Exam 5: Performance Pay Choices

What do employees receive under an employee stock bonus plan?

An automotive shop wants to reward employees for demonstrating creative customer service that leads to repeat business. A particular employee received a 10 percent bonus for suggesting that the company contact customers 24 hours after repairs to ensure customers are satisfied. What type of incentive would be the most appropriate in this scenario?

Employee stock plans are congruent and often used by companies using a classical management strategy

All things being equal, goal-sharing programs are thought to be less motivational than gain-sharing programs.

Your employer is considering tying the bonus pool to the firm's profitability and then allocating this amount to employees based on individual merit. With reference to expectancy theory, which component of the merit system will be weakened and thus make it less motivational for you as an employee?

What is the most common form of performance pay used by medium to large Canadian firms?

Profit-sharing plans can reduce the need for employee supervision.

There are three types of profit-sharing plans discussed in the text. Identify and briefly explain each of them.

John's employer decides to provide him with regular advances against his future commissions as a way to smooth out John's income. Which term best describes the pay plan used by John's employer?

You work for a company that assembles plastic toys. Generally speaking, employees working at similar assembly plants receive $15.00 per hour. Internal corporate data indicates that the average worker should be able to assemble 20 toys per hour. Your organization has made a strategic decision to pay assembly line workers on the basis of their output. What is the piece rate you are contemplating paying your assembly line workers?

The key challenge associated with long-term incentive plans is the need to establish three- to five-year goals, particularly in fairly dynamic industries.

From an employer's point of view, what is the most attractive feature of gain-sharing plans?

The concept of piece rates has its roots in the service industry as a way to compensate individual strong performance.

Identify and briefly explain the nature of individual performance pay plans.

Which of the following management strategies is likely to benefit from a suggestion bonus system set on a group basis?

To qualify as having an employee profit-sharing plan, a firm must have a formal program in which payments based on profits are made to a select group of employees, usually senior management.

The three main types of employee stock plans are: stock bonus plans, stock purchase plans, and stock option plans.

What differentiates merit pay from other types of performance pay, such as piece rates, sales commissions, and target incentives?

Explain the difference between goal-sharing and gain-sharing plans.

Discuss the nature of suggestion systems and some of the problems you need to be aware of.