Unit 3

Question 1

Pay for performance

Answer 1

Compensation based on employee and organizational performance

Question 2

PFP stands for

Answer 2

Pay for performance

Question 3

Open system

Answer 3

Receives input from outside its boundaries

Question 4

Closed system

Answer 4

Does NOT receive input from outside its boundaries

Question 5

Open book management:
What is it?

Answer 5

Sharing financial data with employees

Question 6

Open book management:
Goal

Answer 6

Link nonfinancial measures and financial results

Question 7

Merit increase

Answer 7

Salary raise without performance review

Question 8

Examples of Incentive plans (3)

Answer 8

1) Stock options
2 Profit sharing
3) Gain sharing

Question 9

Annual bonus

Answer 9

Once-a-year compensation added to base pay

Question 10

Stock options

Answer 10

Allowing employees to buy company stock

Question 11

Profit sharing

Answer 11

Portion of year-end profit given to employees

Question 12

Gain sharing

Answer 12

Employees receive saved funds from expense reduction

Question 13

Piece rate

Answer 13

Fixed amount for each unit created or performance completed

Question 14

Sales commission

Answer 14

Portion of sales profit goes to salesperson

Question 15

Goal sharing (2)

Answer 15

1) Set goals
2) Provide compensation for goal completion

Question 16

Organizational scorecard helps you…

Answer 16

Develop employee performance scorecards

Question 17

Performance scorecard

Answer 17

Identifies performance areas important to organizational objectives

Question 18

Performance index score

Answer 18

Employee score derived from performance scorecard

Question 19

Profit indexed performance pay (2):
Compensation based on

Answer 19

1) Employee performance
2) Organizational performance

Question 20

PIPP stands for

Answer 20

Profit indexed performance pay

Question 21

Incentive pay basis percent

Answer 21

Proportion of employee salary eligible for incentive pay

Question 22

Threshold

Answer 22

Minimum funds needed to run the business

Question 23

Exposure:
Calculation

Answer 23

Wages MULTIPLIED BY incentive pay basis percent

Question 24

Exposure:
What is it?

Answer 24

Cost of full PFP bonus before company multiplier

Question 25

Company multiplier (2)

Answer 25

1) Used to calculate PIPP
2) Based on profits

Question 26

Multiplier scale

Answer 26

Profitability index that determines company multiplier

Question 27

Cross-utilization

Answer 27

Employees trained to do other jobs

Question 28

Job enlargement

Answer 28

Increasing job functions in a position

Question 29

Job enrichment

Answer 29

Increasing authority within a position

Question 30

Flexible scheduling (2)

Answer 30

1) Reduce work hours
2) Compensate for productivity

Question 31

Work prospecting

Answer 31

Paying employees to build business

Question 32

Improving and sustaining employee performance: Hire/Fire

Answer 32

Hire only good employees and fire the bad ones

Question 33

Improving and sustaining employee performance: Work hard

Answer 33

Persuade employees that working hard is in their best interest

Question 34

Improving and sustaining employee performance:
Performance system

Answer 34

Reengineer the organization’s performance system to maximize and sustain performance

Question 35

Abernathy’s Seven Sins of Wages

Answer 35

1) Fix-cost pay
2) Pay for time
3) Corporate socialism
4) Performance-based promotions
5) Management by perception
6) Management by exception
7) Entitlement thinking

Question 36

Steps for creating organizational scorecards (5)

Answer 36

1) Identify goals
2) Determine goal weights
3) Select goal measures
4) Identify measure ranges
5) Assign job weights

Question 37

PIPP: Components (4)

Answer 37

1) Employee salary
2) Incentive pay basis percent
3) Performance index score
4) Company multiplier

Question 38

Steps for transitioning to pay-for-performance system (4)

Answer 38

1) Results focus
2) Stakeholder pay
3) Job enrichment
4) Self-managed