Chapter 8 Variable Pay Exam
Questions & Answers
Variable Pay - -- compensation that is tied to performance (aka pay for
performance)
- Incentives - -- are tangible rewards that encourage or motivate action and
this could be related to pay or much broader
- Why they adopt variable pay - -o Link strategic business goals and
employee performance
o Enhance organizational results and reward employees financially
o Recognize different levels of employee performance through different
levels
o Achieve HR objectives
o Reduce fixed cost.
- Variable play can be separated into 3 categories: - -o 1. Individual
incentives - to reward the effort and performance of an individual
o 2. Group/team incentives - when they reward an entire team or group for
their performance.
o 3. Organizational incentives - reward people according to the performance
results of the entire organization.
- Individual Incentives - -This connects reward incentives with that of effort
or performance of the individual.
o Performance must be identifiable
o Competiveness must be desirable
o They must be stressed in the organizational culture
- Piece Rate System - -wages are determined by multiplying the number of
units produced by the piece rate unit.
Differential piece rate - pays employees one-piece rate wage for unit
produced up to standard output and higher piece rate wage for units
produced over the standard.
Questions & Answers
Variable Pay - -- compensation that is tied to performance (aka pay for
performance)
- Incentives - -- are tangible rewards that encourage or motivate action and
this could be related to pay or much broader
- Why they adopt variable pay - -o Link strategic business goals and
employee performance
o Enhance organizational results and reward employees financially
o Recognize different levels of employee performance through different
levels
o Achieve HR objectives
o Reduce fixed cost.
- Variable play can be separated into 3 categories: - -o 1. Individual
incentives - to reward the effort and performance of an individual
o 2. Group/team incentives - when they reward an entire team or group for
their performance.
o 3. Organizational incentives - reward people according to the performance
results of the entire organization.
- Individual Incentives - -This connects reward incentives with that of effort
or performance of the individual.
o Performance must be identifiable
o Competiveness must be desirable
o They must be stressed in the organizational culture
- Piece Rate System - -wages are determined by multiplying the number of
units produced by the piece rate unit.
Differential piece rate - pays employees one-piece rate wage for unit
produced up to standard output and higher piece rate wage for units
produced over the standard.
