World At Work Variable Pay C12 / GR6: Q’s And A’s
What are the three categories of variable pay Right Ans - 1-Incentives 2-Bonuses 3-recognition What are the main characteristics of Incentives Right Ans - 1-Criteria determined in advance 2-Amount of pay can vary 3-Monetary or non-monetary 4-Self-funded or budgeted 5-Non-discretionary What are the main characteristics of Bonuses Right Ans - 1-Task completion 2-Amount determined in advance 3-Monetary 4-Budgeted 5-Non-discretionary What are the main characteristics of Recognition Right Ans - 1-Criteria broadly defined and subjective 2-Awarded spontaneously 3-Decision after the fact 4-Focused on behaviors 5-Monetary or non-monetary 6-Budgeted 7-Discretionary What are short-term incentive plans Right Ans - 1-Profit Sharing 2-Performance Sharing 3-Individual performance based What are the main characteristics of Profit sharing plans Right Ans - Share profits with employees, base rewards on financial performance, typically include entire organization and payout is equal or graduated amounts What are the objectives of profit sharing plans Right Ans - Foster employee identification with the organization's success and create a common focus 1 / 3
What are the considerations of profit sharing plans Right Ans - Promote awareness / focus, pay out only when company has a profit, employee ability to influence overall profits, ease of administration What are the main characteristics of Performance sharing plans Right Ans - Define performance by select criteria, focus on more than financial results, exists at all organizational levels, measure performance based on predetermined objectives and are defined for a specific period What are the objectives of a performance sharing plan Right Ans - 1- Improve organization's performance 2-Foster employee identification with the organization's success 3-Increase employee understanding 4-Promote a more balanced approach What are the considerations for a performance sharing plan Right Ans - 1- Promote awareness / focus 2-Self-funding 3-Employee ability to influence overall performance 4-Flexibility of design 5-May increase administrative requirements What are the main characteristics of individual performance based plans Right Ans - Based payouts on individual performance and focus on more than financial results What are the objectives of an individual performance based plan Right Ans
- Focus on personal performance improvement, increase employee
understanding and link rewards with personal performance What are three types of individual performance based plan approaches Right Ans - Performance against predetermined objectives (MBO), Output- based and commissions Define Performance against predetermined objectives (MBO) Right Ans - Rewards are earned for the accomplishment of predetermined goals and objectives set for the individual 2 / 3
Define Output based individual performance plan Right Ans - Rewards are earned based on a predetermined amount for each unit (piece-rate plan) - used when scope is narrow, produce output in a repetitive fashion and individual has some control over output Define a Commission based individual performance plan Right Ans - A predetermined incentive amount for each discrete unit of sales. Designed to reward individual effort and drive results, create singular focus on sales volume and motivate the sales success by tying the incentive directly to sales results What are the considerations for Individual performance based plans Right Ans - 1-Reinforcement of performance culture 2-Narrow vision 3-wide variations in pay 4-High levels of administration What are some approaches of profit sharing plans Right Ans - First-return plans, Threshold plans, Operating Budget Plans and Peer company comparisons What are the two categories of Long-Term Incentive Plans Right Ans - Equity based and Non-equity based What are the main characteristics of Long Term Equity Based Plans Right Ans - Create Equity interest, based on stock performance and paid out using stock or cash What are the main objectives of Long Term Equity Based Plans Right Ans - 1-Align employees with shareholders 2-Conserve cash 3-Create employee wealth 4-Increase retention What are two types of Appreciation only Equity Based plans Right Ans - 1-
Stock Options: employees get the right to buy company shares at a specific
price at a specific time in the future.
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