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Ch12 Pay-for-Performance and Financial Incentives Exam Questions and Answers
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Ch12 Pay-for-Performance and FinancialIncentives Exam Questions and Answers
What are financial incentives? - -Financial rewards paid to workers whose
production exceeds some predetermined standard
- Frederick Taylor made 3 contributions to financial incentives. What are
they? - -1. He saw the need for formulating a "fair day's work"
2. He spearheaded the scientific management movement
3. He popularized using incentive pay to reward employees who produced
over standard
- What is Fair Day's Work? - -Output standards devised based on careful,
scientific analysis.
- What is the scientific management movement? - -Management approach
based on improving work methods through observation and analysis.
- All incentive plans are pay-for-performance plans. What is pay-for-
performance? - -Any plan that ties pay to some measure of performance,
such as productivity or profitability.
- What is fixed pay? - -Compensation that is relatively consistent and
independent of the performance level of the individual, group, or
organization.
Fixed compensation includes base pay and other forms of relatively
consistent compensation (e.g., allowances) that satisfy the need for income
stability.
- What is variable pay? - -Compensation that ties pay to productivity,
profitability, or another organization performance measure and thus can be
relatively inconsistent.
- What is the most common form of short-term incentives? - -Cash bonuses
or incentives are the most common form of short-term incentives, used in 90
percent of organizations that had short-term incentive plans in place.
- What is the fundamental premise of variable pay plans? - -Top performers
must get top pay to secure their commitment to the organization.
- What are examples of fixed pay? - -- car allowance
- percent contributions to Canada Pension Plan
- hourly wage
,- salary
- percent vacation or accrual payout
- What are examples of variable pay? - -- overtime
- travel expense reimbursement
- compensation
- piecework plans
- educational reimbursement
- According to Frederick Herzberg, what is the best way to motivate
someone? - -Organize the job so that doing it provides the challenge and
recognition that we all need to help satisfy "higher-level" needs, such as
accomplishment and recognition.
- What is extrinsic motivation? - -Motivation derived from earning a tangible
reward, such as base salary or incentive pay.
- What is intrinsic motivation? - -Motivation derived from the non-monetary
pleasure someone gets from doing the job or task.
- Psychologist Edward Deci found that extrinsic rewards could at times
actually detract from the person's intrinsic motivation. How should
organizations address this? - -An organization must be cautious in devising
incentive pay for highly motivated employees, to avoid inadvertently
demeaning and detracting from the employees' desire to do the job out of a
sense of responsibility
- What is the motivation equation according to Victor Vroom's theory? - -
Motivation = (E*I*V)
E = expectancy
I = instrumentality
V = valance
- Psychologist Victor Vroom said a person's motivation to exert some level of
effort depends on three things. What are they? - -1. expectancy
2. instrumentality
3. valence
- What is expectancy? - -A person's expectation that their effort will lead to
performance
- What is instrumentality? - -The perceived relationship between successful
performance and obtaining the reward
- What is valence? - -The perceived value a person attaches to the reward
, - What is behaviour modification? - -Using contingent rewards or
punishment to change behaviour
- For managers, behaviour modification boils down to two main principles,
which are: - -1. behaviour that appears to lead to a positive consequence
(reward) tends to be repeated, whereas behaviour that appears to lead to a
negative consequence (punishment) tends not to be repeated
2. managers can therefore get someone to change their behaviour by
providing the properly scheduled rewards (or punishment).
- Which of the following is an example of variable pay?
A. commission
B. salary
C. vacation
D. wages - -A. commission
- According to expectancy theory, how can an employer increase
motivation?
A. Let employees pick rewards that they perceive to be most valuable.
B. Hire people with low expectations.
C. Decouple the reward from performance.
D. Share rewards equally with employees. - -A. Let employees pick rewards
that they perceive to be most valuable.
- What does productivity measure?
A. the ratio of inputs (resources such as labour and capital) divided by the
outputs (goods and services)
B. the ratio of revenue accumulated by the organization over a
predetermined time divided by the financial rewards paid to workers
C. the ratio of outputs (goods and services) divided by the inputs (resources
such as labour and capital)
D. the ratio of financial rewards paid to workers divided by the revenue
accumulated by the organization over a predetermined time - -C. the ratio of
outputs (goods and services) divided by the inputs (resources such as labour
and capital)
- What is true about how Canadian employers use variable pay plans?
A. Employers limit use to one type of variable pay plan at a time.
B. Cash bonuses or incentives are the most common form of short-term
incentive.
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