Chapter 10

Question 1

What are Payouts?

Answer 1

Variable costs linked to achievement of results

Question 2

What is Compensation?

Answer 2

Directly related to operating performance.

Question 3

What is Straight Piece work?

Answer 3

Employees receive a certain rate per unit produced

Question 4

What is Differential Piece Rate?

Answer 4

A rate for employees who exceed the standard and receive a higher compensation.

Question 5

What incentive plan sets pay based on the completion of a job in a predetermined standard time?

Answer 5

Standard Hour Plan

Question 6

What is the difference between a Bonus and a Spot Bonus?

Answer 6

Bonus: Incentive payment supplemental to base wage and Spot Bonus: Unplanned, for employee effort and is unrelated to established performance measure.

Question 7

Explain a Merit Pay Program. (Merit Raise)

Answer 7

Links increase in base pay to how successfully an employee achieves an objective performance standard.

Question 8

What are some issues with Merit Raises?

Answer 8

1. Difficult to satisfactorily raise all employees’ base pay
2. Lack of guidance on measuring performance from managers
3. Loses the link of compensation relations to effort
4. Variety of views of job success (employee vs manager)
5. Feelings of Pay inequality

Question 9

Merit Guidelines

Answer 9

Guidelines for awarding merit raises tied to performance objectives

Question 10

Lump-Sum Merit Program

Answer 10

Program where employees receive a year-end merit pay, not added to base pay.

Question 11

Awards vs Non-cash Incentive awards

Answer 11

Both motivators however awards are gains and the other is recognition for their efforts.

Question 12

What is a Straight Salary Plan?

Answer 12

A compensation to employees for completing duties that are not immediately reflected in sales volume

Question 13

Straight Commission Plan

Answer 13

Compensation plan based on percentage of sales or output

Question 14

When Straight Commission and Salary plan are combined:

Answer 14

There is a straight salary however, commission is a leverage component.

Question 15

Stock Options:

Answer 15

Executive may purchase shares for an ESTABLISHED PRICE and FIXED TIME.

Question 16

Stock Appreciation Rights:

Answer 16

Cash or Stock award determined by stock increase price. TIME CHOSEN BY EXECUTIVE. No Exec. Financing.

Question 17

Stock Purchase:

Answer 17

Opportunities of SHARES of a stock with COMPANY ASSISTANCE, at market or discount price.

Question 18

Phantom Stock:

Answer 18

Grant of units equal in value to the market value of a share of stock. On a certain date, employee will be paid appreciation of that value up to that time.

Question 19

Restricted Stock:

Answer 19

Grant of Stock or units of stock. Cannot be sold or transferred before employment date.

Question 20

Performance Units:

Answer 20

Grants analogous to annual bonuses except measurement exceeds 1 year, can be given as dollar amount or number of units equiv. to total value

Question 21

Performance Shares:

Answer 21

Grant of actual stocks or phantom stocks.

Question 22

Employee Stock Ownership Plans:

Answer 22

Stock plans the organization contributes for the purpose of employee purchase.