Incentive Pay and Compensation Plans Worksheet

What is the primary purpose of incentive pay?

• To comply with government regulations

• To equalize pay across departments

• To motivate specific performance behaviors

• To minimize overtime costs

A piecework plan rewards employees based on:

• The quality of their work

• The number of hours worked

• The quantity of output produced

• Team-based performance

In a standard hour plan, workers are paid:

• Based on average time to complete a task

• For the number of hours worked only

• More if they finish a task in less than standard time

• Based on customer satisfaction scores

Merit pay is best described as:

• Pay tied to the number of hours worked

• One-time bonus based on team performance

• A pay raise based on individual performance appraisals

• Additional compensation for tenure

A drawback of individual incentive plans is that they:

• Are illegal in most states

• Emphasize collaboration

• May discourage teamwork and quality

• Always require union approval

Which of the following is a group incentive plan?

• Sales commission

• Gainsharing

• Merit pay

• Standard hour plan

Profit-sharing plans are designed to:

• Share individual performance bonuses

• Encourage competition

• Distribute part of company earnings to employees

• Increase wages in low-performing areas

Which incentive plan encourages ownership and long-term commitment?

• Commission

• Piecework

• Stock options

• Merit pay

Balanced scorecards are used to:

• Eliminate bonuses

• Focus solely on financial goals

• Combine financial and non-financial performance metrics

• Determine hourly pay

Which is NOT a requirement for effective incentive plans?

• Clear performance standards

• High base pay

• Valued and fair rewards

• Resources to achieve goals