Term
| Describe (3) incentives for operations employees |
|
Definition
1. Piecework Plans: A system of pay based on the number of items processed be each individual worker in a unit of time, such as items per hour or items of pay
2. Standard hour plan: worker is paid a basic hourly rate plus an extra percentage of his or her base rate for production exceeding the standard per hour or per day
3. Team or group incentive plan: A plan in which a production standard is set for a specific work group and its members are paid incentives if the group exceeds the production standard |
|
|
Term
| Explain what (3) basic issues should be considered when awarding short term incentives to managers and executives |
|
Definition
1. Eligibility (key position, salary level)
2. How much to pay out (non-deductible or deductible formula)
3. Determining individual awards |
|
|
Term
| Name (2) long term incentives for managers and executives |
|
Definition
1. Stock options: to encourage them to stay with the company
2. Plans providing share "units": provides units subject to the achievement of pre-determined financial targets |
|
|
Term
| Name some advantages and disadvantages to a salary plan |
|
Definition
Advantages:
- salespeople know in advance what their income will be
- employer has fixed, predictable sales force expenses
- simple to switch territories or quotas or to reassign salespeople
- high degree of loyalty among sales staff
Disadvantages
- salary plans do not depend on results
- often tied to seniority rather than performance |
|
|
Term
| Name some advantages and disadvantages to a commission plan |
|
Definition
Advantages:
- tendency to attract high performing sales people
- sales costs are proportional to sales rather than fixed
- company's selling investment is reduced
- easy to understand and compute
Disadvantages:
- hard to sell items may be neglected
- variances in income between sales people may occur
- pay is excessive in boom times and very low in recessions |
|
|
Term
| Name (3) organization-wide incentive plans |
|
Definition
1. Profit sharing plans: most or all employees share in the company's profits
2. Employee share purchase/stock ownership plan: a trust is established to hold share of company stock purchased for or issued to employees; the trust distributes stock to employees on retirement or separation from service
3. Scanlon plan: designed to encourage cooperation, involvement, and sharing of benefits |
|
|
Term
| When is it best to use incentives? (5) |
|
Definition
1. When units of output can be measured
2. When the job is standardized
3. With the workflow is regular
4. When there is a clear relationship between employee effort and quantity of output
5. When quality is less important that quantity |
|
|
