Question 1

Which statement does NOT accurately describe a profit-sharing plan?
A) For motivational reasons,fixed formula profit-sharing plans are recommended.
B) Stock bonus plans provide employees with the right to purchase shares in the future at a fixed price.
C) Deciding the split is an important issue in gain-sharing plans.
D) A key issue in designing profit-sharing plans is the form of the bonus payout.

Accepted Answer

Stock bonus plans actually grant employees shares of the company's stock directly, not the right to purchase shares in the future at a fixed price. That description more accurately fits stock option plans, not stock bonus plans.

Question 2

According to research on Canadian firms,in the majority of cases,which employees are included in the profit-sharing plan?
A) all full-time and part-time employees
B) non-unionized employees only
C) designated employees only
D) all full-time employees

Accepted Answer

Research on Canadian firms indicates that profit-sharing plans typically include all full-time employees, as these plans are often designed to reward employees who contribute significantly to the company's success.

Question 3

The Scanlon plan has changed over the years.A central reason for these changes is the notion that employees can reduce labour input as a function of output by increasing other costs.

Accepted Answer

The statement correctly describes one of the reasons for the changes in the Scanlon plan over the years. As employees gain a greater sense of ownership and participation in the success of the company, they may work smarter or find ways to streamline production, which can decrease the amount of labor needed for a given level of output. However, this can also lead to increased costs in other areas, such as materials or equipment, which may need to be factored into the Scanlon plan.

Question 4

In designing gain-sharing plans,why is there a need to decide on the historical baseline against which to compare productivity?
A) to determine whether real productivity gains actually occurred
B) to satisfy the unions
C) to allow for flexibility
D) to increase employee participation

Accepted Answer

The historical baseline is necessary in order to determine whether there have been real productivity gains. Without a baseline, it would be impossible to accurately measure the effectiveness of gain-sharing plans in improving productivity.

Question 5

The Scanlon Plan helps in the development of a cooperative relationship among workers,unions,and management.

Accepted Answer

The Scanlon Plan is a method of gaining greater cooperation and participation from employees by linking their pay to the company's performance. It fosters a culture of shared responsibility and teamwork among workers, unions, and management, leading to a more collaborative and productive work environment.

Question 6

Which gain-sharing plan requires that management has access to historical data so as to be able to calculate a so-called "normal labour cost"?
A) Rucker plan
B) family of measures plan
C) Scanlon plan
D) Improshare plan

Accepted Answer

The Scanlon Plan requires that management has access to historical data to calculate a "normal labour cost" against which employee productivity gains will be measured.

Question 7

What is NOT the "best practice" when designing nonmonetary reward plans?
A) For large organizations,the usage of an elected committee of employees and managers should be considered when providing significant rewards to employees.
B) A champion or group of champions should be considered to keep the program "alive."
C) Whenever possible,reward only those employees in the top 10 percent.
D) Whenever possible,all deserving employees should be recognized.

Accepted Answer

Rewarding only the top 10 percent of employees can create a sense of competition and can demotivate those who do not receive the reward. It is better to recognize all deserving employees to boost morale and encourage a positive work culture. A and B are both good practices, and D is the best practice when designing nonmonetary reward plans.

Question 8

Research supports the notion that if adequate monetary compensation is in place,coupled with an open and supportive management-employee environment,nonmonetary-based recognition tends to offer little value to stakeholders.

Accepted Answer

Research indicates that nonmonetary-based recognition, even in the presence of adequate monetary compensation and a supportive management-employee environment, can significantly enhance employee motivation, engagement, and overall satisfaction, thereby offering substantial value to stakeholders.

Question 9

Working as a human resources compensation specialist for a manufacturing company,you become concerned employees will attempt to reduce labour costs "by any means" so as to enhance available bonuses via the company's gain-sharing plan.This behaviour may potentially lead to more work-related accidents or dissatisfied customers.What would you do to mitigate this reduction in labour costs due to "by any means" mentality?
A) Expand the pool.
B) Introduce a modifier.
C) Use a Scanlon plan.
D) Introduce a "top hat" program.

Accepted Answer

Introducing a modifier can help mitigate the reduction in labor costs due to a "by any means" mentality by adjusting the gain-sharing formula to account for factors such as safety and customer satisfaction. This ensures that employees are incentivized to not only reduce costs but also maintain high standards of quality and safety.

Question 10

In order for the Scanlon plan to work,organizations must be able to predict future cost of inputs,particularly labour.

Accepted Answer

The Scanlon Plan focuses on sharing the productivity gains (cost savings) with employees, rather than predicting future costs of inputs. It encourages teamwork and employee involvement in improving productivity, not forecasting input costs.

Question 11

Employee participation is not necessarily a component of goal-sharing plans.

Accepted Answer

Goal-sharing plans primarily focus on setting and achieving organizational objectives, and while employee participation can enhance the process, it is not an inherent or necessary component of all goal-sharing strategies.

Question 12

A phantom stock plan ties an employee's bonus to the performance of company stock,but that employee never actually receives any stock.

Accepted Answer

A phantom stock plan is a type of incentive plan in which an employee's bonus is tied to the performance of a company's stock, but the employee does not actually receive any stock. Instead, they receive a cash payment based on the change in the stock price over a certain period of time.

Question 13

Full-time employees at ABC Company are given the opportunity to purchase company stock at a future time at a fixed price.What type of performance-based pay is ABC Company using?
A) stock option plan
B) stock purchase plan
C) stock bonus plan
D) phantom share plan

Accepted Answer

Full-time employees at ABC Company are being offered the opportunity to purchase company stock in the future, at a fixed price, which is the definition of a stock option plan.

Question 14

Which statement does NOT accurately describe employee share purchase plans?
A) Employees receive shares at no cost to themselves,usually as a bonus.
B) Employees provide a direct payment of some sort in exchange for the shares.
C) Often the price employees pay for the shares is less than market value.
D) Often employers will match the amount of shares purchased by the employee up to a set limit.

Accepted Answer

Employee share purchase plans typically require employees to purchase shares, often at a discounted rate or with the employer matching their purchase to some extent, rather than receiving shares at no cost as a bonus.

Question 15

Goal-sharing plans have increased in popularity over the last decade.

Accepted Answer

The answer of Goal-sharing plans have increased in popularity over...

Question 16

Gain sharing is not a viable plan to use if no valid historical benchmark can be set.

Accepted Answer

The concept of gain sharing involves establishing a benchmark, measuring performance against it, and sharing the gains with employees. If there is no valid historical benchmark available, it becomes challenging to determine the gains and the share to distribute, making gain sharing a less effective plan.

Question 17

A management report identified the following labour usage ratios for a window manufacturer in Richmond,British Columbia: 1.4 hours of labour per window in 2015; 1.25 hours of labour per window in 2016.Management makes the arbitrary decision to set next year's gain-sharing cutoff at 1.325 labour hours per window (the average of the 2015 and 2016 figures).Which gain-sharing plan is management using?
A) Scanlon plan
B) family of measures plan
C) Rucker plan
D) Improshare plan

Accepted Answer

The management is using the Improshare plan, which is a gain-sharing plan that sets a productivity target based on historical performance data. The cutoff of 1.325 labour hours per window is an arbitrary productivity target, and employees will receive a bonus if they are able to meet or exceed it by reducing labour hours per window.

Question 18

Financially funded plans combine at least two criteria in establishing goal-sharing bonuses.Often,one of those variables is organizational profitability,making such plans highly motivational to employees.

Accepted Answer

The answer of Financially funded plans combine at least two...

Question 19

ABC Ltd.generated one million Canadian dollars in profits this year.ABC Ltd.decides to place 200,000 Canadian dollars (20 percent of pre-tax profits)in a bonus pool.In previous years,this figure has ranged from zero to 50 percent of pre-tax profits.What type of formula is ABC Ltd.using to determine contributions into the pool?
A) fixed percentage
B) fixed threshold
C) discretionary
D) percentage approach

Accepted Answer

ABC Ltd. is using a discretionary formula to determine contributions into the bonus pool as the percentage varies from year to year depending on the company's performance, indicating the use of management's discretion.

Question 20

Deferred profit-sharing plans are often used as quasi pension plans,particularly in medium-sized companies.

Accepted Answer

Deferred profit-sharing plans (DPSPs) are indeed often used as quasi pension plans, particularly in medium-sized companies. DPSPs allow employers to share their profits with employees, and the contributions made by the employer can be invested and grow tax-free until they are paid out to employees. This allows employees to benefit from the company's success while also providing a form of retirement savings.

Quiz 11: Designing Performance Pay Plans

Which statement does NOT accurately describe a profit-sharing plan?

According to research on Canadian firms,in the majority of cases,which employees are included in the profit-sharing plan?

The Scanlon plan has changed over the years.A central reason for these changes is the notion that employees can reduce labour input as a function of output by increasing other costs.

In designing gain-sharing plans,why is there a need to decide on the historical baseline against which to compare productivity?

The Scanlon Plan helps in the development of a cooperative relationship among workers,unions,and management.

Which gain-sharing plan requires that management has access to historical data so as to be able to calculate a so-called "normal labour cost"?

What is NOT the "best practice" when designing nonmonetary reward plans?