World At Work Variable Pay C12 / GR6: Q’s And A’s
What are the three categories of variable pay - ANSWER 1-Incentives
2-Bonuses
3-recognition
What are the main characteristics of Incentives - ANSWER 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 - ANSWER 1-Task completion
2-Amount determined in advance
3-Monetary
4-Budgeted
5-Non-discretionary
What are the main characteristics of Recognition - ANSWER 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 - ANSWER 1-Profit Sharing
2-Performance Sharing
3-Individual performance based
What are the main characteristics of Profit sharing plans - ANSWER 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 - ANSWER Foster employee
identification with the organization's success and create a common focus
What are the considerations of profit sharing plans - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER
Based payouts on individual performance and focus on more than financial results
What are the objectives of an individual performance based plan - ANSWER Focus on
personal performance improvement, increase employee understanding and link rewards
with personal performance
What are three types of individual performance based plan approaches - ANSWER
Performance against predetermined objectives (MBO), Output-based and commissions
Define Performance against predetermined objectives (MBO) - ANSWER Rewards are
earned for the accomplishment of predetermined goals and objectives set for the
individual
Define Output based individual performance plan - ANSWER 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 - ANSWER 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 - ANSWER 1-
Reinforcement of performance culture
2-Narrow vision
3-wide variations in pay
What are the three categories of variable pay - ANSWER 1-Incentives
2-Bonuses
3-recognition
What are the main characteristics of Incentives - ANSWER 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 - ANSWER 1-Task completion
2-Amount determined in advance
3-Monetary
4-Budgeted
5-Non-discretionary
What are the main characteristics of Recognition - ANSWER 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 - ANSWER 1-Profit Sharing
2-Performance Sharing
3-Individual performance based
What are the main characteristics of Profit sharing plans - ANSWER 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 - ANSWER Foster employee
identification with the organization's success and create a common focus
What are the considerations of profit sharing plans - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER 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 - ANSWER
Based payouts on individual performance and focus on more than financial results
What are the objectives of an individual performance based plan - ANSWER Focus on
personal performance improvement, increase employee understanding and link rewards
with personal performance
What are three types of individual performance based plan approaches - ANSWER
Performance against predetermined objectives (MBO), Output-based and commissions
Define Performance against predetermined objectives (MBO) - ANSWER Rewards are
earned for the accomplishment of predetermined goals and objectives set for the
individual
Define Output based individual performance plan - ANSWER 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 - ANSWER 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 - ANSWER 1-
Reinforcement of performance culture
2-Narrow vision
3-wide variations in pay
