CH 4

Question 1

Why use Performance Pay?

Answer 1

1) Can signal EE behaviours and motivate EE’s to acheive them
2) Can reduce the need to control behaviour
3) Raise EE interest in performance
4) Can support management strategies
5) Makes pay plans more valuable

Question 2

pay-for-knowledge system (PKS)

Answer 2

based on skills and competencies of an EE

Question 3

job evaluation

Answer 3

ranking jobs by their value to firm

Question 4

market pricing

Answer 4

average of what others are paying

Question 5

Why use Indirect pay?

Answer 5

1. Competitive pressure.
2. To satisfy needs of members
3. Favourable Inc.tax treatment
4. Many benefits can be purchased more cheaply by the employer
5. Benefits can protect the financial security and peace of mind of employees
6. Many employers feel a genuine sense of responsibility for the welfare of their employees and want to help protect them from adversity.
7. Benefits can reinforce a particular managerial strategy.
8. Specific benefits can be used to promote consequences that benefit the organization.

Question 6

Why use Base Pay?

Answer 6

a. ) easy to measure,
b. ) easy to price in terms of its value to the employer,
c. ) easy to attribute to individual employees,
d. ) controllable by the individual employee, and
e. ) relatively stable.

Question 7

Indirect pay

Answer 7

Any type of ER-provided reward - not part of base pay or performance pay.
Mandatory Benefits
Pension Plan
Health and life Insurance
Pay for time not worked
Employee Services
Other Benefits

Question 8

Performance pay

Answer 8

$ received when results occur
Individual performance
(piece rates, commissions, merit pay)
Group performance
(gain sharing, goal sharing, team based pay)
Organization performance (employee profit share, employee stock plans and other org pay plans)

Question 9

Base Pay

Answer 9

Base pay is based on time worked, “guaranteed”, and usually hourly or salary
Job Evaluation - ranking jobs by value to firm
Market pricing - avg of what others are paying
Pay for knowledge - based on skills and competencies of an EE