ch 10 Pay for Performance Plans
Three major problems with team incentives are known as "the three C's". The "three C's" refer to all of the following
complexity, control, communications
The largest component of executive pay is
long-term incentives
ll of the following are true regarding merit pay except
merit pay tends to cause higher performers to quit
team/group incentive plans
ncentive pay for meeting or exceeding group performance standards
A gain-sharing plan that has provenucker plan easy to administer and communicate, which identified the expected hours required to produce an acceptable level of output is the
Improshare
A corporate, overall performance measure that typically incorporates financial results, process improvements, customer service and innovation is called
a balanced scorecard
An advantage to companies hiring contingent workers is
Cost and flexibility
earnings-at-risk plan
risk plan incentive plan sharing profits in successful years and reducing base pay in unsuccessful years
merit pay
A system of linking pay increases to ratings on performance appraisals
Growing interest in variable pay has been attributed to greater foreign competition and changes in compensation and tax laws
FALSE
One of the difficulties of this plan is that it can be administratively complicated.
Gainsharing
In this type of plan, incentives are derived as a function of the ratio between labor costs and sales value of production.
Scanlon Plan
Research suggests that the most important and most difficult part of sales compensation is
Setting the sales targets
is used to both attract quality employees to organizations with uncertain futures and retain employees.
Stock ownership or options
Gain sharing plans include a split of the savings between management and workers.
TRUE
The incentive system with two rates, one for above production standard and one for below standard is the _____ plan
Taylor
Of the following types of pay, which one is NOT a pay-for-performance plan
across-the-board increases
Employee satisfaction, turnover rates and promotability index are all examples of _____
capability-focused measures
All of the following are advantages of group incentive pay plans
easier to develop performance measures,signals that cooperation is a desired behavior,may increase employee participation in decision-making process
Approaches to explain executive pay includes all
economic comparisons, social comparisons, agency theory
Historically, the most commonly used performance indicator for group incentive plans has been
financially focused measures
The chief benefit of ESOPs is that they _____.
foster employee willingness to participate in decision
The purpose of __________ is to support a major productivity or quality initiative.
gainsharing
In order to make merit pay plans work, managers must
improve the accuracy of performance ratings, allocate enough money to truly reward performance, be sure of the size of the merit differentiates across performance levels
Disadvantages of individual incentive plans include
increases complaints about equipment maintenance, increased turnover among new employees, greater conflict between management and workers
Companies use various methods to resolve the problem of low supervisory pay including
paying supervisors overtime, adding a supervisory differential, adding a variable pay component
employee stock ownership plan (ESOP)
plan offering employees the opportunity to purchase company stock, often partially or fully matched by employer-paid stock for the employee
The method of rate determination identifies whether pay plans pay based on _____ or _____.
production per time period; time period per unit of production
An individual incentive plan differs from a lump-sum bonus because in the individual incentive plan
rewards are linked to pre-established levels of performance
Employers like __________ plans, and most employees would prefer __________ plans.
risk-sharing, success sharing
Dual career tracks have been successful for jobs such as
scientists
broad-based option plans
stock options provided to employees at all levels
This plan is used to recruit top quality employees when an organization has a highly uncertain future.
stock ownership or options
problems with team compensation
there are many types of teams, the level problem, control of outcomes
All of the following are disadvantages of individualized incentive plans EXCEPT ____.
they can increase quantity, but decrease quality of work, employees may not suggest new production methods for fear of increases in production standards,they can increase mistrust between workers and management correct less supervision is required to maintain output levels
profit-sharing plans
variable pay plans requiring a profit target to be met before any payouts occur
Maturity curves represent the relationship between compensation and
years of experience in the labor market