Deck 11: Pay-For-Performance Plans

Question 1

The major focus of individual spot awards is on:

A) linking increases in base pay to employee ratings on performance evaluations
B) rewarding group or team performance
C) promising pay for some objective, pre-established level of performance
D) awarding employees for performance that exceeds expectations
E) rewarding employees with monthly increments to keep up their motivation

Answer 1

awarding employees for performance that exceeds expectations

Question 2

Which of the following is a customer-focused performance measure?

A) economic value added
B) cycle time
C) distribution systems
D) return on sales
E) service / quality index

Answer 2

cycle time

Question 3

Which of the following is one of the three Cs that are problems with team compensation?

A) control
B) conflict
C) coordination
D) culture
E) confidentiality

Answer 3

control

Question 4

Which of the following is a disadvantage of profit sharing?

A) Most profit sharing plans are highly sophisticated and hence not easily understood by employees.
B) Most employees are not concerned about the profitability of their organizations.
C) Most employees are unwilling to learn about financial measures and the business factors that influence them.
D) There is no guarantee that profits will increase.
E) Most profit sharing plans involve high administrative costs.

Question 5

Which of the following plans would an organization use if they had a highly uncertain future?

A) gain sharing
B) team incentives
C) quality incentives
D) stock ownership or options
E) cash profit sharing

Question 6

Which of the following is true about broad-based option plans?

A) They are applicable only to senior executives.
B) They are unable to inspire commitment and retention.
C) They are capable of reinforcing either performance or retention and commitment.
D) They maximize distinctions between employee groups.
E) They have only short-term effects on employee performance.

Question 7

Which of the following is an example of a long-term incentive in an executive compensation package?

A) pension plans
B) base pay
C) stock grants
D) low-cost loans
E) bonuses

Question 8

A contingent worker sacrifices ____ in exchange for _____.

A) benefits, flexibility
B) income, skills
C) stability, benefits
D) knowledge acquisition, flexibility
E) loyalty, stability

Question 9

Broad-based option plans create an ownership culture based on a strong emphasis on performance.

Question 10

To align the interest of the directors and the organizations, publicly traded companies are moving away from mandatory or recommended share ownership guidelines.

Question 11

Deferred share units are stock awards earned when specific performance goals achieved.

Question 12

Describe the three types of incentive plans based on time.

Question 13

What is the purpose behind each of the four variable pay plans?

Question 14

List the major factors that influence the design of sales compensation plans?