Incentive Pay and Employee Benefits Quiz

A pay structure specifically designed to energize, direct, or control employees' behavior is known as

• monthly salary.

• wage.

• incentive pay.

• annual salary.

• fixed pay.

Vroom Motors, an automobile company, ties individual performance, profits, and other measures of employees' success to a particular form of pay. This form of pay is influential because the amount paid is linked to certain predefined behaviors or outcomes. What pay structure is exemplified in this scenario?

• minimum wage

• overtime pay

• incentive pay

• piecework rates

• salary

A feature of an effective incentive pay plan is that it should

• have performance measures based on employees' requirements.

• not be provided as a direct percentage of employees' performance.

• encourage group performance and sideline individual achievements.

• be the same for all employees in the organization.

• have performance measures linked to the organization's goals.

For incentive pay to motivate employees to contribute to the organization's success, the pay plans must be well designed. Which statement describes a characteristic of a well-designed plan?

• Performance measures are to be linked to the individual's goals.

• Employees are given unattainable performance standards.

• Employees value the rewards or incentives that are being offered.

• Employees are given limited resources to meet their goals.

• The pay plan takes into account that employees will accept all goals irrespective of their rewards.

In the process of designing incentives, managers should make sure that

• all the employees are paid the same amount.

• even the lowest performing employees are rewarded.

• employees focus only on completing the task quickly.

• employees believe that the pay plan is fair.

• they hire employees who consider earning money as the sole reason to perform well.

Which type of incentive plans are used to reward individual performance?

• gainsharing

• merit pay

• Scanlon plan

• profit sharing

• stock ownership

 Jewels & Co., a watch manufacturing company, provides wages to its employees based on the number of watches the workers assemble. The more the employees assemble, the more they earn. This type of plan is called a

• piecework rate plan.

• merit pay plan.

• Scanlon plan.

• profit-sharing plan.

• rapid hour plan.

As an incentive to work efficiently, some organizations pay production workers ________, a wage based on the amount they produce.

• merit pay

• a sales commission

• standard hour pay

• a piecework rate

• a special bonus

Wayne Inc., a health insurance company, pays clerks an incentive based on the average amount of work completed per hour. Wayne pays $10 for processing 20 invoices per hour. An employee who processes 30 invoices would earn $15 per hour. Hence, Wayne pays the same rate per invoice no matter how many invoices an employee processes per hour. Which type of incentive pay does this scenario illustrate?

• straight piecework plan

• falling differential

• rising differential

• standard hour plan

• straight commission plan

An employee at CellWorld who produces 10 phone components in an hour earns $9 ($0.90 ×10) per hour, while another employee who produces 15 components earns $13.50 ($0.90 ×15). This is an example of a

• commission plan.

• differential piece rate plan.

• direct commission plan.

• profit-sharing plan.

• straight piecework plan.