Question 1

Agency theory is of particular value in compensation management because of its emphasis on the _____ trade-off.

Accepted Answer

A)  performance-reward
B)  risk-reward
C)  motivation-reward
D)  ability-reward
E)  behavior-rewardF) A) and B)
G) C) and E)

Question 2

Which of the following is a difference between a profit-sharing plan and an employee ownership plan?

Accepted Answer

A)  Unlike an ownership plan, base pay is not reduced when a profit-sharing plan in introduced.
B)  Ownership focuses on the success of the organization as a whole unlike profit-sharing.
C)  Profit sharing plans promote individual competition whereas ownership plans promote group competition.
D)  The link between pay and performance is less obvious under ownership than under profit sharing.
E)  Ownership plans promote individual competition whereas profit-sharing plans promote group competition.F) A) and B)
G) B) and C)

Question 3

Agency costs can arise when _____.

Accepted Answer

A)  principals and agents have different goals
B)  ownership of a company is not separated from organizational control
C)  most stockholders are involved the day-to-day operations of companies
D)  payments are not rolled into base pay
E)  there is information symmetry between the agent and the principalF) A) and B)
G) A) and C)

Question 4

Discuss the expectancy theory.

Accepted Answer

Although expectancy theory focuses on th...

Question 5

Which of the following makes ESOPs less attractive?

Accepted Answer

A)  Less diversification of investment risk
B)  Increased dependence on individual performance
C)  High levels of liquidity
D)  Lack of dependence on organizational performance
E)  The right they offer employees to vote securitiesF) A) and E)
G) A) and B)

Question 6

Which of the following is true of individual incentive pay programs?

Accepted Answer

A)  Individual incentive pay programs are not rolled into base pay.
B)  Individual incentives often motivate employees do whatever they get paid for and nothing else.
C)  Individual incentives are calculated based on the annual profit of the company.
D)  Individual incentives are not effective in manufacturing industries where employees work independently.
E)  Individual incentive pay programs are common in organizations.F) D) and E)
G) A) and B)

Question 7

In merit pay programs majority of information on individual performance is collected from _____.

Accepted Answer

A)  organizational databases
B)  human resource managers
C)  the immediate supervisor
D)  the employee being evaluated
E)  performance indicatorsF) B) and D)
G) A) and E)

Question 8

Gainsharing plans often encompass more than just a monetary component. Describe some of the employment or organizational conditions that are recommended to be in place for gainsharing to be successful.

Accepted Answer

A number of recommendations have been ma...

Question 9

Gainsharing plans encompass more than just a monetary component.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is compensation system used in behavior-oriented contracting schemes?

Accepted Answer

A)  Stock options
B)  Profit sharing
C)  Commissions
D)  Merit pay
E)  Revenue sharingF) A) and D)
G) B) and C)

Question 11

Explain why it is crucial to communicate reasons for the changes to employees. Describe various ways using which organizations communicate changes.

Accepted Answer

A change in any part of the compensation...

Question 12

Which of the following theories emphasizes expected rewards rather than experienced rewards?

Accepted Answer

A)  Social exchange theory
B)  Equity theory
C)  Agency theory
D)  Expectancy theory
E)  Reinforcement theoryF) A) and D)
G) A) and E)

Question 13

Differentiate between outcome-oriented contracts and behavior-based contracts.

Accepted Answer

To reduce agency costs, the theory says ...

Question 14

The flow of feedback tends to be multi-directional in merit pay programs.

Accepted Answer

A) True 
 B)False

Question 15

According to expectancy theory, motivation is a function of which of the following functions?

Accepted Answer

A)  Effort
B)  Power
C)  Structure
D)  Instrumentality
E)  ConfirmationF) C) and E)
G) A) and D)

Question 16

An employee's assessment of the fairness of his or her compensation based on the amount received is referred to as distributive fairness.

Accepted Answer

A) True 
 B)False

Question 17

In _____ programs, annual compensation increases are usually linked to performance appraisal ratings.

Accepted Answer

A)  skill-based pay
B)  gainsharing
C)  merit pay
D)  incentive pay
E)  cost-based payF) B) and C)
G) A) and E)

Question 18

Which of the following pay programs has the highest frequency of payout?

Accepted Answer

A)  Merit pay
B)  Profit sharing
C)  Skill-based
D)  Incentive pay
E)  GainsharingF) B) and D)
G) C) and D)

Question 19

_____ can be described as a function of ability and motivation.

Accepted Answer

A)  Attitude
B)  Behavior
C)  Reinforcement
D)  Team work
E)  ExpectancyF) A) and E)
G) D) and E)

Question 20

Which compensation program offers payouts on a monthly or quarterly basis?

Accepted Answer

A)  Skill based pay
B)  Gainsharing
C)  Profit sharing
D)  Merit pay
E)  Incentive payF) A) and B)
G) B) and E)

Exam 12: Recognizing Employee Contributions With Pay

Gainsharing plans often encompass more than just a monetary component. Describe some of the employment or organizational conditions that are recommended to be in place for gainsharing to be successful.

Correct AnswerverifiedA number of recommendations have been ma...View AnswerShow Answer

Which of the following theories emphasizes expected rewards rather than experienced rewards?

Correct AnswerverifiedShow Answer

Explain why it is crucial to communicate reasons for the changes to employees. Describe various ways using which organizations communicate changes.

Correct AnswerverifiedA change in any part of the compensation...View AnswerShow Answer

Which compensation program offers payouts on a monthly or quarterly basis?

Correct AnswerverifiedShow Answer

_____ can be described as a function of ability and motivation.

Correct AnswerverifiedShow Answer

An employee's assessment of the fairness of his or her compensation based on the amount received is referred to as distributive fairness.

Correct AnswerverifiedShow Answer

Which of the following makes ESOPs less attractive?

Correct AnswerverifiedShow Answer

Which of the following is a difference between a profit-sharing plan and an employee ownership plan?

Correct AnswerverifiedShow Answer

Agency costs can arise when _____.

Correct AnswerverifiedShow Answer

Gainsharing plans encompass more than just a monetary component.

Correct AnswerverifiedShow Answer

Discuss the expectancy theory.

Correct AnswerverifiedAlthough expectancy theory focuses on th...View AnswerShow Answer

Differentiate between outcome-oriented contracts and behavior-based contracts.

Correct AnswerverifiedTo reduce agency costs, the theory says ...View AnswerShow Answer

Agency theory is of particular value in compensation management because of its emphasis on the _____ trade-off.

Correct AnswerverifiedShow Answer

In _____ programs, annual compensation increases are usually linked to performance appraisal ratings.

Correct AnswerverifiedShow Answer

Which of the following is compensation system used in behavior-oriented contracting schemes?

Correct AnswerverifiedShow Answer

The flow of feedback tends to be multi-directional in merit pay programs.

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In merit pay programs majority of information on individual performance is collected from _____.

Correct AnswerverifiedShow Answer

Which of the following pay programs has the highest frequency of payout?

Correct AnswerverifiedShow Answer

According to expectancy theory, motivation is a function of which of the following functions?

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Which of the following is true of individual incentive pay programs?

Correct AnswerverifiedShow Answer

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A number of recommendations have been ma...
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A change in any part of the compensation...
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Although expectancy theory focuses on th...
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To reduce agency costs, the theory says ...
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