Compensation Final CH 10
One common feature of all types of incentive plans is:
An established standard of performance that is used to determine the magnitude of the incentive pay.
An incentive payment can be BEST described as:
Any form of pay tied directly to achievement of performance standards
A _____ plan requires division of a task into simple actions and determination of the time required by an average skilled worker to complete each action.
Bedeaux Plan
A team leader with a free-rider problem in his team can most likely maximize the performance of his team by:
Specifying performance levels and due dates
Which plan varies the incentive level (two rates) as a function of the level of production relative to a standard? In this plan, a new rate is used once production expectations are met (e.g., 50/unit up to 7-10 units/hour and .70/unit of every unit over 11 and up units/hour).
Taylor Plan
In which of the following standard hour plans does the employee's bonus increase as time required to complete the task decreases?
The Rowan Plan
Which of the following is the most commonly used team incentive performance standard?
Customer Satisfaction Measures
Which of the following does NOT support the use of an individual incentive plan?
Does not support the use of an individual incentive plan: Unionized work force.
When a firm is _____ on business risk, and its outcomes are _____, its performance is more likely to be higher without any incentive plans.
High; Uncertain
Which of the following is NOT a long-term incentive plan?
Improshare
Which of the following is an advantage of providing stock ownership options as variable pay to employees?
It defers a portion of taxes to employees
What distinguishes individual incentive plans from individual merit plans?
Merit pay is typically added to base, while incentives generally do not.
An incentive system with three piecework rates is the _____ plan.
Merrick
Which of the following does NOT provide for incentives based on standards that are expressed in terms of time period per unit of production?
Merrick System
Which of the following is NOT an advantage of the all-salaried work force?
Not an advantage: Union support
Which of the following is NOT an advantage of team incentives?
Not an advantage: Easy to set equitable targets for all teams
Which of the following is a disadvantage of gain-sharing plans?
Pay outs can occur even if a company's financial performance is poor
A complex pay guideline ties pay not only to performance but also to position in the:
Pay range.
The two most commonly used team incentive performance standards are:
Productivity and Quality.
For any task completed in standard time or less, earnings are pegged at 120 percent of the time saved under the _____ plan.
Gantt Plan
A gain-sharing plan that has proven easy to administer and communicate, which identifies the expected hours required to produce an acceptable level of output is the:
Improshare Plan
All of the following are reasons to choose a group plan vs. an individual plan EXCEPT:
Reasons to choose a group plan vs. an individual plan: Production methods and labor mix must adapt to meet changing resources When work stoppages are regular and controllable When the management information and cost accounting systems are relatively primitive Performance standards for individuals change to meet environmental pressures
Which of the following statements about merit pay is NOT true?
Removal of merit pay lowers satisfaction but not performance.
Which of the following gain sharing plans is designed to lower labor costs without lowering the level of a firm's activity?
Scanlon Plan
What is the main difference between Scanlon and Rucker Plans?
Scanlon Plan focus on labor savings, Rucker Plans focus on a variety of savings.
Surveys show the most popular type of variable pay plans are _____.
Special Recognition Plans
If you had repair work done on your car, the shop most likely used the _____ plan to pay the mechanic.
Standard Hour Plan
_____ have the disadvantage of requiring employees to spend money to obtain their incentive.
Stock Option Plans
_____________ have (has) advantages of having minimal impact on the company's financial standards.
Stock Options
In which of the individual incentive plans, is rate of determination based on units of production per time period, and wages vary directly as a function of production level?
Straight Piecework System
Paying a dime for every bottle collected and turned into a collection center is an example of a:
Straight Piecework System
The most frequently used incentive system is the:
Straight Piecework System
Which of the following is NOT true of merit bonuses?
They are more expensive than merit pay in the long run.
Which of the following is an advantage of gain-sharing plans?
They increase employees' knowledge of business
It is observed that __________________ is/are commanding a larger share of the total compensation for all employee groups.
Variable Pay
In gain-sharing plan formulas, _____ are in the numerator and _____ are in the denominator.
labor inputs; productivity outcomes
Which of the following is NOT true about individual spot awards?
A majority of companies do not feel that these awards are effective.
Components identified as vital to the success of both Scanlon and Rucker plans are:
A productivity norm and effective worker comities
A penalty for poor performance rather than reward for good is an example of:
A reverse incentive plan
The trend in recent variable-pay design is to combine the best of _____ and _____ plans.
Gain sharing; Profit sharing
Which plan divides a task into actions and measures the time required to perform each action? In this same plan workers receive a wage incentive for completing a task in less than standard time. This incentive is a direct function of the time saved in completing the task.
Bedeaux Plan
Which of the following is NOT a condition favoring gain-sharing plans?
Does not support gain-sharing plans: Product costs not controllable by employees.
The best variable pay plan for employees when company financial performance is poor is _______________.
Gain Sharing
Which of the following statements is true of individual spot awards?
True: They are given to employees for exceptional performance as an add-on bonus
The authors argue that for merit pay to live up to its potential, all of the following should be done EXCEPT _____.
Use more peer than supervisor raters
