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HR - Final > Chapter 12 > Flashcards

Chapter 12 Flashcards

1
Q

Fixed Pay

A

Compensation is independent of performance level (includes base pay, allowances)

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2
Q

Variable Pay

A

Any plan that ties pay to productivity or profitability (may be in addition to base pay)

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3
Q

Types of Incentive Plans

A
  1. Incentives for Operations Employees
  2. Incentives for Senior Managers + Executives
  3. Incentives for Sales People
  4. Incentives for other managers/professionals
  5. Organization-wide incentive plans
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4
Q

Incentives for Operations Employees

A

Based on production standard

  1. Piecework plans (based on number of unites processed in a certain amount of time)
  2. Group Incentives (production standard is set)
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5
Q

Types of piecework plans

A
  1. Straight piecework ( set payment for each unit)
  2. Guaranteed (hourly wage + incentive for each unit about set/unit per hour)
  3. Differential (basic hourly rate + percentage of base rate for production exceeding standard)
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6
Q

Advantages and Disadvantages of Piecework Plans

A

Adv: simple, directly tied to performance, appears equitable

Disadv: some employers arbitrarily raise standards, difficult to adjust, resistance to revising the standard, quality may be compromised

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7
Q

Incentives for Senior Managers + Executives

A
  1. Short-term incentives (annual bonus)

2. Long-term incentives (capital accumulation - stock options - must be linked to appropriately to strategy)

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8
Q

Recommendations for Incentives for Senior Managers + Executives

A
  • define internal/external issues facing the company
  • group executive compensation components into a whole plan
  • check for legal compliance + tax effectiveness
  • review/evaluate plan whenever a major business change occurs
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9
Q

Incentives for Sales People

A
  1. Salary plan (fixed salary)
  2. Commission plan (pay in direct proportion to sales)
  3. Combination Plan (Base pay + commission)
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10
Q

Salary plan advantages/disadvantages

A

[Incentives for Sales People]

Adv: works for prospecting + accounting servicing, sales people know income in advance, easy to reassign sales people, enhance long term perspective

Disadv: high-performance not recognized/rewarded, salary usually based on seniority (demotivating)

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11
Q

Commission plan advantages/disadvantages

A

[Incentives for Sales People]

Adv: greatest incentive, attracts high perf sales people, easy to understand/compute

Disadv: focus on sales, not customer. Variance in income, sales people may neglect other duties

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12
Q

Combination plan advantages/disadvantages

A

[Incentives for Sales People]

Adv: Earning floor, allows compensation for admin work

Disadv: maybe a compromise, often confusing to calcluate

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13
Q

Sales compensation in E-Commerce Era

A
  • sales people must strengthen relationships w/ customers
  • face-to-face sales reserved for high-volume, high-margin customers
  • focus on integration w/ online customer ordering
  • movement towards team-based sales + results
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14
Q

Incentives for other managers/professionals

A

Merit pay or merit raise

  • Link to performance acts as motivator
  • usually ongoing increase to base pay

*Increases are not as motivating for lawyers, doctors, engineers (driven by high quality work + peer recognition - give them better equip or support for publishing work)

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15
Q

Organization-wide incentive plans

A
  1. Profit sharing
  2. Employee share purchase/stock ownership plan
  3. Gainsharing plans
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16
Q

Developing + Implementing Effective Incentive Plans (Considerations)

A

Considerations:

  • performance management CANNOT replace goof management
  • firms get what they pay for
  • pay is not a motivator
  • rewards rupture relationships
  • rewards may undermine responsiveness
17
Q

Developing + Implementing Effective Incentive Plans (Effective Implementation)

A
  • pay for performance
  • link incentives to engaging activities, measurable, valuable competencies
  • match incentives to organization culture
  • keep group incentives clear and simple
  • over-communicate
  • GREATEST INCENTIVE is the work itself
18
Q

Employee recognition programs

A
  • Emerging as a critical component of incentive plans
  • Effective (even more in small, entrepreneurial companies)
  • plaque, certificates, company merchandise, accessories.

HR - Final (6 decks)

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