Exam 10: Pay for Performance: Incentive Rewards

Under the merit pay system, employees who have better political connections within the company may bear a threat to their supervisor and therefore may end up with a larger share of the "merit pie" than their performance would warrant.

According to research, which of the following best describes incentive plans?

Which of the following is NOT a reason that merit raises may fail to achieve their intended purpose?

Which of the following is a major concern about executive compensation?

Which of the following is NOT a reason given by organizations for implementing incentive plans?

Which of the following best describes profit sharing?

Incentive plans are not effective in service and government organizations because of the difficulty in measuring productivity.

ESOPs can increase employees' pride of ownership in the organization, providing an incentive for them to increase productivity and help the organization prosper and grow.

Last year, many CEOs of Canada's largest companies earned less than $300,000 base pay, yet their overall compensation was on average more than $10 million. What was the major reason for the huge overall pay?

Under a differential piece rate plan, employees whose performance (i.e., production)exceeds the standard amount of output receive a higher rate for all of their work than the rate paid to those who have not exceeded the standard amount.

What is the term for an incentive given for a special employee contribution not directly tied to a performance standard?

A bonus is supplemental to base wages.

Which of the following is NOT an important component of a meaningful gainsharing plan?

Profit-sharing plans represent one way that wealth can be redistributed at which of the following levels?

What is the purpose of a profit-sharing plan?

Financial incentives for salespeople are widely used.

Several organizations have an incentive that managers can give to their employees for outstanding singular effort not tied to any planned performance standard. What is such an incentive usually called?

Discuss the problems identified with merit raises. As a manager, what would you do to ensure that merit raises fulfilled their intended value?

The operation of a merit pay plan depends on the effectiveness of the performance appraisal system.

Scenario 10.1 BioMetrics Imaging Ltd. is a small Saskatoon-based firm that designs and produces one-of-a-kind machines that are capable of capturing medical imaging similar to that of MRI machines but with a higher percentage of accuracy. So far, the company has been able to sell various units to privately-owned medical clinics and a few hospitals in the United States. The problem currently facing BioMetrics Imaging is finding salespeople with the appropriate experience who not only understand the equipment but are also trustworthy and willing to work extremely hard to bring the product to the marketplace. It takes roughly six months to convince potential clients to purchase the machines. Sales agents receive a hefty paycheque when a unit is sold based on a percentage of the unit price, and all travel expenses are covered. Still, the company is not able to retain its employees because the time lag between beginning to sell machines and getting paid is too long. -Refer to Scenario 10.1. Which of the following factors is LEAST likely to affect sales for this equipment?