Chapter 1 Flashcards
What is the difference between extrinsic and extrinsic rewards?
Extrinsic rewards satisfy basic needs for survival and security, as well as social needs for recognition. They include monetary and non monetary rewards and come from the job context.
Intrinsic rewards satisfy higher level needs for self-esteem, achievement, growth and development. They are based on the work itself, job content (i.e. challenge, interest or variety of job)
Joe, a service manager, loves his job. He particularly appreciates the level of autonomy his job provides. From a rewards perspective, which kind of rewards appears to be motivating Joe?
Intrinsic reward
Which statement best describes the difference between the terms “rewards” and “incentives”
Rewards serve to recognize valued behaviour , while incentives are intended to produce valued behaviour
As a small business owner committed to the total rewards approach to compensation, what do you need to establish before you start to develop your compensation system?
A reward strategy
What is a reward strategy?
The mix extrinsic and intrinsic rewards provided to organization members (quiz answer)
The system is the mix of rewards while the strategy refers to the PLAN for the mix of rewards, along with the means through which they will be provided (textbook)
What is the compensation system?
The compensation system is the economic or monetary part of the reward system.
What is the compensation strategy?
The compensation strategy is the PLAN for the mix and total amount of performance pay, base pay, indirect pay (economic or monetary rewards) to be paid to various categories of employees
What are the components of the compensation system/strategy?
It consists of: PERFORMANCE PAY (variable pay) - monetary reward matched to individual, group or organizational performance
BASE PAY - foundation pay component for most employees, usually based on some unit of time worked (i.e salary or hourly wage)
INDIRECT PAY (employee benefits) - non cash items or services that satisfy a variety of specific employee needs
What is the total rewards approach?
A compensation philosophy that considered the entire spectrum of rewards that an organization may offer to employees
You have offered to your sales associate an all-expense-paid trip for two to Australia if she doubles her annual sales volume from last year. This is an example of what concept?
Incentives
Pay for performance based on number of units produced per year is an example of what type of award?
Extrinsic reward
What is the best choice for a compensation system?
The system is cost effective and achieves company goals
What is the optimal rewards system?
The optimal rewards system is one that adds the most value to the organization, after considering all its costs
What is one of the goals of an effective reward and compensation system?
Supporting the corporate strategy
What are the 5 steps for an effective compensation system according to the Road Map to effective compensation?
1) Understand your organization and your people
2) Formulate your reward and compensation strategy
3) Determine your compensation values
4) Design your performance pay and indirect pay plans
5) Implement, mage, evaluate, and adapt the compensation system
