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Homework answers / question archive / 1)When Greater Aircraft acquired Middling Aircraft, the executives of the two companies identified key employees they needed for the combined companies' success
1)When Greater Aircraft acquired Middling Aircraft, the executives of the two companies identified key employees they needed for the combined companies' success. One of them was Michael, the vice president of engineering. The executives offered Michael a one-time bonus of $25,000 if he stayed with Greater Middling for 12 months following the acquisition. In this scenario, Michael's the $25,000 represents _____.
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a commission
a retention bonus
stock options
merit pay
a differential piece rate
2 Which of the following is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust?
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stock options
employee stock ownership plan
Scanlon plan
collective stock options
profit-sharing plan
3 Which of the following statements is true of using stock options as incentive pay?
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The use of stock options ensures that managers add value in terms of efficiency and customer satisfaction.
Stock options require an option holder to purchase the organization's stocks at its present market rate.
Stock options are rewarding for employees who exercise their option when the company's stock value has risen.
Low-level employees with stock options are more likely to think like owners than executives who have stock options.
A company's performance in the stock market tends to be significantly better if its low-level employees are provided stock options.
4 Merit pay system decisions are based on two factors: an individual's performance rating and their
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compa-ratio.
seniority.
pay grade.
educational qualifications.
experience.
5 _____ occurs when a date or price in a stock option agreement is changed so that the option holder can buy shares at a bargain price.
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"Backdating"
"Option revising"
"Retro-vising"
"Adjusting"
"Rechecking"
6 The human resource, accounting, and legal departments of GloryB Software, a company with locations in seven states plus Australia, are working together on developing a profit-sharing plan. Of the following options for communicating with employees about the plan, which would be the most practical and effective?
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Call a meeting of all the employees to discuss the plan face-to-face.
Set up a balanced scorecard to measure opinions about the plan.
Ask employees not to engage in rumors.
Post descriptions and videos on the company's intranet.
Hold off on any communications until all employees can be brought together.
7 An organization wants to provide its employees information about what its goals are and what it expects employees to accomplish. It is planning to implement an incentive plan that helps employees understand the organization's goals. Which of the following should be used by this organization?
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a retention bonus
a piecework rate system
a merit pay system
the Scanlon plan
a balanced scorecard
8 Which of the following is a disadvantage of using group bonuses?
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Physical outputs are not rewarded.
It reduces the level of cooperation between the members of the group.
The performance measures used are narrow.
It could result in competition among groups.
It cannot be used to promote specific goals.
9 Which of the following incentive programs measures improvements in productivity and effectiveness and distributes a portion of the earnings to all employees?
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merit pay
team award
commission
standard hour plans
gainsharing
10 Sheldon, the manager of a manufacturing firm, wants the organization to perform better. He expects his employees to think more like owners, taking a broad view of what they need to do in order to make the organization more effective. In this case, Sheldon should
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pay his employees per piece that is manufactured.
create a balanced scorecard.
reorganize the departments in the organization.
implement a profit-sharing incentive plan.
hire new employees and pay them above the market rate.
11 Which of the following is a common condition for gainsharing to be a success in an organization?
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employees who value working in groups
employers who do not set short-term goals for employees
work environment with minimum management commitment
employees who prefer minimum interaction and cooperation
low levels of cooperation and interaction
12 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
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commission plan.
differential piece rate plan.
direct commission plan.
profit-sharing plan.
straight piecework plan.
13 Which of the following is an advantage of the merit pay incentive system?
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It makes the reward more valuable by relating it to economic conditions.
It promotes group performance instead of promoting individual behavior.
It provides merit increases to employees solely on the basis of performance.
It is the most economical incentive system for the employers.
It provides a direct link between the work done by the employee and the amount earned.
14 As an incentive to work efficiently, some organizations pay production workers _____, a wage based on the amount they produce.
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merit pay
a sales commission
standard hour pay
a piecework rate
a special bonus
15 To make merit increases consistent, administrators of merit pay programs must closely monitor the compa-ratio and the
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number of grades in the pay structure.
individual's performance ratings.
number of new hires in the company.
company's stock price in the current financial year.
average pay of the area where the organization is based.
16 Jupiter Systems, an information technology company, determines that most problems handled by employees at its help desk can be resolved within 20 minutes. The company sets 20 minutes as the standard time for resolving a customer problem. If an employee solves a customer's problem in less than 20 minutes, the employee still earns 20 minutes' worth of wages. Which of the following payment methods does this scenario illustrate?
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piecework plan
differential plan
standard hour plan
merit pay
performance bonus
17 The primary function of a merit increase grid is to
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make pay increases consistent.
further increase the pay of those whose pay is relatively higher for their job.
increase the employees' compa-ratios.
stabilize economic conditions.
increase incentives on a year-by-year basis.
18 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
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piecework rate plan.
merit pay plan.
Scanlon plan.
profit-sharing plan.
rapid hour plan.
19 Most pay-related communications come through
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the company newsletter.
one designated company speaker.
rumors between employees from various departments.
an employee's annual review.
individual discussions between employees and their supervisor.
20 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?
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minimum wage
overtime pay
incentive pay
piecework rates
salary
21 Brendan, the HR manager at Baretta & Co., is trying to implement an effective group incentive plan which measures increases in productivity and effectiveness and distributes a portion of its earnings to all employees. In this case, Brendan should apply the incentive scheme of _____.
Multiple Choice
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piecework rate
gainsharing
sales commission
merit pay
ESOPs
22 By law, what is the minimum percentage of assets that an ESOP must invest in its company's stock?
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10
26
51
60
76
23 The link between employees' performance and pay is hardest to establish in
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piece rate plans.
merit pay plans.
standard hour plans.
stock ownership plans.
Scanlon plans.
24 Which of the following is an advantage of using balanced scorecard?
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It eliminates the need to communicate the details of an incentive plan to the employees.
It eliminates managerial effort when providing incentives to employees.
It increases the pay for all employees in the organization regardless of their performances.
It reduces employee stress because it does not focus on financial targets.
It helps employees understand the organization's goals.
25 How does the balanced scorecard help organizations deal with unethical behaviors of executives?
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It allows companies to deduct executive pay that exceeds $1 million.
It ensures that by rewarding the achievement of a variety of goals, temptation on the executive's part to gain bonuses by manipulating data are reduced.
It encourages executives to hold on to their stock options when the company is undergoing financial problems.
It forces executives to focus on the company's long-term success because ESOP funds are guaranteed by the Pension Benefit Guarantee Corporation.
It mandates that an ESOP invest at least 51% of its assets in the company's own stock.
26 Organizations that want employees to focus on efficiency and on group incentives are most likely to implement a _____ program.
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gainsharing
standard hour
bonus
commission
piece rate pay
27 An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as _____.
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commissions
the Scanlon plan
merit pay
gainsharing
profit sharing
28 Mike, the CEO of an automobile company, believes that profit sharing has increased the productivity of his organization. He feels that an incentive plan motivates employees to be more productive. Which of the following statements strengthens Mike's argument?
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In a profit-sharing plan, employees are the owners of the organization.
Profit sharing helps employees to cooperate and to focus on organizational interests.
Profit sharing makes employees workaholics.
In profit sharing, employees contribute their base salary for the development of the organization.
Profit sharing benefits employees even if the organization makes less profit or no profit.
29 Which of the following statements is true about a piecework rate plan?
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It can be used for all types of jobs and in all types of industries.
It is best suited for complex jobs and tasks.
It can be used to encourage teamwork and collaboration.
It has a direct link between the work done by the employee and the amount earned.
It encourages the employee's peers to perform and reduces conflicts
30 _____ provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system.
Multiple Choice
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Differential piece rate
Standard hour plan
Merit pay
Piece rate
Commission
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