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HR Test 3 > Recognizing And Rewarding Day 24 > Flashcards

Recognizing And Rewarding Day 24 Flashcards

1
Q

Organizations have wide discretion in setting performance-related pay called

A

Incentive pay

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2
Q

This is pay specifically designed to energize, direct, or conte employees’ behavior

A

Incentive pay

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3
Q

Organizations select incentives based on (3)

A

Costs
Expected influence on performance
Fit with the organization’s broader HR policies and goals

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4
Q

Organizations can tie incentive pay to (4)

A

Individual performance
Profits
Seniority
Other measures of success

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5
Q

Three types of incentives

A

Individual incentives
Group incentives
Organizational incentives

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6
Q

Law of effect

A

What is rewarded gets done.

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7
Q

Two major rewards at work

A

Money

Praise

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8
Q

Individual incentives (5)

A 
Piecework rate
Standard hour plan
Merit pay
Performance bonuses
Commission
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9
Q

Wage based on the amount workers produce

A

Piecework rate

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10
Q

Piecework rate is best for work that is

A

Stable, repetitive, worker paced, and easily measured

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11
Q

Piecework rate fits best with _______ between jobs

A

Low interdependence

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12
Q

Piecework rate is rarely used because (5)

A

Most jobs have no physical output
Individuals focus only on the incentive
Does not fit with team approach
Does not reward obtaining multiple skills
Rewards output at the expense of quality or service

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13
Q

An incentive plan that pays workers extra for work done in less than a preset “standard time”

A

Standard hour plan

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14
Q

Standard hour plan

A

An incentive plan that pays workers extra for work done in less than a preset “standard time”

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15
Q

Piecework rate

A

An incentive plan that pays wages based on the amount workers produce

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16
Q

Advantage of standard hour plans

A

They encourage employees to work as fast as they can and be efficient, can potentially bill more hours in a week than worked

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17
Q

Disadvantage of standard hour plans

A

Employees may not necessarily care about quality or service

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18
Q

System of linking pay increases to ratings on a performance scale
Requires quality performance appraisal
Supervisor provides most performance info

A

Merit pay

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19
Q

Most common individual incentive system

A

Merit pay

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20
Q

Merit pay

A

System of linking pay increases to ratings on a performance scale

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21
Q

Disadvantages of merit pay (5)

A

Discouraged teamwork
Too much reliance on supervisor for rating
Pay increase are not representative of performance and/or are too small to be motivating
An annuity based on the past rather than the present
Fail to account for short-term fluctuations in performance

22
Q

Incentive not built into base pay so employees must re-earn it every year
Usually given in addition to or in place of merit “pay” incentives

A

Performance bonuses

23
Q

Advantages of performance bonuses

A

Allows organizations to be flexible, year to year, in terms of what they want to reward

24
Q

Incentive pay calculated as a percentage of sales, revenue, or profitability

A

Commissions

25
Q

Commissions

A

Incentive pay calculated as a percentage of sales, revenue, or profitability

26
Q

3 types of commissions

A

Straight commission
Salary-plus-commission
Commission-plus-draw

27
Q

2 disadvantages of commissions

A

Contaminated - some things employees cannot control

Deficient - (make the sale regardless of the long term cost)

28
Q

Group incentives (2)

A

Gainsharing

Bonuses and rewards

29
Q

Measures increases in productivity or effectiveness and distributes part of the gain back to employees

A

Gainsharing

30
Q

Gainsharing

A

Measures increases in productivity or effectiveness and distributed part of the gain back to employees

31
Q

This frees employees to determine how to improve their own and group’s performance
Distributed payouts frequently

A

Gainsharing

32
Q

Conditions for success of gainsharing (5)

A

Management commitment
Commitment to continuous improvement and change
High level of cooperation and information sharing
Employment security
Requirements clearly communicated with employee input

33
Q

These reward the members of a group for attaining a specific goal, usually measured in terms of physical output

A

Group bonuses and rewards

34
Q

Advantages of group bonuses and rewards

A

They encourage group or team members to cooperate

35
Q

Disadvantage of group bonuses and rewards

A

Competition among individuals may be replaced by competition among groups

36
Q

4 issues with group rewards

A

Hurdle too high/too low
Value the payout
Line of sight
Free rider

37
Q

Organization incentives (2)

A

Profit sharing

Stock options

38
Q

Incentive pay in which payments are a percentage of the organization’s profits and do not become part of the employees’ base salary

A

Profit sharing

39
Q

3 disadvantages of profit sharing

A

Many plans defer actual payments
Few plans pay out during business downturns
Increases variability of compensation costs

40
Q

Profit sharing

A

Incentive pay in which payments are a percentage of the organization’s profits and do not become part of the employees’ base salary

41
Q

Opportunity to buy stock at a later date but at a price established when the option is granted

A

Stock options

42
Q

Stock options

A

Opportunity to buy stock at a later date but at a price established when the option is granted

43
Q

Advantage of stock options

A

Puts employees in the role of (part) owner

44
Q

Employee stock ownership plans (ESOPs)

A

Stock distributed to employees to keep in a trust fund
Employees can sell stock when they leave the company
Must invest 51% or more of fund’s assets in the company’s own stock

45
Q

A combination of performance measures directed toward the company’s long- and short-term goals and used as the basis for awarding incentive pay

A

Balance scorecard

46
Q

Balance scorecard

A

A combination of performance measures directed toward the company’s long- and short-term goals and used as the basis for awarding incentive pay

47
Q

When are organization-focused incentives effective? (4)

A

Performance measures should be linked to organization’s goals
Organization must give employees resources needed to meet goals
Plan should take into account that employees may ignore goals that are not rewarded
Establish concrete goals with sufficient feedback

48
Q

When are employee-focused incentives effective? (5)

A 
Employees believe they can meet performance standards
Employees value rewards
Employees perceive reward system as fair
Do not make employees feel coerced
Shield employees from unnecessary risk
49
Q

Central tenet of this theory is that there is potential for mischief when the interests of owners and managers diverge

A

Agency theory

50
Q

4 examples of agency theory

A

Used illegal accounting practices
Backdated stock options
Acted on internal knowledge and engaged in insider trading
Financially mismanage organization to attain bonuses

HR Test 3 (4 decks)

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