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For incentive pay to motivate employees to contribute to the organization's success,the pay plans must be well designed.Which of the following statements describes a characteristic of a well-designed plan?


A) Performance measures are to be linked to the individual's goals.
B) Employees are given unattainable performance standards.
C) Employees value the rewards or incentives that are being offered.
D) Employees are given limited resources to meet their goals.
E) The pay plan takes into account that employees will accept all goals irrespective of their rewards.

F) B) and C)
G) B) and D)

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_____ refers to incentive pay in which the wage paid is higher when a greater amount is produced.


A) Profit sharing
B) Differential piece rate
C) Gainsharing
D) Scanlon pay
E) Merit pay

F) A) and B)
G) D) and E)

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What are group bonuses and team awards? What are their advantages and disadvantages?

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Bonuses for group performance tend to be...

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Incentive pay is specifically designed to energize,direct,or control employees' behavior and is influential because the amount paid is linked to certain predefined behaviors or outcomes.

A) True
B) False

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Stock options are best suited to motivate day-to-day effort or to attract and retain top individual performers.

A) True
B) False

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Organizations customize their balanced scorecards according to their


A) earnings.
B) profits,benefits,and incentives.
C) markets,products,and objectives.
D) objectives as set by the organization's CEO and board of directors.
E) research on what drives employee motivation.

F) None of the above
G) D) and E)

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Team awards differ from group bonuses in that they


A) are typically plant-wide group incentive programs.
B) make payments in company stock rather than in cash.
C) are more likely to use a broad range of performance measures.
D) encourage competition among individual employees to achieve higher bonuses.
E) give more importance to organizational performance than small groups' performances.

F) A) and C)
G) B) and D)

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Organizations that want employees to focus on efficiency and on group incentives are most likely to implement a _____ program.


A) gainsharing
B) standard hour
C) bonus
D) commission
E) piece rate pay

F) C) and D)
G) A) and E)

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How does allowing employees to participate in pay-related decisions affect the incentive process?

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Employee participation in pay-related de...

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Under profit sharing,payments are a percentage of the organization's profits and become part of the employees' base salary.

A) True
B) False

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A major problem with ESOPs is that


A) they carry a significant risk for employees.
B) employees are not allowed to participate in votes by shareholders.
C) the stocks within the trust are too widely diversified to earn high returns.
D) any earnings from the trust holdings are taxed at an extremely high rate.
E) they result in reduced profitability for the employees.

F) None of the above
G) B) and C)

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Which of the following is an advantage of the merit pay incentive system?


A) It makes the reward more valuable by relating it to economic conditions.
B) It promotes group performance instead of promoting individual behavior.
C) It provides merit increases to employees solely on the basis of performance.
D) It is the most economical incentive system for the employers.
E) It provides a direct link between the work done by the employee and the amount earned.

F) A) and E)
G) All of the above

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Global Solutions Corp.pays its executives short-term incentives for meeting financial targets.Which of the following could be included in this incentive pay?


A) bonus for meeting the return on investment goal for last year
B) bonus for meeting a target for greater customer satisfaction
C) stock options
D) stock purchase plans
E) merit pay

F) D) and E)
G) All of the above

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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 _____.


A) a commission
B) a retention bonus
C) stock options
D) merit pay
E) a differential piece rate

F) A) and C)
G) B) and C)

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Which of the following is a disadvantage of a merit pay system?


A) It does not relate the rewards to economic conditions.
B) It cannot be used effectively with performance appraisals.
C) Comparative pay is not considered in its evaluation.
D) It does not provide rewards for performance in all the dimensions measured in the organization's performance management system.
E) It can quickly become expensive for the company.

F) A) and B)
G) B) and C)

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Straight commission plans are plans which


A) provide a straight salary to employees.
B) are useful when the organization wants salespeople to concentrate on listening to customers.
C) help to attract risk-averse employees.
D) are common among insurance and real estate agents.
E) are uncommon among car salespeople.

F) B) and E)
G) A) and D)

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The Rudd-Mitchell organization uses the Scanlon plan to provide incentives to its employees.The workers produce electrical components worth $5 million.The target ratio set by the organization is 30%.The employees will be given a bonus if the actual labor costs are less than


A) $0.5 million.
B) $1 million.
C) $1.5 million.
D) $2 million.
E) $2.5 million.

F) B) and E)
G) A) and C)

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What should employees typically do to earn bonuses under the Scanlon plan?


A) They should produce products at a rate that is much higher than the standard production time.
B) They should create goodwill with customers and close as many sales as possible.
C) They should follow a defined set of quality standard to produce the desired outcome.
D) They should keep labor costs to a minimum and produce as much as possible with that amount of labor.
E) They should improve their performance year after year so that they re-earn the bonus during each performance period.

F) A) and B)
G) All of the above

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A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals.

A) True
B) False

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Which of the following statements is true about standard hour plans?


A) They encourage employees to focus exclusively on customer service.
B) They succeed only for employees who are not motivated by money.
C) They encourage employees to focus mainly on quality.
D) In terms of their pros and cons,they are very different from piecework plans.
E) They encourage employees to work as fast as they can.

F) B) and D)
G) A) and C)

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