Discussion Question

Topics: Sales, Profit sharing, Thought Pages: 3 (1037 words) Published: August 14, 2012
Discussion Questions:
1.Compare and contrast six types of incentive plans.
Various types of incentive plans werepresented in the text, including piecework plans, straight and guaranteed plans, standardhour plans, plans for salespersons (commissions and combination plans), and groupincentive plans. With the piecework plans, earnings are tied directly to what the individualworker produces, and are more appropriate in a manufacturing organization. Commissionsare more appropriate for salespeople in situations where they are largely unsupervised. Ingroup incentive plans like the Scanlon Plan, all workers involved in developing andimplementing cost savings share in the benefits of the suggestions.(Pages 440-460) 2.Explain five reasons why incentive plans fail.

When incentive plans fail, it can be for avariety of reasons like: employees do not believe that effort will obtain the reward, badmanagement overrides the plan, rewards tied to the wrong measures, plan is complicatedand difficult for employees to understand, or standards are too high or too low. See the liston page 462 for more reasons and details. (Pages 461-463) 3.Describe the nature of some important management incentives .

Two widely usedmanagement incentive plans are merit pay and profit sharing plans. Merit pay is any salaryincrease that is awarded to an employee on his or her individual performance. Advocatesargue that only pay tied directly to performance can motivate improved performance. Profitsharing plans distribute a portion of the company's profits to employees in the form of abonus. Research shows that benefits are more subtle than increased productivity—possiblyin the form of better worker commitment. There are additional management incentive plansstudents might cover, including long-term incentives such as capital accumulation plans,various alternative stock plans, and performance plans. (Pages 443-449) 4.When and why would you pay a salesperson a salary and commission combined? Salary...
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