Assessing Performance and Developing Employees/ Compensating Human Resources


1. Which of the following statements correctly describes in-basket exercises?
A. In-basket exercises simulate the administrative tasks of a manager’s job, using a pile of documents for the employee to handle.
B. In-basket exercises require participants to take the part of a manager or employee in a situation involving the skills to be
C. In-basket exercises require teams of five to seven employees to work together to solve assigned problems within a certain
time period.
D. In-basket exercises are paper-and-pencil tests designed to measure participants’ communication styles and skills.

2. Explanation, consideration, and empathy are key determinants of
A. procedural justice.
B. perceptual justice.
C. interactional justice.
D. alternative dispute resolutions.

3. If a performance measure lacks _______ reliability, determining whether an employee’s performance has
truly changed over time will be impossible.
A. strategic
B. interrater
C. test-retest
D. external

4. In terms of job dissatisfaction, an employee who calls in sick or arrives to work late is engaging in
A. behavior change.
B. physical withdrawal.
C. whistleblowing.
D. psychological withdrawal.

5. An Individual Coaching for Effectiveness program is designed to
A. improve managers in succession planning.
B. reduce the effects of the glass ceiling.
C. help prepare managers for overseas assignments.
D. help managers with dysfunctional behaviors.

6. Which of the following is a false statement about the glass ceiling?
A. The barrier may be due to a lack of access to training programs, developmental job experiences, and developmental
relationships, such as mentoring.
B. The barrier may be due to stereotypes that hinder the development of women and minorities.
C. Research has found gender differences in accessing job experiences involving transitions and creating change.
D. Research shows male managers receive more assignments involving high levels of responsibility than do female managers of
similar ability and managerial level.

7. To improve performance of underutilizers, managers should
A. withhold pay increases.
B. link rewards to performance outcomes.
C. demote them from their current position.
D. offer temporary assignments for skill development.

8. If peer review doesn’t lead to a settlement, a neutral party from outside the organization hears the case
and tries to help the people in conflict arrive at a settlement. This process is called
A. mediation.

B. open-door policy.
C. arbitration.
D. progressive discipline.

9. The type of performance management system in which a company assembles performance data on an
individual from most or all of his or her contacts within and outside the company is known as
A. 360-degree performance appraisals.
B. behavioral-observation scales.
C. the critical-incidents technique.
D. management by objectives.

10. Which of the following describes managing the behavior of employees through a formal system of
feedback and reinforcement?
A. Behavioral-observation scales
B. Critical incidents
C. Behaviorally anchored rating scales
D. Organizational behavior modification

11. As a predictor of job dissatisfaction, nothing surpasses
A. pay and benefits.
B. relationships with coworkers.
C. the nature of the task itself.
D. negative affectivity and negative self-evaluations.

12. Three of the following are likely outcomes or benefits of conducting annual employee satisfaction
surveys. Which of the following is not a likely outcome or benefit?
A. The surveys give employees an outlet for voicing their concerns.
B. The surveys provide a means for empirically assessing the effects of changes in personnel practices on worker attitudes.
C. The surveys provide evidence of the knowledge, skills, and abilities necessary to perform specific jobs.
D. The surveys allow the company to monitor trends over time.

13. Three of the following are trends in executive education. Which one is not a trend in executive
A. Formal educational programs are being supplemented with other developmental activities.
B. Due to increasing costs, employees are increasingly being asked to cover tuition and other program-related costs.
C. Distance learning is being used more frequently by companies.
D. Employers and education providers are developing short courses with content designed specifically for the audience.

14. What is the employee’s responsibility in the self-assessment stage of career management?
A. Communicate performance evaluations
B. Identify opportunities and areas of needed improvement
C. Identify steps and a timetable to reach goals
D. Provide assessment information to identify strengths, weaknesses, interests, and values

15. Advantages of result-based measures include three of the following. Which is not an advantage of
result-based measures?
A. Result-based measures are highly acceptable to employees and managers alike.
B. Result-based measures are relatively easy to link to the organization’s goals.
C. Result-based measures are generally less subjective than other kinds of performance systems.
D. Result-based measures are very effective in providing guidance on how to improve.

16. A team of five to seven employees is assigned a problem and must work together to solve it within a
certain time period. Which of the following techniques is being used?
A. Discussion
B. Role playing
C. Leaderless group discussion
D. In-basket exercise

17. Total quality management differs from traditional performance measurement in that TQM
A. focuses on support decisions about work assignments, training, and compensation.
B. assesses both individual performance and the system within which the individual works.
C. has an external, rather than an internal, focus.
D. is a top-down review process.

18. The step in the career management process in which employees receive information about their skills
and knowledge and where these assets fit into the organization’s plans is called
A. action planning.
B. goal setting.
C. reality check.
D. self-assessment.

19. Based on the expectation that two people in conflict should first try to arrive at a settlement together,
the organization has a policy of making managers available to hear complaints. Typically, the first open
door is that of the employee’s
A. peers.
B. immediate supervisor.
C. immediate subordinates.
D. director.

20. Which of the following statements about benchmarks is false?
A. The instrument measures 16 skills and perspectives, such as how well managers deal with subordinates, acquire resources,
and create a productive work climate.
B. The items measured by benchmarks are based on research into the lessons that executives have learned as a result of critical
events within their careers.
C. The managers’ supervisors, their peers, and the managers themselves must complete the instrument to ensure its effectiveness.
D. While managers enjoy completing the instrument and find the results interesting, research is inconclusive regarding the skills
measured and their relationship to on-the-job performance.


1. Pay specifically designed to energize, direct, or control employees’ behavior is known as
A. exempt pay.
B. incentive pay.
C. empowerment pay.
D. indirect pay.

2. Three of the following are vesting rights. Which is not a vesting right?
A. The right to a pension at retirement
B. A guarantee that the employer won’t switch the pension plan from defined-benefit to defined-contribution plan
C. In most cases, a waiting period of no more than five years or a three- to seven-year period, with 20 percent in the third and
each year thereafter
D. The right to a pension regardless of whether or not the employee remains with the employer until retirement

3. Which of the following is an advantage of group incentives?
A. Groups trying to outdo one another in satisfying customers
B. Encouraging team members to compete with each other so they can achieve their goal
C. Group more likely using a broad range of performance measures
D. Rewarding the performance of all employees at a facility

4. Which level of child care is most frequently provided by organizations with 100 or more employees?
A. The organization operates a day-care center at or near the workplace.
B. The organization offers no support within this area.
C. The organization provides vouchers or discounts for employees to use at existing child-care facilities.
D. The organization supplies and helps employees collect information about the cost and quality of available child care.

5. By law, what percent of assets must an ESOP invest in its company’s stock?
A. 80 percent
B. 10 percent
C. 51 percent
D. 100 percent

6. From which source do most retirees receive the largest percentage of their retirement income?
A. Social Security
B. Private pensions
C. Disability insurance
D. Earnings from personal assets

7. In response to the growing concern over ethical issues surrounding incentive pay for executives, three of
the following actions have been taken. Which action has not been taken in response to the growing concern
over ethical issues?
A. Using the balanced-scorecard to design executive pay and incentives
B. Requiring companies to more clearly report executive compensation levels and the company’s performance relative to that of
C. Imposing strict limits on insider trading
D. Limiting the amount companies may deduct for executive and performance-related pay to no more than $1 million

8. On average, out of every dollar spent on compensation, about _______ cents go to benefits.
A. 45
B. 8
C. 17
D. 30

9. Organizations being squeezed between labor and product markets need to
A. move their operations overseas.
B. move from job-based pay structures to skill-based pay systems, where employees are empowered and jobs are more
C. change their strategic mission and direction, moving to more attractive industries.
D. couple pay policies with creative HR, production, and marketing management to make workers’ contributions more valuable
and products more profitable.

10. Three of the following are objectives of the unemployment insurance program. Which is not an
objective of the unemployment insurance program?
A. To preserve investments in worker skills by providing income during short-term layoffs
B. To offset lost income during involuntary unemployment
C. To offset lost income during a labor dispute
D. To provide an incentive for employers to stabilize employment

11. Which of the following is a false statement about key jobs?
A. Key jobs have many incumbents within the organization.
B. Key jobs are jobs on which it’s possible to obtain market-pay survey data.
C. Key jobs are common to many organizations.
D. Key jobs are relatively stable in content.

12. Quality guru W. Edwards Deming advocates the use of
A. stock options.
B. merit-pay systems.
C. group incentives.
D. piecework incentives.

13. An employee earns $10 an hour and receives a weekly attendance award of $20. That employee works
50 hours this week and thus earns a total compensation of
A. $550.00.
B. $570.00.
C. $577.50.
D. $557.50.

14. If employees conclude that they’re underrewarded, they’re likely to make up the difference in three of
the following ways. Which is not a way in which employees who feel underrewarded are likely to make up
the difference?
A. Withdrawing by leaving the organization
B. Reducing their inputs
C. Finding a way to reduce their outcomes
D. Refusing to cooperate

15. Which of the following is a false statement about the Fair Labor Standards Act?
A. Nonexempt employees are covered by FLSA and include most hourly workers.
B. The FLSA requires federal contractors to pay prevailing wage rates.
C. The overtime rate under the FLSA is one and a half times the employee’s hourly rate, including any bonuses and piece-rate
D. The FLSA permits a subminimum training wage equal to 85 percent of the minimum wage.

16. Which of the following is not an advantage of a balanced scorecard?
A. Communicating a balanced scorecard helps employees understand the organization’s goals and how they might contribute to
these goals.
B. A balanced scorecard allows for a combination of performance measures that are directed toward both the company’s longand
short-term objectives.
C. A balanced scorecard links external pay rates with internal job structures, allowing organizations to gain both internal and
external pay equity.
D. A balanced scorecard balances the disadvantages of one type of incentive pay with the advantages of another type.

17. Since the 1990s, the trend in larger public companies is to grant stock options to
A. all top and middle managers.
B. only top management.
C. all employees.
D. all exempt employees.

18. An organization is adjusting pay to better match a local labor market in which the cost of living is rising
sharply. These adjustments are called
A. pay differentials.
B. green-circle rates.
End of exam
C. bonuses.
D. rank-and-file adjustments.

19. An employee produces 10 components in an hour and earns $8.00 ($.80 × 10), while an employee who
produces 12 components per hour earns $9.60 ($.80 × 12). This arrangement is an example of a _______
A. commission
B. differential-piece-rate
C. straight-salary
D. straight-piecework

20. In 2003, a company employee received an option to purchase the company’s stock at $45 per share. If
the stock is trading at $40 a share in 2005, the employee will most likely
A. hold on to the option, hoping the stock price will increase in the future.
B. try changing the price in the original option agreement to improve the stock’s performance.
C. exercise the option, receiving a gain of $40.
D. exercise the option, receiving a gain of $5.


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