ch12

Question 1

expectancy theory

Answer 1

The theory that says
motivation is a function
of valence, instrumentality, and expectancy.

Question 2

principal

Answer 2

In agency theory, a 
person (e.g., an owner) 
who seeks to direct 
another person’s 
behavior.

Question 3

agent

Answer 3

In agency theory, a person (e.g., a manager)
who is expected to act
on behalf of a principal
(e.g., an owner).

Question 4

merit bonus

Answer 4

Merit pay paid in the
form of a bonus, instead
of a salary increase.

Question 5

merit increase grid

Answer 5

A grid that combines 
an employee’s performance rating with 
the employee’s position in a pay range to 
determine the size and 
frequency of his or her 
pay increases.

Question 6

profit sharing

Answer 6

A compensation plan 
in which payments are 
based on a measure 
of organization performance (profits) and do 
not become part of the 
employees’ base salary.

Question 7

stock options

Answer 7

An employee ownership plan that gives
employees the opportunity to buy the
company’s stock at a
previously fixed price.

Question 8

employee stock ownership plan

Answer 8

An employee ownership plan that gives
employers certain tax
and financial advantages when stock is
granted to employees.

Question 9

gainsharing

Answer 9

A form of compensation 
based on group or plant 
performance (rather 
than organizationwide 
profits) that does not 
become part of the 
employee’s base salary.