Strategic Compensation In Canada 5th Edition By Richard Long – Test Bank

Overview

Chapter 11
Designing Performance Pay Plans

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1. In order for the Scanlon plan to work, organizations must be able to predict future cost of inputs, particularly labour.

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2. Improshare provides a ratio of labour hours per unit of output, generally based on metrics from the previous fiscal year.

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3. The Scanlon plan has changed over the years. A central reason for these changes is the notion that employees can reduce labour input as a function of output by increasing other costs.

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

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

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6. As a general rule, the broader the formula used to determine the pool of funds available for gain sharing the lower the “share.”

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7. Financially funded plans combine at least two criteria in establishing goal-sharing bonuses. Often, one of those variables is organizational profitability, making such plans highly motivational to employees.

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8. Deferred profit-sharing plans are often used as quasi pension plans, particularly in medium-sized companies.

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

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10. Research supports the notion that if adequate monetary compensation is in place, coupled with an open and supportive management–employee environment, nonmonetary-based recognition tends to offer little value to stakeholders.

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