Exam 12: Recognizing Employee Contributions With Pay

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Almost all organizations have established some program of merit pay-a system of linking pay increases to ratings on performance appraisals.An advantage of merit pay is that it makes the reward more valuable by relating it to economic conditions.Another advantage is that it provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system.If that system is appropriately designed to measure all the important job behaviors,then the merit pay is linked to the behaviors the organization desires.A drawback of merit pay is that conditions can shrink the available range of increases.It also has a long-term focus.Over an entire career,the bigger increases for top performers can grow into a major change,but viewed on a year-by-year basis,they are not much of an incentive to excel.A drawback of merit pay,from the employer's standpoint,is that it can quickly become expensive. Explanation: Pay level is the average amount (including wages, salaries, and bonuses) the organization pays for a particular job.

A) Commission
B) Group bonus
C) Merit pay
D) Stock option
E) Piece rate

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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 only on the basis of performance.
D) it would never become costly for the employers.
E) it results in a bigger short-term reward for the best performers.

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A

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

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

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A

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Employee participation in pay-related de...

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A) HR professionals.
B) executives.
C) production workers.
D) managers.
E) knowledge workers.

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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.

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A) Merit pay
B) Team award
C) Commission
D) Profit sharing
E) Gainsharing

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A) It allows companies to deduct executive pay that exceeds $1 million.
B) Rewarding the achievement of a variety of goals reduces temptation on the executive's part to gain bonuses by manipulating data.
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 company's long-term success because funds in ESOP are guaranteed by the Pension Benefit Guarantee Corporation.
E) In a balance scorecard, maximum points are given to ethical behavior.

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A) Physical outputs are not rewarded.
B) It reduces the level of cooperation between the members of the group.
C) The performance measures used are narrow.
D) It could result in competition among groups.
E) It cannot be used to promote specific goals.

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

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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 recruitment

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A) administering the plans become simple.
B) the organization's interests can be best protected.
C) the cost borne by the organization decreases.
D) monitoring performance becomes difficult.
E) the incentive plan has more chances of being successful.

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A) To make the merit increases consistent
B) To further increase the pay for those whose pay is relatively higher for their job
C) To increase the employees' compa-ratio
D) To stabilize economic conditions
E) To increase incentives on an year-by-year basis

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A) standard hour plan.
B) differential piecework plan.
C) merit pay plan.
D) straight piecework plan.
E) Scanlon plan.

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