Question 1

Describe Scanlon-type plans.

Accepted Answer

The Scanlon plan provides employees with...

Question 2

In employee stock ownership plans:

Accepted Answer

A)   a company establishes a trust, which contains company stock purchased for the benefit of employee participants.
B)   a company is not allowed to buy back shares when an employee retires or leaves the company.
C)   meager tax benefits are earned, making these plans unpopular among employees and their organizations.
D)   employees and their company equally share any incremental economic gains realized through increased productivity.

Question 3

Most Scanlon plans pay ____ percent of the bonus fund to employees.

Accepted Answer

A)   25
B)   50
C)   75
D)   100

Question 4

For premium-priced stock options,a stockholder realizes a gain only when the:

Accepted Answer

A)   market value is equal to the exercise price.
B)   selling price is lower than the exercise price.
C)   selling price is equal to the exercise price.
D)   market value exceeds the exercise price.

Question 5

Stock option plans are generally designed to give managers an option to buy company stock at the existing market price.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the least effective practice when rewarding employees' good performance within an organization?

Accepted Answer

A)   Sharing rewards of doing business with employees
B)   Rewarding employees through the base wage or salary structure
C)   Having employees think of themselves as business partners
D)   Sharing the financial risks of doing business with employees

Question 7

In recent times,stock grants and stock options have often represented the largest portion of an executive's total compensation.

Accepted Answer

A) True 
 B)False

Question 8

When a company establishes an employee stock ownership plan (ESOP),the shareholders risk losing voting control of the company.

Accepted Answer

A) True 
 B)False

Question 9

The management at Virtue Infra Inc.has decided to reward good performance within the organization through group incentives.Which of the following is a negative impact the firm will have to face as a result of using group incentives?

Accepted Answer

A)   Groups can become considerably less competitive with one another, leading to the detriment of the entire organization.
B)   The members of a group may not perceive a direct relationship between their individual performances and that of the group.
C)   Group incentives are paid only when an employee retires or decides to separate from a company.
D)   The members within a group are not motivated by group incentives to exert peer pressure on each other to perform.

Question 10

Discuss piece rate plans,plans based on time saved,and plans based on commissions.

Accepted Answer

Piece rate plans are the simplest and mo...

Question 11

Under ____,an executive is allowed to relinquish a stock option and receive from the company an amount equal to the increase in the stock price from the date the option was granted.

Accepted Answer

A)   phantom stock plans
B)   incentive stock options
C)   stock appreciation rights
D)   qualified stock options

Question 12

A reward offered on a one-time basis for high performance is referred to as a:

Accepted Answer

A)   merit pay increase.
B)   bonus.
C)   subsidy.
D)   differential piece rate system.

Question 13

Under stock-for-stock swaps,an executive has the right to relinquish a stock option and receive from the company an amount equal to the appreciation in the stock price from the date the option was granted.

Accepted Answer

A) True 
 B)False

Question 14

Restricted stock plans normally require that an executive remain with a company for a number of years after the grant in order for him or her to cash them in.

Accepted Answer

A) True 
 B)False

Question 15

Qualified stock options are known for their:

Accepted Answer

A)   lack of marketability.
B)   favorable tax treatment.
C)   lack of restrictions.
D)   high rate of interests.

Question 16

A major disadvantage of commission plans as an incentive pay system is the:

Accepted Answer

A)   use of draws in conjunction with commissions.
B)   weak link between performance and reward.
C)   inability to combine salary with commission.
D)   impact of uncontrollable factors on sales.

Question 17

A pay plan in which an individual is paid for the typical time required to complete a job is a(n) :

Accepted Answer

A)   uniform piecework pay plan.
B)   differential piecework pay plan.
C)   standard hour plan.
D)   overtime pay plan.

Question 18

To employers,an advantage of incentive pay over salary increases is that it:

Accepted Answer

A)   disregards employees' performance.
B)   is not subject to payroll consideration for taxes and other deductions.
C)   promotes equity since all employees end up with an equal amount of compensation.
D)   is not permanent and would need to be earned during each designated period.

Question 19

Which of the following is true about self-directed work teams?

Accepted Answer

A)   They are teams of employees that accomplish tasks within their area of responsibility with direct supervision.
B)   They are well established in the United States, but relatively new in Europe.
C)   Most self-directed work teams are based on the basic idea that when employees are isolated from decision making, they can perform better.
D)   Most companies that use such teams usually incorporate some type of group incentive pay based on the performance of the respective work teams.

Question 20

Linda,a human resource executive,is trying to convince her colleagues that their organization should use an individual incentive plan as opposed to group incentive plans.Which of the following can Linda use as an argument to support her views on the individual incentive system?

Accepted Answer

A)   Individual incentive plans ensure that competition among employees never produces negative results.
B)   Individual incentive plans work especially well for those involved in team projects.
C)   Individual incentive plans help employees see the clear relationship between their actions and rewards.
D)   Individual incentive plans, unlike group incentive plans, do not have to be based on performance.

Exam 14: Incentive Pay Systems

Describe Scanlon-type plans.

Correct AnswerverifiedThe Scanlon plan provides employees with...View AnswerShow Answer

When a company establishes an employee stock ownership plan (ESOP),the shareholders risk losing voting control of the company.

Correct AnswerverifiedShow Answer

Under stock-for-stock swaps,an executive has the right to relinquish a stock option and receive from the company an amount equal to the appreciation in the stock price from the date the option was granted.

Correct AnswerverifiedShow Answer

Which of the following is the least effective practice when rewarding employees' good performance within an organization?

Correct AnswerverifiedShow Answer

In recent times,stock grants and stock options have often represented the largest portion of an executive's total compensation.

Correct AnswerverifiedShow Answer

Restricted stock plans normally require that an executive remain with a company for a number of years after the grant in order for him or her to cash them in.

Correct AnswerverifiedShow Answer

Which of the following is true about self-directed work teams?

Correct AnswerverifiedShow Answer

The management at Virtue Infra Inc.has decided to reward good performance within the organization through group incentives.Which of the following is a negative impact the firm will have to face as a result of using group incentives?

Correct AnswerverifiedShow Answer

Under ____,an executive is allowed to relinquish a stock option and receive from the company an amount equal to the increase in the stock price from the date the option was granted.

Correct AnswerverifiedShow Answer

Stock option plans are generally designed to give managers an option to buy company stock at the existing market price.

Correct AnswerverifiedShow Answer

A major disadvantage of commission plans as an incentive pay system is the:

Correct AnswerverifiedShow Answer

Qualified stock options are known for their:

Correct AnswerverifiedShow Answer

Most Scanlon plans pay ____ percent of the bonus fund to employees.

Correct AnswerverifiedShow Answer

To employers,an advantage of incentive pay over salary increases is that it:

Correct AnswerverifiedShow Answer

Linda,a human resource executive,is trying to convince her colleagues that their organization should use an individual incentive plan as opposed to group incentive plans.Which of the following can Linda use as an argument to support her views on the individual incentive system?

Correct AnswerverifiedShow Answer

In employee stock ownership plans:

Correct AnswerverifiedShow Answer

For premium-priced stock options,a stockholder realizes a gain only when the:

Correct AnswerverifiedShow Answer

Discuss piece rate plans,plans based on time saved,and plans based on commissions.

Correct AnswerverifiedPiece rate plans are the simplest and mo...View AnswerShow Answer

A pay plan in which an individual is paid for the typical time required to complete a job is a(n) :

Correct AnswerverifiedShow Answer

A reward offered on a one-time basis for high performance is referred to as a:

Correct AnswerverifiedShow Answer

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The Scanlon plan provides employees with...
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Piece rate plans are the simplest and mo...
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