Deck 4: Incentive Pay

Question 1

To have better safety records,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 plans
B)referral plans
C)piecework plans
D)behavioral encouragement plans

Answer 1

D

Question 2

The concept that a hard working employee is likely to stay at an incentive pay position is better known as which of the following effects?

A)representative effect
B)structural effect
C)sorting effect
D)output effect

Answer 2

C

Question 3

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

Answer 3

B

Question 4

Which of the following is true regarding group incentive plans as opposed to individual 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 group incentive plans.
D)It is easier to develop performance measures for group incentive plans than individual incentive plans.

Question 5

Which of the following is another name for parallel teams?

A)task forces
B)innovation teams
C)process teams
D)work teams

Question 6

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)gain sharing plan
C)management incentive plans
D)employee stock ownership plan

Question 7

Which gain sharing plan focuses on lowering the percentage of labor costs using a value-added formula?

A)Rucker Plan
B)Scanlon Plan
C)behavior encouragement plan
D)Improshare

Question 8

Which gain sharing 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

Question 9

On which team is membership relatively permanent and members work full-time?

A)work (process)
B)project
C)parallel
D)innovative

Question 10

John is a design engineer working at an auto manufacturer 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.What type of team is John assigned to?

A)incentive teams
B)project teams
C)work (process)teams
D)parallel teams

Question 11

In addition to the guaranteed hourly pay rate,John receives incentives for every item produced over the designated production standard.What kind of incentive plan is used in this situation?

A)management incentive plans
B)referral plans
C)piecework plans
D)behavioral encouragement plans

Question 12

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

Question 13

This incentive plan has a buy-back provision.

A)ESOPs
B)Rucker
C)Improshare
D)Scanlon

Question 14

This method reinforces cooperation among team members except when team members perceive differences in other members' performances.

A)differential incentive payments approach
B)differential payments by ratio of base pay
C)equal incentives payment approach
D)small group incentive plans

Question 15

Which type of individual incentive plan requires the achievement of multiple,complex objectives without compromising the quality and quantity of output that is generated by employees?

A)piecework plans
B)referral plans
C)management incentive plans
D)behavior encouragement plans

Question 16

Which of the following is true concerning incentive pay?

A)The award is earned only when the predetermined work objective is totally completed.
B)Motivates employees to be more productive,but does little to control payroll costs.
C)Awards are granted in one-time payouts.
D)Incentive levels are generally subjective in nature.

Question 17

Which of the following group incentive system was designed to provide employees with financial incentives for increasing customer satisfaction,increasing productivity,lowering costs,or improving safety?

A)gain sharing
B)team based
C)small group
D)profit sharing

Question 18

Customer satisfaction,labor cost savings,materials cost savings,and reduction in accidents were listed as typical performance measures for which type of incentive plan?

A)individual
B)group
C)company-wide
D)executive

Question 19

Which of the following is true of incentive pay?

A)Incentive pay is considered part of an employee's fringe compensation.
B)The criteria for judging an award tends 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.

Question 20

XYZ Manufacturing Co.uses a gain sharing 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.What kind of gain sharing program does XYZ Manufacturing Co.use?

A)Improshare
B)Rucher
C)Scanlon
D)SVOP

Question 21

The Improshare bonus is based on a ________ ratio formula.

Question 22

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

Question 23

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

Question 24

Individual incentive plans help to promote the relationship between pay and ________.

Question 25

The ________ effect refers to a worker's willingness to work diligently to produce more quality output rather than simply attending work without putting in the effort.

Question 26

________ profit sharing plans place cash awards in trust accounts for employees and are set aside on employees' behalf as a source of retirement income.

Question 27

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

Question 28

Which of the following performance measures corresponds to individual/ group/ companywide incentive plans respectively?

A)customer satisfaction/quantity of work/market share
B)quantity of work/market share/customer satisfaction
C)quality of work output/customer satisfaction/market share
D)customer satisfaction/market share/quality of work

Question 29

The main disadvantage of group incentive compensation is employee ________.

Question 30

Which of the following is true about the level of risk involved with incentive pay?

A)The level of risk decreases as incentive pay represents a greater proportion of total core compensation.
B)The level of risk is lower for higher-level employees than those who are lower in the job structure.
C)The level of risk depends on the extent to which employees control the attainment of a desired goal.
D)The level of risk is dependent on subjective performance appraisals.

Question 31

In a "pay at ________" profit sharing compensation package,base pay is set below the average for competing employers,and employees' pay can be very meager or very large compared to a similar position elsewhere.

Question 32

Stock ________ describe an employee's right to purchase company stock.

Question 33

Which of the following is true of most general stock compensation plans?

A)The company stock shares represent equity segments of equal value.
B)Employees own the stock upon purchase.
C)Company stock represents partial equity in the company.
D)Stock options refer to what an employee can do with the stock once they purchase it.

Question 34

These profit sharing plans award cash to employees on a quarterly or annual basis as part of their regular compensation.

A)recent profit sharing plans
B)current profit sharing plans
C)deferred profit sharing plans
D)anticipated profit sharing plans

Question 35

________ teams consist of a group of people assigned to complete a one-time project.

Question 36

Another name for incentive pay is ________ pay.

Question 37

XYZ Company pays a portion of company profits to its employees.The management offers this incentive plan as one kind of retirement program.What kind of companywide incentive plan does XYZ Co.offer?

A)employee stock ownership plan
B)deferred profit sharing plan
C)current profit sharing plan
D)employee stock option plan

Question 38

The sales value of production (SVOP)is the sum of sales ________ plus the value of goods in inventory.

Question 39

Profit sharing plans and employee stock option plans are incentives on what level?

A)individual
B)group
C)companywide
D)executive

Question 40

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

Question 41

How do traditional pay methods differ from incentive pay methods?

Question 42

Briefly describe the three categories of incentive pay plans and give an example of each.

Question 43

In an effort to increase the productivity of its employees,a manufacturing company is considering adopting an incentive pay program.List and discuss the five factors the HR professionals should consider in the adoption of such a program.