Chapter 1 Flashcards
(54 cards)
wall street financial service firms and banks used ______ plans that rewarded people for developing innovative financial investment vehicles
incentive
Federal Reserve officials advise firms to track warning signs of ______
excessive risk taking and cultural breakdowns
the incentive system encourages traders to be ______
confident and aggressive
what is the Troubled Asset Relief Program?
includes restrictions on executive pay that were designed to discourage executives from taking unnecessary and excessive risks
what are two causes of the global financial crisis?
misaligned incentives, weak education in compensation systems
benefits given as part of a total compensation package may also be seen as a reflection of ____
equity or justice in society
civilian employers spend about 46 cents for benefits on top of every dollar paid for _____
wages and salaries
individuals and businesses spend about __% of US economic output on health care
18
when unemployment rates increase, health care coverages (decline/incline)?
decline
job loss/gain is a function of ___
relative labor costs and productivity
why are some companies moving work out of China?
hourly wage is not as low in other countries such as Vietnam, India, and the Philippines
stockholders have a particular interest in what type of pay?
executive pay
how are the interests of executives aligned with shareholders?
they pay executives on the basis of company performance measures such as shareholder return
how do shareholders influence executive compensation decisions
shareholder proposals and election of directors in proxy votes
what are clawback provisions
designed to allow companies to reclaim compensation from executives in certain situations
what are the two ways compensation influences the success of managers?
- it is a major expense that must be managed
2. it is a major determinant of employee attitudes and behaviors
How do companies like Costco manages to hold an advantage over competitors even with higher labor costs?
employee retention, customer satisfaction, efficiency in generating sales
why is pay important?
it can influence employee behavior, quality of work, and attitude
how do employees view compensation?
return in an exchange between their employer and themselves, an entitlement for being an employee of the company, an incentive to stay in a job, and as a reward
the extensive legal framework governing pay consists of what
minimum wage, living wage, overtime, nondiscrimination regulations
what are the two ways pay influences employee motivation and behavior?
affects motivational intensity, direction, and persistence.
employee ability and organizational design.
what is the incentive effect
the ways in which pay influences motivation and behavior
what is the sorting effect
different types of pay strategies cause different types of people to apply and stay with an organization
what does compensation mean in the US
something that counterbalances, offsets, or makes up for something else
