Question 1

Group bonuses typically reward the performance of all employees in an organization.

Accepted Answer

Employees have a right to participate in votes by shareholders if the stock is registered on a national exchange, such as the New York Stock Exchange.

Question 2

Under profit sharing,payments are a percentage of the organization's profits and become part of the employees' base salary.

Accepted Answer

Incentive pay for executives lays the groundwork for significant ethical issues. When an organization links pay to its stock performance, executives need the ethical backbone to be honest about their company's performance even when dishonesty or clever shading of the truth offers the tempting potential for large earnings.

Question 3

From employers' perspective,an advantage of merit pay is that it is cheap.

Accepted Answer

The drawback of stock ownership as a form of incentive pay is that employees may not see a strong link between their actions and the company's stock price, especially in larger organizations.

Question 4

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.

Accepted Answer

The employees would not bother to exercise the options if the stock price decreases.

Question 5

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.

Accepted Answer

An effective incentive pay plan should have performance measures that are linked to the organization's goals.

Question 6

Successful gainsharing plans include employee stock ownership plans.

Accepted Answer

A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay.

Question 7

Employees should exercise the stock options even if the stock price has decreased.

Accepted Answer

An incentive pay designed support to a management goal may interfere with other management goals. The employees may provide more importance to those goals that are supported by the incentive plan.

Question 8

Generally,team awards do not use cost savings as a performance measure.

Accepted Answer

Not only does the balanced scorecard combine the advantages of different incentive-pay plans, it helps employees understand the organization's goals.

Question 9

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Accepted Answer

Along with empowerment, communicating with employees is important. It demonstrates to employees that the pay plan is fair. It is particularly important to communicate with employees when changing the plan. Employees tend to feel concerned about changes.

Question 10

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Accepted Answer

Employee stock ownership plan refers to an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust.

Question 11

Standard hour plans are quality-oriented incentives for professional employees.

Accepted Answer

Profit sharing has the practical advantage of costing less when the organization is experiencing financial difficulties.

Question 12

Profit sharing costs more when the organization experiences financial difficulties.

Accepted Answer

The balanced-scorecard approach is useful in designing executive pay.

Question 13

A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals.

Accepted Answer

Organizations may reward individual performance with a variety of incentives such as merit pay. All other options provided in the question are designed to promote group/organizational performance.

Question 14

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.

Accepted Answer

Under profit sharing, payments are a percentage of the organization's profits and do not become part of the employees' base salary.

Question 15

In stock ownership plans,employees may not see a strong link between their actions and the company's stock price.

Accepted Answer

Along with wages and salaries, many organizations offer incentive pay-that is, pay specifically designed to energize, direct, or control employees' behavior.

Question 16

Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes.

Accepted Answer

Bonuses for group performance tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output.

Question 17

Stock options are best suited to motivate day-to-day effort or to attract and retain top individual performers.

Accepted Answer

Attitudes that influence the success of incentive pay include whether employees value the rewards and think the pay plan is fair.

Question 18

Merit pay incentive system is usually used to attract employees who are more team-oriented.

Accepted Answer

Team awards are similar to group bonuses, but they are more likely to use a broad range of performance measures, such as cost savings, successful completion of a project, or even meeting deadlines.

Question 19

Piecework rates are most suited for routine,standardized jobs with output that is easy to measure.

Accepted Answer

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Question 20

Gainsharing addresses the challenge of identifying appropriate performance measures for complex jobs.

Accepted Answer

Relying heavily on profit sharing or stock ownership may increase cooperation but do little to motivate day-to-day effort or to attract and retain top individual performers.

Quiz 12: Recognizing Employee Contributions With Pay

Group bonuses typically reward the performance of all employees in an organization.

Under profit sharing,payments are a percentage of the organization's profits and become part of the employees' base salary.

From employers' perspective,an advantage of merit pay is that it is cheap.

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.

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.

Successful gainsharing plans include employee stock ownership plans.

Employees should exercise the stock options even if the stock price has decreased.

Generally,team awards do not use cost savings as a performance measure.

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Standard hour plans are quality-oriented incentives for professional employees.

Profit sharing costs more when the organization experiences financial difficulties.

A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals.

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.

In stock ownership plans,employees may not see a strong link between their actions and the company's stock price.

Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes.

Stock options are best suited to motivate day-to-day effort or to attract and retain top individual performers.

Merit pay incentive system is usually used to attract employees who are more team-oriented.

Piecework rates are most suited for routine,standardized jobs with output that is easy to measure.

Gainsharing addresses the challenge of identifying appropriate performance measures for complex jobs.