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Kolese Inc.,a manufacturing company,includes stock options and stock purchase plans.Executives at the company will want to do what is best for Kolese because that will cause the value of the stock to grow.Which of the following is being exemplified in this scenario?


A) Scanlon plan
B) Balanced scorecard
C) Long-term incentive
D) Merit plan
E) Short-term incentive

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

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How does the balanced scorecard help organizations deal with unethical behaviors of executives?


A) It allows companies to deduct executive pay that exceeds $1 million.
B) 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.
C) It encourages executives to hold on to their stock options when the company is undergoing financial problems.
D) It forces executives to focus on the company's long-term success because ESOP funds are guaranteed by the Pension Benefit Guarantee Corporation.
E) It mandates that an ESOP invest at least 51% of its assets in the company's own stock.

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

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Which of the following is a common condition for gainsharing to be a success in an organization?


A) Employees who value working in groups
B) Employers who do not set short-term goals for employees
C) Work environment with minimum management commitment
D) Employees who prefer minimum interaction and cooperation
E) Low levels of cooperation and interaction

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

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How does linking executive pay to stock performance lead to unethical behavior?


A) Executives can use the advantage of knowing the company's inside information to buy or sell stock and create huge personal gains.
B) Executives can roll in the stock price into their base pay to avoid paying a huge tax.
C) Executives will lower the stock prices in order to enjoy bonuses.
D) Executives can use the employee stock ownership plan to buy their company if it is experiencing financial problems.
E) The executives can obtain as many shares as they need at a price that is much lower than the market rate.

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

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What is the difference between stock options and an employee stock ownership plan (ESOP) ?


A) Stock options carry significant risk whereas ESOPs are risk-free.
B) Stock options are usually granted to company executives whereas ESOPs are provided to all employees.
C) In stock options, stocks are placed into a trust whereas ESOPs give employees the right to buy a certain number of shares of stock.
D) Under stock options, employees can sell their stocks whereas ESOPs do not allow employees to sell their stocks.
E) Earnings from stock options are exempt from income taxes whereas earnings from ESOPs are taxable.

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

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Keytechi and Sons,a marketing company,has implemented a few incentive plans to motivate its employees.The organization encourages employees to learn new skills and cooperate with others.Which of the following will contribute to employees' feeling that the organization's incentive pay plans are fair?


A) Employees must be able to understand the requirements of the incentive pay plan.
B) Equal incentives should be offered to all the employees of the organization.
C) Employees must be the key decision makers when creating incentive pay plans.
D) The company should not inform the employees about incentive plan changes.
E) Employees should make decisions that are only in favor of their interests.

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

Correct Answer

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Employees should participate in pay-related decisions.This will most likely help in the success of incentive plans,and the plans are more likely to influence employee behavior as desired.Which of the following statements weakens this argument?


A) Employees will make decisions that are in their best interests at the expense of the organization's interests.
B) It is difficult to monitor an employee's work output when decisions are made by the employee.
C) When employees become more involved in pay decisions, they neglect the work assigned to them.
D) Employees should be a part of the human resource department to be involved in pay-related decisions.
E) It will have a negative impact on the top-level management of the company.

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

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QVO Financial,an auditing firm,distributes a portion of the profits resulting from improvements in productivity and efficiency among its employees.If the company enjoys an improvement of $45,000,60% of the improvement might be the company's share.The other 40% would be distributed among the employees in the company.Which of the following is being exemplified in this scenario?


A) Profit rate
B) Gainsharing
C) Commission sharing
D) Merit gain
E) Group bonus

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

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Successful gainsharing plans include employee stock ownership plans.

A) True
B) False

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What are the different types of incentive pay? How should organizations choose the right type of incentive pay?

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The kinds of incentive pay fall into thr...

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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:


A) pay his employees per piece that is manufactured.
B) create a balanced scorecard.
C) reorganize the departments in the organization.
D) implement a profit-sharing incentive plan.
E) hire new employees and pay them above the market rate.

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

Correct Answer

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By law,what is the minimum percentage of assets that an ESOP must invest in its company's stock?


A) 10
B) 26
C) 51
D) 60
E) 76

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

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Merit pay is a system of linking pay increases to ratings on performance appraisals.

A) True
B) False

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Which of the following is most likely a consequence of paying most or all of a salesperson's compensation in the form of commissions?


A) It encourages the salesperson to focus on closing the sale.
B) It frees the salesperson to focus on developing customer goodwill.
C) It encourages teamwork over individual performance.
D) It makes the employee appreciate the reward as the reward relates to economic conditions.
E) It will quickly become expensive for the employer.

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

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Which of the following is an advantage of using balanced scorecard?


A) It eliminates the need to communicate the details of the plan to the employees.
B) It eliminates managerial effort when providing incentives to employees.
C) It increases the pay for all employees in the organization regardless of their performances.
D) It reduces employee stress because it does not focus on financial targets.
E) It helps employees understand the organization's goals.

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

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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) C) and E)
G) B) and D)

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Merit pay system decisions are based on two factors: an individual's performance rating and their:


A) compa-ratio.
B) seniority.
C) pay grade.
D) educational qualification.
E) experience.

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

Correct Answer

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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 C)
G) A) and B)

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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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