Pay-for-Performance: Incentive Rewards: Chapter 10

A worker at Robix paid under a straight piecework rate made $12.75 an hour this week. If each unit took the employee twelve minutes to produce, the piece rate is __________ per unit

$2.55

In most profit-sharing plans, about __________ of the net profit is shared

20 to 25 percent

According to Sammer, which of the following is NOT a characteristic of a successful incentive plan?

Find technically detailed, quantitative, and extremely thorough payout formulas.

Which of the following is an individual type of incentive plan?

Lump sum merit pay

The performance threshold in incentive pay programs is

the minimum level an employee must reach in order to qualify for variable pay

The compensation committee at Robix needs to justify its large executive compensation packages. They might use all of the following arguments EXCEPT

the pay gap between the CEO and employees builds credibility

Robix is launching a new incentive plan for individual pay. To increase its chances for success, the plan should measure

work that is independent of others' contribution

Executive base salaries represent between __________ percent of the total annual compensation

30 and 40

__________ is the single word that best describes the design of individual incentive plans

Flexibility

Which plan provides opportunities for executives to purchase shares of their organization's stock valued at full market or a discounted price?

Stock purchase

The success of the Lincoln Electric Company profit-sharing plan rests largely on

contributions by employees

Profit sharing refers to any procedure by which an employer pays employees

current or deferred sums based on the organization's financial performance

Employees on the XL27 production line at Robix whose work exceeds a standard level of output receive a higher rate of pay than those whose work meets the standard. They are working under the __________ incentive plan

differential piece rate

The disadvantages of profit sharing include all of the following EXCEPT that

effective profit sharing plans require a second HR program.

The philosophy behind the Scanlon plan is that

employees should make suggestions to improve performance and be rewarded for their contributions

The advantages of employee stock ownership plans include all of the following EXCEPT that

employees' pensions are less vulnerable due to diversification

Robix has a robust incentive program that rewards employees generously for completing tasks ahead of schedule and/or under budget. They have found, however, that this plan does not motivate certain employees. Of the following groups, the employees not motivated by this plan are most likely

engineers

A study on bonus versus actual pay raises showed that improving one's pay through merit increases by 1 percent would increase future performance by __________ percent

2

Research shows that a merit increase in the range of __________ is necessary to serve as a pay motivator

7 to 9 percent

According to the National Center for Employee Ownership, in 2016 approximately __________ organizations have employee stock ownership plans (ESOP) for their employees.

7,000

__________ is a bonus incentive plan which uses employee and management committees to gain cost-reduction

The Scanlon plan

Contemporary reasons given by organizations for implementing incentive plans are

a) improving or maintaining high levels of productivity. b) focusing employee efforts on specific performance targets. c) linking compensation rewards to the achievement of results.

Management should guard against incentive payments being seen as

an entitlement

Rate busting refers to

an increase in output that results in the disapproval of fellow employees

Group incentive plans include

improshare

Robix is launching a set of new incentive plans, based on individual, group, and enterprise pay. While each plan will have unique features, one thing that all plans should have in common is to measure

in a way that shows a relationship between work and performance

A major problem of employee stock ownership plans is that

it places employees' pensions at risk

To minimize the problems of merit raises, organizations should use

merit guidelines

A problem with creating team incentive plans is that

not all teams that are created are alike

Team incentive bonuses may be paid out in all of the following ways EXCEPT by distributing it

on the basis of individual performance appraisal

A grant of units equal in value to fair market value or book value of a share of stock is known as

phantom stock

ESOPs can qualify as tax-exempt employee trusts under section __________ of the Internal Revenue Code

401(a)

Robix Industries has announced the rollout of a new incentive program for its production team. A baseline of performance has been established based upon actual production numbers from the last six quarters. If productivity exceeds that deadline in a quarter, 80 percent of the money that is saved will be given to the employees. What type of plan is this?

Gain sharing

Robix uses a bonus plan that is based on overall group productivity. The determination of a bonus includes both production employees and nonproduction. Which type of gainsharing program is being used?

Improshare

The CFO at Robix has been incentivized with a stock option that can only be exercised after a three-year vesting period. This is known as

a golden handcuff

Piecework is appropriate when

a job is fairly standardized

When computing executive pay, many organizations are tying __________ to traditional financial gauges

balanced scorecards

The most widely used sales incentive program is the __________ plan

combined salary and commission

Noncash incentive rewards are most effective as motivators when the award is

combined with a meaningful employee recognition program

The purpose of a profit-sharing plan is to

give employees the opportunity to increase their earnings

Some of the benefits that Robix gives to its CEO and other top executives as a way to attract and retain talented individuals include chauffeurs, country club memberships, and special vacation policies. These are known as

perquisites

The pay for employees on the KRX line at Robix is not based on the actual amount of time it takes them to complete a job. Rather, they are paid based on a predetermined amount of time for completing the job. These employees are working under the

piece rate plan

Executive compensation consists of all of the following EXCEPT

proficiency adjustments

Steph works in a company that uses a piecework system. She is an extremely efficient and is capable of producing more units per hour. However, she monitors the productivity rate of her colleagues and is careful to never work at a faster pace than them. Steph is limiting her own productivity to avoid

rate busting

Group incentive plans do all of the following EXCEPT

reduce free-ride effect

Robix just developed a complex incentive system in which the rewards provide purpose, as well as give autonomy to the workers and offer them the opportunity to master a skill. This new system was most likely designed to

reward professionals.

The straight commission plan is limited by all of the following disadvantages EXCEPT that

salespeople will stress low-priced products

A reward given to a consumer service representative who put in extra effort to fill a new customer's large order, even though this was not specifically tied to the employee's performance standards, is a

spot bonus

Raj likes to give small rewards to employees "caught in the act" of doing something good, even if that effort is not directly tied to a performance standard. When he does this, Raj is making use of a

spot bonus

In 2011, a study by the American Psychological Association found that __________ of employees feel they receive inadequate nonmonetary awards and recognition for their contributions at work

43 percent

When setting performance measures for incentive systems, we can say that the best measures are those that

are quantitative, simple to understand, and show a clear relationship to improved performance

The greatest influence on executive base salary is most likely

the levels of competitive salaries in the job market

A cash or stock award determined by increase in stock price during any time chosen by the executive in the option period, which does not require executive financing is known as

stock appreciation rights

Enterprise incentive plans include

stock options

Long-term incentive plans in which rights are granted to executives to purchase shares of their company's stock at a fixed price for a fixed period of time are known as

stock options

Robix notified all employees that for the next 60 days, employees can purchase up to 200 shares of stock in the company at the price at which it closed at the end of yesterday's trading day, which was $38, regardless of any price fluctuations in the market. Robix is using __________ to incentivize its employees

stock options

Salespeople at Julee's are compensated based on a percentage of sales. This is known as a

straight commission plan

Employees on the T13 production line at Robix are paid a set rate for each unit produced. They are working under the __________ incentive plan

straight piecework

A sales incentive plan that permits salespeople to be paid for performing various duties not reflected immediately in their sales volume is known as a

straight salary plan

A major concern of executive compensation involves

the amount of compensation