Question 1

Vactin Motors,an automobile company,ties individual performance,profits,and other measures of employees' success to a particular form of pay.This form of pay is influential because the amount paid is linked to certain predefined behaviors or outcomes.Which of the following is exemplified in this scenario?

Accepted Answer

The scenario describes an incentive pay plan where individual performance and profits are tied to a particular form of pay. Incentive pay is typically tied to specific behaviors or outcomes, making it influential in motivating employees to meet or exceed performance expectations. The other options listed do not fit the scenario described.

Question 2

Token Inc.is an envelope manufacturer based in Dallas.The employees of the organization receive pay based on the amount of work produced.If the output of an employee is more than the average production volume,then the organization pays more for the work performed.In this case,which of the following incentives is offered by Token Inc.?

Accepted Answer

The incentive offered by Token Inc. is differential piecework rate, which means the pay rate per unit of output increases as the employee exceeds the average production volume.

Question 3

The balanced-scorecard approach should be avoided while designing executive pay.

Accepted Answer

The balanced-scorecard approach aligns executive pay with strategic goals and objectives, which can lead to more effective performance management and greater accountability. Therefore, it is often used in designing executive pay programs.

Question 4

An employee at CellWorks who produces 10 components in an hour earns $9 ($.90 × 10)per hour,while another employee who produces 15 components earns $13.50 ($.90 × 15).This is an example of a

Accepted Answer

This is an example of a straight piecework plan, where employees are paid a fixed rate per unit produced, in this case, $0.90 per component.

Question 5

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

Accepted Answer

A balanced scorecard includes a variety of performance measures that are not solely focused on financial outcomes, but also on customer satisfaction, internal business processes, and learning and growth. It is designed to provide a comprehensive view of the organization's performance and progress toward achieving its strategic objectives.

Question 6

Which of the following types of incentive plans are used to reward individual performance?

Accepted Answer

Merit pay is used to reward individual performance. Gainsharing and Scanlon plans are group incentive plans, while profit sharing and stock ownership plans are organization-wide incentive plans.

Question 7

The differential piece rate system refers to

Accepted Answer

The differential piece rate system is an incentive pay plan in which the piece rate is higher when a greater amount is produced. In this system, employees are rewarded for producing more, which encourages higher levels of productivity.

Question 8

A feature of an effective incentive pay plan is that it should

Accepted Answer

An effective incentive pay plan should have performance measures linked to the organization's goals as it ensures that the employees are motivated to work towards achieving the organization's objectives rather than only individual goals. This encourages a sense of teamwork and collaboration. Option A is also a good choice, but it does not encompass the overall goals of the organization. Option B is incorrect as incentive pay should be directly linked to job performance. Option C is incorrect as it can create a sense of unhealthy competition among employees. Option D is incorrect as not all employees have the same job roles and responsibilities, and hence their performance measures should differ.

Question 9

Wayan Inc. ,a health insurance company,pays clerks an incentive based on the average amount of work completed per hour.Wayan pays $10 for processing 20 invoices per hour.An employee who processes 30 invoices would earn $15 per hour.Hence,Wayan pays the same rate per invoice no matter how many invoices an employee processes per hour.Which type of incentive pay does this scenario illustrate?

Accepted Answer

This scenario illustrates a straight piecework plan, where employees are paid a fixed rate for each unit of work completed, regardless of the time taken to complete it.

Question 10

_____ refers to incentive pay in which the wage paid is higher when a greater amount is produced.

Accepted Answer

Differential piece rate refers to incentive pay in which the wage paid is higher when a greater amount is produced. This means that the more an employee produces, the higher their pay will be. This type of pay is often used in manufacturing settings where employees are responsible for producing a certain number of units within a specified timeframe.

Question 11

Which of the following is a disadvantage of using incentive plans?

Accepted Answer

The goals of an incentive plan may interfere with other management goals, such as promoting teamwork and collaboration among employees. This can create a conflict of interest and undermine overall organizational productivity.

Question 12

The many kinds of incentive pay fall into three broad categories: _____.

Accepted Answer

The passage clearly states that incentive pay falls under three broad categories which are linked to individual, group, or organizational performance. Therefore, option A is the correct answer. Options B, C, D, and E are incorrect as they do not accurately reflect the three broad categories mentioned in the passage.

Question 13

An organization should keep information,such as changes made to its incentive plan,confidential from its employees.

Accepted Answer

Transparency about changes to incentive plans is crucial for maintaining trust and ensuring employees understand how their performance impacts their rewards, which can motivate and engage them.

Question 14

A pay structure specifically designed to energize,direct,or control employees' behavior is known as

Accepted Answer

Incentive pay is specifically designed to motivate or encourage employees to behave in a certain way, such as achieving specific goals or completing tasks in a timely manner. Other forms of pay, such as monthly or annual salaries, may not have the same effect on employee behavior.

Question 15

As an incentive to work efficiently,some organizations pay production workers _____,a wage based on the amount they produce.

Accepted Answer

A piecework rate is a wage system where a worker is paid based on the quantity of work they produce. It can serve as an incentive for workers to work efficiently as their pay is tied to their level of productivity.

Question 16

For incentive pay to motivate employees to contribute to the organization's success,the pay plans must be well designed.Which of the following statements describes a characteristic of a well-designed plan?

Accepted Answer

For incentive pay to be effective, employees must value the rewards or incentives being offered. If the rewards are meaningful and desirable, employees are more likely to be motivated to achieve the performance standards set by the organization.

Question 17

Incentive pay for executives lays the groundwork for significant ethical issues.

Accepted Answer

Incentive pay for executives can create ethical dilemmas as it may encourage them to prioritize short-term gains over the long-term health and sustainability of the company. This can lead to unethical behavior such as financial manipulation or misleading marketing tactics. Additionally, the criteria for earning incentive pay can be vague or subjective, leading to potential conflicts of interest and favoritism.

Question 18

The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals.

Accepted Answer

The balanced scorecard is a management tool that helps organizations clarify their strategy and communicate it to employees by identifying a set of performance indicators across four perspectives: financial, customer, internal business processes, and learning and growth. By understanding these goals and indicators, employees can align their work with the organization's strategy and contribute to its success.

Question 19

Jules & Co. ,a smartphone manufacturing company,provides wages to its employees based on the number of smartphones the workers assemble.The more the employees assemble,the more they earn.This type of plan is called a

Accepted Answer

The type of payment plan described is a piecework rate plan, where payment is based on the number of units produced.

Question 20

In the process of designing incentives,managers should make sure that

Accepted Answer

In order for incentives to be effective, it is important for employees to perceive them as fair. This helps to create buy-in and motivation to perform well. Choices A, B, C, and E are not optimal because they do not take into account the importance of fairness, performance differentiation, or individual motivation.

Quiz 13: Recognizing Employee Contributions With Pay