Few topics in the business press grab headlines and ignite the public than the compensation packages received by top management, which continue to rise. For companies in the United States with more than $5 billion in revenue, the median CEO compensation for the CEO was $14 million in 2012 – a 2.8 percent increase over 2011. How do compensation committees set executive compensation? In many cases, it comes down to equity theory and depends on the referent others to which the CEO is compared. To determine a “fair” level of pay for a given CEO, members of a compensation board find out how much CEOs with similar levels of experience in similar firms (similar inputs) are being paid and attempt to adjust compensation (outcomes) to be similar. So, CEOs in large tech firms are paid similarly to CEOs in other large tech firms, CEOs in small hospitals are paid similarly to CEOs in other small hospitals, and so forth. Proponents of this practice consider it to be “fair” because it achieves equity. However, critics of high CEO pay want to change the perspective by changing the referent other and comparing the CEO’s pay to the pay of the company’s lowest-ranking employees. For example, the average S&P 500 CEO is paid 263 times what the lowest- ranking employee makes – a ratio eight times higher than the same ratio from the 1950s. From this perspective, CEO pay is grossly inequitable and thus “unfair.” In response, many CEOs, such as Mark Zuckerberg of Facebook and Larry Page of Google, have taken $1 annual salaries, though they still earn substantial compensation by exercising their stock options. In addition, shareholders of some companies, such as Verizon, are playing a greater role in setting CEO compensation by reducing awards when the company underperforms. 1. How does the executive compensation issue relate to equity theory? Who do you think should be the referent others in these equity judgments? What are the relevant inputs for top executives? 2. Can you think of procedural justice implications related to the ways pay policies for top executives have been instituted? Do these pay-making decisions follow the procedural justice principles outlined in the chapter? 3. Are there any positive motivational consequences of tying compensation pay closely to firm performance?
> The accounting records of Columbia Furniture show these data (in millions). The shareholders are very happy with Columbia’s steady increase in net income. Auditors discovered that the ending inventory for 2010 was understated by $1 mi
> Eddie’s Convenience Stores’ income statement for the year ended December 31, 2011 and its balance sheet as of December 31, 2011 reported the following. The business is organized as a proprietorship, so it pays no corpo
> During 2012, Vanguard, Inc., changed to the LIFO method of accounting for inventory. Suppose that during 2013, Vanguard changes back to the FIFO method and the following year Vanguard switches back to LIFO again. Requirements 1. What would you think of
> Assume Young Company, a music store, lost some inventory in a fi re on March 15. To fi le an insurance claim, Young Company must estimate its March 15 inventory by the gross profit method. Assume that for the past two years, Young Company’s gross profit
> Cinnamon Roll, Inc., and Dunking Coffee Corporation are both specialty food chains. The two companies reported these figures, in millions: Requirements 1. Compute the gross profit percentage and the rate of inventory turnover for Cinnamon Roll, Inc., a
> Saltwater Trade Mart has recently had lackluster sales. The rate of inventory turnover has dropped, and the merchandise is gathering dust. At the same time, competition has forced Saltwater’s suppliers to lower the prices that Saltwater will pay when it
> The records of Shepard Aviation include the following accounts for inventory of aviation fuel at October 31 of the current year: Requirements 1. Prepare a partial income statement through gross profit under the average, FIFO, and LIFO methods. Round av
> Camp Surplus began May with 67 tents that cost $25 each. During the month, Camp Surplus made the following purchases at cost: May 6 ………………… 101 tents @ $27 = $2,727 18 ……………………….. 163 tents @ $29 = 4,727 26 …………..…………….. 41 tents @ $30 = 1,230 Camp Surp
> Assume a Tilton Sports outlet store began January 2012 with 42 pairs of running shoes that cost the store $37 each. The sale price of these shoes was $63. During January, the store completed these inventory transactions: Requirements 1. The preceding d
> Fun Buy purchases inventory in crates of merchandise; each crate of inventory is a unit. The fiscal year of Fun Buy ends each June 30. Assume you are dealing with a single Fun Buy store in Nashville, Tennessee. The Nashville store began 2012 with an inve
> The accounting records of J.L. Home Store show these data (in millions). The shareholders are very happy with J.L.’s steady increase in net income. Auditors discovered that the ending inventory for 2010 was understated by $4 million and
> Chester’s Convenience Stores’ income statement for the year ended December 31, 2011 and its balance sheet as of December 31, 2011 reported the following. The business is organized as a proprietorship, so it pays no c
> Assume Smith Company, a camera store, lost some inventory in a fire on August 15. To file an insurance claim, Smith Company must estimate its August 15 inventory by the gross profit method. Assume that for the past two years Smith Company’s gross profit
> Duracraft Corporation is nearing the end of its first year of operations. Duracraft made inventory purchases of $745,000 during the year, as follows: Sales for the year are 5,000 units for $1,200,000 of revenue. Expenses other than cost of goods sold a
> Express Detail, Inc. provides mobile car washing and detailing to its customers. The Income Statement for the month ended January 31, 2012, the Balance Sheet for December 31, 2011, and details of postings to the cash account in the general ledger for the
> The accounts of Gleneagles Company prior to the year-end adjustments follow. Adjusting data at the end of the year include the following: a. Unearned service revenue that has been earned, $1,650 b. Accrued service revenue, $32,200 c. Supplies used in o
> Valley Forge Corporation reported the following current accounts at December 31, 2011 (amounts in thousands): Cash................................................ $1,500 Receivables...................................... 5,900 Inventory...................
> This problem demonstrates the effects of transactions on the current ratio and the debt ratio of Hiaport Company. Hiaport’s condensed and adapted balance sheet at December 31, 2011, follows. __________________________________(In millions) Total current a
> Refer back to Problem 3-80B. In Problem 3-80B The accounts of Cool River Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. Prepare the company’s classified balance sheet in report form at March 31, 2
> The accounts of Cool River Service, Inc., at March 31, 2012, are listed in alphabetical order. Requirements 1. All adjustments have been journalized and posted, but the closing entries have not yet been made. Journalize Cool River’s c
> The adjusted trial balance of Nicholl Corporation at May 31, 2012, follows: Requirements 1. Prepare Nicholl’s 2012 income statement, statement of retained earnings, and balance sheet. List expenses (except for income tax) in decreasin
> Crossway Apartments, Inc.’s unadjusted and adjusted trial balances at April 30, 2012, follow: Requirements 1. Make the adjusting entries that account for the differences between the two trial balances. 2. Compute Crosswayâ€
> Consider the unadjusted trial balance of Princess, Inc., at August 31, 2012, and the related month-end adjustment data. Adjustment data at August 31, 2012, include the following: a. Accrued advertising revenue at August 31, $2,100. b. Prepaid rent expi
> Journalize the adjusting entry needed on December 31, the end of the current accounting period, for each of the following independent cases affecting Woods Corp. Include an explanation for each entry. a. Details of Prepaid Insurance are shown in the acco
> Tulsa, Inc., reported the following data: Tulsa’s gross profit percentage is a. 54.0. b. 50.7. c. 53.0. d. 46.0. Freight in.. Purchases . $ 21,000 Sales returns. Purchase returns... $ 4,000 6,000 ........ 202,000 Beginning invento
> MusicMagic.net specializes in sound equipment. Because each inventory item is expensive, MusicMagic uses a perpetual inventory system. Company records indicate the following data for a line of speakers: Requirements 1. Determine the amounts that MusicM
> What are the three alternative work arrangements of flextime, job sharing, and telecommuting? What are the advantages and disadvantages of each?
> What are the consequences of stress?
> How do individual differences and organizational constraints influence decision making?
> How do the predications of self-determination theory apply to intrinsic and extrinsic rewards?
> What are the early theories of motivation? How applicable are they today?
> What are the three key elements of motivation?
> What are some contemporary theories of motivation, and how do they compare to one another?
> What is the link between perception and decision making? How does one affect the other?
> What is the role of dependence in power relationships?
> What are the possible sources of stress?
> What shortcuts do people frequently use in making judgments about others?
> What is attribution theory? What are the three determinants of attribution? What are the implications of attribution theory for explaining organizational behavior?
> What is perception, and what factors influence our perception?
> Samantha Parks is the owner and CEO of Sparks, a small New York agency that develops advertising, promotions, and marketing materials for high-fashion firms. Parks has tended to keep a tight rein on her business, overseeing most projects from start to fi
> What are the three ethical decision criteria, and how do they differ?
> What are the three major ways that jobs can be redesigned? In your view, in what situations would one of the methods be favored over the others?
> What is the job characteristics model? How does it motivate employees?
> What is variable pay? What are the variable-pay programs that are used to motivate employees? What are their advantages and disadvantages?
> What are employee involvement programs? How might they increase employee motivation?
> What are the key tenets of expectancy theory?
> How is organizational justice a refinement of expectancy theory?
> What are the key principles of goal-setting theory, self-efficacy theory, and reinforcement theory?
> What are the implications of employee job engagement for management?
> What are some of the common decision biases or errors that people make?
> What is the rational model of decision making? How is it different from bounded rationality and intuition?
> How do the Big Five traits predict behavior at work?
> What is the Myers-Briggs Type Indicator (MBTI), and what does it measure?
> What is personality? How do we typically measure it? What factors determine personality?
> You are probably so used to seeing Starbucks coffee shops everywhere that you might not realize the company went from just 11 stores in 1987 to 2,600 in the year 2000. This incredibly rapid growth sprang from the company’s ability to create a unique expe
> Do values differ across generations? How so?
> What is the difference between terminal and instrumental values?
> What is the difference between trait and behavioral theories? Are those theories valid?
> How does the situation or environment affect the degree to which personality predicts behavior?
> Those who have been in the workforce for many years often lament the “job hopping” that occurs with those who are more recent entrants into the workforce. Younger individuals tend to see such an attitude as old-fashioned, and may resent the implication t
> Agreeable people tend to be kinder and more accommodating in social situations, which you might think could add to their success in life. However, one downside of agreeableness is potentially lower earnings. Recent research has shown the answer to this a
> Are emotions rational? What functions do they serve?
> What is the difference between emotions and moods? What are the basic motions and moods?
> How do you apply concepts about emotions and moods to specific OB issues?
> What are some strategies for emotion regulation and their likely effects?
> What is the evidence for and against the existence of emotional intelligence?
> What factors create and sustain an organization’s culture?
> What is affective events theory? What are its applications?
> Are leadership and management different from one another? If so, how?
> What are the sources of emotions and moods?
> We mentioned previously that some researchers have studied whether facial expressions reveal true emotions—the psychologist Paul Ekman is the best known. These researchers have distinguished real smiles (so-called Duchenne smiles, named after French phys
> As this chapter has shown, emotions are an inevitable part of people’s behavior at work. At the same time, it’s not entirely clear that we’ve reached a point where people feel comfortable expressing all emotions at work. The reason might be that business
> Does behavior always follow from attitudes? Why or why not? Discuss the factors that affect whether behavior follows from attitudes.
> What are the main components of attitudes? Are these components related or unrelated?
> What outcomes does job satisfaction influence? What implications does this have for management?
> What causes job satisfaction? For most people, is pay or the work itself more important?
> What are the major job attitudes? In what ways are these attitudes alike? What is unique about each?
> What are the key biological characteristics and how they are relevant to OB?
> What are the functional and dysfunctional effects of organizational culture?
> How can organizations select and develop effective leaders?
> What are stereotypes and how do they function in organizational settings?
> What are the two major forms of workforce diversity?
> How do organizations manage diversity effectively?
> How can you contrast intellectual and physical ability?
> What is intellectual ability and how is it relevant to OB?
> That women are underrepresented on boards of directors is an understatement. In the United States, only 16 percent of board members among the Fortune 500 are women. Among the 100 largest companies in Great Britain, women hold approximately 12 percent of
> Over the past century, the average age of the workforce has continually increased as medical science continues to enhance longevity and vitality. The fastest-growing segment of the workforce is individuals over the age of 55. Recent medical research is e
> Given that a substantial amount of intellectual ability (up to 80 percent) is inherited, it might surprise you to learn that intelligence test scores are rising. In fact, scores have risen so dramatically that today’s great-grandparents seem mentally def
> What is the importance of interpersonal skills?
> What are the three levels of analysis in this book’s OB model?
> How is mentoring valuable to leadership? What are the keys to effective mentoring?
> How does national culture affect what happens when an organizational culture is transported to another country?
> What are the challenges and opportunities for managers in using OB concepts?
> Why are there few absolutes in OB?
> What are the major behavioral science disciplines that contribute to OB?
> Why is it important to complement intuition with systematic study?
> What is organizational behavior (OB)?
> What do managers do in terms of functions, roles, and skills?
> The great global recession has claimed many victims. In many countries, unemployment is at near-historic highs, and even those who have managed to keep their jobs have often been asked to accept reduced work hours or pay cuts. Another consequence of the
> What is a positive organizational culture?
