Chapter 12 Flashcards
(20 cards)
What is Fixed Pay?
Compensation independent of performance level, includes base pay and allowances.
What is Variable Pay?
Incentive pay tied to productivity or profitability, in addition to base pay.
What is Merit Pay?
Salary increase based on individual performance, can be ongoing or lump sum.
What is an Employee Share Ownership Plan?
A trust holds and distributes company stock to employees.
What is a Profit-Sharing Plan?
Most or all employees share in company profits.
What is a Gainsharing Plan?
Employees share productivity gains; works best in stable organizations.
What are Team Incentives?
Group-based pay methods like equal pay, pay by highest/lowest performer.
What are Piecework Plans?
Pay based on number of items produced, includes straight, guaranteed, and differential piecework.
What are Senior Manager Incentives?
Includes annual bonuses (short-term) and stock options or share units (long-term).
What is a Sales Salary Plan?
Fixed income, good for account servicing but doesn’t reward high sales.
What is a Commission Plan?
Pay tied directly to sales volume; strong incentive but may neglect other tasks.
What is a Combination Plan?
Mix of salary and commission; offers stability and reward but can confuse.
What are the Effective Incentive Plan Keys?
Must be strategically aligned, measurable, and culturally appropriate.
What is Intrinsic Motivation?
The work itself should be motivating—cannot rely on pay alone.
What are Employee Recognition Programs?
Reward programs that value employees through praise and acknowledgement.
What is Strategic Fit?
Link incentives to performance, competencies, and cultural values.
What are the Performance Pay Limitations?
Can’t replace good management; incentives must drive the right behavior.
What is Contextual Performance?
Employee contributions beyond job tasks (e.g., teamwork, flexibility).
What is Capital Accumulation?
Long-term executive incentive using stock-based performance rewards.
What are Sales Incentive Considerations?
Balancing motivation, fairness, retention, and job duties.
