Compensation and Benefits

Correct Answer: 401(k) plan

The correct answer is the 401(k) plan. This type of retirement plan is characterized by defined contributions that an employee can make from their salary. The Internal Revenue Service sets annual contribution limits to these plans, and they may include employer matching contributions as well. The primary feature of a 401(k) plan is that the contributions are typically made pre-tax, and the amount grows tax-deferred until withdrawn during retirement. The other options provided are not the best fits for the question: A defined benefit pension plan is an employer-sponsored retirement plan where the employee benefits are calculated based on a formula considering factors like salary history and duration of employment, rather than specific contribution amounts set by the employee. Consequently, they are not defined contribution plans. A Simplified Employee Pension (SEP) plan is another type of retirement plan that allows an employer to make contributions to traditional IRAs (SEP-IRAs) set up for employees, but while it does have contribution limits, it is not known primarily for defined contributions by employees themselves. Lastly, a deferred compensation plan is a catch-all term for agreements between an employer and an employee to pay the employee some amount of earnings at a later date, including pensions and retirement plans, but this term by itself does not denote a defined contribution plan subject to annual IRS limits like the 401(k) plan does.

Correct Answer: Implement a team recognition program with public acknowledgment and shared bonuses.

Implementing a team recognition program with public acknowledgment and shared bonuses fosters team cohesion and sustains motivation by rewarding collective effort, thereby encouraging continued high performance. Other strategies, such as individual bonuses or team outings, may recognize achievements but do not as effectively promote a sense of shared purpose and ongoing motivation.

Correct Answer: Implementing a team-based incentive program linked to collective performance goals.

Implementing a team-based incentive program linked to collective performance goals is the most effective strategy for sustaining long-term team motivation and enhancing collective performance. This approach aligns the team's rewards with their shared objectives, fostering collaboration and a sense of joint accountability. In contrast, providing individual bonuses based on personal performance metrics may encourage competition over cooperation, potentially undermining team cohesion. Offering opportunities for professional development and organizing regular team-building events are valuable for overall motivation and team dynamics but do not directly tie rewards to the achievement of collective performance goals.