81. Which among the following is an example of a group incentive measure?
A. Physical output
B. Cost savings
C. Meeting deadlines
D. Completion of product design
Broad performance measures like cost savings, meeting deadlines, and completion of product design are used for team award plans.
82. In recognition of the fact that every pay plan has its advantages and disadvantages, companies are generally taking all but one of the following actions. Name the exception.
A. Designing pay systems that include a mix of pay programs.
B. Seeking to balance multiple objectives through the use of the balance scorecard.
C. Tracking financial results while monitoring progress.
D. Outsourcing their pay systems to third-party vendors.
Some companies find it useful to design a mix of pay programs. It is possible to balance multiple objectives by using the balanced scorecard which allows companies to track financial results while simultaneously monitoring progress in building the capabilities and acquiring the intangible assets they would need for future growth.
83. From an agency theory perspective, linking executive pay be linked to organization performance may mean
A. more emphasis on noncontingent pay and less emphasis on outcome-oriented contracts.
B. less emphasis on noncontingent pay and more emphasis on outcome-oriented contracts.
C. more emphasis short term compensation and less emphasis on long term compensation.
D. more emphasis on base pay and less emphasis on stock performance.
Less emphasis on noncontingent pay and more emphasis on outcome-oriented contracts makes some portion of executive pay contingent on the organization’s profitability or stock performance.
84. Which one of the following is not among guidelines to ensure that boards of directors act in shareholders’ best interests when making executive pay decisions?
A. A company’s retiring CEO should continue to serve as a director on the board.
B. The board should be chaired by an independent director.
C. Increase the number of outside directors.
D. Allow outside directors to meet without top executives.
Generally, a company’s retiring CEO should not continue to serve as a director on the board and at the very least should be prohibited from sitting on any of the board committees.
85. Researchers have suggested that the two factors critical to encouraging self-monitoring and peer monitoring are:
A. monetary incentives and an environment that fosters trust and cooperation.
B. intrinsic motivation and a competitive environment.
C. intrinsic motivation and a participatory management style.
D. empowerment and team-based work.
Employees have knowledge about the workplace and behavior of fellow employees that managers do not have. Monetary incentives and an environment that fosters trust and cooperation encourage employees to monitor themselves as well as their colleagues.
86. Intertwined effects of pay and process refers to the idea that
A. the way workers are treated is just as important as the way they are paid.
B. changing the way workers are paid is more important than the way that they are treated.
C. productivity can only be boosted if employees in the same jobs are paid equally.
D. pay decisions have no effect on productivity.
Human resource programs, including compensation systems, do not work alone. Changing the way workers are treated may boost productivity.
87. Which of the following pay strategy dimensions best fits with a business strategy of growth?
A. Low variable pay
B. Below-market short-term pay level
C. Above-market benefits level
D. Centralization of pay decisions
A growth strategy’s emphasis on innovation, risk taking, and new markets is linked to a pay strategy that shares risk with employees but also gives them the opportunity for high future earnings which means relatively low levels of fixed compensation in the short run but the use of bonuses and stock options in the long run.
88. Which of the following pay strategy dimensions best fits with a business strategy of concentration?
A. Long-term time orientation
B. Below-market short-term pay level
C. Above-market benefits level
D. Decentralization of pay decisions
Growth organizations have more decentralization and flexibility in pay decisions and in recognizing individual skills, rather than being constrained by job or grade classification systems.
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