Question 1

What percentage of total pay-related spending is on variable-pay related expenses?

Accepted Answer

D

Question 2

What is the fundamental premise of variable pay plans?

Accepted Answer

The fundamental premise of variable pay plans is that top performers should get top pay to secure their commitment. This creates an incentive for employees to perform better and helps organizations retain their best performers. Other options may play a role in variable pay plans, but they are not the fundamental premise.

Question 3

What motivation is derived from the pleasure someone gets from doing the job or task?

Accepted Answer

Intrinsic motivation is derived from the pleasure or enjoyment that someone gets from doing a job or task. It is an internal drive to engage in a particular activity because it is personally rewarding or fulfilling.

Question 4

According to Frederick Herzberg what kind of factor is safety?

Accepted Answer

According to Frederick Herzberg, safety is a hygiene factor. Hygiene factors are basic factors that, if not met, can cause dissatisfaction among employees. Safety is necessary to prevent employees from feeling unsafe, but it does not truly motivate them to perform better in their jobs.

Question 5

Accurate ________ are a precondition for effective variable pay plans.

Accepted Answer

Performance appraisals are necessary to accurately determine an employee's performance and determine what level of variable pay they should receive. Without accurate performance evaluations, it is difficult to determine the appropriate variable pay amounts, which can lead to dissatisfaction and demotivation among employees. Job evaluation, job specifications, salary curves, and job descriptions are important in determining overall compensation but do not specifically relate to variable pay plans.

Question 6

Which psychologist warned that too much extrinsic rewards could result in demotivation?

Accepted Answer

Edward Deci is known for his research on intrinsic motivation and self-determination theory. He warned that offering too many extrinsic rewards (such as money or prizes) could reduce people's intrinsic motivation and interest in a task, leading to demotivation.

Question 7

Today, any plan that ties pay to productivity or profitability is called

Accepted Answer

Variable pay refers to compensation that is tied to productivity, profitability, or other performance metrics, making it the correct choice.

Question 8

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

Accepted Answer

Victor Vroom's term for the perceived value a person attaches to the reward is called "valence". Valence is the degree of preference or aversion that an individual attaches to an outcome. It is a measure of how much an individual desires a particular outcome.

Question 9

Amy received a salary increase based on her individual performance as a collections clerk over the past year. Which type of compensation did Amy receive?

Accepted Answer

The description of Amy's compensation aligns with the definition of merit pay, which is a type of compensation based on individual performance.

Question 10

What does Frederick Herzberg call factors that satisfy lower level needs?

Accepted Answer

Herzberg calls factors that satisfy lower level needs "hygienes."

Question 11

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

Accepted Answer

A gainsharing plan is specifically designed to reward employees for improvements in organizational productivity. This type of incentive plan is organization-wide and based on the idea that employees will receive a portion of the monetary savings and profits resulting from their efforts in improving productivity.

Question 12

What is compensation that is independent of the performance level of the individual, group, or organization?

Accepted Answer

Fixed pay is the compensation that remains constant regardless of the performance level of the individual, group, or organization. It is usually based on factors such as job responsibilities, experience, and qualifications.

Question 13

What is Victor Vroom's term for when a worker believes his or her effort will lead to performance?

Accepted Answer

Victor Vroom's term for when a worker believes his or her effort will lead to performance is expectancy. The expectancy theory suggests that an individual's level of effort is determined by their belief in the likelihood of their effort resulting in desired performance outcomes.

Question 14

Amy is part of a team of four software developers. Upon completion of a major client project, she and each of her team members received a set amount in addition to their base salary. What is this an example of?

Accepted Answer

This is an example of a group incentive program, where all members of a team receive a reward for achieving a collective goal, such as completing a major project.

Question 15

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

Accepted Answer

Instrumentality refers to the belief that successful performance will lead to the desired outcome or reward, according to Victor Vroom's Expectancy Theory.

Question 16

According to Frederick Herzberg what kind of factor is salary?

Accepted Answer

According to Herzberg's two-factor theory, salary belongs to the hygiene factors, which are the basic requirements needed to prevent dissatisfaction among employees. Salary is considered a basic factor that only serves as a threshold or minimum requirement for most employees. While an inadequate salary can lead to dissatisfaction, an increase in salary beyond a certain level does not necessarily lead to increased motivation or job satisfaction.

Question 17

Traditional merit pay plans have which of the following characteristics?

Accepted Answer

Traditional merit pay plans usually base the merit raise on individual performance.

Question 18

Paula reviews her company's financial reports to ensure revenues exceed expenses before authorizing additional pay beyond base salaries. What is this an example of?

Accepted Answer

This is an example of a profit-sharing plan, as Paula is reviewing the company's financial reports to ensure that there is enough profit to authorize additional pay beyond base salaries.

Question 19

An important prerequisite for an effective variable pay plan is referred to as "line of sight." What does this refer to with respect to the employee?

Accepted Answer

"Line of sight" refers to the ability of the employee to see the connection between their daily work and the achievement of overall corporate goals. This connection is necessary for the employee to be motivated by the variable pay plan, as they can see how their efforts directly impact the success of the company. Option A relates to motivation but does not address the connection to the corporate goals, while options B, D, and E are not directly related to the concept of "line of sight."

Question 20

The term merit pay can apply to incentive raises given to any employees, but which employees is it most often related to?

Accepted Answer

Merit pay is most often related to white-collar employees, meaning those who work in professional or administrative positions in an office or other professional setting. These employees are typically salaried and may be eligible for performance-based bonuses or raises based on their individual contributions to the company. Meanwhile, blue-collar employees, contract workers, and part-time employees are typically paid hourly and may not be eligible for these types of performance incentives. Salespeople may also be eligible for commission-based incentives in addition to merit pay.

Quiz 12: Pay-For-Performance and Financial Incentives