HRM701 chapter 10 Exam ( Latest 2026/2027 Update) with
Questions and Verified Answers| | 100% Correct | Grade A+
• Question
Why are some compensation plans referred to as variable pay?
Correct Answer: because employee pay is linked to performance
• Question
According to research, which of the following best describes incentive plans?
Correct Answer: They can contribute to organizational performance if certain conditions
are met.
• Question
Which of the following is NOT a reason given by organizations for implementing
incentive plans?
Correct Answer: to increase employee benefits
• Question
Which of the following is NOT likely to help an incentive plan succeed in an organization?
Correct Answer: ensuring that employees believe that performance standards are
unachievable
• Question
Why are performance measures vital in incentive plans
Correct Answer: because they communicate the importance of the organizational goals
• Question
When setting performance measures for incentive systems, what can we say about the
best measures?
Correct Answer: They are quantitative, simple to understand, and show a clear
relationship to improved performance.
• Question
When employees receive a higher rate of pay for all of their work if production exceeds a
standard level of output, which incentive plan are they are working?
Correct Answer: differential piece rate
,• Question
If the standard time for producing one unit of work in a job paying $5.00 per hour were
set at 6 minutes, what would the piece rate be?
Correct Answer: $1.50 per unit
• Question
Which of the following is an advantages of piece rate pay systems?
Correct Answer: They have a direct link to performance.
• Question
At Steelcase, an office furniture maker, employees can earn more than their base pay if
they produce more units, such as upholster more chairs. This part of their pay is
determined on units produced. Which of the following plans is being used here?
Correct Answer: piece rate plan
• Question
Several organizations have an incentive that managers can give to their employees for
outstanding singular effort not tied to any planned performance standard. What is such
an incentive usually called?
Correct Answer: a spot bonus
• Question
Which of the following would NOT be the basis for a merit raise?
Correct Answer: gain sharing decisions
• Question
Which of the following is NOT a problem with merit raises?
Correct Answer: The raise may be based on achieving an objective standard.
• Question
There are many potential errors, as well as discrimination, that can occur in the
performance appraisal process. Which of the following can such errors lead to?
Correct Answer: problematic merit pay
• Question
Which of the following is NOT a reason that merit raises may fail to achieve their
intended purpose?
Correct Answer: Incentive rewards are linked to organizational goals.
, • Question
Which of the following would NOT be a problem with merit raises?
Correct Answer: if they are based upon objective, measurable criteria
• Question
Jim Jones received a $500 pay bonus as a result of his job performance last year;
however, this extra money was not added to his base pay. This is an example of which
of the following?
Correct Answer: lump sum merit pay
• Question
Elizabeth received a stellar performance appraisal in 2008, which translated to a 10
percent pay raise for the next year. Her 2008 base pay was $50,000. Which of the
following applies to 2009?
Correct Answer: $5,000 would be added to her 2008 base pay
• Question
Which of the following is an advantage of merit increases on a lump-sum basis?
Correct Answer: They do not contribute to escalating base salary levels.
• Question
Naveen works as a sales representative for Rogers Pet Foods. He is on a commission
plan. His individual performance has been steady over the past few months but he has
noticed a decline in his pay. Which of the following is NOT a likely cause for Naveen's
pay decline?
Correct Answer: His intrinsic motivation.
• Question
Saturn, the auto firm, has a sales incentive plan that permits salespeople to be paid for
performing various duties not reflected immediately in their sales volume. What is this
type of pay plan?
Correct Answer: a straight salary plan
• Question
Which of the following is a pay plan that only compensates sales employees based on a
percentage of sales?
Correct Answer: straight commission plan
Questions and Verified Answers| | 100% Correct | Grade A+
• Question
Why are some compensation plans referred to as variable pay?
Correct Answer: because employee pay is linked to performance
• Question
According to research, which of the following best describes incentive plans?
Correct Answer: They can contribute to organizational performance if certain conditions
are met.
• Question
Which of the following is NOT a reason given by organizations for implementing
incentive plans?
Correct Answer: to increase employee benefits
• Question
Which of the following is NOT likely to help an incentive plan succeed in an organization?
Correct Answer: ensuring that employees believe that performance standards are
unachievable
• Question
Why are performance measures vital in incentive plans
Correct Answer: because they communicate the importance of the organizational goals
• Question
When setting performance measures for incentive systems, what can we say about the
best measures?
Correct Answer: They are quantitative, simple to understand, and show a clear
relationship to improved performance.
• Question
When employees receive a higher rate of pay for all of their work if production exceeds a
standard level of output, which incentive plan are they are working?
Correct Answer: differential piece rate
,• Question
If the standard time for producing one unit of work in a job paying $5.00 per hour were
set at 6 minutes, what would the piece rate be?
Correct Answer: $1.50 per unit
• Question
Which of the following is an advantages of piece rate pay systems?
Correct Answer: They have a direct link to performance.
• Question
At Steelcase, an office furniture maker, employees can earn more than their base pay if
they produce more units, such as upholster more chairs. This part of their pay is
determined on units produced. Which of the following plans is being used here?
Correct Answer: piece rate plan
• Question
Several organizations have an incentive that managers can give to their employees for
outstanding singular effort not tied to any planned performance standard. What is such
an incentive usually called?
Correct Answer: a spot bonus
• Question
Which of the following would NOT be the basis for a merit raise?
Correct Answer: gain sharing decisions
• Question
Which of the following is NOT a problem with merit raises?
Correct Answer: The raise may be based on achieving an objective standard.
• Question
There are many potential errors, as well as discrimination, that can occur in the
performance appraisal process. Which of the following can such errors lead to?
Correct Answer: problematic merit pay
• Question
Which of the following is NOT a reason that merit raises may fail to achieve their
intended purpose?
Correct Answer: Incentive rewards are linked to organizational goals.
, • Question
Which of the following would NOT be a problem with merit raises?
Correct Answer: if they are based upon objective, measurable criteria
• Question
Jim Jones received a $500 pay bonus as a result of his job performance last year;
however, this extra money was not added to his base pay. This is an example of which
of the following?
Correct Answer: lump sum merit pay
• Question
Elizabeth received a stellar performance appraisal in 2008, which translated to a 10
percent pay raise for the next year. Her 2008 base pay was $50,000. Which of the
following applies to 2009?
Correct Answer: $5,000 would be added to her 2008 base pay
• Question
Which of the following is an advantage of merit increases on a lump-sum basis?
Correct Answer: They do not contribute to escalating base salary levels.
• Question
Naveen works as a sales representative for Rogers Pet Foods. He is on a commission
plan. His individual performance has been steady over the past few months but he has
noticed a decline in his pay. Which of the following is NOT a likely cause for Naveen's
pay decline?
Correct Answer: His intrinsic motivation.
• Question
Saturn, the auto firm, has a sales incentive plan that permits salespeople to be paid for
performing various duties not reflected immediately in their sales volume. What is this
type of pay plan?
Correct Answer: a straight salary plan
• Question
Which of the following is a pay plan that only compensates sales employees based on a
percentage of sales?
Correct Answer: straight commission plan
