Chapter 10 - Pay-for-Performance Plans

69. (p. 347) Firms high on business risk and those with uncertain outcomes, have

higher

corporate performance without incentive plans than with them.

TRUE

Difficulty: Medium

70. (p. 349) Advantages of the balanced scorecard are that it is easily understood by employees

and has low administrative costs. 

FALSE

 

Difficulty: Medium

 

71. (p. 351) Individual incentives yield higher productivity gains. 

TRUE

Difficulty: Easy

 

72. (p. 351) The free-rider problem is common in firms using individual incentive plans. 

FALSE

Difficulty: Difficult

 

73. (p. 351) Unions prefer individual to group incentive pay plans since members can earn more

money. 

FALSE

Difficulty: Medium

 

74. (p. 351) A group performance based pay plan is superior to an individual plan when

individual production standards and production methods must change to meet changing events. 

TRUE

Difficulty: Medium

 

10-16

© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Chapter 10 - Pay-for-Performance Plans

75. (p. 353) Gain sharing plans tend not to use a historical standard to set productivity standards

since environmental conditions can change quickly. 

FALSE

Difficulty: Medium

 

76. (p. 353) A major problem of group incentive plans is performance targets are not correctly

set. 

TRUE

Difficulty: Medium

 

77. (p. 353) A good solution to the problem of production variability is to set gain sharing goals

based upon industry norms. 

TRUE

Difficulty: Medium

78. (p. 359) An advantage of group incentives is turnover may be higher among poorer

performers because they hurt group performance. 

FALSE

Difficulty: Medium

 

 79. (p. 363) Most variable-pay plans have some form of profit "trigger" linked to revenue

growth or profit margins. 

TRUE

 

Difficulty: Medium

80. (p. 363) Performance plans typically feature corporate performance objectives for a time

three years in the future. 

TRUE

 

Difficulty: Medium

 

10-17

© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.