Chapter 12

Question 1

variable aka incentive pay is what?

Answer 1

compensation that can be linked to individual, work unit/team, and/or organizational performance

Question 2

what are some commonly used individual incentives

Answer 2

piece rate and bonus plans

Question 3

the design of work unit/team variable pay plans must consider what 3 things?

Answer 3

1. how the incentives are to be distributed
2. the timing of the incentive payments
3. who will make decisions about variable payout

Question 4

organization-wide rewards include what two things.

Answer 4

1. profit sharing

2. stock ownership plans

Question 5

sales compensation can be provided as what 4 things?

Answer 5

1. salary only
2. commission only
3. salary plus commission
4. bonuses

Question 6

executive compensation must be viewed as a total package composed of what 5 things?

Answer 6

1. salaries
2. bonuses
3. benefits
4. prerequisites (perks)
5. short and long term performance based incentives

Question 7

variable pay

Answer 7

compensation that is tied to performance

Question 8

incentives

Answer 8

tangible rewards that encourage or motive action

Question 9

pay for perofmrance is also known as what?

Answer 9

variable pay

Question 10

extrinsic rewards

Answer 10

rewards that are external to the individual

Question 11

intrinsic rewards

Answer 11

rewards that are internal to the individual

Question 12

line of sight

Answer 12

idea that employees can clearly see how their actions and decisions lead to desired outcomes

Question 13

criticial success factors

Answer 13

variables that have a strong influence on the results of the organization

Question 14

key performance indicators

Answer 14

scorecard measures that tell managers how well the organization is performaing relative to critical success factors

Question 15

individual incentives

Answer 15

incentives given to reward the effort and performance of each employee

Question 16

work unit/team incentives

Answer 16

gainsharing (or goalsharing) plans. people in group must meet certain goals to share gains

Question 17

organizational incentives

Answer 17

incentives for the org

Question 18

what e conditions are necessary to use individual incentive plans?

Answer 18

1. individual performance must be identifiable
2. individual competitiveness must be desirable
3. individualism must be stressed in the organizational culture
4. individuals must be in control of the pace of production

Question 19

piece rate system

Answer 19

wages are determined by multiplying the number of units produced by the piece rate for one unit

Question 20

differential piece rate system

Answer 20

pays employees one pierce rate wage for units produced up to a standard level of output and a higher piece rate wage for units produced over the standard

Question 21

bonues

Answer 21

one time payment that does not become part of the mployees base salary

Question 22

spot bonuses

Answer 22

bonuses that can be given at any time for an good reason

Question 23

performance rewards?

Answer 23

incentives for performance such as merchandise, gift cards, etc…

Question 24

recognition rewards?

Answer 24

awards for recognition such as employee of the month

Question 25

service awards

Answer 25

awards for service meaning their service or longevity with company

Question 26

u can distribute rewards to team two ways what are they?

Answer 26

1. same size reward for everyone on team | 2. differtent size reward for each member

Question 27

free rider?

Answer 27

member of the group who contributes little

Question 28

gainsharing

Answer 28

system of sharing with employees greater than expected gains in profits and or productivity

Question 29

profit sharing

Answer 29

system to distribute a portion of an organizations profits to employees

Question 30

stock option plan

Answer 30

gives employees the right to pruchase a fixed number of shares of company stock at a specified price for a limited period of time

Question 31

employee stock ownership plan?

Answer 31

designed to give employees significant stock ownership in their organizations

Question 32

sales compensation can be of three general types what are they?

Answer 32

1. salary only 2. straight commission 3. salary plus commission

Question 33

draw (part of straight commission)?

Answer 33

when sales representatives can draw advance payments against future comission

Question 34

salary plus commission?

Answer 34

combines the stability of a salary with a commission based on sales generated

Question 35

what do CEOs do to earn all that money? ideally what 3 things?

Answer 35

1. estabish strategic directin for the org 2. create shareholder value 3. ensure the sustainability of the enterprise

Question 36

regular benefit plans vs supplemental benefits vs deffered compensation for CEOs

Answer 36

- regular benefit plans is what regular employees get - supplemental benefits are benefits other employees do not receive - deferred compensation is another way of heping executives with tax liabilities

Question 37

prerequisites (perks)

Answer 37

special benefits - usually noncash items 0 for executives

Question 38

restricted stock options

Answer 38

indicates that company stock shares will be paid as a grant of shares to individuals, usually linked to achieving specific performance criteria