Question 1

The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees.What would be their best approach?
A) Make the performance bonus at least 3 to 4 percent of base salary to have some impact.
B) Make the performance bonus at least 10 to 12 percent of base salary to have some impact.
C) Make the performance payoff equal for average and below-average performers.
D) Set unrealistic performance standards,but with an equally high compensation.
E) Reward people who work very hard,even if they fall short of achieving performance targets.

Accepted Answer

Offering a performance bonus of at least 10 to 12 percent of base salary would likely have a greater impact in attracting ambitious employees than a bonus of 3 to 4 percent. A higher bonus percentage can be seen as more competitive and attractive to ambitious individuals. However, it is also important to set realistic performance standards and reward those who work hard, rather than setting unrealistic standards or treating all employees equally regardless of their performance.

Question 2

A reward system that accentuates positive rewards for good performance:
A) works best in strong culture organizations,while negative motivational approaches and reward systems tend to be most successful in weak culture organizations.
B) is especially effective in aligning the well-being of organizational members with achieving the company's performance targets;reward systems with negative elements tend to be very dysfunctional in motivating employees.
C) seldom works very well because the threat of denying rewards to sub-par performers is typically the most powerful motivator.
D) works fine so long as 100 percent emphasis is placed on monetary incentives.
E) has considerable appeal because when cooperation is positively enlisted and rewarded,rather than strong-armed by orders and threats (implicit or explicit),people tend to respond with more enthusiasm,dedication,creativity,and initiative.

Accepted Answer

The passage clearly states that a reward system that accentuates positive rewards for good performance has considerable appeal as it enlists cooperation positively and rewards it, thus leading to more enthusiasm, dedication, creativity, and initiative. The other choices are either incorrect or only partially correct.

Question 3

A no-pressure/no-adverse-consequences work environment does not necessarily lead to:
A) superior strategy execution or operating excellence.
B) satisfactory outcomes because there is always a cadre of ambitious people who relish the challenge.
C) workforce morale issues.
D) establishing more positive than negative motivational reward elements.
E) excessive shortfall in performance.

Accepted Answer

A no-pressure/no-adverse-consequences work environment may create a comfortable and stress-free atmosphere for employees, but it may not always lead to superior strategy execution or operating excellence. Without a sense of urgency or accountability, employees may not be motivated to put in their best effort, meet deadlines, or work towards achieving the organization's goals. Therefore, a lack of pressure or consequences may not always be beneficial for organizational outcomes.

Question 4

Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically:
A) use only positive rewards and never involve the use of tension,fear,job insecurity,stress,or anxiety.
B) entail decidedly positive rewards for meeting or beating performance targets,but also impose sufficiently negative consequences when actual performance falls short of the target.
C) aim at creating a no-pressure/no-adverse-consequences work environment.
D) entail paying the highest wages and salaries in the industry for all jobholder positions and also stressing nonmonetary rewards,like cash bonuses for high-performing employees.
E) put top priority on making employees happy and secure in their jobs.

Accepted Answer

Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution usually involve both positive rewards for meeting or beating performance targets and negative consequences when actual performance falls short of the target. This creates a sense of accountability and motivation to strive for better performance. However, the negative consequences should not be excessively punitive, and the overall work environment should not be excessively stressful or anxiety-inducing.

Question 5

An important consideration in designing a strategy-supportive reward system is to:
A) link the payment of all monetary rewards to the company's bottom-line profitability.
B) employ incentives that will help motivate employees to put in long hours and sacrifice personal ambitions and aspirations to pursue the priorities of management.
C) choose those types of rewards and incentives that will focus employees' attention on total customer satisfaction.
D) make across-the-board wage and salary increases the cornerstone of monetary rewards.
E) make nonmonetary rewards and recognition an integral part of the reward system.

Accepted Answer

Nonmonetary rewards and recognition are important in a strategy-supportive reward system because they can help reinforce desired behaviors and actions, provide positive feedback to employees, and increase job satisfaction and commitment. While monetary rewards can also be effective, they should be tied to specific performance goals and objectives, rather than simply being handed out as across-the-board increases. In addition, incentives should be designed to align with the company's strategy and goals, rather than discouraging personal ambitions and sacrificing work-life balance. Lastly, while customer satisfaction is an important focus for many companies, it should not be the sole criteria for reward and recognition, as employees may have other important contributions to make to the organization.

Question 6

Which of the following is NOT characteristic of a compensation and reward system designed to help drive successful strategy execution?
A) Tying incentives to performance outcomes directly linked to good strategy execution and financial performance
B) Keeping the time between achieving the target performance outcome and the payment of the reward as short as possible
C) Making sure that the performance targets that each individual or team is expected to achieve involve outcomes that the individual or team can personally affect
D) Providing generous rewards for people who turn in outstanding performances
E) Offering rewards that amount to 3 percent of an employee's total compensation

Accepted Answer

Offering rewards that amount to a specific percentage of an employee's total compensation is not a characteristic of a successful compensation and reward system. The percentage of the reward should be tied to the specific performance outcomes and financial performance, not a predetermined percentage.

Question 7

The strategic role of a company's reward system is to:
A) compensate employees for performing their assigned duties in a diligent fashion.
B) boost employee morale in ways that create widespread job satisfaction.
C) enlist employees' commitment to successful strategy execution by rewarding them,both monetarily and non-monetarily,for their valuable contributions.
D) relieve managers of the burden of closely monitoring each employee's performance.
E) boost labor productivity and help lower the firm's overall labor costs.

Accepted Answer

The strategic role of a company's reward system is to enlist employees' commitment to successful strategy execution by rewarding them, both monetarily and non-monetarily, for their valuable contributions. This helps to ensure that employees are motivated to work towards the company's goals and objectives, increasing the likelihood of successful strategy implementation.

Question 8

The guidelines for designing an incentive compensation system that will help drive successful strategy execution include:
A) making the performance payoff a major,not minor,piece of the total compensation package.
B) having incentives that apply to the management team (employees should generally not be included in incentive pay plans but should have attractive wages and salaries).
C) having an outside wage and salary expert administer the system so there is no doubt as to its fairness and impartiality.
D) basing the incentives on group performance rather than individual performance.
E) making minimal use of nonmonetary incentives and rewarding people for diligently performing their assigned duties.

Accepted Answer

Making the performance payoff a major, not minor, piece of the total compensation package ensures that employees are incentivized to work towards successful strategy execution.

Answer: D
 Basing the incentives on group performance rather than individual performance promotes teamwork and collaborative effort towards strategy execution.

Question 9

A well-designed reward system:
A) ties rewards to performance outcomes directly linked to good strategy execution and the achievement of financial and strategic objectives.
B) should be free of elements that induce stress,anxiety,tension,pressure to perform,and job insecurity.
C) puts the primary emphasis on denying rewards to those who fail to perform tasks in the prescribed fashion.
D) emphasizes weeding out employees who are average performers.
E) strives for a 50-50 balance between positive and negative rewards and a 50-50 balance between monetary and nonmonetary rewards.

Accepted Answer

A well-designed reward system should tie rewards to performance outcomes directly linked to good strategy execution and the achievement of financial and strategic objectives. This creates alignment between employee efforts and organizational goals, which ultimately leads to improved performance and success.

Question 10

In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence,managers are well advised to use all of the following incentives EXCEPT:
A) providing attractive perks and fringe benefits.
B) giving awards and public recognition to high performers and showcasing company successes.
C) creating a work atmosphere in which there is genuine caring and mutual respect among workers and between management and employees.
D) relying on opportunities for promoting from within wherever possible.
E) .withholding information from employees about financial performance,strategy,and competitors' actions.

Accepted Answer

Withholding information from employees about financial performance, strategy, and competitors' actions will not encourage them to fully commit to good strategy execution and operating excellence. In fact, open communication and transparency about the company's goals, performance, and environment can help to build trust, engagement, and motivation among employees. Therefore, managers should use attractive perks and fringe benefits, give awards and recognition, create a caring work atmosphere, and offer career advancement opportunities to incentivize employees to perform at their best.

Question 11

Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the strategic priorities and financial objectives is best done by:
A) having top executives commit to making employees the company's most valuable competitive asset.
B) developing core competencies in the use of TQM,Six Sigma programs,and business process reengineering.
C) resourceful and effective use of motivational incentives,both monetary and nonmonetary.
D) clever and innovative use of benchmarking and best practices.
E) providing employees with a high degree of job security and attractive perks.

Accepted Answer

Resourceful and effective use of motivational incentives, both monetary and nonmonetary, is the best way to enlist employees' sustained and energetic commitment to good strategy execution and achievement of the strategic priorities and financial objectives. Providing employees with job security and attractive perks may be helpful, but it is not as effective as using motivational incentives. Having top executives commit to making employees the company's most valuable competitive asset, developing core competencies, and clever and innovative use of benchmarking and best practices may be important for strategy execution, but they are not specific to enlisting employees' sustained commitment.

Question 12

Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?
A) The reward system must be administered with scrupulous objectivity and fairness.
B) The payoff for meeting or beating performance targets must be a major,not minor,piece of the total compensation package.
C) The incentive plan should extend to all managers and all employees,not just top management.
D) The reward system must reward nonperformers who,despite expending tremendous effort,have not fared well in achieving the benchmarks under the incentive system.
E) Make sure that the performance targets each individual or team is expected to achieve involve outcomes that the individual or team can personally affect.

Accepted Answer

Rewarding nonperformers who have not achieved the benchmarks under the incentive system goes against the purpose of having a reward and incentive system in the first place, which is to promote good strategy execution by rewarding those who have met or exceeded performance targets. Hence, this option is not a sound guideline for designing a reward and incentive system.

Question 13

The managing director of a paper products company,wanted to introduce nonmonetary incentives to enhance employee motivation and spur strategy execution.When presented with some ideas,he chose all of the following EXCEPT:
A) rewarding employees even for subpar performance.
B) giving awards and public recognition to high performers and showcasing company successes.
C) providing a comfortable and attractive working environment.
D) providing opportunities for promotion from within wherever possible.
E) providing attractive perks and fringe benefits.

Accepted Answer

The managing director did not choose to reward employees for subpar performance, as this would undermine the effectiveness of the nonmonetary incentives program. Instead, the focus should be on rewarding and recognizing high performers and creating a positive work environment. Providing opportunities for promotion and attractive perks and benefits can also help to motivate employees and improve strategy execution.

Question 14

Why does a company's budget need to be closely linked to the needs of good strategy execution?

Accepted Answer

The answer of Why does a company's budget need to...

Question 15

From the standpoint of promoting successful strategy execution,it is important that the firm's motivation and reward system:
A) be completely free of such elements as tension,pressure,anxiety,job insecurity,and tight deadlines-a no-pressure/no-adverse-consequences work environment is essential.
B) emphasize only positive types of rewards.
C) accentuate positive rewards but also carry out the "up-or-out" policy for performance that does not meet expectations.
D) not deny rewards to employees who put forth good effort and try hard,though performance is subpar.
E) reduce job insecurity and give employees an incentive to stay busy and work hard.

Accepted Answer

Accentuating positive rewards is important for promoting successful strategy execution, but it is also important to have consequences for employees who do not meet expectations. The "up-or-out" policy ensures that employees who consistently fail to meet expectations are replaced, allowing the company to maintain a high standard of performance. This helps to motivate employees to work hard and improve their performance in order to earn positive rewards and avoid negative consequences.

Question 16

The first principle in designing an effective compensation system and the most dependable way to keep people focused on strategy execution and the achievement of performance targets is to:
A) establish ethical compensation policies and convince employees that they are the firm's most valuable competitive asset.
B) design monetary and nonmonetary incentives that boost labor productivity and help lower the firm's overall labor costs.
C) generously reward and recognize people who meet or beat performance targets and to deny rewards and recognition to those who don't.
D) pay employees a bonus for each strategic and financial objective that the company achieves.
E) allow employees to propose what rewards they would like to receive to achieve the company's stretch objectives.

Accepted Answer

The answer of The first principle in designing an effective...

Question 17

Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution?
A) Strictly enforcing all rules in the employee handbook with the use of fines.
B) Giving awards and public recognition to high performers and showcasing company successes.
C) Providing a comfortable and attractive working environment
D) Providing opportunities for promotion from within wherever possible
E) Providing attractive perks and fringe benefits

Accepted Answer

Strictly enforcing all rules in the employee handbook with the use of fines is unlikely to gain employees' wholehearted commitment as it creates a culture of fear rather than motivation. It may lead to resentment and distrust among employees. All other options, such as giving awards, providing a comfortable work environment, offering opportunities for promotion, and providing fringe benefits, are more likely to generate positive feelings and inspire employees to give their best effort towards executing the company's strategy.

Question 18

Reward and incentive systems serve as a(n):
A) direct stimulus for satisfying the basic expectations of the standard job and mechanisms.
B) indirect motivational tool designed to convert employee commitment into high-powered incentives.
C) indirect type of control mechanism that conserves on more costly control mechanisms of supervisory oversight.
D) direct base-pay financial compensation mechanism that competes with rival companies' salary bands for similar work efforts.
E) negative motivational element.

Accepted Answer

The answer of Reward and incentive systems serve as a(n):
A)...

Question 19

To create a strategy-supportive system of rewards and incentives,a company must:
A) reward people for accomplishing results,not just for dutifully performing assigned tasks.
B) focus jobholders' attention and energy on what to do as opposed to what to achieve.
C) demand jobholders' 100 percent attendance since it guarantees results.
D) hold jobholders' responsible for their function and not burden them with being accountable.
E) incorporate negative motivational elements to assure results.

Accepted Answer

Rewarding people for accomplishing results rather than just performing assigned tasks encourages and motivates employees to take ownership of their work and strive for success. Focusing on what to achieve, rather than what to do, helps to align employees' efforts with the company's overall strategy and goals. Demand for 100 percent attendance is not always feasible or necessary, and incorporating negative motivational elements can create a toxic work environment. Holding jobholders accountable for their function is also important, but should be balanced with recognition and rewards for achieving results.

Question 20

The resolute standard for judging whether individuals,teams,and organizational units have done a good job must be measured by:
A) comparing industry performance standards against the company's own internal criteria.
B) the level of rapid growth in industry (buyer)demand.
C) whether they meet or beat performance targets that reflect good strategy execution.
D) the number of rivals existing in the marketplace and their growth results.
E) the relative competitive strengths of the industry leaders and how vulnerable they are to mimicry.

Accepted Answer

The resolute standard for judging whether individuals, teams, and organizational units have done a good job must be measured by whether they meet or beat performance targets that reflect good strategy execution. This is because performance targets are set based on the company's strategic objectives and achieving them is an indicator of good strategy execution. Comparing industry performance standards, level of rapid growth in demand, number of rivals existing in the marketplace, and competitive strengths of industry leaders are important factors to consider but cannot be the primary standard for judging good performance.

Quiz 11: Managing Internal Operations

The top management at a new social media technology company would like to revamp its incentive compensation system to attract ambitious employees.What would be their best approach?

A reward system that accentuates positive rewards for good performance:

A no-pressure/no-adverse-consequences work environment does not necessarily lead to:

Motivational and incentive compensation practices that aim at winning the commitment of company personnel to good strategy execution typically:

An important consideration in designing a strategy-supportive reward system is to:

Which of the following is NOT characteristic of a compensation and reward system designed to help drive successful strategy execution?

The strategic role of a company's reward system is to:

The guidelines for designing an incentive compensation system that will help drive successful strategy execution include:

A well-designed reward system:

In trying to gain employees' wholehearted commitment to good strategy execution and operating excellence,managers are well advised to use all of the following incentives EXCEPT:

Enlisting employees' sustained and energetic commitment to good strategy execution and achievement of the strategic priorities and financial objectives is best done by:

Which of the following is NOT a sound guideline for designing a reward and incentive system that helps promote good strategy execution?

The managing director of a paper products company,wanted to introduce nonmonetary incentives to enhance employee motivation and spur strategy execution.When presented with some ideas,he chose all of the following EXCEPT:

Why does a company's budget need to be closely linked to the needs of good strategy execution?

From the standpoint of promoting successful strategy execution,it is important that the firm's motivation and reward system:

The first principle in designing an effective compensation system and the most dependable way to keep people focused on strategy execution and the achievement of performance targets is to:

Which of the following is NOT likely to be effective in trying to gain employees' wholehearted commitment to good strategy execution?

Reward and incentive systems serve as a(n) :

To create a strategy-supportive system of rewards and incentives,a company must:

The resolute standard for judging whether individuals,teams,and organizational units have done a good job must be measured by: