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VII. Discussion Questions and Suggested Answers
9.1. Many compensation professionals are faced with making choices about which
discretionary benefits to drop because funds are limited and the costs of these
benefits continually increase. Assume you make such choices. Rank order
discretionary benefits from the ones you would most likely eliminate to the
ones you would least likely eliminate. Explain your rationale. Do such
factors as the demographic composition of the workforce of the company
matter? Explain.
Answer to this question can be found in the MyLab
9.2. Discuss your views about whether discretionary employee benefits should be
an entitlement or something earned based on job performance.
Answer to this question can be found in the MyLab
9.3. Assume that you are an HRM professional whose responsibility is to develop
a brochure for the purpose of conveying the value of your company’s benefits
program to potential employees. Your company has asked you to showcase
the benefits program in a in a manner that will encourage recruits to join the
company. Develop a brochure (of no more than one page) that lists the
benefits and objectives.
This is a practical exercise. Results will vary widely.
Learning Objective: 9-4. Discuss the fundamentals of designing and planning the
benefits program.
AACSB: Application of knowledge
9.4. Conduct some research in order to identify examples of innovative benefit
practices. A useful starting point is an Internet search using phrases such as
“best companies to work for.”
This is a practical exercise. Results will vary widely.
9.5. Are employees more likely to favor defined contribution plans over defined
benefit plans? How about employers? Explain your answers.
Employees are likely to favor defined benefit plans as the employer bears the risk in the
investment. Employees know what to expect in their retirement based on the formula for
VIII. End of Chapter Case; Instructor Notes, and Questions and Suggested
Student Responses
Case Name: Time-off at Superior Software Services
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Instructor Notes
Many employers believe restrictive sick day policies may increase unscheduled absences.
Superior’s time-off policy seems to create such a concern. Because the company is
Suggested Student Responses:
9.6. Do you think changing Superior’s time-off policies will decrease unscheduled
time-off?
Unscheduled absences seem to occur at Superior because of the structure of the time-off
benefits. Employees plan their vacation time at the beginning of the year and most likely
9.7. Beyond reducing occurrences of unscheduled time-off, are there any other
benefits to offering PTO?
9.8. Are there any disadvantages to changing to PTO?
As the PTO policy is much different from the current policy, Superior would have to
invest time and effort in guiding employees and supervisors on the new policy. Further,
IX. Crunch the Numbers! Questions and Suggested Student Responses
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9.9. How much more money would you need to contribute to meet the allowable
maximum contribution?
9.10. In 2015, the company offers a $0.75 match for each dollar that you contribute
between 3 percent and 6 percent of your annual salary. How much is the
company match based on your 10 percent contribution?
9-11. Based on the sum of your answers to questions 9-9 and 9-10, what is the
difference between the IRS maximum annual addition for 2015 and the total
contribution to your 401(k) plan?
X. Assisted-graded Questions
9-12. If a company’s budget were extremely limited and could only afford to offer
one benefit, which would you select? Provide your rationale.
9-13. Name at least one discretionary benefit practice that would help companies
to have better control over absenteeism.
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Answer to this question can be found in the MyLab.
9-14. MyManagementLab Only – comprehensive writing assignment for this
chapter.
XI. Additional Cases from the MyManagementLab Website; Instructor Notes,
Questions and Suggested Student Responses
Case Name: Boosting Sales or Boosting Commissions?
Instructor Notes
A commission pay plan is a common compensation approach for sales representatives
because it recognizes the individual contributions of each sales representative. Further, if
a company is pursuing a low-cost competitive strategy, a commission pay plan supports
the strategy by only paying employees for activities that directly contribute to the bottom
line success of the company. However, designing a commission pay plan is not as simple
as just determining a percentage of sales to pay in commission. There are many factors
that impact the effectiveness of a commission pay plan. In this case, while a commission
pay plan makes sense, the design of the plan could lead to some unethical behavior on
behalf of the sales representatives. While avoiding ethical issues can be addressed
through other strategies such as effective hiring practices, it should also be a
consideration when designing the commission pay plan structure.
Suggested Student Responses:
9.15. What are some potential problems with Aspect’s compensation structure for
sales representatives?
Because the compensation is structured as commission only plan, there is no incentive for
9.16. What changes do you recommend?
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Aspect may want to consider offering some base salary to help encourage the sales
representatives to provide service to recent customers. This could ultimately help the
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