Chp 12

Question 1

Frederick Taylor on financial incentives

Answer 1

Father of scientific method
Popularized incentive pay-paid a financial reward to workers who exceeded a predetermined standard

• traditionally paid workers based on output
• The question… is it better to pay based on passage of time or output/productivity?

Question 2

Motivation and incentives

Answer 2

1) Maslow's Hierarchy of Needs
Self-actualize
Love & belonging
Safety & security 
Physiological needs

2) Hertzberg’s two factory theory
Hygiene (job dissatisfaction)-pay, office, etc (increase pay leads to decrease job dissatisfaction)
Motivators (job satisfaction)-increase responsibility leads to increase satisfaction. Sense of achievement & responsibility.higher pay will not increase job performance for cognitive jobs (non-physical)

3) Edward Deci-extrinsic rewards could decrease intrinsic motivation

Question 3

Individual employee incentive & recognition programs

Answer 3

• Piecework plans-oldest to most popular
  a) straight piecework-paid by output of work, manual labor
  b) standard hour plans-worker gets premium equal to % by which his/her performance exceeds the standard
• Merit pay-any salary increase awarded based on indiv perf (perf appraisal) (increase base pay)
• Lump-sum merit raise
• Merit pay tied to individual & organization performance

Question 4

Incentives for salespeople

Answer 4

Salary plan
Commission plan
Combination plan

Question 5

Short term Incentives for managers & executives -annual bonus

Answer 5

Eligibility
Fund size
Individual performance

Question 6

Strategic long-term incentives for managers & executives

Answer 6

A)stock options
B)other stock plans
-performance-contingent restricted stock-receive shares only if s/he meets present performance targets
-restricted stock plans

Question 7

Other executive incentives

Answer 7

-Golden parachutes-extra ordinary payment made to executives in connection w/ change in ownership or control of company

Question 8

Team & organization-wide incentive plans

Answer 8

• profit-sharing plans
• scanlon plans (gainsharing plan)
• at-risk pay plans
• employee stock ownership plans-doesn’t really act as an incentive for individual employees bc if 1 works hard & the others don’t, is not gonna impact stock price