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C12 Variable Pay - Module 1 - Module 5 Exam Q’s and A’s
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C12 Variable Pay - Module 1 - Module5 Exam Q’s and A’s
Elements of Compensation - -Fixed pay and variable pay
- Fixed Pay - -compensation independent of performance level, includes
base pay, allowances
- Variable Pay - -Compensation linked directly to individual, team, or
organizational performance; amount varies based on achievement of criteria;
contingent on achievement
- Primary elements of variable pay - -- Based on org, group, or individual
results
- Performance based compensation (serves as pay differentiator which is not
always positive and can be counter productive)
- Flexible and adaptable
- Goal of Variable Pay - -To improve organizational performance
- fixed vs variable expense: variable more beneficial in adverse business
conditions
- What are three business strategies? - -- Operational Excellence
- Product/Service Leadership
- Customer Intimacy
- Operational Excellence Strategy - -beat competitors in price, quality,
dependability and ease of purchase; focus on efficiency of operations and
processes, reduction of waste. Lower cost operations leads to lower prices
for customers. (Lean methods)
- Product/Service Leadership Strategy - -Innovation based strategy; offer
products and services that expand performance boundaries (best products),
leapfrog/replace tech or products; create more/better ideas and get to
market faster (New toys)
- Customer Intimacy Strategy - -strategy based on delivering value through
solutions tailored to specific customer needs; focus on selected customers
and build bond and deep relationship
- Operational Excellence Strategy --> Business Objectives - -- Product
Quality
- Operational efficiency
- Process improvement
,- Cost reduction
- Ease of Purchase
- Dependability of product or service
- Product/Service Leadership Strategy --> Business Objectives - -- Market
share/market penetration * First to Market
- Product Development
- Time from innovation to market (product development lifecycle)
- Customer Intimacy Strategy --> Business Objectives - -- Customer
Opinions of products
- Product Quality
- Customer retention and recommendation to others
- Customer satisfaction and repeat sales
- Four stages of business life cycle - -- Start up
- Growth
- Mature
- Decline
- Start-up - -new org with little or no policies or procedures; focus on
obtaining capital, marketing, initial sales growth and cash conservation
- Obtaining capital
- Cash conservation
- Develop brand awareness
- Develop Marketing plan
- Growth - -begin standardizing procedures and policies; growing sales,
increasing distribution capacity and efficiency to meet growing demands
- Production capability
- Market share/market penetration
- Sales volume/ revenue growth
- Mature - -maintaining/growing market share, improving productivity and
reducing cost of sales; more evolutionary and less revolutionary; more
bureaucracy
- Improve operational efficiency
- Stock price appreciation
- Maintain/increase market share
- Decline - -revenues are declining; must decide whether to reinvest in
current products or create new
- Maximize profits
- Extend product demand
- New product development
, - How does variable pay help achieve business objectives? - -- Focus
- Alignment
- Motivation/Influence
- Reinforcement
- high variable, low fixed - -Good for new companies looking to conserve
cash while providing opportunities to earn high levels of variable if growth
objectives are met
- High variable, high fixed - -Innovative companies that want to hire best
talent
- High fixed, low variable - -Mature company hoping for retention
- Plan Implementation - -- selecting the implementation team
- developing the communication plan
- introducing the plan (how the plan is into'd to mgmt and participants will
affect buy-in and comprehension)
- coordinating plan administration (mgrs want the plan to require minimal
admin support; if too complex or labor intensive, threatens success of plan)
- Selecting the Implementation Team - -- members with broad based
representation
+ include Communication team, key functional groups, sr. mgmt sponsor,
members of plan design team
- Define team role and support mechanisms
+ expectations/deliverables, resources/budget, authority, nature of
supervision/degree of autonomy
- providing training
+group effectiveness, project mgmt
- define role of human resources
- Developing the communication plan - -- determine key points
- tailor to audience
- choose communication channels **
- document the communication plan (what and when)
- determine outgoing communications (how will disseminate updates on
progress and results.
- Communication Key Points - -- objective (desired business results)
- employees' role (how they can contribute to achievement)
- methods (measures; link to performance assessment)
- eligibility
- feedback (how results reported and when)
- ** rewards (how much is awarded and when)
- reviews (plan changes/when)
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