Deck 10: Pay-For-Performance Plans

Question 1

If you had repair work done on your car,the compensation system the shop uses to pay the mechanics is most likely the ________ plan.

A) Bedeaux
B) standard hour
C) Halsey 50-50
D) straight piece-work

Answer 1

B

Question 2

Standard hour plan is to Rowan plan as straight piecework is to ______________ plan.

A) Halsey 50-50
B) Gantt
C) Bedeaux
D) Taylor or Merrick plan

Answer 2

D

Question 3

It is observed that _____ is/are commanding a larger share of the total compensation for all employee groups.

A) merit pay
B) health benefits
C) retirement benefits
D) variable pay

Answer 3

D

Question 4

Advantages of individual incentive plans include all of the following except:

A) lowered production costs.
B) less direct supervision.
C) greater trust between workers and management.
D) higher productivity.

Question 5

Variable pay as a percent of payroll is __ percent.

A) 5
B) 12
C) 17
D) 21

Question 6

All of the following are true regarding merit pay except _______

A) it has a small, but significant effect on performance.
B) removal of merit pay lowers satisfaction but not performance.
C) departments and units with merit pay show higher performance.
D) merit pay has a sorting effect.

Question 7

Which of the following is not a problem with team compensation?

A) Complexity
B) Control
C) Consistency
D) Communications

Question 8

Which of the following is not true of lump-sum bonuses?

A) They help maintain competitive pay position relative to competitors.
B) They are less expensive than merit pay.
C) Employees dislike them.
D) They are a more visible reward than merit pay.

Question 9

Surveys show the most popular type of variable pay plan is ____________

A) stock options.
B) gainsharing.
C) individual incentives.
D) special recognition

Question 10

The authors argue that for merit pay to live up to its potential,all of the following should be done except _________

A) use more peer than supervisor raters.
B) improve the accuracy of appraisals.
C) allocate enough merit money to truly reward performance.
D) ensure merit pay differentiates across performance levels.

Question 11

A _____ plan divides a task into simple actions and determines the time an average worker takes to complete each action.

A) standard hour
B) Rowan
C) Bedeaux
D) Merrick

Question 12

The common feature to all types of incentive plans is:

A)a standard of performance to determine magnitude of incentive pay.
B)a sharing formula between worker and employer.
C)penalties for poor performance.
D)limits on magnitude of incentive pay.

Question 13

The most frequently used incentive system is the:

A) standard hour plan.
B) straight piecework.
C) Halsey 50-50 plan.
D) Taylor differential piece-rate plan.

Question 14

A penalty for poor performance rather than reward for good is an example of:

A) benchmarking.
B) a reengineering plan.
C) a Rowan plan.
D) a reverse incentive plan.

Question 15

Which of the following is not true about individual spot awards?

A) Smaller companies may be more casual about recognition.
B) Someone in the organization alerts top management to the exceptional performance.
C) A majority of companies do not feel that these awards are effective.
D) Smaller companies are more subjective about deciding the size of the award.

Question 16

In which of the following incentive pay plans does the wage rate not increase for production above the standard?

A) Standard hour plan
B) Rowan plan
C) Taylor plan
D) Merrick plan

Question 17

Paying a dime for every bottle collected and turned into a collection center is an example of:

A) a commission based work.
B) a standard hour based work.
C) straight piecework.
D) a Rowan plan.

Question 18

Compensation security is highest for workers who fail to complete tasks within the standard time under the _____ plan?

A) Halsey 50-50
B) Gantt
C) Taylor
D) Rowan

Question 19

Usually _____ are awarded for exceptional performance,often on special projects or for performance that so exceeds expectations as to be deserving of an add-on bonus.

A) variable pay awards
B) individual spot awards
C) lump-sum bonuses
D) merit pay

Question 20

An incentive system with three piecework rates is the _____ plan.

A) Taylor
B) Gantt
C) Halsey 50-50
D) Merrick

Question 21

A team leader with a free rider problem could maximize performance by:

A) instructing them to do their best.
B) specifying performance levels and due dates.
C) assigning another team member to monitor their performance.
D) punishing free riders who fail to meet standards.

Question 22

The two most commonly used team incentive performance standards are:

A) productivity and quality.
B) productivity and customer satisfaction.
C) financial performance and quality.
D) customer satisfaction and financial performance.

Question 23

_____ has the disadvantage that employees may be required to spend money to obtain the incentive.

A) Cash profit sharing
B) A balanced scorecard
C) Stock options
D) Deferred profit sharing

Question 24

Components identified as vital to the success of both Scanlon and Rucker plans are:

A) top management support and employee acceptance.
B) a flexible and accepted pay out formula.
C) union and top management support.
D) a productivity norm and effective worker committees.

Question 25

The purpose of this variable pay plan is to foster a "one for all" culture and to educate employees about business.

A) Team incentives
B) Cash profit sharing
C) Balanced score card
D) Stock options

Question 26

_____ have (has)advantages of having minimal impact on the company's financial statements.

A) Cash profit sharing
B) A balanced scorecard
C) Stock options
D) Deferred profit sharing

Question 27

Which gain sharing plan is most similar to the standard hour plan?

A) Scanlon
B) Improshare
C) Rucker
D) Cash profit sharing

Question 28

Labor costs are to value added as pay roll costs are to:

A) total standard value hours
B) production costs minus scrap
C) SVOP
D) customer satisfaction

Question 29

Which of the following is not an advantage of team incentives?

A) Stimulates problem solving
B) May better reflect how work is performed
C) Encourages competition between teams
D) Minimizes distinctions between team members

Question 30

More complex gain sharing plans create needs for:

A) higher levels of trust among participants and more effective communication.
B) greater variety of incentives and more effective communication.
C) revisions in the management worker split and revisions to the scope of the formula.
D) more effective communication and greater variety of incentives.

Question 31

All of the following are human resource capabilities performance indicators used for group incentive plans except:

A) employee satisfaction.
B) total recruitment costs.
C) promotability index.
D) accuracy/error rates.

Question 32

Hoarding star performers,reluctance to accept new team members and resistance to transferring team members are examples of which team-related compensation problem?

A) Level
B) Large variety of teams
C) Pay plan complexity
D) Control

Question 33

In gain sharing plan formulas,_____ is/are the numerator and _____ the denominator.

A) productivity measures, inputs
B) productivity measures, labor inputs
C) costs and scrap rate, revenues
D) labor inputs, productivity measures

Question 34

When a firm is _____ on business risk and outcomes are _____,corporate performance is higher without any incentive plans.

A) high, well defined
B) high, uncertain
C) low, well defined
D) low, uncertain

Question 35

_____ offer(s)a reward pool based upon achieving performance targets and communicates organizational priorities.

A) The balanced scorecard
B) Stock options
C) Deferred profit sharing
D) Cash profit sharing

Question 36

A team works on a project with specific performance level goals and time deadlines,but weather problems cause the team to miss the deadline.What is the key factor affecting how the team feels about their incentive?

A) The incentive was as promised
B) The incentive was less than promised
C) The team's perception of reward fairness
D) The timing of the incentive

Question 37

The best variable pay plan for employees when company financial performance is poor is _____.

A) profit sharing
B) a balanced scorecard
C) stock ownership
D) gain sharing

Question 38

All of the following factors except _____ have been associated with success of Scanlon/Rucker plans.

A) the presence of a union
B) managers open to criticism
C) competent supervision
D) cooperative union-management attitudes

Question 39

The variable pay plan with the highest instrumentality is _____.

A) gain sharing
B) team incentives
C) a balanced scorecard
D) stock ownership

Question 40

All of the following are conditions supporting use of individual incentives except:

A) task accomplishment is independent of others.
B) the worker has a strong commitment to their profession.
C) production methods and labor mix are stable.
D) presence of a union.

Question 41

The standard hour plan is likely to be an effective incentive plan for plumbers employed by a plumbing company.

Question 42

Standard hour plans are better for non-repetitive jobs requiring numerous skills for completion.

Question 43

A fast and efficient worker would earn more money under a Rowan plan than under a Halsey 50-50.

Question 44

Individual spot awards are an example of an incentive plan.

Question 45

Recently,the private sector has shown more interest and innovation using merit pay than the public sector.

Question 46

The method of rate determination for incentives for short cycle jobs is typically the time it takes to complete one unit.

Question 47

One common feature an established standard against
which worker performance is compared to determine the magnitude of the incentive
pay.

Question 48

Merit pay differs from other forms of incentive pay in that it must be "earned" every year.

Question 49

Which of the following is not a long-term incentive plan?

A) ESOPs
B) Broad-based option plans (BBOPs)
C) Improshares
D) Performance plans

Question 50

A common problem with incentive systems is workers focus primarily on behaviors and results that are rewarded.

Question 51

A job involving production of many parts each hour would have a rate based upon a time period per unit of production.

Question 52

Individual incentives never include financial penalties for poor performance.

Question 53

The Rowan plan uses a standard that is purposefully set high requiring high performance levels.

Question 54

High performance ratings are nearly always statistically related to high merit increases.

Question 55

The trend in recent variable-pay design is to combine the best of _____ and _____ plans.

A) individual, group
B) gain-sharing, profit-sharing
C) short-term, long-term
D) long-term, short-term

Question 56

The percent of companies using some form of variable pay is declining because many employees prefer base wages.

Question 57

Which of the following is not an advantage of group incentive pay plans?

A) Performance measures are easier to develop than for individual plans
B) Cooperation within and across groups is encouraged
C) Compensation risk to income stability is reduced
D) Employee participation in decision-making increases

Question 58

( p.336)Pay-for-performance plans are used for more than three-quarters of all exempt,clerical,and administrative employees.

Question 59

Jobs with short cycle tasks normally have a rate based upon a time period per unit of production.

Question 60

Over time,lump-sum bonuses cost employers less than merit pay.

Question 61

An advantage of group incentives is turnover may be higher among poorer performers because they hurt group performance.

Question 62

Performance plans typically feature corporate performance objectives for a time three years in the future.

Question 63

While interest in teams and team compensation has grown significantly,most companies are not happy with their team compensation systems.

Question 64

Individual incentive systems are growing in popularity.

Question 65

Gain sharing plans tend not to use a historical standard to set productivity standards since environmental conditions can change quickly.

Question 66

Employees working under individual incentive plans tend to resist the introduction of new technology.

Question 67

Broad-based option plans are usually limited to managerial and professional employees.

Question 68

Unions prefer individual to group incentive pay plans since members can earn more money.

Question 69

Costing and budgetary control are more difficult using individual incentives than under time-based pay.

Question 70

A combination plan often favored by CEOs who don't like to make payouts when the company loses money is a completely self-funding plan.

Question 71

Many of the disadvantages of individual incentives are due to both a fear production standards may be changed and workers' focus on maximizing output.

Question 72

The free-rider problem is common in firms using individual incentive plans.

Question 73

A major problem of group incentive plans is performance targets are not correctly set.

Question 74

Advantages of the balanced scorecard are that it is easily understood by employees and has low administrative costs.

Question 75

The level problem in team compensation is an example of the line of sight problem.

Question 76

A good solution to the problem of production variability is to set gain sharing goals based upon industry norms.

Question 77

A group performance based pay plan is superior to an individual plan when individual production standards and production methods must change to meet changing events.

Question 78

Firms high on business risk and those with uncertain outcomes,have higher corporate performance without incentive plans than with them.

Question 79

The focus of team incentive plans is work groups or teams and does not include divisions or an entire company.

Question 80

Individual incentives yield higher productivity gains.