08 Oct Determining Pay Level and Individual Pay

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Determining Pay Level and Individual Pay

 

1. Sena Inc. is a consulting firm with 10 employees. Each new client generates $10,000 in revenue. If the

 

company hires another employee who brings in five new clients and all other factors of production are

 

constant, which of the following statements is true?

 

A. Sena needs to pay $10,000 as wage to the eleventh employee to break even.

 

B. Sena will break even if it hires a twelfth employee for a wage of $50,000.

 

C. Sena will break even if it hires a thirteenth employee for a wage of $10,000.

 

D. Sena needs to pay $50,000 as wage to the eleventh employee to break even.

 

2. Villasenor Inc. is a company that provides more performance-based pay and less base pay than its

 

competitors. Who among the following is most likely to join Villasenor?

 

A. Linnie, a senior citizen who wants a job only to keep herself busy

 

B. Hunter, a musician who wants to supplement his income

 

C. Josef, a recently married man who wants a stable income

 

D. Audrey, a recent college graduate who loves to take on a challenge

 

3. When employee performance measures are ambiguous and vary from time to time, but the

 

organization’s performance is fairly stable over time, the most effective type of compensation is to offer

 

A. monetary rewards with no benefits.

 

B. a variety of rewards with significant incentive pay.

 

C. a large base pay and low-incentive pay.

 

D. an increase in base pay.

 

4. Krebs Construction Corp. employs a lot of uneducated laborers. The company wants to introduce a

 

variable-pay plan that is easy to understand and doesn’t cost much to administer. Which of the following

 

variable-pay plans is Krebs most likely to introduce?

 

A. Cash profit sharing plan

 

B. Balanced scorecard plan

 

C. Gain-sharing plan

 

D. Stock ownership plan

 

5. Kumail and Charlie work as crane operators in a construction company called Fleck Corp. Fleck uses a

 

skill-based plan that establishes single flat rates for each skill level. Kumail performs better than Charlie

 

even though Charlie has more seniority. Which of the following statements is most likely to be true in this

 

scenario?

 

A. Both Kumail and Charlie will be paid the same amount.

 

B. Kumail will be paid more than Charlie as his performance is higher.

 

C. Charlie will be given more incentives than Kumail.

 

D. Charlie will be paid more than Kumail as he has more seniority.

 

6. When an organization’s performance has regular and large swings and individual performance is unclear

 

and hard to measure, the most effective compensation mix is to offer

 

A. monetary rewards with large incentives.

 

B. a wide range of rewards and significant incentives.

 

C. a large base pay and low-incentive pay.

 

D. a base pay with low incentives and a variety of rewards.

 

7. _______ is the additional output associated with the employment of one additional person, with other

 

production factors held constant.

 

A. The marginal product of labor

 

B. The marginal revenue of labor

 

C. Incremental productivity

 

D. Productivity

 

8. Which of the following statements about subordinate ratings is true?

 

A. They’re used by 70 percent of all team-style organizations.

 

B. They’re immune to horn errors.

 

C. They’re likely to be inflated if they’re not anonymous.

 

D. They’re immune to halo errors.

 

9. Which of the following is the most commonly used team incentive performance standard?

 

A. Quality of services

 

B. Financial performance

 

C. Quality of goods

 

D. Customer satisfaction measures

 

10. The best appraisal format for employee development is the _______ format.

 

A. MBO

 

B. BARS

 

C. ranking

 

D. essay

 

11. Among peer raters, the most objective evaluations are given by

 

A. workers who are friends of the ratees.

 

B. low-performing workers.

 

C. workers who aren’t close friends with ratees.

 

D. high-performing workers.

 

12. In which of the following jobs is it most appropriate to use behaviorally anchored rating scales?

 

A. An assembly line job that requires tightening nuts on an engine

 

B. A client relations job that requires bringing in new clients to a firm

 

C. The job of a trainer that requires training new employees every month

 

D. The job of a web designer that requires designing websites according to client expectations

 

13. Which of the following is an advantage of providing stock ownership options as variable pay to

 

employees?

 

A. It reinforces team identity.

 

B. It defers a portion of taxes to employees.

 

C. It’s the simplest type of variable-pay plan.

 

D. It provides a direct pay-performance link.

 

14. Telling raters that sometimes the work environment and system affect job performance more than the

 

individual employee’s behavior

 

A. makes the ratings completely accurate.

 

B. leads to lower ratings.

 

C. has no effect on the ratings.

 

D. leads to higher ratings.

 

15. Which of the following statements regarding the Employment Cost Index (ECI) is true?

 

A. It allows comparison of changes in its average costs to an all-industry average.

 

B. It measures annual changes in employer compensation costs.

 

C. It’s published by the Department of Commerce.

 

D. It’s an excellent source of competitor labor costs.

 

16. When an organization’s performance has frequent highs and lows, but individual performance is fairly

 

stable and performance measures are clear, the most effective compensation mix is to offer

 

A. a large base pay and low-incentive pay.

 

B. a wide range of rewards and significant incentives.

 

C. a base pay with low incentives and a variety of rewards.

 

D. monetary rewards with large incentives.

 

17. Paying a dime for every bottle collected and turned into a collection center is an example of a

 

A. straight piecework system.

 

B. Merrick system.

 

C. standard hour plan.

 

D. Rowan plan.

 

18. _______ theory states that success-sharing plans will be motivating, whereas at-risk plans will be

 

demotivating.

 

A. Agency

 

B. Expectancy and agency

 

End of exam

 

C. Herzberg’s two-factor

 

D. Equity

 

19. The motivation triangle includes

 

A. culture.

 

B. selection.

 

C. organization development.

 

D. organization design.

 

20. Surveys show the most popular type of variable pay plans are _______ plans.

 

A. gainsharing

 

B. stock option

 

C. individual incentive

 

D. special recognition