Chapter 12: Rewarding Performance

Test Bank

Multiple Choice

1. A reward system is made up of which three components?

A. internal equity, distribution justice, and compensation

B. relational returns, compensation, and benefits

C. compensation, benefits, and distribution justice

D. relational returns, compensations, and organizational justice

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: REF: Cognitive Domain: Knowledge

Answer Location: Pay as a Motivator

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

2. ______ refers to financial rewards offered in exchange for achieving certain goals and can be an integral component of an organization’s broader reward system.

A. Traditional pay programs

B. Piecework plans

C. Pay for performance

D. Differential pay plans

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Improving Patient Care with Financial Rewards: Geisinger Health System

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

3. ______ reward employees for the behaviors they actually exhibit at work and for the results or goals they actually achieve.

A. Traditional pay programs

B. Piecework plans

C. Pay for performance

D. Differential plan

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

4. ______ reward employees based on the content of their job description, job title, and/or organizational level.

A. Traditional pay programs

B. Piecework plans

C. Pay for performance

D. Differential pay plans

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

5. Olivia is paid based on her job description, job title, and level in the organization. What is this an example of?

A. piecework pay

B. traditional pay

C. pay-for-performance

D. individual incentives

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Application

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

6. A traditional-pay program is a guarantee of ______.

A. bonuses

B. profit sharing

C. benefits

D. wage/salary

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Pay as a Motivator

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

7. Which pay program applies to a doctor who is paid based on patient outcomes versus the number of patients he sees?

A. traditional pay

B. base pay

C. bonus pay

D. pay-for-performance

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Application

Answer Location: Pay as a Motivator

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

8. Pay-for-performance is linked to greater ______ to perform.

A. instrumentality

B. motivation

C. valence

D. expectancy

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

9. Pay-for-performance motivates employees to perform with greater ______.

A. instrumentality

B. attention to detail

C. efficiency and effectiveness

D. intrinsic motivation

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

10. Pay-for performance attracts ______.

A. applicants who are high performing

B. applicants who value security

C. applicants sensitive to interactional justice

D. applicants insensitive to equity

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Pay as a Motivator

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

11. ______ is a psychological force that propels an individual (or a group of individuals) to enact certain behavior or to strive for a goal or result.

A. Expectancy

B. Instrumentality

C. Motivation

D. Incentive

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Defining Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

12. In relation to motivation, direction is the ______ a person is focused on.

A. place

B. time

C. goals

D. pay

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Defining Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

13. In relation to motivation, form is the types of ______ an individual pursues.

A. behaviors

B. pay

C. incentives

D. environments

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Defining Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

14. In relation to motivation, the intensity with which a person focuses on goals is called ______.

A. effort

B. outcome

C. results

D. instrumentality

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Defining Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

15. Motivation that originates outside of an individual and the work itself is known as ______ motivation

A. reinforcement

B. extrinsic

C. intrinsic

D. expectancy

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Extrinsic Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

16. ______ motivation compels the individual to action because the individual perceives the action as innately rewarding, meaningful, challenging, and/or enjoyable.

A. Intrinsic

B. Extrinsic

C. Expectancy

D. Discrete

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Intrinsic Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

17. Sarah praises Angie for completing her expense report on time. Going forward, Angie consistently submits her expense report on time. Sarah’s praise is an example of ______.

A. instrumentality

B. influential performance

C. extrinsic motivation

D. a bonus

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Application

Answer Location: Extrinsic Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

18. Jillian received a bonus for reaching her target performance goals. The bonus is ______.

A. an extrinsic motivator

B. a nonmonetary award

C. merit pay

D. traditional pay

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Extrinsic Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

19. Jacqueline is known around the office for helping coworkers. Jacqueline feels good when she helps people, even if they do not thank her or show appreciation. According to the textbook, why does Jacqueline continue to help people?

A. She is intrinsically motivated to be helpful.

B. She enjoys challenging her coworkers to be better.

C. Her behaviors are reinforced.

D. She is extrinsically motivated to be helpful.

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Analysis

Answer Location: Intrinsic Motivation

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

20. A company that sells lawn care service packages rewards its employees based on the number of packages they sell each month. The company provides prizes such as gift cards and event tickets for extrinsic motivation. Extrinsic motivators work best for this scenario because the metric of interest is ______ of performance.

A. quantity

B. value

C. quality

D. condition

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Analysis

Answer Location: Motivation and Performance

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

21. The purpose for theories of motivation is to provide a framework ______.

A. to assess how well a person produces products and services on the job

B. to assess the quantity of a person’s performance on the job

C. for designing, explaining, and understanding the effects pay-for-performance on behavior

D. to assess the quality of a person’s performance on the job

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Theories of Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

22. Who are the three influential social scientists who researched reinforcement theory?

A. Thorndike, Pavlov, and Skinner

B. Macmillian, Steers, and Mayer

C. Bauer, Berrin, and Caughlin

D. Truxillo, Latham, and Locke

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Reinforcement Theory

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

23. ______ theory provides a useful framework for understanding pay as an extrinsic motivator, particularly when pay is used for behavior modification, as in many pay-for-performance programs.

A. Reinforcement

B. Expectancy

C. Equity

D. Discrete

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Reinforcement Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

24. Reinforcement theory helps us to understand ______.

A. how to use intrinsic motivators to enhance behavior

B. how pay can be used to motivate behavior

C. why the provision of intrinsic motivators serves as a motivating force

D. the instrumentality of motivation and performance.

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Reinforcement Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

25. Rashid considers his sales commission as a reward for his hard work to meet his quotas. Which theory explains Rashid’s behavior?

A. goal-setting theory

B. expectancy theory

C. pay-for-performance theory

D. reinforcement theory

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Application

Answer Location: Reinforcement Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

26. According to ______, to elicit a desired behavior, an environmental consequence--such as a reward or punishment--should be distributed soon after the behavior is exhibited.

A. expectancy theory

B. traditional-pay theory

C. reinforcement theory

D. goal-setting theory

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Reinforcement Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

27. According to reinforcement theory, a salesperson would be motivated to meet performance goals by a sales commission because ______.

A. if a reward is provided for a specific behavior, the behavior is likely to be repeated

B. if a punishment is provided for a specific behavior, the behavior is unlikely to be repeated

C. if a reward is withheld for a specific behavior, the behavior unlikely to be repeated

D. if a punishment is withheld for a specific behavior, the behavior unlikely to be repeated

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Reinforcement Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

28. According to reinforcement theory, a factory worker would be motivated to avoid actions (such as wasting product) that lead to having her pay docked because ______.

A. if a reward is provided for a specific behavior, the behavior is likely to be repeated

B. if a punishment is provided for a specific behavior, the behavior is unlikely to be repeated

C. if a reward is withheld for a specific behavior, the behavior unlikely to be repeated

D. if a punishment is withheld for a specific behavior, the behavior unlikely to be repeated

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Reinforcement Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

29. According to reinforcement theory, refusing to give commissions to salespeople who use unethical tactics would motivate salespeople to be ethical because ______.

A. if a reward is provided for a specific behavior, the behavior is likely to be repeated

B. if a punishment is provided for a specific behavior, the behavior is unlikely to be repeated

C. if a reward is withheld for a specific behavior, the behavior unlikely to be repeated

D. if a punishment is withheld for a specific behavior, the behavior unlikely to be repeated

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Reinforcement Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

30. ______ theory can be useful for understanding the cognitive processes via which pay-for-performance programs drive the direction, form, effort, and duration of behavior.

A. Equity

B. Expectancy

C. Reinforcement

D. Perceptive

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

31. In expectancy theory, ______ refers to the perceived connection between individuals’ effort and performance.

A. valence

B. expectancy

C. reinforcement

D. instrumentality

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

32. In expectancy theory, ______ refers to the perceived connection between performance and rewards.

A. valence

B. expectancy

C. reinforcement

D. instrumentality

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

33. In expectancy theory, ______ is the extent to which individuals perceive a reward as being attractive or important.

A. valence

B. expectancy

C. worth

D. instrumentality

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

34. According to expectancy theory, which three psychological concepts explain motivation?

A. expectancy, instrumentality, and valence

B. reinforcement, instrumentality, and valence

C. punishment, expectancy, and valence

D. reward, punishment, and expectancy

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Expectancy Theory

Answer Location: Knowledge

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

35. According to expectancy theory, what is the equation for motivation?

A. Expectancy × Instrumentality × Valence

B. Reinforcement × Instrumentality × Valence

C. Instrumentality × Valence

D. Instrumentality × Expectancy

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

36. Wynonna meets her quality standards because she perceives high performance as instrumental for receiving rewards. Which theory supports the concept of instrumentality?

A. traditional-pay theory

B. expectancy theory

C. goal-setting theory

D. reinforcement theory

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Application

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

37. Lynne exerts more effort when she values the rewards being offered for meeting her targeted behaviors. What is valuing the rewards offered for goal attainment called?

A. goal focus

B. expectancy

C. valence

D. instrumentality

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Application

Answer Location: Expectancy Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

38. Why might a person perceive low expectancy between their effort and performance?

A. when the performance management program has low instrumentality

B. when the valence of the performance management program is too high

C. when there is not a clear line of sight between effort and performance

D. when there is no valence commensurate with the amount of effort and performance

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Expectancy Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

39. What is the objective of most pay-for-performance programs?

A. goal setting

B. job satisfaction

C. strategy realization

D. employee engagement

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Goal-Setting Theory

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

40. Which theory of motivation provides a framework to explain how and why setting measurable objectives contributes to increase motivation and higher levels of performance?

A. reinforcement theory

B. goal-setting theory

C. SMART theory

D. expectancy theory

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Goal-Setting Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

41. What are the components of a SMART goal?

A. specific, maximum, aggressive, rigorous, and tested

B. sporadic, minimum, assertive, realistic, and tested

C. specific, measurable, assertive, rigorous, and time-bound

D. specific, measurable, aggressive, realistic, and time-bound

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Goal-Setting Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

42. Why might a manager attach a reward to team performance?

A. to motivate high performers to lead

B. to encourage interdependence

C. to increase valence

D. to make team work less difficult

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Analysis

Answer Location: Goal-Setting Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

43. Since pay is a finite resource within organizations, a performance-contingent pay plan signals ______.

A. some goals are more important than others

B. strategy is not linked to pay

C. company goals are not well defined

D. the compensation budget is limited

KEY: Learning Objective: 12.3: Explain how pay can be used strategically to motivate desired behavior.

REF: Cognitive Domain: Comprehension

Answer Location: Strategy and Pay for Performance

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

44. What are bonuses, spot awards, and individual incentives examples of?

A. traditional pay

B. variable pay

C. sales commissions

D. standard pay

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Individual Pay-for-Performance Programs

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

45. Sydney received pay based on feedback she got on her performance evaluation. What is this an example of?

A. merit pay

B. bonus

C. spot award

D. commission

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Merit pay

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

46. How does merit pay work?

A. It is based on hours work at a certain performance level.

B. It distributed in a lump sum annually.

C. It is split between all the members of an employee’s team.

D. It is integrated into an employee’s base pay.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Merit pay

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

47. What must be true for a merit pay program to be effective?

A. It should occur quarterly.

B. It should be tied to performance evaluation.

C. It should be predicated upon team performance.

D. It should be left up to a manager’s discretion.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Merit pay

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

48. ______, a form of variable pay, are one-time payouts distributed in recognition of performance such as the attainment of a goal.

A. Bonuses

B. Benefits

C. Perks

D. Standard hours

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Bonuses

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

49. ______ are after-the-fact recognition, which are often reserved for exceptional levels of performance on a project or for exceptionally high overall job performance.

A. Performance pay

B. Merit pay

C. Spot awards

D. Base pay

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Spot Awards

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

50. Spot awards vary with respect to the level of ______ applied by a company.

A. criteria

B. formality

C. attention

D. incentive

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Spot Awards

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

51. Which is one of the least commonly used individual pay-for-performance programs?

A. individual incentives

B. bonuses

C. merit pay

D. sales commission

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Individual Incentives

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

52. ______ refer(s) to the distribution of pay in response to the attainment of certain predetermined and objective levels of performance.

A. Merit pay

B. Performance pay

C. Individual incentives

D. Spot awards

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Individual Incentives

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

53. In ______, employees are compensated based on their respective production levels.

A. piecework plans

B. employee stock ownership plans

C. profit sharing

D. gainsharing

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Piecework Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

54. In a(n) ______ plan, employee variable pay is based on the units they produce in a given time period, such that there is a direct correspondence between the amount of pay distributed and the number of units produced.

A. bonus

B. employee stock ownership

C. straight piecework

D. gainsharing

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Piecework Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

55. What are the two types of piecework plans?

A. straight and differential

B. standard and commission

C. standard and nonstandard

D. straight and nonstandard

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Piecework Plans

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

56. Huon works in a factory and is paid based the units produced in a given amount of time. What type of pay plan is this?

A. standard hour

B. differential piecework

C. traditional pay

D. straight piecework

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Piecework Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

57. Addison works in a factory and gets paid based on the number of widgets she produces. She gets one rate if it is below a certain number and another rate if it is above a certain number. What type of pay plan is this?

A. standard hour

B. differential piecework

C. traditional pay

D. straight piecework

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Piecework Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

58. Breccan fixes washing machines. His pay is based on completing a specific repair within a predetermined amount of time. What type of pay plan is this?

A. standard hour

B. differential piecework

C. sales commission

D. straight piecework

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Standard-Hour Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

59. A person who sells real estate is paid a percentage of the contract price associated with each sale. What kind of pay plan is this?

A. standard pay

B. standard hour

C. sales commission

D. individual incentive

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Sales Commissions

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

60. A boat manufacturer provides a year-end bonus to the team who most frequently reaches the highest quality metrics during each report period. What type of group pay-for-performance plan is this?

A. team reward

B. gainsharing

C. profit sharing

D. stock options

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Team Rewards

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

61. Some hospitals offer a portion of cost savings to individual doctors when the hospital is able to meet certain goals such as reducing waste without changing the quality of care provided to patients. What type of group pay-for-performance plan is this?

A. team reward

B. gainsharing

C. profit sharing

D. stock options

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Gainsharing

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

62. Employees at a local lumber company had a percentage of the company’s profits placed in their retirement plan when the company exceeded their targets for the year. What type of pay plan is this?

A. team reward

B. gainsharing

C. profit sharing

D. stock options

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Profit Sharing

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

63. ______ are a type of defined-contribution retirement plan in which employees are given company stock shares that can only be used after a vesting period.

A. Stakeholder

B. Employee stock ownership

C. Profit sharing

D. Stock option

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Employee stock ownership plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

64. What is the result when a pay-for-performance plan motivates employees to pursue company goals?

A. profit sharing

B. sorting effects

C. incentive effects

D. gainsharing

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Incentive and Sorting Effects

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

65. That individuals tend to gravitate to jobs with reward systems that fit their disposition, goals, and performance capabilities, and the associated processes of attraction, selection, and attrition are referred to collectively as ______ effects.

A. sorting

B. compensation

C. target

D. incentive

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Incentive and Sorting Effects

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

66. When employees realize they are not a good fit with a company and subsequently leave, this is called ______.

A. selection

B. attraction

C. attrition

D. dismissal

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Incentive and Sorting Effects

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

67. The primary limitation of statistical modeling to determine labor costs is that it assumes ______.

A. turnover controls labor costs

B. high-performing employees will continue their performance

C. the past can help to predict the future

D. the selection process will naturally control overages

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Labor Costs

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

68. When people are rewarded for unethical behavior, the result is ______.

A. illegal

B. less motivation

C. more unethical behavior

D. team work

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Unethical Behaviors

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

69. When a person applies less effort in a group pay-for-performance situation, they are engaged in ______.

A. corporate citizenship

B. competition

C. social loafing

D. collaboration

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Efforts and cooperation

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

True/False

1. As long as employees hold on to their jobs, they receive their base pay, regardless of how they perform.

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Knowledge

Answer Location: Pay as a Motivator

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

2. Motivation applies only to individuals, not groups.

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Comprehension

Answer Location: Defining Motivation

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

3. According to reinforcement theory, intrinsic consequences drive motivation and ultimately behavior.

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Reinforcement Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

4. According to expectancy theory, motivation equals expectancy times instrumentality times valence.

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Knowledge

Answer Location: Expectancy Theory

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

5. Challenging goals increase job satisfaction and motivation.

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Comprehension

Answer Location: Goal-Setting Theory

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

6. Attaching financial incentives to certain performance expectations does not make a difference in aligning employee behavior with the most critical objectives for company success.

KEY: Learning Objective: 12.3: Explain how pay can be used strategically to motivate desired behavior.

REF: Cognitive Domain: Comprehension

Answer Location: Strategy and Pay for Performance

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

7. Employees who receive merit pay increases tend to show higher performance than those who do not receive merit pay increases.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Merit pay

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

8. Since bonuses are a form of variable pay, they are added to an individual’s base pay.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Bonuses

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

9. Generally, individual incentives are based on a manager’s discretion.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Individual Incentives

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

10. Katarina’s pay is based on how many widgets she assembles during her shift. This is an example of a straight piecework plan.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Piecework Plans

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

11. A pay plan where an employee receives pay for completing a specific task within a designated time frame is a standard hour plan.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Individual Incentives

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

12. There is no limit on the sales commission Shawn earns; however, Bill is limited on the amount of commission he can earn. In general, Shawn will be more motivated than Bill.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Application

Answer Location: Sales Commissions

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

13. Success-sharing plans tend to be more effective when applied to larger groups, such as an entire organization.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Group Pay-for-Performance Programs

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

14. Statistical modeling can be used to help a company plan for future labor costs associated with pay-for-performance programs.

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Labor Costs

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

15. High performers, and those who see themselves as high performers, are usually more attracted to pay-for-performance programs than low performers.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Knowledge

Answer Location: Unintended Behavioral Consequences

Difficulty Level: Easy

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

Essay

1. Contrast traditional-pay programs with pay-for-performance programs.

KEY: Learning Objective: 12.1: Describe the motivating potential of pay and other rewards.

REF: Cognitive Domain: Analysis

Answer Location: Pay as a Motivator

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

2. Explain what a SMART goal is and practice writing at least two examples.

KEY: Learning Objective: 12.2: Identify the prevailing theories of motivation and goal setting.

REF: Cognitive Domain: Application

Answer Location: Goal-Setting Theory

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

3. Discuss how a company can use pay to strategically motivate employees to perform the desired behavior.

KEY: Learning Objective: 12.3: Explain how pay can be used strategically to motivate desired behavior.

REF: Cognitive Domain: Analysis

Answer Location: Strategy and Pay for Performance

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

4. Explain at least four individual pay-for-performance programs.

KEY: Learning Objective: 12.4: Describe common individual and group pay-for-performance programs.

REF: Cognitive Domain: Comprehension

Answer Location: Pay-for-Performance Programs

Difficulty Level: Medium

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards

5. Analyze the possible unintended behavioral consequences of pay-for-performance programs when they are not well thought out and monitored properly.

KEY: Learning Objective: 12.5: Assess common challenges and opportunities of pay-for-performance programs.

REF: Cognitive Domain: Analysis

Answer Location: Unintended Behavioral Consequences

Difficulty Level: Hard

TOP: AACSB Standard: Application of knowledge

SHRM: Total Rewards