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FALSE Like merit pay, performance bonuses for individual performance are rolled into an employee's base pay. FALSE Retention bonuses are one-time incentives paid to top managers, engineers, top-performing salespeople, and information technology specialists in exchange for remaining with the company. TRUE Gainsharing addresses the challenge of identifying appropriate performance measures for complex jobs. TRUE Successful gainsharing plans include employee stock ownership plans. FALSE Group bonuses typically reward the performance of all employees in an organization. FALSE Generally, team awards do not use cost savings as a performance measure. FALSE Linking incentives to the organization's profits or stock price exposes employees to a high degree of risk. TRUE Profit sharing costs more when the organization experiences financial difficulties. FALSE Under profit sharing, payments are a percentage of the organization's profits and become part of the employees' base salary. FALSE In stock ownership plans, employees may not see a strong link between their actions and the company's stock price. TRUE Employee stock ownership plan is an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust. TRUE Employees should exercise the stock options even if the stock price has decreased. FALSE Stock options are best suited to motivate day-to-day effort or to attract and retain top individual performers. FALSE A balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals. TRUE ESOP does not give employees the right to participate in votes by shareholders even if the stock is registered on a national exchange. FALSE The balanced scorecard helps employees understand the organization's goals and how they can contribute to these goals. TRUE An organization should always communicate with employees when changing an incentive plan. TRUE The balanced-scorecard approach is not particularly useful in designing executive pay. FALSE Incentive pay for executives lays the groundwork for significant ethical issues. FALSE Pay specifically designed to energize, direct, or control employees' behavior is known as: A. monthly salary. B. wage. C. incentive pay. D. annual salary. E. fixed pay. C. incentive pay. An effective incentive pay plan should: A. have performance measures based on employees' requirements. B. not be provided as a direct percentage of employees' performance. C. encourage group performance and dispirit individual achievements. D. be the same for all types of employees in the organization. E. have performance measures linked to the organization's goals. E. have performance measures linked to the organization's goals. An effective incentive pay plan should have performance measures that are linked to the organization's goals. Which of the following is a disadvantage of using incentive plans? A. The goals of an incentive plan may interfere with other management goals. B. The goals of incentive plans cannot be linked to particular outcomes or behaviors. C. Incentive plans cannot be used to promote group and organizational performance. D. Incentive plans cause dissatisfaction among the non-performing employees in the organization. E. Incentive plans are not very effective for jobs other than sales and service. A. The goals of an incentive plan may interfere with other management goals. An incentive pay designed support to a management goal may interfere with other management goals. The employees may provide more importance to those goals that are supported by the incentive plan. When designing incentives, managers should make sure that: A. all the employees are paid equal amounts. B. even the lowest performing employees get some rewards. C. employees focus only completing the task quickly. D. employees think that the pay plan is fair. E. they focus on hiring employees for whom earning money is the only reason to do a good job. D. employees think that the pay plan is fair. Attitudes that influence the success of incentive pay include whether employees value the rewards and think the pay plan is fair.
Which of the following types of incentive pay plans are used to reward individual performance? A. Gainsharing B. Merit pay C. Scanlon plan D. Profit sharing E. Stock ownership B. Merit pay Organizations may reward individual performance with a variety of incentives such as merit pay. All other options provided in the question are designed to promote group/organizational performance. A company provides wages to its employees based on the amount workers produce. The more employees produce, the more they earn. This type of plan is called: A. piecework rate plan. B. merit pay plan. C. Scanlon plan. D. profit sharing plan. E. standard hour plan. A. piecework rate plan. As an incentive to work efficiently, some organizations pay production workers a piecework rate, a wage based on the amount they produce. A piecework rate plan is best suited for: A. HR professionals. B. executives. C. production workers. D. managers. E. knowledge workers. C. production workers. As an incentive to work efficiently, some organizations pay production workers a piecework rate, a wage based on the amount they produce. This pay plan may not be suited for the other categories of jobs given. As an incentive to work efficiently, some organizations pay production workers a ____, a wage based on the amount they produce. A. merit pay B. commission C. standard hour pay D. piecework rate E. special bonus D. piecework rate As an incentive to work efficiently, some organizations pay production workers a piecework rate, a wage based on the amount they produce. An employee who produces 10 components in an hour earns $9 ($.90 X 10) per hour, while an employee who produces 15 components earns $13.50 ($.90 x 15). This is an example of a: A. commission plan. B. differential piece rate plan. C. direct commission plan. D. profit sharing plan. E. straight piecework plan. E. straight piecework plan. Incentive pay in which the employer pays the same rate per piece, no matter how much the worker produces is referred to as straight piecework plan. 35. _____ refers to an incentive pay in which the wage paid is higher when a greater amount is produced. A. Profit sharing B. Differential piece rate C. Gain sharing D. Scanlon pay E. Merit pay B. Differential piece rate Differential piece rate refers to an incentive pay in which the piece rate is higher when a greater amount is produced. Which of the following is true about a piece rate plan? A. It can be used for all types of jobs and in all types of industries. B. It is best suited for complex jobs and tasks. C. It can be used to encourage team work and collaboration. D. It has a direct link between the work and how much the employee earns. E. It encourages peers to perform as well as the co-workers and reduce conflicts. D. It has a direct link between the work and how much the employee earns. An obvious advantage of piece rates is the direct link between how much work the employee does and the amount the employee earns. Differential piece rates system refers to: A. an incentive pay plan in which the employer pays the rate per piece based on the difference in performance of employees. B. a wage system designed for salespeople who earn a differential pay for every piece sold. C. an incentive pay in which the piece rate is higher when a greater amount is produced. D. a system of linking pay increases to ratings on performance appraisals. E. an incentive pay plan where every employee is paid different wages based on the skills they possess. C. an incentive pay in which the piece rate is higher when a greater amount is produced. Differential piece rates refers to an incentive pay in which the piece rate is higher when a greater amount is produced. Piecework rate plans are most suited for _____. A. innovative tasks B. non-standard jobs C. managerial jobs D. jobs with difficult-to-measure output E. routine, standardized jobs E. routine, standardized jobs Most jobs, including those of managers, have no physical output, so it is hard to develop an appropriate performance measure. So piecework rates are most suited for very routine, standardized jobs with output that is easy to measure. Standard hour plans are likely to succeed if: A. most or all of a salesperson's compensation is in the form of commissions. B. employers keep labor costs to a minimum. C. the pay increase is linked to ratings on performance appraisals. D. employees want the extra money more than they want to work at a pace that feels comfortable. E. the organization values employee satisfaction and motivation more than profits. D. employees want the extra money more than they want to work at a pace that feels comfortable. A standard hour plan is an incentive plan that pays workers extra for work done in less than a preset "standard time." This plan can only succeed if employees want the extra money more than they want to work at a pace that feels comfortable. Martin owns and manages a small auto-parts shop. He determines the time required to complete each task in his shop. When an employee completes the repair in less time, he/she receives an amount of pay equal to the rate determined by Martin for . Martin is using a: A. standard hour plan. B. differential piecework plan. C. merit pay plan. D. straight piecework plan. E. Scanlon plan. A. standard hour plan. An incentive plan that pays workers extra for work done in less than a preset "standard time" is referred to as a standard hour plan. Which of the following is true about standard hour plans? A. They always encourage employees to focus on customer service. B. They succeed only for employees who are not motivated by money. C. They encourage employees to focus mainly on quality. D. In terms of their pros and cons, they are very different from piecework plans. E. They encourage employees to work as fast as they can. E. They encourage employees to work as fast as they can. An incentive system in which an organization links pay increases to ratings on performance appraisals is referred to as: A. commission. B. a Scanlon plan. C. merit pay. D. gain sharing. E. profit sharing. C. merit pay. Merit pay is a system of linking pay increases to ratings on performance appraisals. In merit pay programs, an individual's compa-ratio represents his/her: A. pay relative to performance of other workers in the industry. B. pay relative to average pay. C. comparable worth versus others. D. ratio of pay to benefits. E. the average worth of the skills possessed by the individual. B. pay relative to average pay. Compa-ratio refers to the pay relative to average pay of the individual. The decisions about merit pay are based on two factors: the individual's performance rating and the individual's: A. compa-ratio. B. seniority. C. pay grade. D. longevity. E. emotional quotient. A. compa-ratio. The decisions about merit pay are based on two factors: the individual's performance rating and the individual's compa-ratio. What is the function of a merit increase grid? A. To make the merit increases consistent B. To further increase the pay for those whose pay is relatively higher for their job C. To increase the employees' compa-ratio D. To stabilize economic conditions E. To increase incentives on an year-by-year basis A. To make the merit increases consistent To make the merit increases consistent, so they will be seen as fair, many merit pay programs use a merit increase grid. In order to control compensation costs, administrators of merit pay programs must closely monitor the compa-ratio and the: A. number of pay grades in the pay structure. B. an individual's performance ratings. C. number of new hires in the company. D. company's stock price in the financial year. E. average pay of the area where the organization is functioning. B. an individual's performance ratings. The decisions about merit pay are based on two factors: the individual's performance rating and the individual's compa-ratio. An advantage of merit pay is that: A. it makes the reward more valuable by relating it to economic conditions. B. it promotes group performance instead of promoting individual behavior. C. it provides merit increases to employees only on the basis of performance. D. it would never become costly for the employers. E. it results in a bigger short-term reward for the best performers. A. it makes the reward more valuable by relating it to economic conditions. An advantage of merit pay is that it makes the reward more valuable by relating it to economic conditions.
Which of the following is a disadvantage of a merit pay system? A. It does not relate the rewards to economic conditions. B. It cannot be used effectively in performance appraisals. C. Comparative pay is not considered in its evaluation. D. It is not consistent with performance management's dimensions. E. It can quickly become expensive for the company. E. It can quickly become expensive for the company. _____ provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system. A. Differential piece rate B. Standard hour plan C. Merit pay D. Piece rate E. Commission C. Merit pay An advantage of merit pay is that it provides a method for rewarding performance in all of the dimensions measured in the organization's performance management system. If that system is appropriately designed to measure all the important job behaviors, then the merit pay is linked to the behaviors the organization desires. Which of the following is true of a performance bonus? A. It is designed to reward group performance. B. It should be re-earned by employees during each performance period. C. It is rolled into base pay and provided yearly or monthly. D. It lacks flexibility and hence it is less popular. E. It is not a one time reward in most of the cases. B. It should be re-earned by employees during each performance period. Like merit pay, performance bonuses reward individual performance, but bonuses are not rolled into base pay. The employee must re-earn them during each performance period. When an employee's pay is calculated as a percentage of sales is referred to as?When an employee's pay is calculated as a percentage of sales, it is referred to as: commission.
Is a type of incentive pay in which payments are a percentage?Structured incentive pay is set by specific sales or production goals and paid to employees at a percentage or flat rate. For example, you set a goal for $50,000 in sales for the fiscal year. If you reach that goal, you give each employee a bonus equaling 2% of their annual salary.
What is the difference between performance bonuses and merit pay multiple choice question?C) Merit pay is linked to individual performance, while a bonus is linked to profits. D) A bonus is linked to individual performance, while merit pay is linked to profits.
What is the difference between bonuses and team awards quizlet?What is the difference between bonuses and team awards? Bonuses reward attainment of goals measured in terms of physical output, whereas teams awards reward performance in terms of cost savings. Team awards differ from group bonuses in that they: Are more likely to use a broad range of performance measures.
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