Question 1

Sales compensation plans have typically relied heavily on incentives such as sales commissions. What does this vary by?

Accepted Answer

A)   Strategic plan
B)   Corporate policy
C)   Labour contract
D)   Industry
E)   Geographic location

Question 2

When all employees earning over a threshold amount are automatically eligible for consideration for short-term incentives, what is this called?

Accepted Answer

A)   Key position
B)   Job evaluation
C)   Job clusters
D)   Salary grade
E)   Salary-level cutoff point

Question 3

The right to purchase a specific number of shares of company stock at a specific price during a specified period of time is called a

Accepted Answer

A)   book value plan.
B)   stock appreciation right.
C)   phantom stock plan.
D)   stock option plan.
E)   restricted stock plan.

Question 4

Today, any plan that ties pay to productivity or profitability is called

Accepted Answer

A)   competency-based pay.
B)   piecework pay.
C)   variable pay.
D)   pay-for-performance.
E)   fixed pay.

Question 5

Most experts argue that in most organizations managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Accepted Answer

A) True 
 B)False

Question 6

Amy received a salary increase based on her individual performance as a collections clerk over the past year. Which type of compensation did Amy receive?

Accepted Answer

A)   Individual increases
B)   Individual incentives
C)   Special awards
D)   Individual bonuses
E)   Merit pay

Question 7

One approach to using the team incentive plan is to set work standards for each member of the group and maintain a count of the output of each member.

Accepted Answer

A) True 
 B)False

Question 8

An important prerequisite for an effective variable pay plan is referred to as "line of sight." What does this refer to with respect to the employee?

Accepted Answer

A)   Relate daily work to compensation for continual motivation.
B)   Relate daily work to the achievement of personal needs.
C)   Relate daily work to the achievement of overall corporate goals.
D)   Relate daily work to how overall society is impacted.
E)   Relate daily work to other employees efforts to ensure equity is achieved.

Question 9

Traditional merit pay plans have which of the following characteristics?

Accepted Answer

A)   A merit raise is usually based on individual performance.
B)   A merit raise is usually based on corporate performance.
C)   A merit raise is usually based exclusively on group performance.
D)   A merit raise is based on overall level of company profits.
E)   A merit raise is usually based on individual performance only.

Question 10

Paula reviews her company's financial reports to ensure revenues exceed expenses before authorizing additional pay beyond base salaries. What is this an example of?

Accepted Answer

A)   Group incentive plan
B)   Semi-variable incentive plan
C)   Individual incentive plan
D)   Profit-sharing plan
E)   Gainsharing plan

Question 11

What form of compensation is most common for salespeople in the pharmaceutical industry?

Accepted Answer

A)   Salary
B)   Bonuses
C)   Commission
D)   Hourly wages
E)   Merit pay

Question 12

Which combination is the most prevalent approach to compensating salespeople?

Accepted Answer

A)   Salary and stock options
B)   Commission and stock options
C)   Salary and commissions
D)   Commissions and profit sharing
E)   Salary and profit sharing

Question 13

What is the main disadvantage to salary plans for salespeople?

Accepted Answer

A)   They tend to motivate new salespeople to the organization only.
B)   They do not depend on results and can be demotivating.
C)   They are hard to keep track of.
D)   Salespeople tend to act like administrators as opposed to making calls.
E)   Salespeople give in to customer demands more.

Question 14

The chief disadvantage of group plans is that

Accepted Answer

A)   each worker's rewards are no longer based just on his/her own efforts.
B)   a group incentive is problematic when conflict arises between group members.
C)   a group incentive may not improve importance.
D)   some members let others take on the burden of work.
E)   the group is as strong as its weakest worker.

Question 15

Employers have put increasing emphasis on variable pay plans in order to maximize their return on human capital.

Accepted Answer

A) True 
 B)False

Question 16

The oldest and most commonly used type of incentive plan is the standard hour plan.

Accepted Answer

A) True 
 B)False

Question 17

Amy is part of a team of four software developers. Upon completion of a major client project, she and each of her team members received a set amount in addition to their base salary. What is this an example of?

Accepted Answer

A)   Group incentive program
B)   Gain-sharing program
C)   Individual incentive plan
D)   Spot bonus plan
E)   Profit-sharing plan

Question 18

A group incentive plan's chief advantage is that each worker's rewards are no longer based solely on his or her own effort.

Accepted Answer

A) True 
 B)False

Question 19

A recent study of extroverted salespeople found that extroverts only sold more than those less extroverted when what occurred?

Accepted Answer

A)   Selling included a presentation in front of groups of buyers.
B)   Their total compensation was in the form of commission.
C)   Their compensation was all salary based.
D)   Their rewards were contingent on their performance.
E)   They were given a listing of highly potential buyers.

Question 20

Which psychologist warned that too much extrinsic rewards could result in demotivation?

Accepted Answer

A)   Edward Deci
B)   Frederick Herzberg
C)   Frederick Taylor
D)   Victor Vroom
E)   Douglas McGregor

Exam 12: Pay-For-Performance and Financial Incentives

A group incentive plan's chief advantage is that each worker's rewards are no longer based solely on his or her own effort.

Correct AnswerverifiedShow Answer

Paula reviews her company's financial reports to ensure revenues exceed expenses before authorizing additional pay beyond base salaries. What is this an example of?

Correct AnswerverifiedShow Answer

The chief disadvantage of group plans is that

Correct AnswerverifiedShow Answer

Amy received a salary increase based on her individual performance as a collections clerk over the past year. Which type of compensation did Amy receive?

Correct AnswerverifiedShow Answer

The right to purchase a specific number of shares of company stock at a specific price during a specified period of time is called a

Correct AnswerverifiedShow Answer

Most experts argue that in most organizations managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Correct AnswerverifiedShow Answer

An important prerequisite for an effective variable pay plan is referred to as "line of sight." What does this refer to with respect to the employee?

Correct AnswerverifiedShow Answer

Today, any plan that ties pay to productivity or profitability is called

Correct AnswerverifiedShow Answer

Amy is part of a team of four software developers. Upon completion of a major client project, she and each of her team members received a set amount in addition to their base salary. What is this an example of?

Correct AnswerverifiedShow Answer

Which psychologist warned that too much extrinsic rewards could result in demotivation?

Correct AnswerverifiedShow Answer

What is the main disadvantage to salary plans for salespeople?

Correct AnswerverifiedShow Answer

The oldest and most commonly used type of incentive plan is the standard hour plan.

Correct AnswerverifiedShow Answer

Which combination is the most prevalent approach to compensating salespeople?

Correct AnswerverifiedShow Answer

Employers have put increasing emphasis on variable pay plans in order to maximize their return on human capital.

Correct AnswerverifiedShow Answer

A recent study of extroverted salespeople found that extroverts only sold more than those less extroverted when what occurred?

Correct AnswerverifiedShow Answer

When all employees earning over a threshold amount are automatically eligible for consideration for short-term incentives, what is this called?

Correct AnswerverifiedShow Answer

Traditional merit pay plans have which of the following characteristics?

Correct AnswerverifiedShow Answer

One approach to using the team incentive plan is to set work standards for each member of the group and maintain a count of the output of each member.

Correct AnswerverifiedShow Answer

What form of compensation is most common for salespeople in the pharmaceutical industry?

Correct AnswerverifiedShow Answer

Sales compensation plans have typically relied heavily on incentives such as sales commissions. What does this vary by?

Correct AnswerverifiedShow Answer

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