Strategic Compensation In Canada 4th Edition By Richard Long – Test Bank

Overview

Chapter 11:
Designing Performance Pay Plans

True / False

1. Profit sharing and employee stock plans are geared to the performance of work groups.

ANS: F PTS: 1 REF: 396 OBJ: 1

2. Improshare expresses labour costs as a percentage of value added.

ANS: F PTS: 1 REF: 398 OBJ: 1

3. With the Scanlon plan employees benefit from reductions in raw materials or any other purchased input.

ANS: F PTS: 1 REF: 398 OBJ: 1

4. Gain-sharing is not a viable plan to use if no valid historical benchmark can be set.

ANS: T PTS: 1 REF: 401 OBJ: 1

5. A rolling baseline goes up each year there is a productivity gain, and last year’s productivity becomes the new baseline.

ANS: F PTS: 1 REF: 401 OBJ: 1

6. The first issue in designing a goal-sharing plan is to determine the levels necessary to trigger a bonus payout.

ANS: F PTS: 1 REF: 404 OBJ: 2

7. Most firms typically use multi-goal sharing plans.

ANS: T PTS: 1 REF: 405 OBJ: 2

8. Most firms allocate the profit-sharing bonus equally to all employees.

ANS: F PTS: 1 REF: 409 OBJ: 3

9. A phantom stock plan ties an employee’s bonus to the performance of company stock but that employee never actually receives any stock.

ANS: T PTS: 1 REF: 415 OBJ: 4

10. In general, the more inexpensive the noncash recognition reward, the more judiciously it must be provided to be seen as having value.

ANS: T PTS: 1 REF: 420 OBJ: 5