Incentive Pay and Performance Plans Worksheet

Which of the following is not a requirement for an effective incentive pay plan?

• Link to company goals

• Employees value rewards

• Emphasis on uniform salary

• Fair performance measures

What distinguishes merit pay from performance bonuses?

• Merit pay is temporary

• Merit pay is added to base pay

• Bonuses are taxed differently

• Bonuses are based on attendance

A straight piecework plan pays:

• A flat annual rate

• Employees for each piece produced, with variable rates

• The same rate per piece regardless of quantity produced

• A rate only after quotas are met

Which best describes a standard hour plan?

• Pay tied to sales figures

• Pay increases based on tenure

• Pay tied to time saved completing a task

• Pay for overall group effort

Which performance plan is most likely to result in team-based innovation?

• Piecework

• Gainsharing

• Stock options

• Standard hour

Which of the following is a disadvantage of stock ownership as incentive pay?

• Not legally enforceable

• No impact on motivation

• Increases turnover

• Cannot be taxed

What is a balanced scorecard used for?

• Assigning performance bonuses equally

• Reducing payroll

• Evaluating performance across key company areas

• Balancing accounting records

An ESOP grants employees:

• Annual pay increases

• Rights to purchase stocks at a discount

• Shares of stock in a trust

• Stock options with expiration dates

Which group is most likely to receive long-term incentives like stock options?

• Janitorial staff

• Entry-level employees

• Executives

What ethical concern arises from linking executive pay to stock performance?

• Overpayment to lower-level workers

• High turnover rates

• Incentive to manipulate performance data

• Reduced shareholder value