Pay For Performance and Financial Incentives! Hardest Trivia Questions Quiz

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.

Employee stock ownership plans (ESOPs) are a form of employee benefit where employees are given ownership stakes in the company. Research suggests that ESOPs are likely to increase employee commitment. When employees have a financial stake in the company's success, they are more likely to be motivated and dedicated to their work. This sense of ownership can lead to increased productivity, loyalty, and a stronger sense of teamwork among employees. Additionally, ESOPs can also foster a culture of transparency and open communication within the organization as employees have a vested interest in understanding the company's performance and decision-making processes.

Elaine, the HR manager at Western Enterprises, will receive stock from a trust upon her retirement. This indicates that she will have ownership of the company's stock, making her a participant in the company's success. This aligns with the concept of an Employee Stock Ownership Plan (ESOP), where employees are given stock in the company as part of their compensation or retirement benefits. Therefore, the correct answer is Employee Stock Ownership Plan (ESOP).

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.

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.

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.

The main feature of broad-based stock option plans is that they allow all or most employees to participate. This means that the option to buy stock is not limited to a select few individuals, but rather is extended to a larger group of employees. This can be seen as a way to incentivize and reward employees, as well as align their interests with the success of the company. By giving more employees the opportunity to participate, the company can create a sense of ownership and motivation among its workforce.

McDonald Manufacturing contributes cash to a trust to purchase shares of McDonald stock for employees. This suggests that McDonald Manufacturing is most likely offering employee stock ownership plans. These plans allow employees to become partial owners of the company by providing them with shares of stock. By contributing cash to the trust, McDonald Manufacturing enables employees to acquire company stock and benefit from its performance and growth.

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.

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.

Earnings-at-risk pay plans involve employees agreeing to put a portion of their regular pay at risk if they fail to meet their goals. In exchange for taking this risk, they have the opportunity to receive a significantly larger bonus if they exceed their goals. This type of pay plan incentivizes employees to work harder and strive for better performance, as the potential reward is greater. It also helps align individual goals with organizational goals, as employees are directly impacted by their own performance.

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.

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.

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.

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.

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.

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.

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.

The Scanlon plan is based on a philosophy that managers and employees must cooperate together. This plan encourages employees to actively participate in decision-making processes and share in the financial benefits of their efforts. It promotes teamwork, communication, and collaboration between management and employees to achieve common goals and improve overall performance. The plan emphasizes the importance of shared responsibility and rewards, fostering a culture of cooperation and mutual success.

Gainsharing is an incentive plan that engages employees in a common effort to achieve a company's productivity objectives with any resulting cost-savings gains shared among employees and the company. This means that when employees contribute to increasing the company's productivity and cost-saving measures, they are rewarded with a share of the financial gains. This encourages teamwork and motivation among employees to work towards the company's goals and ultimately benefits both the employees and the company.

Shane most likely participates in an earnings-at-risk pay plan. This type of plan involves a trade-off between a potential reduction in pay if goals are not met and a bonus if goals are exceeded. In this case, Shane agreed to forego 6% of his normal pay if he didn't meet his goals, but would receive a 12% bonus if he exceeded his goals. This arrangement aligns Shane's compensation with his performance, providing an incentive for him to work towards achieving his goals.

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.

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.

Competence in the Scanlon plan refers to a focus on employee abilities. This means that the plan emphasizes the skills, knowledge, and capabilities of the employees. By focusing on employee abilities, the Scanlon plan aims to empower and develop the workforce, enabling them to contribute effectively to the organization's goals and objectives. This focus on employee abilities can lead to increased productivity, improved performance, and overall organizational success.

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.

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.

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.

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.

The Scanlon plan is a management strategy that emphasizes employee participation, cooperation, and involvement in decision-making processes. It focuses on creating a sense of identity and unity among employees, promoting competency and skill development, and fostering a philosophy of cooperation. However, it does not prioritize individual achievement as the main objective. Instead, the plan encourages teamwork and collective efforts to achieve organizational goals.

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.

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.

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.

ESOPs (Employee Stock Ownership Plans) are designed to provide employees with ownership stakes in the company. This sense of ownership can have a positive impact on employees' attitudes and behaviors. When employees feel a sense of ownership, they are more likely to be motivated, perform better, and exhibit helping behaviors. They become more invested in the success of the company and take pride in their work. This can lead to increased productivity, teamwork, and overall job satisfaction.

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.

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.

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.

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.

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.

The fact that employees are unskilled but motivated suggests that an incentive plan would not be appropriate at DYS Enterprises. Incentive plans are typically designed to reward and motivate employees to perform at a higher level. However, in this case, since the employees are already motivated, the implementation of an incentive plan may not be necessary. Additionally, the fact that the job is standardized and there is a link between employee effort and output further supports the idea that an incentive plan may not be needed, as these factors already provide intrinsic motivation for the employees.

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.

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.

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.

Tyler Oil most likely uses the Lincoln incentive system. This system distributes total annual profits among employees based on their merit ratings. This suggests that the distribution of profits is linked to individual performance and incentives are provided to motivate employees to perform well. The other options, such as cash plan, deferred profit-sharing plan, and employee stock ownership plan, do not specifically mention merit ratings or individual performance as the basis for profit distribution.

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.

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.

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.

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.

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.

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.

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.