Pay For Performance And Financial Incentives! Hardest Trivia Questions Quiz

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Pay For Performance And Financial Incentives! Hardest Trivia Questions Quiz - Quiz

This is the hardest trivia questions quiz that is designed to test out how you Pay For Performance and Financial Incentives in the business sector. There have been a lot of scholars who have come up with theories that form the background of the buying and selling of goods and services. And in this quiz,you will get to review most of them and their use in the world today.


Questions and Answers
  • 1. 

    Frederick Taylor referred to the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level as ________.

    • A.

      Social loafing

    • B.

      Systematic soldiering

    • C.

      Work shifting

    • D.

      Group logrolling

    Correct Answer
    B. Systematic soldiering
    Explanation
    Systematic soldiering refers to the tendency of employees to intentionally work at a slower pace and produce at a minimum acceptable level. This behavior is often driven by factors such as lack of motivation, fear of standing out, or a desire to avoid additional work or responsibility. Frederick Taylor, a pioneer in the field of scientific management, identified and studied this phenomenon as a barrier to productivity and efficiency in the workplace.

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  • 2. 

    Which of the following terms refers to financial rewards paid to workers whose production exceeds some predetermined standard?

    • A.

      Indirect financial payments

    • B.

      Merit payments

    • C.

      Hardship allowances

    • D.

      Financial incentives

    Correct Answer
    D. Financial incentives
    Explanation
    Financial incentives refer to the financial rewards that are given to workers when their production exceeds a certain predetermined standard. These incentives are designed to motivate and encourage employees to perform at a higher level and achieve specific targets or goals. They can take various forms such as bonuses, commissions, profit-sharing, or performance-based pay. By providing financial incentives, organizations aim to increase productivity, improve performance, and reward employees for their exceptional efforts and achievements.

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  • 3. 

    A management approach based on improving work methods through observation and analysis is known as ________.

    • A.

      Strategic management

    • B.

      Scientific management

    • C.

      Management by objectives

    • D.

      Performance management

    Correct Answer
    B. Scientific management
    Explanation
    Scientific management is a management approach that focuses on improving work methods by using observation and analysis. It involves studying and analyzing work processes to identify the most efficient methods and then implementing those methods to increase productivity and reduce waste. This approach is based on the principles of standardization, specialization, and the use of scientific methods to improve efficiency and effectiveness in the workplace.

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  • 4. 

    Who proposed a two-factor theory that explains how motivator factors relate to satisfaction and hygiene factors relate to dissatisfaction?

    • A.

      Frederick Taylor

    • B.

      Abraham Maslow

    • C.

      Frederick Herzberg

    • D.

      David McClelland

    Correct Answer
    C. Frederick Herzberg
    Explanation
    Frederick Herzberg proposed a two-factor theory that explains how motivator factors relate to satisfaction and hygiene factors relate to dissatisfaction. This theory suggests that motivator factors such as recognition, responsibility, and growth opportunities contribute to job satisfaction, while hygiene factors such as salary, working conditions, and job security, if lacking, can lead to dissatisfaction. According to Herzberg, these factors operate independently of each other, meaning that improving hygiene factors alone would not necessarily result in increased job satisfaction.

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  • 5. 

    Which of the following is a true statement about Herzberg's Hygiene-Motivator theory?

    • A.

      Highly motivated workers rely equally on lower-level and higher-level needs.

    • B.

      Assigning workers to teams can eliminate job-associated stress and frustration.

    • C.

      Providing employees with feedback and challenge satisfies their lower-level needs

    • D.

      Managers can create a self-motivated workforce by providing feedback and recognition.

    Correct Answer
    D. Managers can create a self-motivated workforce by providing feedback and recognition.
    Explanation
    According to Herzberg's Hygiene-Motivator theory, providing feedback and recognition can create a self-motivated workforce. This is because recognition satisfies the higher-level needs of employees, such as the need for achievement and self-actualization. Additionally, feedback helps employees understand their performance and progress, which can enhance their motivation and job satisfaction. Therefore, managers can use feedback and recognition as tools to motivate their employees and create a self-motivated workforce.

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  • 6. 

    According to Herzberg's Hygiene-Motivator theory, which of the following factors will most likely satisfy employees' higher-level needs?

    • A.

      Base salary

    • B.

      Achievement

    • C.

      Incentive pay

    • D.

      Co-worker relationships

    Correct Answer
    B. Achievement
    Explanation
    According to Herzberg's Hygiene-Motivator theory, employees' higher-level needs are satisfied by factors that provide a sense of achievement. This means that employees are motivated and fulfilled when they are able to accomplish tasks, reach goals, and experience personal growth and development in their work. Achievement is considered a motivator factor that goes beyond basic salary or material rewards, and it contributes to employees' overall job satisfaction and engagement.

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  • 7. 

    Which of the following found that extrinsic rewards could detract from an employee's intrinsic motivation?

    • A.

      Frederick Taylor

    • B.

      Frederick Herzberg

    • C.

      David McClelland

    • D.

      Edward Deci

    Correct Answer
    D. Edward Deci
    Explanation
    Edward Deci found that extrinsic rewards could detract from an employee's intrinsic motivation. Deci is a renowned psychologist known for his research on human motivation and self-determination theory. His studies have shown that when individuals are rewarded solely for completing a task, their intrinsic motivation decreases. This is because external rewards can undermine a person's sense of autonomy and intrinsic interest in the task. Deci's work highlights the importance of fostering intrinsic motivation in the workplace for optimal performance and satisfaction.

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  • 8. 

    Rebecca's manager wants to acknowledge her outstanding service record for the past quarter. The manager decides to give Rebecca a bonus of $1000 as a reward. According to Edward Deci, which of the following will most likely occur as a result?

    • A.

      The bonus will encourage Rebecca to work harder than before.

    • B.

      The bonus will detract from Rebecca's inner desire to work hard.

    • C.

      Rebecca's bonus will satisfy her higher-level needs and increase her motivation.

    • D.

      Rebecca will feel inadequate because the bonus fails to address hygiene factors.

    Correct Answer
    B. The bonus will detract from Rebecca's inner desire to work hard.
    Explanation
    According to Edward Deci's theory of motivation, individuals are driven by intrinsic motivation, which comes from within, and extrinsic motivation, which comes from external rewards like bonuses. In this case, the bonus is an external reward that may undermine Rebecca's intrinsic motivation to work hard. Deci's theory suggests that when individuals are rewarded for a task they already find intrinsically motivating, the external reward can decrease their intrinsic motivation. Therefore, the bonus is likely to detract from Rebecca's inner desire to work hard.

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  • 9. 

    According to Victor Vroom, expectancy could also be referred to as the ________.

    • A.

      Probability that effort will lead to success

    • B.

      Relationship between performance and reward

    • C.

      Perceived value a person attaches to a reward

    • D.

      Employer's strategy for motivating employees

    Correct Answer
    A. Probability that effort will lead to success
    Explanation
    According to Victor Vroom, expectancy refers to the probability that effort will lead to success. This means that individuals are more likely to put in effort if they believe that their efforts will result in successful outcomes. Expectancy theory suggests that people are motivated to perform tasks when they believe that their efforts will lead to desired outcomes or rewards.

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  • 10. 

    The perceived relationship between successful performance and obtaining the reward is referred to by Vroom as ________.

    • A.

      Instrumentality

    • B.

      Valence

    • C.

      Expectancy

    • D.

      Optimism

    Correct Answer
    A. Instrumentality
    Explanation
    Vroom refers to the perceived relationship between successful performance and obtaining the reward as "instrumentality." Instrumentality is the belief that if an individual performs well, they will receive the desired outcome or reward. It is the perception that there is a direct connection between performance and the attainment of a specific reward or outcome.

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  • 11. 

    In Vroom's theory of motivation, motivation is equal to E * I * V, where E represents ________.

    • A.

      Existence

    • B.

      Expectancy

    • C.

      Esteem

    • D.

      Energy

    Correct Answer
    B. Expectancy
    Explanation
    In Vroom's theory of motivation, the variable E represents "expectancy". Expectancy refers to an individual's belief that their efforts will result in achieving a desired outcome or goal. It reflects the perception of the likelihood of success in achieving a particular outcome. Expectancy plays a crucial role in determining an individual's motivation level, as higher expectancy leads to increased motivation to put in effort and work towards achieving the desired outcome.

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  • 12. 

    In Vroom's theory of motivation, motivation is equal to E * I * V, where I represents ________.

    • A.

      Intrinsic needs

    • B.

      Internalization

    • C.

      Instrumentality

    • D.

      Incentives

    Correct Answer
    C. Instrumentality
    Explanation
    In Vroom's theory of motivation, motivation is equal to E * I * V, where I represents instrumentality. Instrumentality refers to the belief that a certain level of effort will lead to a desired performance outcome. It is the perception that there is a direct relationship between the effort put in and the rewards or outcomes that will be received. This concept is important in understanding how individuals are motivated to exert effort in order to achieve their goals.

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  • 13. 

    In Vroom's theory of motivation, which of the following terms refers to the perceived value a person attaches to a reward?

    • A.

      Valence

    • B.

      Instrumentality

    • C.

      Expectancy

    • D.

      Variable pay

    Correct Answer
    A. Valence
    Explanation
    Valence in Vroom's theory of motivation refers to the perceived value or attractiveness that an individual attaches to a reward. It represents the extent to which a person desires or prefers a particular outcome. Valence is subjective and can vary from person to person, depending on their needs, preferences, and goals. It plays a crucial role in determining an individual's motivation and willingness to exert effort to achieve a specific reward.

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  • 14. 

    According to Vroom's theory, when managers design incentive plans they should do all of the following EXCEPT ________.

    • A.

      Focus on behavior modification methods

    • B.

      Make incentive plans easy to understand

    • C.

      Provide training and support to employees

    • D.

      Boost the confidence level of employees

    Correct Answer
    A. Focus on behavior modification methods
    Explanation
    According to Vroom's theory, managers should focus on behavior modification methods when designing incentive plans. This means they should consider how to shape and reinforce desired behaviors through rewards and consequences. Therefore, the correct answer is "provide training and support to employees." This is because Vroom's theory does emphasize the importance of creating clear and understandable incentive plans, boosting employee confidence, and providing training and support to enhance performance and motivation.

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  • 15. 

    Behavior modification is based upon the principles of rewards and punishments advanced by ________.

    • A.

      Frederick Taylor

    • B.

      Frederick Herzberg

    • C.

      B.F. Skinner

    • D.

      Edward Deci

    Correct Answer
    C. B.F. Skinner
    Explanation
    Behavior modification is based upon the principles of rewards and punishments, which align with the theories and concepts developed by B.F. Skinner. Skinner was a renowned psychologist known for his work on operant conditioning, where he demonstrated that behavior can be shaped and modified through reinforcement and punishment. His research and theories laid the foundation for behavior modification techniques used in various fields, including education, psychology, and organizational management.

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  • 16. 

    Which of the following terms refers to changing behavior through rewards or punishments that are contingent on performance?

    • A.

      Behavior modification

    • B.

      Personal development

    • C.

      Instrumentality

    • D.

      Internal motivation

    Correct Answer
    A. Behavior modification
    Explanation
    Behavior modification refers to changing behavior through rewards or punishments that are contingent on performance. It involves using positive reinforcement or negative consequences to shape or modify behavior. This approach is based on the belief that behavior can be learned or unlearned through conditioning and that external consequences can influence behavior. Behavior modification is often used in various settings, such as schools, workplaces, and therapy, to encourage desired behaviors and discourage undesirable ones.

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  • 17. 

    Which of the following is NOT a basic tenet of behavior modification?

    • A.

      Behavior that leads to rewards tends to be repeated.

    • B.

      Properly scheduled rewards can be used to encourage some behaviors

    • C.

      Properly scheduled punishments can be used to minimize some behaviors

    • D.

      Employees must understand the link between rewards, punishments, and behavior.

    Correct Answer
    D. Employees must understand the link between rewards, punishments, and behavior.
    Explanation
    The correct answer is that employees must understand the link between rewards, punishments, and behavior. This statement contradicts the basic tenets of behavior modification because behavior modification focuses on the use of rewards and punishments to shape and change behavior, rather than relying on employees' understanding of the link between these factors.

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  • 18. 

    Which of the following terms refers to an incentive plan that ties a group's pay to the firm's profitability?

    • A.

      Piecework

    • B.

      Variable pay

    • C.

      Pay-for-performance

    • D.

      Merit pay

    Correct Answer
    B. Variable pay
    Explanation
    Variable pay refers to an incentive plan that ties a group's pay to the firm's profitability. This means that the amount of pay received by the employees is directly linked to the financial performance of the company. In other words, if the firm's profitability increases, the employees will receive higher pay, and if the profitability decreases, their pay will be reduced. Variable pay is designed to motivate employees to work towards improving the company's profitability as their own pay is directly affected by it.

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  • 19. 

    Under the Fair Labor Standards Act, which of the following would NOT be included in overtime pay computations?

    • A.

      Bonus for new hires

    • B.

      Christmas bonus

    • C.

      Efficiency bonus

    • D.

      Union contract bonus

    Correct Answer
    B. Christmas bonus
    Explanation
    Under the Fair Labor Standards Act, a Christmas bonus would not be included in overtime pay computations because it is considered a discretionary bonus. Discretionary bonuses are given at the employer's discretion and are not tied to any specific criteria or performance measures. In contrast, bonuses for new hires, efficiency bonuses, and union contract bonuses are typically based on specific criteria or performance measures, and therefore would be included in overtime pay computations.

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  • 20. 

    What type of pay plan is being used when workers are paid a sum for each unit they produce?

    • A.

      Competency-based pay

    • B.

      Job-based pay

    • C.

      Piecework

    • D.

      Bonus

    Correct Answer
    C. Piecework
    Explanation
    Piecework is the correct answer because it refers to a pay plan where workers are paid a sum for each unit they produce. This means that their compensation is directly tied to their level of productivity, incentivizing them to produce more units in order to earn more money. Competency-based pay refers to a pay plan where employees are rewarded based on their skills and abilities, job-based pay refers to a pay plan where employees are compensated based on the specific job they perform, and bonuses are additional payments given as a reward for good performance or achievement.

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  • 21. 

    Which of the following terms refers to an incentive plan in which a person is paid a sum for each item he or she makes or sells, with a strict proportionality between results and rewards?

    • A.

      Variable pay

    • B.

      Straight piecework

    • C.

      Straight hourly pay

    • D.

      Standard hour plan

    Correct Answer
    B. Straight piecework
    Explanation
    Straight piecework refers to an incentive plan where an individual is paid a specific amount for each item they produce or sell. The amount of pay is directly proportional to the quantity of items produced or sold. This means that the more items a person makes or sells, the higher their rewards will be.

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  • 22. 

    In which of the following do workers receive a basic hourly rate plus a premium equal to the percent by which their performance exceeds the standard?

    • A.

      Variable pay

    • B.

      Straight piecework

    • C.

      Standard hour plan

    • D.

      Standard piecework

    Correct Answer
    C. Standard hour plan
    Explanation
    In a standard hour plan, workers receive a basic hourly rate along with a premium that is equal to the percentage by which their performance exceeds the standard. This means that if a worker performs above the expected standard, they will receive an additional payment proportional to their performance. This incentivizes workers to strive for higher productivity and efficiency, as they have the opportunity to earn more based on their performance.

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  • 23. 

    All of the following are disadvantages associated with piecework plans EXCEPT that workers ________.

    • A.

      Resist attempts to modify production standards

    • B.

      Focus on production quantity instead of quality

    • C.

      View the plans as unfair and complicated

    • D.

      Dislike new technology or processes

    Correct Answer
    C. View the plans as unfair and complicated
    Explanation
    Piecework plans have several disadvantages, including the fact that workers may resist attempts to modify production standards, focus on production quantity instead of quality, and dislike new technology or processes. However, the given answer states that workers do NOT view the plans as unfair and complicated. This means that workers do not have negative perceptions or opinions about the plans being unfair or complicated, which is not a disadvantage associated with piecework plans.

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  • 24. 

    Which of the following is the primary advantage of piecework plans?

    • A.

      Powerful incentive to workers

    • B.

      Workers earn efficiency bonuses

    • C.

      Firms save on overtime wages

    • D.

      Entices independent contractors

    Correct Answer
    A. Powerful incentive to workers
    Explanation
    Piecework plans provide a powerful incentive to workers because they are directly rewarded based on their productivity and output. This encourages employees to work more efficiently and effectively in order to earn more. By offering financial bonuses or rewards for meeting or exceeding production targets, piecework plans motivate workers to increase their output and strive for higher levels of performance. This can lead to increased productivity, higher quality work, and improved overall efficiency within the organization.

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  • 25. 

    Which of the following terms refers to any salary increase the firm awards to an individual employee based on his or her individual performance?

    • A.

      Competency-based pay

    • B.

      Variable pay

    • C.

      Merit pay

    • D.

      Base pay

    Correct Answer
    C. Merit pay
    Explanation
    Merit pay refers to any salary increase the firm awards to an individual employee based on his or her individual performance. This means that the employee's pay is increased based on their merit or worth, which is determined by their performance evaluation. Merit pay is often used as a way to reward and motivate employees who have demonstrated exceptional performance and contribute to the success of the organization. It is a form of recognition and incentive to encourage employees to continue performing at a high level.

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  • 26. 

    How does merit pay differ from a bonus?

    • A.

      Merit pay becomes part of an employee's base pay, but a bonus does not

    • B.

      A bonus becomes part of an employee's base pay, but merit pay does not.

    • C.

      Merit pay is linked to individual performance, while a bonus is linked to profits.

    • D.

      A bonus is linked to individual performance, while merit pay is linked to profits.

    Correct Answer
    A. Merit pay becomes part of an employee's base pay, but a bonus does not
    Explanation
    Merit pay differs from a bonus in that merit pay becomes part of an employee's base pay, while a bonus does not. This means that merit pay is a permanent increase in salary, whereas a bonus is typically a one-time payment. Merit pay is often given as a reward for individual performance and can be adjusted annually based on performance evaluations. On the other hand, a bonus is often linked to company profits and may vary in amount from year to year.

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  • 27. 

    Studies indicate that in order for merit pay to be most effective, it should be linked to ________.

    • A.

      Company profits

    • B.

      Annual base salary

    • C.

      Employee overtime

    • D.

      Employee performance

    Correct Answer
    D. Employee performance
    Explanation
    Merit pay is a system where employees are rewarded based on their performance, rather than their position or seniority. Studies suggest that in order for merit pay to be most effective, it should be linked to employee performance. This means that employees who consistently perform well and meet or exceed their targets should be rewarded with higher pay. Linking merit pay to employee performance provides a strong incentive for employees to work hard and strive for excellence, ultimately benefiting both the employees and the organization.

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  • 28. 

    Ryobi is a large, international power tool manufacturer that develops affordable, high-quality products, such as drills, circular saws, and routers, for both homeowners and craftspeople. As the company continues to grow, its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective. Currently, the firm provides merit raises based on performance appraisals; however, executives are considering changing the current incentive plan. Which of the following, if true, supports the argument that Ryobi should eliminate all merit raises?

    • A.

      Performance appraisals at Ryobi occur annually, and standards vary from manager to manager.

    • B.

      Ryobi employees have the option of accepting lump-sum raises or traditional merit raises.

    • C.

      Ryobi recently began using an enterprise incentive management system to automate compensation.

    • D.

      The commission percentage for Ryobi salespeople is based on the ability to meet monthly quotas

    Correct Answer
    A. Performance appraisals at Ryobi occur annually, and standards vary from manager to manager.
    Explanation
    The fact that performance appraisals at Ryobi occur annually and standards vary from manager to manager suggests that the current merit raise system may not be fair and effective. If there is inconsistency in evaluating employee performance and determining merit raises, it could lead to unfair compensation practices and demotivate employees. Therefore, eliminating all merit raises would address this issue and ensure that financial incentives are fair and based on objective criteria.

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  • 29. 

    Ryobi is a large, international power tool manufacturer that develops affordable, high-quality products, such as drills, circular saws, and routers, for both homeowners and craftspeople. As the company continues to grow, its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective. Currently, the firm provides merit raises based on performance appraisals; however, executives are considering changing the current incentive plan. Which of the following, if true, undermines the argument that Ryobi should discontinue all merit raises?

    • A.

      Ryobi employees have expressed that they would prefer stock options to merit raises.

    • B.

      Ryobi managers have not received significant training about conducting performance appraisals.

    • C.

      Ryobi managers have noticed significant productivity improvements among employees who receive merit raises.

    • D.

      Ryobi's top executives receive a combination of base salary and stock options to encourage them to focus on the firm's strategic goals.

    Correct Answer
    C. Ryobi managers have noticed significant productivity improvements among employees who receive merit raises.
    Explanation
    The argument that Ryobi should discontinue all merit raises is undermined by the fact that Ryobi managers have noticed significant productivity improvements among employees who receive merit raises. This suggests that the current incentive plan of providing merit raises based on performance appraisals is effective in motivating employees and improving their productivity. If the merit raises are discontinued, it may lead to a decrease in employee motivation and productivity, which would not align with the goal of ensuring fair and effective financial incentives.

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  • 30. 

    Ryobi is a large, international power tool manufacturer that develops affordable, high-quality products, such as drills, circular saws, and routers, for both homeowners and craftspeople. As the company continues to grow, its top executives want to ensure that employees are appropriately paid for their performance and that financial incentives are both fair and effective. Currently, the firm provides merit raises based on performance appraisals; however, executives are considering changing the current incentive plan. Which of the following questions is most relevant to the decision by Ryobi executives to discontinue all merit raises?

    • A.

      What are the guidelines for implementing a gainsharing plan?

    • B.

      What types of merit raises are effective for high-performing managers?

    • C.

      What organization-wide incentive plans are used by other manufacturing firms?

    • D.

      What is the connection between merit pay increases and employee productivity?

    Correct Answer
    D. What is the connection between merit pay increases and employee productivity?
    Explanation
    The question about the connection between merit pay increases and employee productivity is the most relevant to the decision by Ryobi executives to discontinue all merit raises. This question directly addresses the concern of whether financial incentives, such as merit pay increases, are effective in motivating employees and improving their performance. By understanding the connection between merit pay increases and employee productivity, the executives can make an informed decision about the effectiveness of the current incentive plan and whether it should be changed.

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  • 31. 

    _______ is a program where informal manager-employee exchanges such as praise, approval, or expressions of appreciation are given for a job well done.

    • A.

      Merit pay

    • B.

      A social recognition program

    • C.

      Performance feedback

    • D.

      Variable pay

    Correct Answer
    B. A social recognition program
    Explanation
    A social recognition program is a program where informal manager-employee exchanges such as praise, approval, or expressions of appreciation are given for a job well done. This program is designed to acknowledge and reward employees for their achievements and contributions, fostering a positive work environment and boosting morale. It helps to create a culture of recognition and appreciation within the organization, motivating employees to continue performing at their best. Merit pay, performance feedback, and variable pay are not specifically focused on informal exchanges of recognition and appreciation, making them incorrect answers.

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  • 32. 

    Craig is a line manager at a paper supply company. All of the following are methods that Craig should most likely implement to motivate his subordinates EXCEPT ________.

    • A.

      Recognizing an employee's contribution

    • B.

      Encouraging workers to earn overtime pay

    • C.

      Gaining agreement on goals with employees

    • D.

      Using positive reinforcement on a daily basis

    Correct Answer
    B. Encouraging workers to earn overtime pay
    Explanation
    Encouraging workers to earn overtime pay may not be an effective method for motivating subordinates because it can lead to burnout and decreased job satisfaction. Overtime work can put excessive pressure on employees, affecting their work-life balance and overall well-being. Instead, Craig should focus on recognizing an employee's contribution, gaining agreement on goals with employees, and using positive reinforcement on a daily basis to motivate his subordinates. These methods can boost morale, increase job satisfaction, and create a positive work environment.

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  • 33. 

    Which of the following was shown by the Harvard Business School to have the greatest impact on employee engagement?

    • A.

      Feedback

    • B.

      Job design

    • C.

      Responsibility

    • D.

      Challenging work

    Correct Answer
    B. Job design
    Explanation
    The correct answer is "job design." Job design refers to the way tasks and responsibilities are organized and structured within a job. The Harvard Business School found that effective job design has the greatest impact on employee engagement. This means that when employees have clear roles, responsibilities, and tasks that align with their skills and interests, they are more likely to be engaged and motivated in their work. Job design also involves providing employees with autonomy, opportunities for growth, and a sense of purpose, which further contribute to their engagement.

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  • 34. 

    Enterprise incentive management systems enable firms to ________.

    • A.

      Compare corporate incentive programs

    • B.

      Accurately calculate sales commissions

    • C.

      Efficiently administer employee incentive programs

    • D.

      Create a matrix of merit awards and incentive options

    Correct Answer
    C. Efficiently administer employee incentive programs
    Explanation
    Enterprise incentive management systems are designed to efficiently administer employee incentive programs. These systems streamline the process of managing and distributing incentives within an organization, making it easier for companies to track and administer employee rewards and bonuses. By automating these processes, companies can save time and resources, ensuring that incentives are accurately and efficiently distributed to employees based on their performance and achievements.

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  • 35. 

    A straight salary is most appropriate when a salesperson's primary duties involve ________.

    • A.

      Finding new clients

    • B.

      Meeting sales quotas

    • C.

      Pushing hard-to-sell items

    • D.

      Fostering relationships with customers

    Correct Answer
    A. Finding new clients
    Explanation
    A straight salary is most appropriate when a salesperson's primary duties involve finding new clients. This is because a straight salary provides a fixed income regardless of the sales performance, which allows the salesperson to focus on prospecting and building relationships with potential clients without the added pressure of meeting sales quotas or pushing hard-to-sell items. By emphasizing finding new clients, the salesperson can dedicate their time and efforts towards expanding the customer base and generating new business opportunities.

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  • 36. 

    Using a straight salary to compensate salespeople is most likely ineffective because it ________.

    • A.

      Discourages sales flexibility

    • B.

      Lacks connection to performance

    • C.

      Makes it hard to switch territories

    • D.

      Depends on annual corporate profits

    Correct Answer
    B. Lacks connection to performance
    Explanation
    Compensating salespeople with a straight salary is likely ineffective because it lacks a direct connection to their performance. Salespeople who receive a fixed salary may not be motivated to perform at their best since their compensation remains the same regardless of their sales results. Without a performance-based incentive, salespeople may lack the drive to exceed targets and may not put in the extra effort required to maximize sales. This can ultimately lead to lower sales productivity and hinder the company's overall performance.

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  • 37. 

    All of the following are disadvantages of straight commission plans EXCEPT ________.

    • A.

      Salespeople avoid pushing hard-to-sell items

    • B.

      Salespeople fail to service small accounts

    • C.

      Payments are complicated to calculate

    • D.

      Significant variations in pay exist

    Correct Answer
    C. Payments are complicated to calculate
    Explanation
    The correct answer is "payments are complicated to calculate." Straight commission plans typically offer salespeople a percentage of the sales they generate, which means that their earnings are directly tied to their performance. This can act as a motivator for salespeople to push hard and sell even difficult-to-sell items. However, this type of plan may have disadvantages such as salespeople failing to service small accounts and significant variations in pay, but it does not necessarily mean that the payments themselves are complicated to calculate.

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  • 38. 

    Which of the following is the primary advantage of using a combination of salary and commission as compensation for salespeople?

    • A.

      Provides a guaranteed minimum salary

    • B.

      Allows freedom to choose own work activities

    • C.

      Completely links to performance

    • D.

      Offers simple administration

    Correct Answer
    A. Provides a guaranteed minimum salary
    Explanation
    Using a combination of salary and commission as compensation for salespeople provides a guaranteed minimum salary. This means that even if a salesperson does not meet their sales targets or perform exceptionally well, they will still receive a certain amount of income. This can provide stability and security for salespeople, as they have a baseline income to rely on. Additionally, it can also serve as motivation for salespeople to work harder and strive for higher sales, as they have the potential to earn more through commission on top of their guaranteed salary.

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  • 39. 

    Edward is the new sales manager at Wilson Auto Mart. The previous sales manager set commission rates informally without considering how much each sale covered expenses. As a result, Wilson Auto Mart barely breaks even on each car sale once commissions are paid. Edward wants to motivate his sales force but avoid having excessive commissions. All of the following questions are relevant to developing an effective sales compensation plan EXCEPT:

    • A.

      How much time does each Wilson salesperson spend with qualified prospects?

    • B.

      What are the motivation and skill levels of Wilson sales team members?

    • C.

      What is the average annual bonus received by Wilson's CEO?

    • D.

      What is Wilson's desired profit for each car sale?

    Correct Answer
    C. What is the average annual bonus received by Wilson's CEO?
    Explanation
    The question is asking which of the following questions is not relevant to developing an effective sales compensation plan. The other three questions are relevant because they pertain to factors that can directly impact the sales compensation plan. The time spent with qualified prospects and the motivation and skill levels of the sales team members can help determine the appropriate commission rates and incentives. The desired profit for each car sale is also important as it can influence the commission structure. However, the average annual bonus received by the CEO is not directly related to the sales compensation plan and therefore is not relevant.

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  • 40. 

    Edward is the new sales manager at Wilson Auto Mart. The previous sales manager set commission rates informally without considering how much each sale covered expenses. As a result, Wilson Auto Mart barely breaks even on each car sale once commissions are paid. Edward wants to motivate his sales force but avoid having excessive commissions. Which of the following, if true, supports the argument that Edward should pay his sales team a combination of salary plus commission?

    • A.

      Wilson Auto Mart's sales team consists of high-performing, experienced salespeople

    • B.

      Wilson Auto Mart has a sales force that has a significant desire for a floor to their earnings.

    • C.

      Each Wilson Auto Mart salesperson is encouraged to sell at least ten vehicles each month.

    • D.

      Wilson Auto Mart salespeople are primarily asked to find new clients and service current accounts.

    Correct Answer
    B. Wilson Auto Mart has a sales force that has a significant desire for a floor to their earnings.
    Explanation
    The answer supports the argument because if the sales force has a significant desire for a floor to their earnings, it implies that they want a guaranteed base salary in addition to commission. This suggests that a combination of salary plus commission would motivate them, as it provides a stable income while still incentivizing them to make sales.

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  • 41. 

    What percentage of employers track sales performance using spreadsheets?

    • A.

      15%

    • B.

      35%

    • C.

      60%

    • D.

      85%

    Correct Answer
    C. 60%
    Explanation
    The correct answer is 60%. This suggests that a majority of employers track sales performance using spreadsheets. This could be due to the ease and accessibility of spreadsheets for organizing and analyzing sales data. Spreadsheets allow employers to track and monitor sales performance in a structured and systematic manner, enabling them to make informed decisions and identify areas for improvement. Additionally, spreadsheets offer flexibility and customization options, allowing employers to tailor their tracking methods to their specific needs and preferences.

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  • 42. 

    Which of the following terms refers to the right to purchase a stated number of shares of a company stock at today's price at some time in the future?

    • A.

      At-risk variable plan

    • B.

      Multiplier method

    • C.

      Stock option

    • D.

      Gainsharing plan

    Correct Answer
    C. Stock option
    Explanation
    A stock option refers to the right to purchase a stated number of shares of a company stock at today's price at some time in the future. This means that the holder of the stock option has the choice to buy a certain number of shares at a predetermined price, regardless of whether the stock price has increased or decreased by the time the option is exercised. Stock options are commonly used as a form of compensation for employees or as a way for investors to speculate on the future price of a company's stock.

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  • 43. 

    With which of the following can an executive NOT profit until the stock makes significant gains?

    • A.

      Indexed options

    • B.

      Phantom stock

    • C.

      Restricted stock

    • D.

      Premium priced options

    Correct Answer
    D. Premium priced options
    Explanation
    Premium priced options are options that have a higher premium or cost to purchase compared to other options. These options allow the holder to buy or sell the underlying stock at a predetermined price within a specific time frame. However, the executive cannot profit from premium priced options until the stock makes significant gains because the predetermined price must be higher than the current market price for the options to be profitable. Therefore, until the stock price increases significantly, the executive cannot make a profit from premium priced options.

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  • 44. 

    With a ________, an executive receives units instead of shares of company stock. In the future, the executive receives cash equal to the appreciation of the units owned.

    • A.

      Nonqualified stock option

    • B.

      Premium priced option

    • C.

      Phantom stock plan

    • D.

      Restricted stock plan

    Correct Answer
    C. Phantom stock plan
    Explanation
    A phantom stock plan is a type of compensation plan where an executive receives units instead of actual shares of company stock. These units do not represent actual ownership in the company, but rather the future cash appreciation of the units owned by the executive. This allows the executive to benefit from the increase in value of the company's stock without actually owning the shares.

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  • 45. 

    Which term refers to payments companies make in connection with a change in ownership or control of a company?

    • A.

      Pension

    • B.

      Golden parachute

    • C.

      Retirement bonus

    • D.

      Stock option

    Correct Answer
    B. Golden parachute
    Explanation
    A golden parachute refers to payments that companies make in connection with a change in ownership or control of a company. These payments are typically given to top executives or key employees as a form of compensation or incentive to ensure their loyalty and commitment during the transition period. The term "golden parachute" is used metaphorically to suggest that these payments provide a soft landing or financial security for executives in the event of a change in ownership or control.

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  • 46. 

    The most common eligibility determinant for bonuses is:

    • A.

      Salary grade

    • B.

      Job title

    • C.

      Officer status

    • D.

      Base salary

    Correct Answer
    A. Salary grade
    Explanation
    The most common eligibility determinant for bonuses is the salary grade. This means that employees who fall within a certain salary grade are eligible to receive bonuses. The salary grade is often determined by factors such as job responsibilities, experience, and performance. By using salary grade as the eligibility determinant, organizations can ensure that bonuses are distributed fairly and consistently based on employees' positions within the company.

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  • 47. 

    All of the following are advantages of team incentive plans EXCEPT that ________.

    • A.

      Jealousy is reduced

    • B.

      Wage equity is guaranteed

    • C.

      Team planning is reinforced

    • D.

      Problem solving is encouraged

    Correct Answer
    B. Wage equity is guaranteed
    Explanation
    The correct answer is "wage equity is guaranteed". This means that team incentive plans do not guarantee equal wages for all team members. While team incentive plans have several advantages, such as reducing jealousy, reinforcing team planning, and encouraging problem-solving, they do not ensure that wages will be distributed equally among team members.

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  • 48. 

    The employees at DataMax participate in a profit-sharing plan. DataMax distributes 15% of its profits as profit shares to employees at regular intervals. Which of the following is most likely used at DataMax?

    • A.

      Current profit-sharing

    • B.

      Lincoln incentive system

    • C.

      Deferred profit-sharing plan

    • D.

      Employee stock ownership plan

    Correct Answer
    A. Current profit-sharing
    Explanation
    DataMax most likely uses a current profit-sharing plan. This type of plan involves distributing a percentage of the company's profits to employees at regular intervals. Since DataMax distributes 15% of its profits as profit shares, it aligns with the concept of current profit-sharing. The other options, such as the Lincoln incentive system, deferred profit-sharing plan, and employee stock ownership plan, do not directly involve distributing profits to employees.

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  • 49. 

    Tanner's employer puts a predetermined portion of profits into a trust account for Tanner's retirement. Which of the following is most likely the type of profit-sharing plan used by Tanner's employer?

    • A.

      Deferred profit-sharing plan

    • B.

      Lincoln incentive system

    • C.

      Jefferson incentive system

    • D.

      Gainsharing plan

    Correct Answer
    A. Deferred profit-sharing plan
    Explanation
    A deferred profit-sharing plan is the most likely type of profit-sharing plan used by Tanner's employer. In this type of plan, a predetermined portion of the company's profits is set aside in a trust account for the employee's retirement. The funds are typically invested and grow tax-deferred until the employee reaches retirement age. This type of plan allows employees like Tanner to share in the company's success and provides a long-term savings vehicle for their retirement.

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  • 50. 

    Which profit-sharing plan provides tax advantages for employees by postponing income taxes, often until the employee retires?

    • A.

      Cash plan

    • B.

      Lincoln incentive system

    • C.

      Deferred profit-sharing plan

    • D.

      Employee stock ownership plan

    Correct Answer
    C. Deferred profit-sharing plan
    Explanation
    A deferred profit-sharing plan is a profit-sharing plan that allows employees to postpone paying income taxes on the profits they receive from the plan until they retire. This provides tax advantages for employees as they can defer paying taxes on their earnings and potentially pay a lower tax rate in retirement. This plan allows employees to save for retirement while also receiving tax benefits.

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