C12 - VARIABLE PAY- IMPROVING PERFORMANCE WITH VARIABLE PAY EXAM QUESTIONS WITH CORRECT ANSWERS

Which of the following describes the purpose of variable pay? (A) To reward individuals for acquisition of new skills and competencies (B) To ensure the individuals' value relative to the labor market (C) To differentiate the pay of individuals who achieve results from those who do not (D) To reward individuals for their sustained performance over time. - ANS (C) To differentiate the pay of individuals who achieve results from those who do not What business strategy often includes a combination of price, quality, dependability and ease of purchase that competitors cannot match? (A) Operational excellence (B) Product/service leadership (C) Customer intimacy - ANS (A) Operational excellence Which of the following business objectives would relate most to a product/service leadership strategy? (A) Improve operational efficiency (B) Time from innovation to market (C) Customer attraction and retention (D) Reduce costs - ANS (B) Time from innovation to market In which of the following stages of the business life cycle would an organization generally be focused on maintaining/increasing market share, improving productivity and reducing cost of sales? (A) Start-up (B) Growth (C) Mature (D) Decline - ANS (C) Mature Which of the following business objectives would relate most to the start-up stage of a business life cycle? (A) Maximize profits (B) Product quality (C) Maintain/increase market share (D) Obtaining capital - ANS (D) Obtaining capital What influences can variable pay provide in relation to organizational performance? (A) Customer satisfaction, brand awareness and product quality (B) Focus, alignment, motivation and reinforcement (C) Attraction, penetration, innovation and collaboration (D) Growth, efficiency and capability - ANS (B) Focus, alignment, motivation and reinforcement What are the three categories of variable pay? (A) Cash, noncash and equities (B) Quarterly, annual and spot bonuses (C) Incentives, bonuses and recognition - ANS (C) Incentives, bonuses and recognition Which of the following plans is a type of long-term incentive plan? (A) Equity-based plan (B) Profit-sharing plan (C) Individual performance-based plan (D) Performance-sharing plan - ANS (A) Equity-based plan Which individual performance-based plan would be most appropriate for an account representative with a high degree of influence over company sales? (A) Performance against predetermined objectives (MBO) plan (B) Output-based plan (C) Commission plan - ANS (C) Commission plan Which of the following is an example of an appreciation-only equity-based plan? (A) Performance shares (B) Restricted stock (C) Stock grant (D) Stock options - ANS (D) Stock options Which of the following is considered an objective for long-term nonequity-based plans? (A) Allow flexibility of design (B) Utilize stock (C) Promote a more balanced approach (D) Reward long-term performance - ANS (D) Reward long-term performance Which of the following would describe the appropriate use of a bonus? (A) Paying a bonus to supplement a merit increase (B) Paying a bonus to employees for completing a key project (C) Paying a special bonus to key players in lieu of an incentive plan payment despite performance thresholds not being met - ANS (B) Paying a bonus to employees for completing a key project As opposed to incentive plans, recognition plans tend to have which of the following characteristics? (A) They are more financial than psychological (B) They generally are self-funded rather than budgeted (C) They are more after-the-fact than objective-based. - ANS (C) They are more after-the-fact than objective-based. What is a primary type of recognition award? (A) Referral (B) Sign-on (C) Spot (D) Retention - ANS (C) Spot What activity would typically take place before designing the plan? (A) Selecting plan type (B) Defining eligibility (C) Obtaining management support (D) Determining plan objectives - ANS (C) Obtaining management support Which of the following best describes an internal factor that should be considered in developing the plan? (A) Labor market (B) Competition (C) Technology (D) Costs/resource availability - ANS (D) Costs/resource availability Which of the following items would most likely be considered in determining who would be eligible to participate? (A) Participant line of sight (B) Past performance (C) Day-to-day data (D) Implementation costs - ANS (A) Participant line of sight Which of the following should be a primary driver of plan performance?