Chapter 10 - Pay for Performance: Incentive Rewards

Question 1

Variable pay

Answer 1

tying pay to some measure of individual, group, or organizational performance

Question 2

Individual Incentive Plans

Answer 2

• Piecework
• Standard hour pay
• Bonuses
• Merit Pay
• Lump Sum Merit Pay
• Non Monetary Awards and Recognition

Question 3

Straight piecework

Answer 3

an incentive plan under which employees receive a certain rate for each unit produced

Question 4

Differential price rate

Answer 4

a compensation rate under which employees whose production exceeds the standard amount of output receive a higher rate for all their work than the rate paid to those who do not exceed the standard amount

Question 5

Standard hour pay

Answer 5

an incentive plan that sets rates based on the completion of a job in predetermined standard time

Question 6

Bonuses

Answer 6

an incentive payment that is supplemental to the base wage

Question 7

Spot bonus

Answer 7

an unplanned bonus given for employee effort unrelated to an established performance measure

Question 8

Merit pay

Answer 8

links an increase in base pay to how successfully an employee performs their job. Issues: managers have no guidance, different views about job success, can lead to pay inequity

Question 9

Merit guidelines

Answer 9

guidelines for awarding merit raises that are tied to performance objectives

Question 10

Lump-sum merit pay

Answer 10

program under which employees receive a year end merit payment, which is not added to their base pay

Question 11

Non-monetary awards and recognition -

Answer 11

provide different benefits to the recipient, recognition can lead to an employees desire to be acknowledged and recognized by their supervisors and colleagues

Question 12

Sales Incentives

Answer 12

• straight salary plan
• straight comission plan
• combined salary and comission plan
• salary plus bonus plan

Question 13

Straight salary plan

Answer 13

a compensation plan that permits salespeople to be paid for performing various duties that are not reflected immediately in their sales volume

Question 14

Straight commission plan -

Answer 14

• a compensation plan based on a percentage of sales

Question 15

Combined salary and commission plan -

Answer 15

a compensation plan that includes a straight salary and commission

Question 16

Salary plus bonus plan

Answer 16

• a compensation plan that pays a salary plus a bonus achieved by reaching targeted sales goals

Question 17

Executive base salaries -

Answer 17

represent between 30 and 40% of total annual compensation

Question 18

Executive short-term incentive

Answer 18

cash or stock

Question 19

Executive long-term incentive

Answer 19

stock option, stock appreciation rights, stock purchase, restricted stock, performance stock, performance shares

Question 20

Executive benefits -

Answer 20

health insurance, life insurance, retirement plans, vacation

Question 21

Executive prerequisites/perks

Answer 21

special non-monetary rewards given to executives

Question 22

Team compensation - Team incentive plan

Answer 22

a compensation plan in which all team members receive an incentive bonus payment when production or service standards are met or exceeded

Question 23

Gainsharing Incentive Plans

Answer 23

Programs under which both employees and the organization share financial gains according to a predetermined formula that reflects improved productivity and profitability

Question 24

Enterprise Incentive Plans

Answer 24

reward employees on the basis of the success of the organization over an extended period of time, seek to create a culture of ownership by fostering a philosophy of cooperation and teamwork among all organizational members

Question 25

Common Enterprise Incentive Plans

Answer 25

• profit sharing
• stock options
• employee stock ownership

Question 26

Profit sharing

Answer 26

Any procedure by which an employer pays, or makes available to all regular employees, in addition to base pay, special current or deferred sums based on the profits of enterprise

Question 27

Employee Stock Ownership Plans (ESOP)

Answer 27

Stock plans in which an organization contributes shares of its stock to an establishment trust for the purpose of stock purchases by employees

Question 28

Advantages

Answer 28

• increase employee pride
• incentive to increase productivity and help org grow

Question 29

Disadvantages

Answer 29

• serve purpose in public over private company since can not dispose of shares on the public market