Ch10 Test Questions & Answers Pay-For-Performance Plans

1.

Surveys show the most popular type of variable pay plans are _____. 
 

2.

Which of the following statements about merit pay is NOT true? 
 

3.

The authors argue that for merit pay to live up to its potential, all of the following should be done EXCEPT _____. 
 

4.

Which of the following is NOT true of merit bonuses? 
 

5.

Which of the following statements is true of individual spot awards? 
 

6.

Which of the following is NOT true about individual spot awards? 
 

7.

One common feature of all types of incentive plans is: 
 

8.

Which of the following does NOT provide for incentives based on standards that are expressed in terms of time period per unit of production? 
 

9.

Paying a dime for every bottle collected and turned into a collection center is an example of a: 
 

10.

The most frequently used incentive system is the: 
 

11.

A _____ plan requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action. 
 

12.

An incentive system with three piecework rates is the _____ plan. 
 

13.

If you had repair work done on your car, the shop most likely used the _____ plan to pay the mechanic. 
 

14.

For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the _____ plan. 
 

15.

Menthorp Inc. wants to design a variable-pay plan that fosters teamwork and business knowledge of its employees. In order to ensure maximum motivation, Menthorp wants its variable-pay plan to show a clear performance-reward link. Which of the following plans is most suitable for Menthorp? 
 

16.

TreeDen Corp. experiences an increase in employee turnover rate. Upon investigating, it discovers that employees are dissatisfied with the company's pay. Employees cannot see a direct link between their performance and their pay. They are also unhappy about having to pay out of their pockets to obtain grants. In this case, TreeDen is most likely using a _____. 
 

17.

Maxwell Construction Corp. employs a lot of uneducated laborers. The company wants to introduce a variable-pay plan that is easy to understand and does not cost much to administer. Which of the following variable-pay plans is Maxwell most likely to introduce? 
 

18.

Which of the following is the most commonly used team incentive performance standard? 
 

19.

When a firm is _____ on business risk, and its outcomes are _____, its performance is more likely to be higher without any incentive plans. 
 

20.

Which of the following is an advantage of providing stock ownership options as variable pay to employees? 
 

21.

_____ have the disadvantage of requiring employees to spend money to obtain their incentive. 
 

22.

Which of the following is an advantage of gain-sharing plans? 
 

23.

Which of the following is a disadvantage of gain-sharing plans? 
 

24.

Which of the following is NOT an advantage of team incentives? 
 

25.

All of the following support the use of individual incentives EXCEPT: 
 

26.

A team leader with a free-rider problem in his team can most likely maximize the performance of his team by: 
 

27.

In gain-sharing plan formulas, _____ are in the numerator and _____ are in the denominator. 
 

28.

Components identified as vital to the success of both Scanlon and Rucker plans are: 
 

29.

Which of the following is NOT a long-term incentive plan? 
 

30.

The trend in recent variable-pay design is to combine the best of _____ and _____ plans. 
 

31.

The percentage of companies using some form of variable pay is declining because many employees prefer base wages. 
 
True    False

32.

Merit pay is a pay-for-performance plan used for more than three-quarters of all exempt, clerical, and administrative employees. 
 
True    False

33.

High performance ratings are nearly always statistically related to high merit increases. 
 
True    False

34.

In the long run, merit bonuses cost employers less than merit pay. 
 
True    False

35.

All incentive plans share an established standard against which worker performance is compared to determine the magnitude of the incentive pay. 
 
True    False

36.

Standard hour plans are better for nonrepetitive jobs requiring numerous skills for completion. 
 
True    False

37.

A fast and efficient worker would earn more money under a Rowan plan than under a Halsey 50-50. 
 
True    False

38.

The Rowan plan uses a standard that is purposefully set high requiring high performance levels. 
 
True    False

39.

Employees working under individual incentive plans tend to resist the introduction of new technology. 
 
True    False

40.

Individual incentives yield higher productivity gains than group incentives. 
 
True    False

41.

The free-rider problem is common in firms using individual incentive plans. 
 
True    False

42.

Unions prefer individual incentive pay plans to group incentive pay plans since members can earn more money. 
 
True    False

43.

A group performance-based pay plan is superior to an individual plan when production methods and labor mix must change to meet changing pressures. 
 
True    False

44.

Gain-sharing plans do not to use a historical standard to set productivity standards since environmental conditions can change quickly. 
 
True    False

45.

A major problem in group incentive plans is that performance targets are not correctly set. 
 
True    False

46.

Scanlon plans are designed to lower labor costs by lowering the level of a firm's activity. 
 
True    False

47.

An advantage of group incentives is that it leads to increased line-of-sight. 
 
True    False

48.

Many variable-pay plans have some form of profit trigger linked to revenue growth or profit margins. 
 
True    False

49.

Performance plans typically feature corporate performance objectives for a time three years in the future. 
 
True    False

50.

A combination plan often favored by CEOs who don't like to make payouts when the company loses money is a completely self-funding plan. 
 
True    False

51.

Discuss the trends that are leading to the increased interest in variable pay. 
 

52.

Why do companies prefer merit bonuses over merit pay increases? 
 

53.

Discuss the plans that provide for variable incentives linked to a standard expressed as a time period per unit of production. 
 

54.

Discuss SVOP. 
 

55.

What is the difference between success-sharing plans and risk-sharing plans?