MAN 4330 Exam 2 Questions With Correct Answers!!

The pay relationships among different jobs within a single organization, forms a pay structure - Answer-Internal Alignment The array of pay rates for different work within a single organization - Answer-Pay Structure many levels, large differentials, individual performers, performance fairness, opportunities for promotion - Answer-Hierarchical structure fewer levels, small differentials, team work organization, equal treatment, and cooperation behavior - Answer-Egalitarian Structure Suggests that workers can be rewarded by their rank in an organization, suggesting why large salaries go to senior executives. To provide a prize for those who put in effort to get to the top - AnswerTournament Theory Employees will be motivated to work harder when they believe that their compensation is at the right level for the work they are doing - Answer-Equity theory Assumption: employers (principals) and employees (agents) have different interests: employers want to maximize profit and employees like income but dislike effort. Agency problem: The principal cannot ensure that its agent is always acting in its best interests. Solve this by financial incentive - Answer-Agency Theory A tendency to act in a certain way depends on an expectation that the act will be followed by a given outcome and on the attractiveness of that outcome to the individual. - Answer-Expectancy Theory 1. effort-performance (expectancy) 2. Performance-reward (Instrumentality) 3. Rewards- personal goals (Valence) - Answer-Three Relationships of expectancy theory People like to repeat actions that result in a positive consequence - Answer-Reinforcement TheoryTells an employee what needs to be done and how much effort is needed. SMART criteria: Specific, measurable, achievable, relevant, time bound - Answer-Goal setting theory Two types of motivation: 1. Extrinsic/controlled (carrot and stick) 2. Intrinsic/autonomous (interest and enjoyment) Extrinsic rewards decrease intrinsic motivation (Want to do it vs having to do it) - Answer-SelfDetermination Theory (SDT) Advantages: Strong incentive effect, sorting effect (attract/retain best performers) Disadvantages: No collaboration/teamwork, no info sharing, competitive culture. Examples: Merit pay, lump sum merit bonuses, piecework incentive plans, sales incentive plans, standard hour plan. - Answer-Individual Incentive Plans Advantages: Teamwork/cooperation/collaboration participation, encouragement, goal alignment Disadvantages: Weak incentive effect, free rider, fairness perception Examples: Team incentive plans, gain sharing plans, profit sharing plans, stock option plans, employee stock ownership plan (ESOP) - Answer-Group Incentive Plans -Boosts Motivation -Increases Productivity -Attracts and retains top talent -Provides clear goals -Reduces the need for monitoring/offers employees more control - Answer-Pros of Pay Performance -Negatively affects teamwork -Focus on the quantity of work -Focus only on things that are measured -Performance reviews can be biased -Promotes unethical behavior - Answer-Cons of pay performance