1) To make merit pay a true incentive, managers must:

A. limit the number of people in the company’s executive management team.

B. pay out a maximum of about 2% as a merit pool each year.

C. avoid giving “all A’s” so that everyone can get a merit increase.

D. pay attention to the company’s stock price and market capitalization.

E. pay out merit pay to every employee every year (to build up value over time).

2) Incentive pay systems usually fail for one or more of the following reasons, except one. Which one?

A. Simplistic programs

B. Employees can’t affect the desired outcomes

C. Employees don’t know how they are doing

D. The plan provides insignificant rewards

E. Poor management

3) Social loafers:

A. Strive to be recognized as an outstanding performer in a group setting

B. Usually cause group infighting by intentionally creating conflict.

C. Are shy and reserved in company social settings

D. Avoid exerting maximum effort in group settings because it is difficult to pick out individual performance

E. Give 100% both individually and in a group setting

4) Which of the following is not true concerning performance bonuses?

A. They do not automatically carry over from one time period to the next.

B. They are generally used as an individual incentive, but in some cases can be used for groups.

C. Effective bonus systems are based on specific, measurable and attainable goals.

D. Bonus payment should be paid immediately upon reaching the goal, not based on time.

E. They should be given on an ongoing, annualized basis in order to create entitlement.

5) A common advantage of group incentives is that:

A. the best performers will maximize their efforts to make up for free riders.

B. they broaden the individual outlook of group members.

C. there is very little chance of infighting or conflict with group incentives.

D. they always equally reward the performance of all employees.

E. they encourage team members to compete with each other.