978-0134320540 Chapter 4 Solution Manual

Unlock access to all the studying documents.

View Full Document

VIII. Discussion Questions and Suggested Answers

4.1. Indicate whether you agree or disagree with the following statement:

“Individual incentive plans are less preferable than group incentives and

companywide incentives.”

Answer to this question can be found in the MyLab

4.2. There is currently a tendency among business professionals to endorse the

use of incentive pay plans. Identify two jobs for which individual incentive

pay is appropriate and two jobs for which individual incentive pay is

inappropriate. Be sure to include your justification.

Two jobs in which individual incentive pay is appropriate are occupations that have to do

with production or sales, such as a salesman or an ice cream factory worker. Occupations

4.3. Critics of profit sharing plans maintain that these plans do not motivate

employees to perform at higher levels. Under what conditions are profit

sharing plans not likely to motivate employees?

Answer to this question can be found in the MyLab

4.4. Unlike individual incentive programs, group and companywide incentive

programs reward individuals based on the group and companywide

performance standards, respectively. Under group and companywide

incentive programs, it is possible for poor performers to benefit without

making substantial contributions to group or company goals. What can

companies do to ensure that poor performers do not benefit?

Companies can do several things to ensure that poor performers do not benefit from

4.5. Opponents of incentive pay programs argue that these programs manipulate

employees more than seniority and merit pay programs. Discuss your views

of this statement.

Answers will vary greatly based on the student’s position and point of view. Opponents

of incentive pay may discuss the relative size of incentive payments compared to merit or

IX. End of Chapter Case; Instructor Notes, and Questions and Suggested

Student Responses

Case Name: Individual or Team Reward?

Instructor Notes

Companies often consider incentive pay plans to reward employees for their

performance. A well-designed incentive pay plan can help a company achieve objectives

Suggested Student Responses:

4.6. What are some advantages of offering an individual piece-rate pay plan to

the furniture builders at Metropolitan Furniture?

Answer to this question can be found in the MyLab

4.7. What are some advantages of offering a team-based incentive pay plan?

The team-based incentive may eliminate concerns that an individual incentive

program could bring such as one worker refusing to help out another worker in order

programs.

AACSB: Analytical thinking

4.8. What do you think Sally should do?

Student responses will vary. Those in support of an individual incentive program

should emphasize higher individual productivity and improved retention of top

X. Crunch the Numbers! Questions and Suggested Student Responses

Calculating Piecework Pay Awards

4.9. Calculate the worker’s total earnings for his shift.

The worker starts with a base of $4.50 per hour. The employee then receives $0.75 per

garment for each stitched garment over the 15 piecework standard.

Hour Number of Garments

above Standard

Incentive Pay Total Pay for the Hour

One 10 $7.50 $12.00

Two 0 0 $4.50

Total pay for the shift: $64.50

Learning Objective: 4-3. Summarize five types of individual incentive pay plans.

AACSB: Application of knowledge

4.10. How many dollars did the garment worker earn in incentive payments?

Total incentive pay: $37.50

Learning Objective: 4-3. Summarize five types of individual incentive pay plans.

AACSB: Application of knowledge

4.11. On the following day, the garment worker completed a six-hour shift, but did

not exceed the standard at any time during this shift. How much did he earn

for the day?

XI. Assisted-graded Questions

4.12. How can incentive pay systems, when properly applied, contribute to

companies meeting the goals of lowest cost and differentiation strategies?

4.13. Considering our discussion of employee roles in strategic compensation

(Chapter 1), how can companies explain employees’ contributions to

company profits? How would the conversation go with administrative staff

members compared to sales professionals?

Answer to this question can be found in the MyLab

4.14. MyManagementLab Only – comprehensive writing assignment for this

chapter

VIII. Additional Case from the MyManagementLab Website; Instructor Notes,

and Questions and Suggested Student Responses

Case Name: Merit Increases at Diverse Prints

Instructor Notes

A well-designed merit pay program should recognize employee performance and adjust

employee pay accordingly. If a company has an effective performance appraisal process

Suggested Student Responses:

4.15. Do you think the company should offer merit pay increases? Why or why

not?

Students may argue for or against the merit increase. Those arguing for the merit

increases may suggest that while the program may not have its desired effect this

year, it may be more appropriate to continue with merit pay increases as they will

likely return to appropriate levels next year. It may be easier to explain to

4.16. If the company chooses not to offer the merit pay increases, how should they

approach explaining the decision to the employees?

It is important for the company to clearly explain why the company is not offering

the merit pay increases. The employees should be aware of the company’s

downturn, and the temporary elimination of the merit pay increases should be