Question 1

What is a balanced scorecard?

Accepted Answer

A)   A combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay
B)   A performance review process where the organization collects feedback from customers, managers, and subordinates, assigns ratings, and lists them on the company's performance card
C)   An arrangement in which the organization distributes shares of stock to all its employees by placing the stock into a trust
D)   An incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary
E)   It is a system designed to measure the performance of HR personnel based on the quality of recruitmentF) B) and C)
G) None of the above

Question 2

Piecework rates are most suited for routine,standardized jobs with output that is easy to measure.

Accepted Answer

A) True 
 B)False

Question 3

The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

Employee participation in pay-related de...

Question 5

Which of the following is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust?

Accepted Answer

A)   Stock options
B)   Employee stock ownership plan
C)   Scanlon plan
D)   Collective stock options
E)   Profit sharing planF) A) and B)
G) C) and E)

Question 6

Why do organizations use profit sharing?

Accepted Answer

A)   It has been established that profit sharing helps organizations perform better.
B)   It makes employees feel that they have control over the company's profits.
C)   It costs less when the organization is experiencing financial difficulties.
D)   It helps employees find a direct relation between their performance and gain.
E)   It motivates employees more than individual incentives.F) A) and E)
G) A) and D)

Question 7

A major problem with ESOPs is that:

Accepted Answer

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) C) and D)

Question 8

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Accepted Answer

A) True 
 B)False

Question 9

What are the advantages and disadvantages of a merit pay system?

Accepted Answer

Almost all organizations have establishe...

Question 10

Which of the following is a reason for ESOPs' popularity?

Accepted Answer

A)   Earnings of the trust holdings are exempt from income taxes.
B)   ESOPs provide very high risk-free retirement income.
C)   Employees can use ESOPs to buy their company during financial crises.
D)   ESOPs require companies to invest 51 percent in the company's own stocks.
E)   The employees are provided with many more stocks than they actually own.F) A) and B)
G) C) and D)

Question 11

The Scanlon plan is a variation of:

Accepted Answer

A)   profit sharing plans.
B)   gainsharing plans.
C)   merit pay plans.
D)   individual bonus plans.
E)   commission plans.F) C) and D)
G) B) and E)

Question 12

As an incentive to work efficiently,some organizations pay production workers a ____,a wage based on the amount they produce.

Accepted Answer

A)   merit pay
B)   commission
C)   standard hour pay
D)   piecework rate
E)   special bonusF) B) and D)
G) A) and B)

Question 13

Which of the following types of incentive plans are specifically designed to promote group performance?

Accepted Answer

A)   Performance bonuses
B)   Gainsharing
C)   Standard hour plans
D)   Merit pay
E)   CommissionsF) A) and E)
G) B) and E)

Question 14

Pay specifically designed to energize,direct,or control employees' behavior is known as:

Accepted Answer

A)   monthly salary.
B)   wage.
C)   incentive pay.
D)   annual salary.
E)   fixed pay.F) B) and D)
G) None of the above

Question 15

Which of the following is a method where a combination of performance measures directed toward the company's long- and short-term goals are used as the basis for awarding incentive pay?

Accepted Answer

A)   Merit pay
B)   Profit sharing
C)   Gainsharing
D)   Balanced scorecard
E)   Scanlon planF) B) and D)
G) D) and E)

Question 16

When designing incentives,managers should make sure that:

Accepted Answer

A)   all the employees are paid equal amounts.
B)   even the lowest performing employees get some rewards.
C)   employees focus only completing the task quickly.
D)   employees think that the pay plan is fair.
E)   they focus on hiring employees for whom earning money is the only reason to do a good job.F) B) and E)
G) A) and D)

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

What is meant by backdating a stock option?

Accepted Answer

A)   Reaping windfall in the stock market by selling stock based on company's nonpublic information
B)   Falsifying numbers in the company's annual report to hide losses and inflate the stock prices
C)   Buying company's stock just before the date of key product launch
D)   Changing the price in the original option agreement so that the option holder can buy stock at a bargain price
E)   Re-evaluating a company's stocks to adjust it to a previous date so that the shareholders and employees minimize the lossesF) B) and D)
G) A) and C)

Question 19

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)   Stock options carry significant risk whereas ESOPs are risk-free.
B)   Stock options are usually used with top management 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 E)
G) All of the above

Exam 12: Recognizing Employee Contributions With Pay

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

Correct AnswerverifiedShow Answer

A major problem with ESOPs is that:

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Piecework rates are most suited for routine,standardized jobs with output that is easy to measure.

Correct AnswerverifiedShow Answer

Like merit pay,performance bonuses for individual performance are rolled into an employee's base pay.

Correct AnswerverifiedShow Answer

Which of the following is a reason for ESOPs' popularity?

Correct AnswerverifiedShow Answer

What are the advantages and disadvantages of a merit pay system?

Correct AnswerverifiedAlmost all organizations have establishe...View AnswerShow Answer

Which of the following is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust?

Correct AnswerverifiedShow Answer

The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals.

Correct AnswerverifiedShow Answer

Which of the following types of incentive plans are specifically designed to promote group performance?

Correct AnswerverifiedShow Answer

Pay specifically designed to energize,direct,or control employees' behavior is known as:

Correct AnswerverifiedShow Answer

What is meant by backdating a stock option?

Correct AnswerverifiedShow Answer

Which of the following is a method where a combination of performance measures directed toward the company's long- and short-term goals are used as the basis for awarding incentive pay?

Correct AnswerverifiedShow Answer

Why do organizations use profit sharing?

Correct AnswerverifiedShow Answer

Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk.

Correct AnswerverifiedShow Answer

When designing incentives,managers should make sure that:

Correct AnswerverifiedShow Answer

What is a balanced scorecard?

Correct AnswerverifiedShow Answer

The Scanlon plan is a variation of:

Correct AnswerverifiedShow Answer

As an incentive to work efficiently,some organizations pay production workers a ____,a wage based on the amount they produce.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedEmployee participation in pay-related de...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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Almost all organizations have establishe...
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Employee participation in pay-related de...
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