61. Which of the following is
not
true of individual incentive pay programs?
A. Payments are not rolled into base pay.
B. Performance is usually measured by physical output.
C. Individual incentives have the potential to significantly increase performance.
D. Individual incentive pay programs are quite common in organizations.
Individual incentives are relatively rare because of certain drawbacks such as administrative problems, lack of physical output measures for certain jobs, unsuitability for team-based work, and other such limitations.
62. Individual incentive plans are relatively rare for all but one of the following reasons. Name the exception.
A. Because many jobs have no physical output measures.
B. Because there are many potential administrative problems.
C. Because such plans are inconsistent with the goals of acquiring multiple skills and proactive problem solving.
D. Because employees generally do not favor such plans due to their lack of distributive justice.
Certain jobs involve "knowledge work" and hence do not have physical output measures. Administrative problems such as setting and maintaining acceptable standards often prove to be difficult. Moreover, learning new skills requires employees to slow or stop production. If they are paid based on production volume, they may not want to slow down or stop.
63. Which of the following is an advantage of individual incentives?
A. They contribute to a flexible, proactive, problem-solving workforce.
B. They are helpful in the pursuit of total quality management objectives.
C. They encourage employees to go beyond the call of duty.
D. They must be continuously earned and re-earned.
Individual incentives are not rolled into base pay and hence need to be earned.
64. In a(n) _____ plan, payments are based on a measure of organizational performance and do not become part of the employees' base salary.
A. ESOP
B. profit sharing
C. individual incentive
D. merit pay
Individual incentives and merit pay focus on individual performance while an ESOP is an employee ownership plan.
65. Which of the following is
not
a recognized characteristic of profit sharing programs?
A. Employers are encouraged to think like owners.
B. Increased employee citizenship is expected.
C. Evidence clearly shows a link to better organization performance.
D. Payments do not become part of base pay.
Although there is consistent support for a correlation between profit sharing payments and profits, questions have been raised about the direction of causality.
66. Of the following pay programs, the weakest link between employees' performance and their earnings is found in
A. individual incentive plans.
B. merit pay plans.
C. profit-sharing plans.
D. group incentive plans.
Most employees are unlikely to see a strong connection between what they do and what they earn under profit sharing. This means that performance motivation is likely to change very little. Motivation depends on a strong link between behaviors and valued consequences such as pay.
67. In expectancy theory terms, the fundamental drawback of profit sharing in encouraging employee effort occurs because of
A. weak instrumentality perceptions.
B. weak valence perceptions.
C. weak expectancy perceptions.
D. weak equity perceptions.
Motivation depends on a strong link between behaviors and valued consequences such as pay (instrumentality perceptions).
68. Because most profit-sharing plans are of the deferred type, their motivational impact is reduced. This argument is most consistent with the
A. agency theory.
B. equity theory.
C. efficiency wage theory.
D. reinforcement theory.
As per the reinforcement theory, a response followed by a reward is more likely to recur in the future.
69. In which way are employee ownership plans different from profit-sharing plans?
A. Their focus is on the success of the organization as a whole
B. Their relatively weak link between pay and performance
C. Their performance measures
D. Their deferred nature
Both employee ownership and profit sharing encourage employees to focus on the success of the organization as a whole. They are of the deferred type. The link between pay and performance is weak under employee ownership.
The performance measures used in profit sharing is the company profit while in employee ownership programs it is the company's stock returns.
70. Stock options have their greatest motivational potential during periods of
A. high unemployment.
B. downturns in the economy.
C. high economic and company growth.
D. low inflation.
When there is economic and company growth, employees have the option to purchase stock at a price lower than the prevailing market rate.