Test Your Knowledge
Variable Pay -- Incentives, Recognition and Bonuses (GRP 6)
Instructions: Choose an answer for each question.
1. Which of the following describes a purpose of variable pay?
A. To reward individuals for the skills and competencies they possess
B. To ensure the individual’s 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 consistent ongoing job performance over time
2. What are the three categories of variable pay?
A. Cash, noncash and equities
B. Quarterly, annual and spot bonuses
C. Incentives, bonuses and recognition
3. 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
4. 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
5. 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
6. 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
7. 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
8. Which of the following best describes an internal factor that should be considered in developing the plan?
A. Labor market
D. Costs/resource availability
9. Which of the following would most likely be a reason to use prospective performance instead of historical performance in setting baselines?
A. When past performance is indicative of future performance
B. When previously achieved levels of performance have been acceptable
C. When a capital improvement or change in the production process has been made
D. When seasonality or other volatility is predictable
10. Plan implementation usually involves which of the following activities?
A. Determining key points, defining eligibility and choosing communication channels
B. Selecting an implementation team, developing the communication plan, introducing the plan and plan administration
C. Conducting a readiness assessment, obtaining management support, selecting an implementation team and introducing the plan