Question 1

A straight-salary sales compensation plan has a tendency to encourage salespeople to emphasize sales volume over customer service.

Accepted Answer

A straight-salary sales compensation plan provides a fixed salary to salespeople, which tends to reduce the pressure on them to make sales at any cost, allowing them to focus more on customer service and satisfaction.

Question 2

Customer service rewards for salespeople are typically individual-based,team-based,or plant-based.

Accepted Answer

Customer service rewards for salespeople can be individual-based, team-based or plant-based.

Question 3

________ are noncash incentives given to a firm's executives.

Accepted Answer

The answer of ________ are noncash incentives given to a...

Question 4

Most companies use a ________ when setting up their sales compensation plan.
A) straight commission plan
B) combination plan
C) straight salary plan
D) gainsharing plan

Accepted Answer

Most companies use a combination plan when setting up their sales compensation plan, which includes a base salary and a commission or bonus component. This allows for a balance between stable income for the salesperson and incentivizing them to exceed their sales targets. Straight commission plans can be too risky for the salesperson, while straight salary plans do not provide enough incentive for high performance. Gainsharing plans are typically used for non-sales roles, where all employees in a team or department share in the success of reaching a specific goal.

Question 5

Additional Case 11.2 
Richland Manufacturing uses an individual-based pay-for-performance plan for employees.

Manager input in the form of performance evaluations primarily determines individual employee rewards. Performance appraisals at Richland are used for multiple purposes including compensation, training, and work planning. Since implementing the plan, many managers have noticed that employees tend to play it safe by setting modest rather than challenging goals for themselves. Employees have also been avoiding important tasks, such as satisfying the needs of customers and keeping work areas neat. In addition, most employees express disbelief that pay and performance are actually linked. As a result, Richland is considering making modifications to the system.

The HR Director wants a system that will reward all employees based on the entire company's performance because he wants to increase employee commitment. The VP of Operations wants to reward specific productivity and quality improvements with a simply structured system that considers labor costs as well as other production expenses. The VP of Operations also believes that labor and management should work together to allocate the rewards.

-Refer to Additional Case 11.1.Sussex executives have decided to change the firm's pay-for-performance plan to one that is plantwide.Which of the following characteristics of Sussex,if true,best supports this decision?
A) Sussex is a midsize firm in a stable product market.
B) Sussex is a large, global firm in a cyclical product market.
C) Most employee contributions at Sussex can be clearly isolated.
D) Sussex managers want to encourage innovation within work groups.

Accepted Answer

A plantwide pay-for-performance plan is more likely to be effective in a stable environment where the entire workforce can be aligned towards common goals, as is the case with a midsize firm in a stable product market.

Question 6

What is the difference between stock options,stock purchase plans,and stock awards as given to corporate executives? Why are long-term incentive plans for executives frequently criticized?

Accepted Answer

The answer of What is the difference between stock options,stock...

Question 7

Tanglewood Enterprises wants a sales compensation plan that is simple to administer,controls sales costs,and encourages salespeople to be entrepreneurial.Which of the following would be the best compensation plan for Tanglewood?
A) Straight commission plan
B) Combination plan
C) Straight salary plan
D) Merit plan

Accepted Answer

A straight commission plan is simple to administer, directly links sales costs to sales revenue (thereby controlling sales costs), and encourages salespeople to be entrepreneurial by directly tying their earnings to their sales performance.

Question 8

In regards to pay-for-performance programs,which of the following is most likely characteristic of small firms than large firms?
A) Conflicts about pay differences are minimal because of close co-worker relationships.
B) Linking pay incentives to team performance is easier at small firms than large ones.
C) Small firms lack personnel able to design and administer complex incentive plans.
D) Clearly established grievance procedures allow employees to address unfair pay.

Accepted Answer

Small firms often lack the specialized personnel or resources needed to design and administer complex incentive plans, unlike larger firms that typically have dedicated human resources departments with the expertise to manage such programs.

Question 9

Benson Marketing is a small firm with fewer than 100 employees.The CEO wants to implement a pay-for-performance system.The CEO wants the plan to motivate employees,attract top workers,and reduce fixed costs.Which of the following would be most appropriate for Benson?
A) Straight-commission
B) Profit sharing
C) Gainsharing
D) Merit pay

Accepted Answer

The answer of Benson Marketing is a small firm with...

Question 10

In what way are compensation programs for salespeople different from compensation programs for other types of employees?
A) Accurate market data on pay practices are easier to find for salespeople than for other types of employees.
B) The reward system for non-salespeople is more supervisory than it is for salespeople.
C) There is less performance variation between salespeople than between non-salespeople.
D) Perceptions of pay inequity are a lesser concern for salespeople than for non-salespeople.

Accepted Answer

The answer of In what way are compensation programs for...

Question 11

If a sales manager wants his sales professionals to service the product and spend time with customers,then a straight salary compensation plan is best.

Accepted Answer

A straight salary compensation plan provides a fixed income regardless of sales performance, encouraging sales professionals to focus on service and customer relationships without the pressure of meeting sales quotas for commissions.

Question 12

Stock options provide the executive with "free" company stock,normally with no strings attached.

Accepted Answer

Stock options are typically granted with certain restrictions and conditions, such as vesting schedules and maximum exercise periods. Therefore, it is not accurate to say that they are "free" with no strings attached.

Question 13

What is the difference between a straight commission and a straight salary system? What are the benefits of each? How can a firm ensure that a sales team does not overlook customer satisfaction for high sales volume?

Accepted Answer

The answer of What is the difference between a straight...

Question 14

________ permit the executive to buy stock at,or below,cost during a limited time.
A) Formula-based stocks
B) Restricted stock plans
C) Stock appreciation rights
D) Stock purchase plans

Accepted Answer

Stock purchase plans permit the executive to buy stock at or below cost during a limited time.

Question 15

Long-term incentive plans are linked very closely with executive performance.

Accepted Answer

The answer of Long-term incentive plans are linked very closely...

Question 16

Firms that give perks to executives are not legally required to disclose such awards..

Accepted Answer

Firms are legally required to disclose executive compensation, including perks, in their proxy statements or annual reports, as per SEC regulations and other financial disclosure laws.

Question 17

When setting up a compensation plan for salespeople to encourage them to service accounts,a ________ plan is the best choice.
A) straight commission
B) combination
C) straight salary
D) merit

Accepted Answer

A straight salary plan is the best choice for encouraging salespeople to service accounts because it provides a stable income, allowing them to focus on customer service and account management without the pressure of making immediate sales for commission.

Question 18

Which of the following is a negative aspect of straight-salary sales compensation plans?
A) Increase in employee turnover
B) Increase of fixed compensation costs
C) Complicated to design and administer
D) Reduced motivation to spend time with customers

Accepted Answer

Straight-salary sales compensation plans increase fixed compensation costs, which may lead to financial strain on the company in periods of reduced sales or economic downturns. A is incorrect because straight-salary plans often lead to lower employee turnover rates. C is incorrect because straight-salary plans are generally simpler to design and administer compared to other sales compensation plans. D is incorrect because straight-salary plans may motivate employees to spend more time with customers since they are not driven solely by commissions.

Question 19

A survey of 1,400 employers showed that ________ of them factor customer satisfaction into their calculation of incentive payments to employees.
A) 75%
B) 55%
C) 35%
D) 15%

Accepted Answer

The answer of A survey of 1,400 employers showed that...

Question 20

Which term refers to a bonus given to executives that is proportional to the change in company stock prices,rather than changes in profitability measures?
A) Stock appreciation rights
B) Performance plan units
C) Performance share plans
D) Phantom stock

Accepted Answer

The answer of Which term refers to a bonus given...

Quiz 11: Rewarding Performance

A straight-salary sales compensation plan has a tendency to encourage salespeople to emphasize sales volume over customer service.

Customer service rewards for salespeople are typically individual-based,team-based,or plant-based.

________ are noncash incentives given to a firm's executives.

Most companies use a ________ when setting up their sales compensation plan.

What is the difference between stock options,stock purchase plans,and stock awards as given to corporate executives? Why are long-term incentive plans for executives frequently criticized?

Tanglewood Enterprises wants a sales compensation plan that is simple to administer,controls sales costs,and encourages salespeople to be entrepreneurial.Which of the following would be the best compensation plan for Tanglewood?

In regards to pay-for-performance programs,which of the following is most likely characteristic of small firms than large firms?

Benson Marketing is a small firm with fewer than 100 employees.The CEO wants to implement a pay-for-performance system.The CEO wants the plan to motivate employees,attract top workers,and reduce fixed costs.Which of the following would be most appropriate for Benson?

In what way are compensation programs for salespeople different from compensation programs for other types of employees?

If a sales manager wants his sales professionals to service the product and spend time with customers,then a straight salary compensation plan is best.

Stock options provide the executive with "free" company stock,normally with no strings attached.

What is the difference between a straight commission and a straight salary system? What are the benefits of each? How can a firm ensure that a sales team does not overlook customer satisfaction for high sales volume?

________ permit the executive to buy stock at,or below,cost during a limited time.

Long-term incentive plans are linked very closely with executive performance.

Firms that give perks to executives are not legally required to disclose such awards..

When setting up a compensation plan for salespeople to encourage them to service accounts,a ________ plan is the best choice.

Which of the following is a negative aspect of straight-salary sales compensation plans?

A survey of 1,400 employers showed that ________ of them factor customer satisfaction into their calculation of incentive payments to employees.

Which term refers to a bonus given to executives that is proportional to the change in company stock prices,rather than changes in profitability measures?