Strategic Compensation Ch. 4

The XYZ Manufacturing Co. uses a gainsharing plan that gives incentives to employees to finish products rather than to incentivize dollar savings. Therefore, this company measures productivity as the ratio of standard labor hours and actual labor hours. Which kind of gainsharing program does XYZ Manufacturing Co. use? A) Improshare B) Rucher C) Scanlon D) SVOP

A) Improshare

Which arrangement represents a long-term companywide incentive plan that provides employees with the option to purchase ownership in the company? A) employee stock option plans B) company equality awards C) profit-sharing plans D) gain sharing plans

A) employee stock option plans

Companies can control costs by replacing annual merit or seniority increases or fixed salaries with which type of plans? A) incentive B) longevity pay C) pay-for-knowledge pay D) base pay

A) incentive

Which of the following is NOT a financial measure? A) operating efficiency B) revenue C) earnings per stock share D) operating income

A) operating efficiency

The Rucker Plan use a value-added formula to measure ________. A) productivity B) revenue growth C) earnings per share D) operating income

A) productivity

Which of the following teams consists of a group of people who are assembled to complete a one-time assignment? A) project teams B) innovation teams C) process teams D) work teams

A) project teams

Which best describes incentive pay? A) Incentive pay is considered part of an employee's compensation. B) The criteria for judging an award tend to be objective, such as quantity produced. C) Award levels are subjective. D) The amount of the award paid for attainment of goals is not communicated in advance.

B) The criteria for judging an award tend to be objective, such as quantity produced.

These profit-sharing plans award cash to employees on a quarterly or annual basis as part of their regular compensation. A) common B) current C) deferred D) anticipated

B) current

The XYZ Company pays a portion of company profits to its employees. The management offers this incentive plan as one kind of retirement program. Which kind of companywide incentive plan does XYZ Co. offer? A) employee stock ownership B) deferred profit sharing C) current profit sharing D) employee stock option

B) deferred profit sharing

Gunther Rohn was rewarded for making a suggestion that saved Ewe and Eye Electronics thousands of dollars. Which type of incentive compensation approach might have worked best? A) group incentive programs B) gainsharing plan C) management incentive plans D) employee stock ownership plan

B) gainsharing plan

With which profit-sharing formula does the profit-sharing pool become funded only after profits exceed a predetermined level, but fall below some established maximum level? A) fixed first-dollar-of-profits B) profitability threshold C) graduated first-dollar-of-profit D) equal payments

B) profitability threshold

This type of individual incentive plan rewards employees who recruit new customers or new employees. A) behavior encouragement B) referral C) management incentive D) piecework

B) referral

Which of the following is true concerning incentive pay? A) The award is earned only when the predetermined work objective is totally completed. B) It motivates employees to be more productive, but does little to control payroll costs. C) Incentive pay awards are granted as one-time payments. D) Incentive levels are generally subjective in nature.

C) Incentive pay awards are granted as one-time payments.

To have better safety records, the XYZ Company gives monetary incentive awards to its workers for lower accident rates due to improper use of heavy equipment. Which of the following incentive plans describes this example? A) management incentive B) referral C) piecework D) behavioral encouragement

D) behavioral encouragement

This formula for determining the amount available for profit sharing uses a specific percentage of annual profits contingent upon the successful attainment of a specified profit goal. A) fluctuating first-dollar-of-profits B) differed first-dollar-of-profits C) graduated first-dollar-of-profits D) fixed first-dollar-of-profits

D) fixed first-dollar-of-profits

John is a design engineer in an auto manufacturer's research and development department. In addition to his normal duties, he is assigned to a team of other engineers developing a highly automated assembly line for the new model of a passenger car. To which type of team is John assigned? A) incentive B) project C) work (process) D) parallel

D) parallel

What is the main objective of Scanlon plans? A) to standardize the workforce B) to encourage unionization C) to increase workforce competitiveness D) to increase employee involvement

D) to increase employee involvement

Over the past 10 years, Lincoln's profit-sharing payments have been substantial. Maria's annual salary was $40,000 last year, and she earned a profit-sharing payment of $10,000. Maria's profit-sharing award represents approximately what percentage of her annual salary? A) 25 percent B) 40 percent C) 45 percent D) 55 percent

A) 25 percent

Which of the following is true about the level of risk involved with incentive pay? A) It decreases as incentive pay represents a greater proportion of total core compensation. B) It is lower for higher-level employees than for lower-level employees. C) It depends on the extent to which employees control the attainment of a desired goal. D) It is dependent on subjective performance appraisals.

C) It depends on the extent to which employees control the attainment of a desired goal.

Which gainsharing plan bases incentives on the ratio between labor costs and sales value of production (SVOP)? A) Rucker Plan B) referral plan C) Scanlon Plan D) Improshare

C) Scanlon Plan

Profit-sharing plans and employee stock option plans are incentives on what level? A) individual B) group C) company-wide D) executive

C) company-wide

This formula for calculating profit-sharing awards gives the employees a higher percentage of the profits as the profits increase. A) fluctuating first-dollar-of-profits B) differed first-dollar-of-profits C) graduated first-dollar-of-profits D) fixed first-dollar-of-profits

C) graduated first-dollar-of-profits

Which individual incentive plans require the achievement of multiple, complex objectives without compromising the quality and quantity of output? A) piecework B) referral C) management incentive D) behavior encouragement

C) management incentive

In addition to the guaranteed hourly pay rate, John receives incentives for every item produced over the designated production standard. Which kind of incentive plan is used in this situation? A) management incentive B) referral C) piecework plans D) behavioral encouragement

C) piecework plans

Which of the following performance measures corresponds to individual, group, and companywide incentive plans, respectively? A) customer satisfaction, quantity of work, and quality of work B) quantity of work, market share, and customer satisfaction C) quality of work output, customer satisfaction, and revenue D) customer satisfaction, market share, and quality of work

C) quality of work output, customer satisfaction, and revenue

Which of the following effects describe the concept that a hard working employee is likely to stay at an incentive pay position? A) representative B) structural C) sorting D) output

C) sorting

In general, which of the following is an incentive plan design consideration? A) profitability B) the outcome of an employee election about willingness to participate in one or more incentive plans C) the level of risk employees will accept in their overall compensation package D) workforce unionization

C) the level of risk employees will accept in their overall compensation package

Nowadays, most companies use a mix of which types of pay plans? A) seniority pay plans and incentive pay plans B) merit pay plans and merit bonus pay plans C) traditional pay plans and incentive pay plans D) traditional pay plans and person-focused pay plans

C) traditional pay plans and incentive pay plans

The general rule of thumb is that short-term company goals last less than how long? A) 1 month B) 6 months C) 1 year D) 5 years

D) 5 years

Which of the following is true regarding group incentive plans? A) There are more groups in a company than individuals to measure. B) Individual group members usually work more efficiently alone than in cohesive groups. C) It is easier to develop performance measures for individual incentive plans than for group incentive plans. D) They reinforce teamwork, cultivate loyalty to the company, and increase productivity.

D) They reinforce teamwork, cultivate loyalty to the company, and increase productivity.