Question 1

Compensation plans for salespeople have typically relied heavily on incentives in the form of sales commissions.

Accepted Answer

Sales commissions have been a traditional way to incentivize salespeople and are still commonly used in many industries.

Question 2

Merit pay plans are effective regardless of the validity of the performance appraisal system.

Accepted Answer

Merit pay plans require a valid and fair performance appraisal system in order to effectively determine and reward employees based on their performance. Without a valid appraisal system, merit pay plans can lead to subjective and unfair evaluations, which can demotivate employees and negatively impact the organization's overall performance.

Question 3

Unlike salaries, short-term incentive bonuses never result in plus or minus adjustments of 25% or more in total pay.

Accepted Answer

Short-term incentive bonuses can result in significant adjustments to total pay, and may be tied to individual or company performance metrics. Therefore, they can result in plus or minus adjustments of 25% or more in total pay.

Question 4

Recent research indicates that employees favour recognition from their manager by a margin of 2 to 1 over recognition form other sources.

Accepted Answer

Recent research has indeed shown that employees value recognition from their manager at a higher rate than recognition from other sources, by a ratio of 2 to 1.

Question 5

Describe a piecework incentive plan using an example.Discuss at least two advantages and two disadvantages of piecework using your example.

Accepted Answer

The answer of Describe a piecework incentive plan using an...

Question 6

The multiplier method is when a manager whose individual performance was poor might not even receive a company performance-based bonus, on the assumption that the bonus should be a product of individual and corporate performance.

Accepted Answer

The statement correctly reflects the multiplier method in which an individual's bonus is based on both individual and company performance, making it a product of the two factors rather than solely based on individual performance.

Question 7

A stock option is the right to purchase a specific number of shares of company stock at a specific price during a period of time.

Accepted Answer

This is the definition of a stock option.

Question 8

A group incentive plan's chief advantage is that each worker's rewards are no longer based solely on his or her own effort.

Accepted Answer

The answer of A group incentive plan's chief advantage is...

Question 9

Why would a company choose to compensate its sales force using a salary plan or a commission plan? Describe the circumstances that would lead a company to choose one or the other type of sales compensation plan.

Accepted Answer

The answer of Why would a company choose to compensate...

Question 10

Helen is the director of human resources at a management consulting firm.She has been tasked with designing an annual bonus plan aimed at motivating the short-term performance of managers and executives.Discuss the issues she should consider in designing this plan.

Accepted Answer

The answer of Helen is the director of human resources...

Question 11

Merit pay has both advocates and detractors and is the subject of much debate.

Accepted Answer

Merit pay is a controversial topic and has both supporters and opponents.

Question 12

Amir is the director of human resources at a management consulting firm.He has been asked to implement an organization-wide incentive plan aimed at increasing employee commitment to company goals.Identify and discuss two different organization-wide incentive plans Amir should consider.

Accepted Answer

The answer of Amir is the director of human resources...

Question 13

Most experts argue that in most organizations managerial- and executive-level bonuses should be tied to both organizational and individual performance.

Accepted Answer

Tying bonuses to both organizational and individual performance helps ensure that managers and executives are not only focused on their own success, but also that of the company as a whole. This can encourage teamwork, accountability, and overall better results for the organization.

Question 14

The term merit pay can apply to the incentive raises given to anyone-office or factory, management or non management.

Accepted Answer

Merit pay refers to the performance-based incentive raises given to anyone in the organization, regardless of their position or level. Therefore, the statement is true.

Quiz 12: Pay-for-Performance and Financial Incentives