Chapter 10

Question 1

Pay that varies with some measure of individual or organizational performance, such as merit pay, lump-sum bonus plans, skill-based pay, incentive plans, variable pay plans, risk sharing, and success sharing.

Answer 1

pay for performance

Question 2

Incentive compensation that is tied directly to objective measures of
individual production

Answer 2

incentive plan

Question 3

Pay tied to productivity or some measure that can vary with the firm’s
profitability.

Answer 3

variable pay plan

Question 4

An incentive plan in which employees’ base wages are set below a specified level
(e.g., 80 percent of the market wage) and incentive earnings are used to raise wages above the bas

Answer 4

compensation at risk

Question 5

An incentive plan (e.g., profit sharing or gain sharing) in which an employee’s
base wage matches the market wage and variable pay adds on during
successful years. Because base pay is not reduced in bad years, employees
bear little risk

Answer 5

success sharing

Question 6

A reward that recognizes outstanding past performance. It can be given in
the form of lump-sum payments or as increments to the base pay.

Answer 6

merit pay

Question 7

Payment of entire increase (typically merit-based) at one time. Because
amount is not factored into base pay, any benefits tied to base pay do not
increase

Answer 7

lump-sum bonus

Question 8

One-time award for exceptional performance

Answer 8

spot awards

Question 9

Individual incentive plan in which rate determination is based on units of
production per time period; wages vary directly as a constant function of
production level

Answer 9

straight piecework system

Question 10

Individual incentive plan that provides a variation on straight
piecework and standard hour plans. Instead of timing an entire task, plan requires the determination of the time required to complete each simple action of a task. Workers receive a wage incentive for completing a task in less than the standard time.

Answer 10

bedeaux plans

Question 11

Individual incentive plan in which rate determination is based on time period
per unit of production and wages vary directly as a constant function of product level. In this context, the incentive rate in standard hour plans is set
based on completion of a task in some expected time period

Answer 11

standard hour plans

Question 12

Individual incentive plan that provides for variable incentives as a function of
units of production per time period. It provides two piecework rates that are established for production above and below standard, and these rates are higher and lower than the regular wage incentive level.

Answer 12

taylor plan

Question 13

Individual incentive plan that provides for variable incentives as a function
of units of production per time period. It works like the Taylor plan, but
three piecework rates are set: (1) high— for production exceeding 100
percent of standard; (2) medium—for production between 83 and 100
percent of standard; and (3) low—for production less than 83 percent of
standard

Answer 13

merrick plan

Question 14

Individual incentive method that provides for variable incentives as a function
of a standard expressed as time period per unit of production. This plan
derives its name from the shared split between worker and employer of any
savings in direct costs

Answer 14

halsey 50-50 method

Question 15

Individual incentive plan that provides for variable incentives as a function of a
standard expressed as time period per unit of production. It is similar to the Halsey
plan, but in this plan a worker’s bonus increases as the time required to complete the
task decreases.

Answer 15

rowan plan

Question 16

Individual incentive plan that provides for variable incentives as a function of
a standard expressed as time period per unit of production. Under this plan, a
standard time for a task is purposely set at a level requiring high effort to
complete.

Answer 16

gantt plan

Question 17

When we move away from individual incentive systems and start focusing on people
working together

Answer 17

group incentive plans

Question 18

Incentive plans that are based on some measure of group performance rather than individual performance.

Answer 18

gain sharing plan

Question 19

Employees share in long-term company successes/failures in the form of…

Answer 19

employee stock ownership plan

Question 20

A group cost-savings plan designed to lower labor costs without lowering the
level of a firm’s activity. Incentives are derived as the ratio between labor costs
and sales value of production (SVOP).

Answer 20

scanlon plans

Question 21

includes sales revenue and the value of goods in inventory

Answer 21

value of production

Question 22

A group cost savings plan in which cost reductions due to employee efforts are shared with the employees. It involves a somewhat more complex formula than a Scanlon plan for determining employee incentive bonuses.

Answer 22

rucker plan

Question 23

A gain-sharing plan in which a standard is developed to identify the
expected hours required to produce an acceptable level of output. Any
savings arising from production of agreed-upon output in fewer-than-
expected hours are shared by the firm and the worker.

Answer 23

improshare

Question 24

Inducements offered in advance to influence longer-rate (multiyear)
results. Usually offered to top managers and professionals to get them to
focus on long-term organization objectives

Answer 24

long term incentives

Question 25

These plans specify that payouts only occur after the company reaches a certain
profit target. Then variable payouts for individual, team, and company
performance are triggered.

Answer 25

self-funding plan

Question 26

A plan where there is penalty for poor performance rather than reward for good.

Answer 26

reverse incentive plan