T9: Employee Contributions - determining indv pay

Question 1

What is pay-for-performance?

Answer 1

Pay for performance plans signals a movement away from entitlements

Question 2

Designing a pay-for-perf plan

The 3 design objs are…

Answer 2

• Efficiency
• Equity/Fairness
• Compliance

Question 3

Designing a pay-for-perf plan

Efficiency

Answer 3

Strategy (supports corporate objectives)
Structure (flexibility)
Standards (measures)

Question 4

Designing a pay-for-perf plan

Equity/Fairness and Compliance

Answer 4

E/F: fair to employees

Compliance: comply w existing laws, enhance and maintain firm’s rep

Question 5

IMPT- Purpose of PFP plans (4)

Answer 5

• Attain strategic goals
• Reinforce org norms
• Motivate performance
• Recognize differential employee contributions

Question 6

IMPT- Specific PFP Plans

the duration GOT 2

Answer 6

Short Term: Merit Pay Increases, Variable Pay programs

Long Term: ESOPS, Performance plans, BBOPs

Question 7

DisAdv of Merit Pay (short term)

Answer 7

Expensive
Lacks Flexibility
May not achieve desired goal

Question 8

IMPT- the 4 Variable Pay Programs (short term)

Answer 8

Lump-Sum Bonuses
Spot Awards
Indv Incentives Bonuses
Team Incentives Bonuses (Gain Sharing, Profit sharing)

Question 9

IMPT- Long term Incentive plans

Answer 9

Employee Stock Ownership Plans (ESOPs)
Performance Plans (Performance Share and Performance Unit)
Broad-Based Option Plans (BBOPs)