund
E)   A long-term incentive that pays out on a straight-line basis with no deductibleF) A) and E)
G) None of the above

Question 16

One drawback to the split-award approach is that it pays too much to a marginal performer. What is one way to get around this problem?

Accepted Answer

A)   Lump-sum bonus method
B)   Individual award system
C)   Group incentive plan
D)   Individual bonus method
E)   Multiplier methodF) A) and E)
G) D) and E)

Question 17

Accurate ________ are a precondition for effective variable pay plans.

Accepted Answer

A)   job evaluation
B)   job specifications
C)   performance appraisals
D)   salary curves
E)   job descriptionsF) None of the above
G) All of the above

Question 18

Which piecework plan has the most advantages of all the piecework plans?

Accepted Answer

A)   Process piecework plan
B)   Straight piecework plan
C)   Gainsharing piecework plan
D)   Guaranteed piecework plan
E)   Differential piece-rate planF) A) and C)
G) B) and D)

Question 19

What long-term incentives are most often reserved for senior executives?

Accepted Answer

A)   Performance achievement plans
B)   Book value plans
C)   Capital accumulation programs
D)   Stock option programs
E)   Stock appreciation rights programsF) D) and E)
G) B) and C)

Question 20

Which plan rewards a worker by a premium that equals the percent by which his or her performance is above standard?

Accepted Answer

A)   The differential piece-rate plan
B)   Gainsharing plan
C)   The percent incentive plan
D)   The premium plan
E)   The guaranteed piecework planF) C) and D)
G) B) and E)

Exam 12: Pay-For-Performance and Financial Incentives

What has been the traditional role of employee recognition plans?

Correct AnswerverifiedShow Answer

What is Victor Vroom's term for the perceived relationship between successful performance and obtaining the reward?

Correct AnswerverifiedShow Answer

Frederick Herzberg encourages the use of cash bonuses and pay increases to motivate workers most effectively to higher levels of performance.

Correct AnswerverifiedShow Answer

A stock option is the right to purchase a specific number of shares of company stock at a specific price during a period of time.

Correct AnswerverifiedShow Answer

What is the fundamental premise of variable pay plans?

Correct AnswerverifiedShow Answer

Victor Vroom says an employee must value the reward from higher performance to be motivated. If that does not occur then motivation will be zero.

Correct AnswerverifiedShow Answer

What is a non-deductible formula as it relates to incentives?

Correct AnswerverifiedShow Answer

Compensation plans for salespeople have typically relied heavily on incentives in the form of sales commissions.

Correct AnswerverifiedShow Answer

What is the term related to a target bonus that is set for each eligible position and then adjustments are made for greater- or less-than-targeted performance?

Correct AnswerverifiedShow Answer

What is the cornerstone of executive compensation?

Correct AnswerverifiedShow Answer

One drawback to the split-award approach is that it pays too much to a marginal performer. What is one way to get around this problem?

Correct AnswerverifiedShow Answer

What long-term incentives are most often reserved for senior executives?

Correct AnswerverifiedShow Answer

What is Victor Vroom's term for the perceived value a person attaches to the reward?

Correct AnswerverifiedShow Answer

Under this pay system, each worker receives the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour. This system is known as a

Correct AnswerverifiedShow Answer

Which plan rewards a worker by a premium that equals the percent by which his or her performance is above standard?

Correct AnswerverifiedShow Answer

Describe a piecework incentive plan using an example. Discuss at least two advantages and two disadvantages of piecework using your example.

Correct AnswerverifiedUp to two points for accurate descriptio...View AnswerShow Answer

To determine eligibility in a short-term incentive program, a job-by-job review is conducted to identify the key jobs (typically of line jobs) that have measurable impact on profitability. This is called the criterion of

Correct AnswerverifiedShow Answer

Accurate ________ are a precondition for effective variable pay plans.

Correct AnswerverifiedShow Answer

Which type of incentive plan is an organization-wide pay plan designed to reward employees for improvements in organizational productivity?

Correct AnswerverifiedShow Answer

Which piecework plan has the most advantages of all the piecework plans?

Correct AnswerverifiedShow Answer

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