Chapter 12 Flashcards
variable aka incentive pay is what?
compensation that can be linked to individual, work unit/team, and/or organizational performance
what are some commonly used individual incentives
piece rate and bonus plans
the design of work unit/team variable pay plans must consider what 3 things?
- how the incentives are to be distributed
- the timing of the incentive payments
- who will make decisions about variable payout
organization-wide rewards include what two things.
- profit sharing
2. stock ownership plans
sales compensation can be provided as what 4 things?
- salary only
- commission only
- salary plus commission
- bonuses
executive compensation must be viewed as a total package composed of what 5 things?
- salaries
- bonuses
- benefits
- prerequisites (perks)
- short and long term performance based incentives
variable pay
compensation that is tied to performance
incentives
tangible rewards that encourage or motive action
pay for perofmrance is also known as what?
variable pay
extrinsic rewards
rewards that are external to the individual
intrinsic rewards
rewards that are internal to the individual
line of sight
idea that employees can clearly see how their actions and decisions lead to desired outcomes
criticial success factors
variables that have a strong influence on the results of the organization
key performance indicators
scorecard measures that tell managers how well the organization is performaing relative to critical success factors
individual incentives
incentives given to reward the effort and performance of each employee
work unit/team incentives
gainsharing (or goalsharing) plans. people in group must meet certain goals to share gains
organizational incentives
incentives for the org
what e conditions are necessary to use individual incentive plans?
- individual performance must be identifiable
- individual competitiveness must be desirable
- individualism must be stressed in the organizational culture
- individuals must be in control of the pace of production
piece rate system
wages are determined by multiplying the number of units produced by the piece rate for one unit
differential piece rate system
pays employees one pierce rate wage for units produced up to a standard level of output and a higher piece rate wage for units produced over the standard
bonues
one time payment that does not become part of the mployees base salary
spot bonuses
bonuses that can be given at any time for an good reason
performance rewards?
incentives for performance such as merchandise, gift cards, etc…
recognition rewards?
awards for recognition such as employee of the month
service awards
awards for service meaning their service or longevity with company
u can distribute rewards to team two ways what are they?
- same size reward for everyone on team
2. differtent size reward for each member
free rider?
member of the group who contributes little
gainsharing
system of sharing with employees greater than expected gains in profits and or productivity
profit sharing
system to distribute a portion of an organizations profits to employees
stock option plan
gives employees the right to pruchase a fixed number of shares of company stock at a specified price for a limited period of time
employee stock ownership plan?
designed to give employees significant stock ownership in their organizations
sales compensation can be of three general types what are they?
- salary only
- straight commission
- salary plus commission
draw (part of straight commission)?
when sales representatives can draw advance payments against future comission
salary plus commission?
combines the stability of a salary with a commission based on sales generated
what do CEOs do to earn all that money? ideally what 3 things?
- estabish strategic directin for the org
- create shareholder value
- ensure the sustainability of the enterprise
regular benefit plans vs supplemental benefits vs deffered compensation for CEOs
- regular benefit plans is what regular employees get
- supplemental benefits are benefits other employees do not receive
- deferred compensation is another way of heping executives with tax liabilities
prerequisites (perks)
special benefits - usually noncash items 0 for executives
restricted stock options
indicates that company stock shares will be paid as a grant of shares to individuals, usually linked to achieving specific performance criteria
