| Course | GB545 Strategic Total Rewards and Financial Impact |
|---|---|
| Unit | Unit 7 |
| Paper type | Incentive plan proposal |
| Length | About 850 words, 6 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MBA |
| Updated | October 2026 |
Free sample paper for GB545 Unit 7
A Pool That Opens at 85 Percent and Stops at 150: A Unit 7 Incentive Plan Proposal for 2,210 Employees
[Student Name]
Purdue University Global
GB545: Strategic Total Rewards and Financial Impact
Unit 7 Incentive Plan Proposal
[Instructor Name]
[Date]
The company, its plan figures and every payout are composite and illustrative; the frameworks and sources cited are real.
1. Eligibility and Targets
The plan covers 1,430 salaried employees outside sales, with targets averaging 9 percent of base salary, and 780 assembly technicians, with a target of 3 percent of base. Assembly technicians are added for the first time; until now only salaried staff had a bonus. The 190 quota-carrying sellers are excluded, because they are paid commissions tied to their own bookings and a company pool would pay them twice for the same revenue.
At target, salaried employees, whose base salaries average about $95,800, account for $12,330,000 of the pool and assembly technicians, at an average base of $52,000, for $1,216,800, giving a target pool of $13,546,800.
2. The Funding Measure
The pool is measured against operating income before the bonus is accrued, planned at $123,546,800. Measuring it after the bonus would create a loop, since a larger bonus would lower the income that determines the bonus. With the measure set before incentive expense, the company's plan is $110,000,000 of operating income after paying the bonus at target.
Murphy (2000) found that plans whose targets are set from the company's own budget invite managers to negotiate low budgets, while targets tied to external or prior-year standards are less open to that pressure. The proposal uses the board-approved operating plan, but the compensation committee reviews the plan target against the prior year's actual result before approving it.
3. Funding Curve
Below 85 percent of plan, under $105.0 million: no pool.
At 85 percent, $105,014,780: the pool opens at half of target, $6,773,400.
From 85 to 100 percent: the pool rises in a straight line to target, $13,546,800 at $123,546,800.
From 100 to 120 percent: the pool rises more slowly, reaching the ceiling of 150 percent of target, $20,320,200, at $148,256,160.
Above 120 percent: the pool stays at $20,320,200.
The ceiling is set at 150 percent rather than 200 because a year far above plan at Tellwater is likelier to come from pricing, a large one-time order or an acquisition than from anything most employees did.
4. Scenario Table
Each row gives operating income before the bonus, the pool and operating income after the bonus.
80 percent, a miss: $98,837,440; no pool; $98,837,440.
85 percent: $105,014,780; $6,773,400; $98,241,380.
90 percent: $111,192,120; $9,031,200; $102,160,920.
95 percent: $117,369,460; $11,289,000; $106,080,460.
100 percent: $123,546,800; $13,546,800; $110,000,000.
110 percent: $135,901,480; $16,933,500; $118,967,980.
120 percent: $148,256,160; $20,320,200; $127,935,960.
In a missed year the plan pays nothing, and in a year far above plan it keeps nearly three of every four extra dollars for the company.
5. Individual Payout Table
Each employee's award is the target multiplied by the pool's funding percentage, adjusted by a performance modifier from 0.8 to 1.2 that managers apply within their department's share of the pool.
Firmware engineer, $131,000 base, 10 percent target: $6,550 at threshold, $13,100 at plan and $19,650 at the ceiling, before the modifier.
Assembly technician, $52,000 base, 3 percent target: $780 at threshold, $1,560 at plan and $2,340 at the ceiling.
Salaried employee at the average, $95,800 base, 9 percent target: about $4,311 at threshold, $8,622 at plan and $12,933 at the ceiling.
Gerhart and Fang (2014) note that pay tied to performance affects both how hard current employees work and which people choose to join and stay, and the individual modifier keeps a link between personal performance and the award without letting it expand the pool.
6. Share of the Increment
The most useful test of a funding curve is how much of each additional dollar of operating income it gives to employees. Between threshold and plan, income rises $18,532,020 and the pool rises $6,773,400, so employees receive about 36.5 cents of each additional dollar. Between plan and ceiling, income rises $24,709,360 and the pool rises another $6,773,400, about 27.4 cents. Above 120 percent, employees receive nothing more.
The steeper share below plan is deliberate: it rewards the effort that closes a gap to plan, where employees have the most influence. The flatter share above plan reflects the view that results far above plan are partly luck. The one weak point is the step at threshold, where the pool jumps from zero to $6,773,400 as income crosses $105.0 million. That gives managers a strong reason to push a borderline year over the line, so the committee should review any year that finishes within one percent of the threshold.
7. Administration
Results are certified by finance after the annual audit, and awards are paid in March. Employees must be employed on the payment date, except for retirement, disability or death. Milkovich et al. (2020) stress that employees must understand how a plan pays for it to influence behavior, so each employee receives a one-page explanation with the funding curve and their own target.
References
Gerhart, B., & Fang, M. (2014). Pay for (individual) performance: Issues, claims, evidence and the role of sorting effects. Human Resource Management Review, 24(1), 41-52. https://doi.org/10.1016/j.hrmr.2013.08.010
Milkovich, G. T., Newman, J. M., & Gerhart, B. (2020). Compensation (13th ed.). McGraw-Hill Education.
Murphy, K. J. (2000). Performance standards in incentive contracts. Journal of Accounting and Economics, 30(3), 245-278. https://doi.org/10.1016/S0165-4101(01)00013-1
The Purdue Global GB545 Unit 7 instructions
GB545 Unit 7 asks you to propose an incentive plan for a defined group of employees. Set out eligibility and targets, explaining any group excluded. Define the funding measure precisely, including how it avoids depending on its own expense. Describe the funding curve from threshold through target to any ceiling, and justify each point. Show a scenario table across a range of results, including a miss. Give individual payouts for representative employees. Analyze how much of each additional dollar of results the plan shares with employees, and identify any feature that could encourage unwanted behavior. Close with administration. Expect about seven pages with a curve, scenario table and payout table, citing sources in APA 7.
Inside the GB545 Unit 7 example
Eligibility covers 1,430 salaried employees at 9 percent targets and 780 assembly technicians at 3 percent, and excludes 190 sellers on commission. The measure is operating income before the bonus, and Murphy's work on budget-based targets prompts a committee check against prior-year results. The curve opens at $105.0 million and stops at a 150 percent ceiling chosen because outsized years usually come from pricing or acquisitions. Seven scenarios run from a miss to $20,320,200, and the highlighted sentence summarizes what the plan keeps. A firmware engineer receives $6,550, $13,100 or $19,650. The increment analysis finds 36.5 and 27.4 cents per dollar, and Gerhart and Fang frame the modifier.
GB545 Unit 7 rubric: what earns full points
Instructors grading a GB545 incentive proposal look for a plan whose pool can be reproduced at every scenario from the stated measure and curve. Precise eligibility with reasons for exclusions earns points. A funding measure that avoids circularity shows technical care. Justified threshold, target and ceiling points show design judgment. A scenario table that includes a miss shows the plan was tested on bad years as well as good. Individual payouts make the design concrete. A share-of-increment analysis shows financial insight. Identifying the incentive created by a threshold step shows critical thinking. Clear administration rules complete the plan. Murphy, Gerhart and Fang, and Milkovich and colleagues are cited.
GB545 Unit 7 help: mistakes that cost points
Many GB545 Unit 7 proposals describe a target pool and a ceiling without saying how the measure is defined, so the pool cannot be calculated at any result other than plan. Others measure income after the bonus, which creates a loop. A frequent gap is the bad year: a scenario table without a miss leaves the plan's most important feature untested. Some writers never ask how much of an exceptional year the plan gives away. Define eligibility and exclusions, state the measure, justify each point on the curve, run scenarios including a miss, show individual payouts, compute the share of increment and examine the threshold step. Explaining the plan to employees is part of the design.
Get a GB545 Unit 7 example written to your instructions
Three things shape the proposal: what the bonus is meant to accomplish in the Unit 7 assignment, who is eligible and the financial figures supplied. Send those with the rubric. Expect a proposal inside 24-48h, the pool funded from a stated measure, threshold and ceiling defended, scenarios including a bad year. A first sample carries no fee. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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GB545 Unit 7 questions, answered
Why measure operating income before the bonus is accrued?
Because measuring it afterward creates a loop: a larger bonus lowers the income that determines the bonus. Most plans avoid this by defining the measure before incentive expense, and the example states that definition in its funding section. If your case specifies a different measure, keep it, but explain how the loop is handled so a reader can reproduce the pool at each scenario.
Is a 150 percent ceiling standard?
It is common rather than required. Ceilings between 150 and 200 percent of target appear often in annual plans, and some organizations set none. The example chose 150 because a year far above plan is likelier to come from pricing or an acquisition than from anything employees did. Whatever figure you choose, state the reason and show the scenario where it binds.
Should sales employees sit in the same plan?
Usually not. Sellers typically work on commission plans tied to their own bookings, and adding a company pool would pay twice for the same revenue. The example excludes 190 quota-carrying employees for that reason and says so in its eligibility section. If your case includes a sales team, one sentence explaining their treatment heads off the question before a grader asks it.
Where can I find a free GB545 Unit 7 sample paper?
This page carries a full GB545 Unit 7 incentive plan proposal for 2,210 employees at a composite analyzer maker, with a funding curve, seven scenarios, individual payouts and APA 7 references.
How much of a good year does the plan share?
Between plan and the ceiling, about 27.4 cents of each extra dollar of operating income goes to the pool; between threshold and plan, about 36.5 cents. Above 120 percent of plan, employees receive nothing more.