Deck 11 Flashcards
(22 cards)
FLSA wage calculations and incentive payments
bonuses included in overtime calculations and bonuses excluded from overtime calculations
bonuses included in overtime calculations
those promised to newly hired employees, provided for in union contracts or other agreements, announced to induce more work, or remain with the firm
Bonuses excluded from the overtime calculations
christmas, gifts, ones so substantial that employees don’t consider them apart of wages, purely discretionary one in which the employer retains discretion over how much to pay
pay of performance plans
-individual employee
-incentive and recognition programs
-sales compensation programs
-team based variable pay programs
-organization wide incentive programs
-executive incentive compensation programs
piecework plans
the worker is paid a sum for each unit they produce
Merit pay
is a permanent cumulative salary increase the firms awards to an individual employee based on their individual performance
merit pay options
give annual lump-sum merit raises that do not make the raise part of an employee’s base salary : tie is to both individual and organizational performance
professional employees
are those whose work involves the application of learned knowledge to the solution of the employer’s problems (lawyers, doctors, economists, engineers)
Possible incentives
bonuses, stock options, and grants profit sharing, better vacations, more flexible work hours, improved pensions plans, equipment for home offices
Effect of Recognition based awards
recognition has a positive impact on performance, either alone or in conjunction with financial rewards
ways to use recognition
social recognition, performance based recognition, performance feedback
information technology and incentives
software that automates planning, calculation, modeling and management of incentive compensation plans
online award programs
programs offered by online incentives firms that improve and expedite the awards process
salary plan/straight salaries
best for: prospecting, account servicing, training customer’s sales force, or participating in national and local trade shows
commission plan
-pay is percentage of sales results
-keeps sales costs proportionate to sales revenues
-may cause a neglect of nonselling duties
-can create wide variation in salesperson’s income
-likelihood of sales success may be linked to external factors rather than to salesperson’s performance
Combination Plan
-pay is a combination of salary and commissions usually with a sizable salary component
-gives salespeople a floor to their earnings
-salary component covers company specified service activities
Commission plus drawing account plan
-commissions are paid but a draw on future earnings helps the salesperson to get through low sales periods
commission plus bonus plan
-pay is mostly based on commissions
-small bonuses are paid for directly
-activities like selling addons or slow moving items
Executive total reward package
-base salary
-short term incentives
-long term incentives
Sarbanes Oxley act of 2002
makes executives and the board of directors personally liable for violating their fiduciary responsibilities to their shareholders
Short term incentives
-plans intended to motivate short term performance or managers and tied to company profitability
Creating an executive compensation plan
- define the strategic context for the executive compensation program
- shape each component of the package to focus the managers on achieving the firm’s strategic goals
3.check the executive compensation plan for compliance with all legal regulatory requirements and for tax effectiveness - install a process for reviewing and evaluating when a major business change occurs
