Ch 11 Pay for Performance Plans *Done

Question 1

Strategic Issues examples

Answer 1

Alignment
competitiveness
contributors
administration

Question 2

alignment techniques and outcome

Answer 2

work analysis
descriptions
evaluation certification

outcome: internal structure

Question 3

competitiveness techniques and outcome

Answer 3

market definition
surveys
policy line

outcome: pay structure

Question 4

contributors techniques and outcome

Answer 4

seniority based
performance based
merit guidance

outcome: incentive programs

Question 5

Administration techniques and outcome

Answer 5

planning
budgeting
communication

outcome: evaluation

Question 6

Strategic objectives

Answer 6

efficiency
 - performance
 - quality
 - customer
 - cost
equity
compliance

Question 7

Pay for performance plan definition

Answer 7

pay that varies with some measures of individual or organizational performance

Question 8

Pay for performance plan is also called

Answer 8

variable pay plans

at risk pay plan

Question 9

these plans have a ___ impact on performance __ they are designed well

Answer 9

positive

if

Question 10

what are the Pay for performance plan different types

Answer 10

short term
long term
group
individual

Question 11

Always look for potential ____ ____

Answer 11

unintended consequences

Question 12

unintended consequences examples

Answer 12

enron
chandelier factory
competition among employees etc.

Question 13

Assume: people ___ game the system if possible

Answer 13

will

Question 14

Short term individual pay for performance plans options

Answer 14

merit pay
lump sum bonuses
individual spot awards
individual incentives

Question 15

Advantages of individualized incentive plans

Answer 15

substantial contribution to 
- increased productivity
- lower production costs
- increased earning of workers
less direct supervision
helps costing and budgeting control

Question 16

Disadvantages of individualized incentive plans

Answer 16

-conflict: output vol. vrs quality
-new tech.: may be resistant by ee’s concerned about the impact on production standards
-reduced willingness of ee’s to suggest new production methods for fear of subsequent increases in production standards
-increase complains that equipment is poorly maintained
- increased turnover among new ee, experienced workers no willing to cooperate in on the job training
elevated levels of mistrust between management/ee’s

Question 17

Team and group incentive plans options

Answer 17

profit sharing plans
gain sharing plans
earnings at risk plans

Question 18

4 types of sample group/tea, performance measures

Answer 18

customer focused measures
financially focused measures
capability focused measures
internal process focused measures

Question 19

Customer focused measures

Answer 19

time to market measures
- on time delivery
- cycle time
- new product introduction
customer satisfaction measures
- market share
- customer satisfaction
- customer growth and retention
- account penetration

Question 20

Financially focused measures

Answer 20

value creation

shareholders return

Question 21

capability focused measures

Answer 21

HR capabilities

other asset capabilties
- patents and copyrights

Question 22

internal processes focused measures

Answer 22

resource utilization

change effectiveness

Question 23

different types of variable pay plans

Answer 23

cash profit sharing
stock ownership or options
balanced scorecard
productivity/gain sharing
team/group incentives

Question 24

gain sharing plans definition

Answer 24

under gain sharing plans ee’s share cost savings or productivity gains as measured by a predetermined. gain sharing formula

• helps isolate problem areas

Question 25

Key elements of designing a gain sharing plan and formula

Answer 25

strength of reinforcement
productivity standards
scope of formula
perceived fairness of the formula
ease of administration
 production variability

Question 26

Three gain sharing formulas are

Answer 26

scanlon plan
rucker plan
improshare

Question 27

What does SVOP stand for?

Answer 27

sale value of production plan

Question 28

what type of data does SVOP use to determine ratio

Answer 28

historical

Question 29

what is improshare?

Answer 29

• use historical production data or time and motion studies

- savings shared 50/50

Question 30

Variables pay plans require a corporate profit target to be met before ____ ____ ____

Answer 30

any payout occurs

Question 31

what are earnings at risk plans ?

Answer 31

incentive plans sharing profits in successful years and reducing base pay in unsuccessful year

Question 32

earnings at risk plan example

Answer 32

base pay reduced 15% across the board
ee”s are then given .5% increase for every % of productivity
above 70% of last years productivity

Question 33

Advantages of group plan incentives plan

Answer 33

• positive impact on org and ind. perf.
• easier to develop Perf. measures than for ind. plans
• signals that cooperation, both within, and across groups, is a desired behaviour
• teamwork supported by most ee’s
• may increase participation of ee’s in decision making processes

Question 34

Disadvantages of group plan incentives plan

Answer 34

• line of sight may be lessened
• may lead to increased turnover amoung top ind. perf. because they must share
• increases compensation risk to ee’s because of lower income stability

Question 35

Long term incentive plans options

Answer 35

ee stock ownership plans
stock options
broad based option plans

Question 36

what are the components of an executive compensation package?

Answer 36

1. base salary
2. short term (annual) incentives or bonuses
3. long term incentives and capital appreciation plans
4. executive benefits
5. executive perquisites

Question 37

Examples of long term incentives for executives

Answer 37

1. appreciation based plans
2. full share plans
3. performance based plans

Question 38

Pay components for professional ee’s

Answer 38

dual career ladders
maturity curves
performance bonuses
perks

Question 39

key factors in designing a sales compensation plan

Answer 39

• the nature of the ppl who enter the sales profession
• org. strategy
• competitor practices
• products/service being sold

Question 40

Key issues in contingent workforce compensation

Answer 40

equity
fairness relative to permanent ee’s
boundary less careers

Question 41

Special ee groups:

Compensation must address high potential for ____ in these jobs

Answer 41

conflict

Question 42

special ee groups”

compensation treatment ___ ___ that for other ee’s

Answer 42

differs from

Question 43

broad based option plans

Answer 43

stock option provided to ee’s at all levels

Question 44

dual career track

Answer 44

career progression on either a managerial path or a professional path

Question 45

earnings at risk plan

Answer 45

an incentive plan that includes reductions in base pay unsuccessful plan

Question 46

merit pay

Answer 46

increase in base pay related to past perf

Question 47

profit sharing plans

Answer 47

variable pay plans requiring a profit target to be met before any payouts occur

Question 48

stock options

Answer 48

the right to purchase stock at a specified (exercise) price for a fixed time period