Recognizing And Rewarding Day 24

Question 1

Organizations have wide discretion in setting performance-related pay called

Answer 1

Incentive pay

Question 2

This is pay specifically designed to energize, direct, or conte employees’ behavior

Answer 2

Incentive pay

Question 3

Organizations select incentives based on (3)

Answer 3

Costs
Expected influence on performance
Fit with the organization’s broader HR policies and goals

Question 4

Organizations can tie incentive pay to (4)

Answer 4

Individual performance
Profits
Seniority
Other measures of success

Question 5

Three types of incentives

Answer 5

Individual incentives
Group incentives
Organizational incentives

Question 6

Law of effect

Answer 6

What is rewarded gets done.

Question 7

Two major rewards at work

Answer 7

Money

Praise

Question 8

Individual incentives (5)

Answer 8

Piecework rate
Standard hour plan
Merit pay
Performance bonuses
Commission

Question 9

Wage based on the amount workers produce

Answer 9

Piecework rate

Question 10

Piecework rate is best for work that is

Answer 10

Stable, repetitive, worker paced, and easily measured

Question 11

Piecework rate fits best with _______ between jobs

Answer 11

Low interdependence

Question 12

Piecework rate is rarely used because (5)

Answer 12

Most jobs have no physical output
Individuals focus only on the incentive
Does not fit with team approach
Does not reward obtaining multiple skills
Rewards output at the expense of quality or service

Question 13

An incentive plan that pays workers extra for work done in less than a preset “standard time”

Answer 13

Standard hour plan

Question 14

Standard hour plan

Answer 14

An incentive plan that pays workers extra for work done in less than a preset “standard time”

Question 15

Piecework rate

Answer 15

An incentive plan that pays wages based on the amount workers produce

Question 16

Advantage of standard hour plans

Answer 16

They encourage employees to work as fast as they can and be efficient, can potentially bill more hours in a week than worked

Question 17

Disadvantage of standard hour plans

Answer 17

Employees may not necessarily care about quality or service

Question 18

System of linking pay increases to ratings on a performance scale
Requires quality performance appraisal
Supervisor provides most performance info

Answer 18

Merit pay

Question 19

Most common individual incentive system

Answer 19

Merit pay

Question 20

Merit pay

Answer 20

System of linking pay increases to ratings on a performance scale

Question 21

Disadvantages of merit pay (5)

Answer 21

Discouraged teamwork
Too much reliance on supervisor for rating
Pay increase are not representative of performance and/or are too small to be motivating
An annuity based on the past rather than the present
Fail to account for short-term fluctuations in performance

Question 22

Incentive not built into base pay so employees must re-earn it every year
Usually given in addition to or in place of merit “pay” incentives

Answer 22

Performance bonuses

Question 23

Advantages of performance bonuses

Answer 23

Allows organizations to be flexible, year to year, in terms of what they want to reward

Question 24

Incentive pay calculated as a percentage of sales, revenue, or profitability

Answer 24

Commissions

Question 25

Commissions

Answer 25

Incentive pay calculated as a percentage of sales, revenue, or profitability

Question 26

3 types of commissions

Answer 26

Straight commission Salary-plus-commission Commission-plus-draw

Question 27

2 disadvantages of commissions

Answer 27

Contaminated - some things employees cannot control | Deficient - (make the sale regardless of the long term cost)

Question 28

Group incentives (2)

Answer 28

Gainsharing | Bonuses and rewards

Question 29

Measures increases in productivity or effectiveness and distributes part of the gain back to employees

Answer 29

Gainsharing

Question 30

Gainsharing

Answer 30

Measures increases in productivity or effectiveness and distributed part of the gain back to employees

Question 31

This frees employees to determine how to improve their own and group's performance Distributed payouts frequently

Answer 31

Gainsharing

Question 32

Conditions for success of gainsharing (5)

Answer 32

Management commitment Commitment to continuous improvement and change High level of cooperation and information sharing Employment security Requirements clearly communicated with employee input

Question 33

These reward the members of a group for attaining a specific goal, usually measured in terms of physical output

Answer 33

Group bonuses and rewards

Question 34

Advantages of group bonuses and rewards

Answer 34

They encourage group or team members to cooperate

Question 35

Disadvantage of group bonuses and rewards

Answer 35

Competition among individuals may be replaced by competition among groups

Question 36

4 issues with group rewards

Answer 36

Hurdle too high/too low Value the payout Line of sight Free rider

Question 37

Organization incentives (2)

Answer 37

Profit sharing | Stock options

Question 38

Incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary

Answer 38

Profit sharing

Question 39

3 disadvantages of profit sharing

Answer 39

Many plans defer actual payments Few plans pay out during business downturns Increases variability of compensation costs

Question 40

Profit sharing

Answer 40

Incentive pay in which payments are a percentage of the organization's profits and do not become part of the employees' base salary

Question 41

Opportunity to buy stock at a later date but at a price established when the option is granted

Answer 41

Stock options

Question 42

Stock options

Answer 42

Opportunity to buy stock at a later date but at a price established when the option is granted

Question 43

Advantage of stock options

Answer 43

Puts employees in the role of (part) owner

Question 44

Employee stock ownership plans (ESOPs)

Answer 44

Stock distributed to employees to keep in a trust fund Employees can sell stock when they leave the company Must invest 51% or more of fund's assets in the company's own stock

Question 45

A combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay

Answer 45

Balance scorecard

Question 46

Balance scorecard

Answer 46

A combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay

Question 47

When are organization-focused incentives effective? (4)

Answer 47

Performance measures should be linked to organization's goals Organization must give employees resources needed to meet goals Plan should take into account that employees may ignore goals that are not rewarded Establish concrete goals with sufficient feedback

Question 48

When are employee-focused incentives effective? (5)

Answer 48

``` Employees believe they can meet performance standards Employees value rewards Employees perceive reward system as fair Do not make employees feel coerced Shield employees from unnecessary risk ```

Question 49

Central tenet of this theory is that there is potential for mischief when the interests of owners and managers diverge

Answer 49

Agency theory

Question 50

4 examples of agency theory

Answer 50

Used illegal accounting practices Backdated stock options Acted on internal knowledge and engaged in insider trading Financially mismanage organization to attain bonuses