Full Test Bank Ch11 Strategic Reward Management

Chapter 11: Strategic reward management

TRUE-FALSE QUESTIONS

1. A reward is defined as an item (either tangible or intangible) that is received in recognition for behaviour or output.

a. True

b. False

LO: 1

Diff: 1

Topic: Strategic reward management

AACSB: 7

2. Pay, bonuses and incentives are examples of intrinsic rather than extrinsic rewards.

a. True

b. False

LO: 1

Diff: 1

Topic: Strategic reward management

AACSB: 3

3. An employee’s assessment of the fairness of his or her compensation, based on the amount received, is based on equity theory.

a. True

b. False

LO: 1

Diff: 2

Topic: Strategic reward management

AACSB: 3

4. In order to more closely link pay to performance and increase the variability of pay discretionary bonuses, profit sharing schemes and incentives should be used to reward employees.

a. True

b. False

LO: 3

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

5. A wage is pay that is paid consistently from period to period and a salary refers to hourly, daily or weekly payment based on the time worked.

a. True

b. False

LO: 3

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

6. Group incentives often take the form of rewarding employees for exceeding productivity targets or deducting a percentage of performance loading if targets are not met.

a. True

b. False

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 5

7. The effectiveness of the performance pay process is closely linked to the effectiveness of the performance management process.

a. True

b. False

LO: 5

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

8. The remuneration and pay of employees should only consider internal organisational factors such as job analyses, the relative worth of employees and performance appraisals.

a. True

b. False

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 8

9. Team-based rewards should pay all members equally for achieving team goals, even if all members of the team are not contributing equally.

a. True

b. False

LO: 4

Diff: 1

Topic: Features of contemporary reward systems

AACSB: 3

10. If organisations want to foster performance improvement through multi-skilling and flexibility to work with a wider range of employees, then a hierarchical reward management system should be adopted.

a. True

b. False

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

MULTIPLE CHOICE QUESTIONS

1. As employees are promoted in GDY Corporation they are also given a car parking space that is closer to the building’s entrance. Most employees value this reward, especially during the rainy season. What type of reward does this represent?

a. intrinsic rewards

b. extrinsic rewards

c. first choice rewards

d. non-financial rewards

LO: 1

Diff: 1

Topic: Strategic reward management

AACSB: 7

2. Members of which generation place a much higher value on work–life balance, are particularly career-oriented and money-focused and place a high value on rewards that allow them to maintain more of a work–life balance:

a. Members of Gen Y

b. The baby-boomers

c. members of Gen X

d. none of the above

LO: 1

Diff: 2

Topic: Strategic reward management

AACSB: 7

3. Linda believes that the harder she works at her job the more likely it is that she will receive a reward that is of value to her. This is an example of:

a. expectancy theory

b. equity theory

c. goal setting theory

d. reinforcement theory

LO: 2

Diff: 1

Topic: Strategic reward management

AACSB: 7

4. When Candy compared her sales bonus to the bonus given to Jack she did not believe that her bonus was fair as she had sold twice as many air conditioners as Jack did. This is an example of:

a. expectancy theory

b. equity theory

c. goal setting theory

d. reinforcement theory

LO: 2

Diff: 2

Topic: Strategic reward management

AACSB: 7

5. It is important, when designing, implementing and using a reward strategy, for it to meet individual and organisational needs. Which of the following is NOT an organisational need?

a. use a fair and objective performance management system with regular performance reviews

b. reinforce the key values and the desired culture and behaviours through clear performance indicators

c. motivate employees to continue improving their performance by making sure that high performers will be rewarded for their contributions

d. attract and develop the desired quality mix of employees

LO: 3

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

6. There are four essential building blocks in the total reward management process. They are:

a. pay, performance pay, employee benefits and non-financial rewards.

b. an accurate job description, strategic skills, company knowledge and technical abilities

c. pay, employee benefits, strategic skills and technical skills.

d. non-financial rewards, company knowledge, technical skills and employee benefits.

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

7. Annie is a casual employee who is paid an hourly rate of $17.50. This represents:

a. base pay

b. a salary

c. a wage

d. a bonus

LO: 4

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

8. Jamie is a full-time employee who is paid a fortnightly rate of $1516 after taxes. This represents:

a. base pay

b. a salary

c. a wage

d. a bonus

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

9. Job evaluation is a method of ranking jobs in relation to their worth to the organisation. Giles compared the jobs of various employees and based their pay on the relative importance of each job to the organisation. This process aims to ensure:

a. external equity

b. internal equity

c. job satisfaction

d. job motivation

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

10. In order to perform her job, Yvonne needs to have good communication skills. She should have a Bachelor of Business or equivalent degree and should be able to lead and manage projects. When evaluating her job the relative importance of each factor was assessed in comparison to the importance of these factors to performing other jobs. This is an example of:

a. qualitative job evaluation

b. quantitative job evaluation

c. the point system

d. the factor comparison system

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

11. Qualitative job evaluation methods include all of the following except:

a. the points system

b. job grading

c. job ranking

d. job classification

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

12. Orange Taxi Service, a small taxi company entering the domestic market, advertised jobs for experienced drivers at salaries that were below market value. The organisation promised applicants that as the taxi service grew it was anticipated that it would offer drivers salaries that were well above market value. Which policy was Orange Taxi Service adopting in relation to rewarding employees?

a. lead-lead policy

b. lead-lag policy

c. lag-lead policy

d. lag-lag policy

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

13. Molly, who works in a sock factory, is paid to pack pairs of socks into boxes. In order to accomplish this she has to fold the socks, place them in plastic bags seal the bags and pack 100 individual pairs into a cardboard box. She works on a piece rate of $20 per 100 socks packed. The more socks she packs the more she is paid. This is an example of:

a. individual incentives

b. group incentives

c. organisation-wide incentives

d. discretionary bonuses

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

14. Jenny, who works in a sock factory, is paid to pack pairs of socks into boxes. In order to accomplish this she has to fold the socks, place them in plastic bags seal the bags and pack 100 individual pairs into a cardboard box. The organisation is always looking for ways to operate more efficiently and so rewards employees for implementing cost-saving initiatives. This is an example of:

a. individual incentives

b. group incentives

c. organisation-wide incentives

d. discretionary bonuses

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 3

15. Performance pay is most useful when it:

a. uses extrinsic rewards to alter the behaviours and attitudes of employees

b. reduces risk-taking and enforces employee compliance

c. fosters teamwork and unit cohesiveness by paying individuals on teamwork results

d. makes employees more competitive as this is good for employee morale

LO: 5

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

16. The total remuneration an employee receives for the work performed is a combination of:

a. base pay, plus performance pay, plus employee benefits

b. wages, plus bonuses, plus incentives

c. salaries, plus wages, plus employee benefits

d. base pay, plus bonuses, plus incentives

LO: 4

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

17. Factors external to the organisation may affect the pay strategies used in an organisation. For example, increases in mortgage rates and increases to the costs of goods and services may affect how much employers pay their employees. This is an example of:

a. labour market conditions

b. area market conditions

c. cost of living

d. social values

LO: 5

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

18. Improved performance may be calculated by using the following equation:

a. improved performance = block 1 + block 2 + block 3

b. improved performance = block 1 + block 2 + block 3 + block 4

c. improved performance = base pay, plus performance pay, plus employee benefits, plus non-financial rewards

d. both b and c

LO: 4

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 3

19. An example(s) of incentives that Australian executives would be likely to have include:

a. a percentage change in the value of the company earnings

b. net profit before tax and growth in sales revenue or production

c. only long term incentives

d. only short term incentives

LO: 5

Diff: 1

Topic: Executive incentive plans

AACSB: 3

20. Which contemporary reward strategy best reflects the notion that a person’s ability to contribute to high organisational performance reaps a competitive edge?

a. employability pay

b. person-based pay

c. market-determined pay

d. team-based rewards

LO: 6

Diff: 2

Topic: Features of contemporary reward strategy

AACSB: 3

SHORT ANSWER QUESTIONS

1. Organisations can choose to reward employees individually or as members of a group. Why is it useful for organisations to think in terms of using both types of reward?

LO: 1

Diff: 1

Topic: Strategic management reward

AACSB: 3

2. State the differences that are evident when rewarding employees in generations including Generation Y, Generation X and the baby boomers.

LO: 1

Diff: 1

Topic: Strategic reward management

AACSB: 8

3. When is performance pay most useful?

LO: 4

Diff: 2

Topic: Essential building blocks of the total reward management process

AACSB: 6

4. There are several internal factors that may influence pay strategies. Name and describe these strategies.

LO: 4

Diff: 1

Topic: Essential building blocks of the total reward management process

AACSB: 8

5. Pay has undergone a tremendous transformation from rigid and inflexible and tenure-based pay to flexible pay in response to the demands of a dynamic changing environment. Under this new belief about pay what are four key reward features that HR managers need to consider?

LO: 6

Diff: 1

Topic: Features of a contemporary reward strategy

AACSB: 7

ESSAY QUESTION

1. Employers can reward employees using intrinsic or extrinsic rewards. Outline the two different methods of reward, contrast the two methods and supply examples of each type of reward method.

LO: 2

Diff: 1

Topic: Strategic reward management

AACSB: 6