Chapte 12: Incentive Pay Flashcards
What are the two components of an employee’s pay?
Fixed amount of base pay (0-100%)
Flexible amount of performance-related pay (0-100%)
Incentive pay relies on what two theories?
Goal-setting theory and Reinforcement theory
What is incentive or variable pay?
Compensation that depends on some measure of individual or group performance or results in order to be awarded.
What are individual incentives?
Incentives that reinforce the performance of a single person with a reward that is significant to that person.
What are employee stock ownership plans (ESOPs)?
Company-established benefit plans in which employees acquire stock as part of their benefits.
What are Variable Pay Programs?
A portion of an employee’s pay is based on some individual and/or organizational measure of performance.
What are piece-rate pay plans?
Workers are paid a fixed sum for each unit of production completed.
What are profit-sharing plans?
Organization-wide programs that distribute compensation based on some established formula designed around company profitability.
What is gain sharing?
An incentive plan in which improvements in group productivity determine the total amount of money that is allocated.
What is a skill-based pay plan?
Pay levels are based on how many skills employees have to how many jobs they can do.
What are flexible benefits?
Employees tailor their benefits program to meet their personal needs by picking and choosing from a menu of benefit options.
What are group incentives?
Incentives that provide reinforcement for actions of more than one individual within the organization.
oWhat are social loafers?
Individuals who avoid providing their maximum effort in group settings because it is difficult to pick out individual performance.
What is a bonus?
A lump-sum payment, typically given to an individual at the end of a time period.
What is a commission?
A payment typically provided to a salesperson for selling an item to a customer.
