Lussier and Hendon, Human Resource Management, Second Edition Instructor Resource

Answers to Applying the Concept Exercises

Applying the Concept 12-1: Individual Incentives

Identify each statement by placing the letter of its advantage or disadvantage on the line next to
it.

Advantages
a. Easy to evaluate individual employees
b. Ability to match rewards to employee desires
c. Promotes the link between performance and results
d. May motivate less productive employees to work harder

Disadvantages
e. Many jobs have no direct output
f. May motivate undesirable employee behaviors
g. Record-keeping burden is high
h. May not fit organizational culture

1. The HR staff offered me a few different gifts for my top performance, but I took the cash.
B. Ability to match rewards to employee desires. Letting the employee select does match them
up.

2. The old compensation system without incentives was easier. Now I have to keep track of
everyone’s performance.
G. Record-keeping burden is high. The employee has more work now with an incentive system.

3. The new incentive system will be easy for me because all my employees are sales reps and we
already keep track of each sale.
A. Easy to evaluate individual employees. Individual sales are easy records to keep, and they
already do this anyway.

4. I just do the minimum required for my job. If I want more compensation, I will just have to
produce more to earn more.
D. May motivate less productive employees. The employee realizes the need to work harder.

5. I’m a new high school teacher, and I’m very concerned about how the administration will
assess my teaching in order to award tenure.
E. Many jobs have no direct physical output. It is difficult to measure teaching performance.

Applying the Concept 12-2: Group Incentives

Identify each statement by its group advantage or disadvantage.

Lussier and Hendon, Human Resource Management, Second Edition Instructor Resource

Advantages
a. Promotes better teamwork
b. Broadens individual outlook
c. Requires less supervision
d. Is easier to develop than individual incentive programs

Disadvantages
e. Social loafing can occur
f. Individual output may be discounted
g. Outstanding performers may slacken efforts
h. Group infighting may arise

6. What happened? Latoya and Katie used to get along so well. Now they are constantly
bickering.
H. Group infighting. Latoya and Katie are fighting within the group.

7. Katrina, you are not being fair to the rest of us by not doing your fair share of the work.
E. Social loafing can occur. The employee is not working up to the level of the others.

8. Now that we use a team-based process, the manager doesn’t check up on us like she used to.
C. Requires less supervision. The boss not checking is a sign of less supervision.

9. By assembling the product as a team, we actually increased production by 20%.

A. Better teamwork. They are getting more produced as a team.

10. I know I’m the best, but none of the department members work very hard, so why should I?
G. Outstanding performers may slacken efforts. The new guy knows that he can’t carry the
group all by himself.

Applying the Concept 12-3: Individual Incentive Options

Place the letter of the individual incentive on the line next to the scenario illustrating it.

a. bonus
b. commissions
c. merit pay
d. piecework
e. standard hour
f. nonmonetary awards
g. praise

11. I’m an auto mechanic at a dealership, and we have a set amount of time to complete each
type of repair work. I complete a job before a stated time so that I can go on to the next car and
get paid extra for being faster than the average guy.
E. Standard Hour. Being faster than the average is based beating a standard time.
Lussier and Hendon, Human Resource Management, Second Edition Instructor Resource

12. I just sold that top-of-the-line BMW M3. I can’t wait to get my pay this week.
B. Commissions. Getting paid based on sales is a commission incentive.

13. I’m the top producer in the entire department, so I will get an extra raise for high
performance this year.
C. Merit Pay. The extra raise over the others is for merit.

14. The boss had me come to the front of the room at the annual meeting to get a plaque for five
years of service to the company. She listed some of my major accomplishments.
F. Non-monetary awards. A plaque is non-monetary.

15. The boss just thanked me for getting a shipment that was behind schedule out on time today.
G. Praise. Thanks without any pay is giving praise.

Applying the Concept 12-4: Group Incentive Options

Place the letter of the group incentive option on the line next to the matching description.

a. profit sharing
b. gainsharing
c. ESOP
d. stock options
e. stock purchasing

16. Our group incentive option gives us a bonus at the end of the year based on how profitable
we were for the year.
A. Profit Sharing. Giving a bonus based on profits, is profit sharing.

17. Our group incentive option plan allows me to get stock and put it in my retirement account
without paying anything for it.
C. ESOP. When the company give shares of its stock to employees, it is stock ownership.

18. Our group incentive option plan worked like this. The manager told us that if we could cut
cost in our department by 5%, as a group we would get 5% of the savings to the company
distributed evenly among us.
B. Gainsharing. Setting a goal and sharing the rewards is gainsharing.

19. Our group incentive option allows me to buy company stock for 10% less than the market
value.
E. Stock Purchasing. If you buy the stock, you have purchased it.

20. Our group incentive option plan allows me to buy $50 shares of the company stock for only
$13 apiece next year.
D. Stock Options. Giving a year to buy is an option.
Lussier and Hendon, Human Resource Management, Second Edition Instructor Resource

Applying the Concept 12-5: Effective Incentives

Identify each statement by the guideline it is violating using the letters (a) to (l) in Exhibit 12-6.
You should read the explanations of each guideline before completing this application.

21. I went to the meeting to find out about the new incentive system, but I didn’t understand
what they were talking about.
C. Make it understandable and clearly communicate the program and expected results. The
presentation was not clear to the employee making the comment.

22. I understand that if the price of the stock goes up next year, I can buy stock at today’s lower
price. But I don’t see how my delivering mail can make any difference in the price of the stock.
D. Base the incentive on factors the individual or group can affect. This individual doesn’t see
how they can affect the price of the stock.

23. What’s the incentive for me? Management gets great bonuses every year and we do all the
work and they don’t give us anything.
B. Incentives for all – managerial and non-managerial employees. In the situation mangers get
bonuses but employees don’t.

24. How can we know if we are the best company in the sporting goods industry?
E. Make sure that you have SMART goals. The stated goal does not meet the SMART criteria.

25. This system isn’t fair to me. I was the top performer but Sam, who didn’t even meet his
quota, got the same bonus.
K. Don’t reward non-performers. John is not performing, yet he is getting the same reward as
the good workers.