Exam (elaborations)
C12 Variable Pay 1 – 2: Questions & Verified Solutions
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C12 Variable Pay 1 – 2: Questions & Verified Solutions
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C12 Variable Pay 1 – 2: Questions & Verified SolutionsFixed Pay Right Ans - Nondiscretionary compensation that does not vary
according to performance or results
Variable Pay Right Ans - Discretionary compensation that is contingent on
performance or results achieved
Fixed Pay Based on EE Value Right Ans - Value related to labor market.
Value related to performance. Value related to skills and competencies.
Variable Pay Based on Results Right Ans - Organizational, group or
individual. Performance based differentiation. Flexible and adaptable to the
circumstances.
Variable Pay Goal Right Ans - Improve organizational performance. Must
know business strategy and objectives in order to develop a plan.
3 Primary Business Strategies Right Ans - Operational Excellence,
Product/Service Leadership and Customer Intimacy.
Operational Excellence Right Ans - Price/cost based strategy. Strive to
minimize waste and reward efficiency.
Product/Service Leadership Right Ans - Innovation/Product development
based strategy. Encourages imagination and ability to commercialize fast.
Customer Intimacy Right Ans - Relationship based strategy. Build bonds
and meet or exceed needs which builds loyalty.
Operational Excellence Business Objectives Right Ans - Product quality,
operational efficiency improvement, process improvement and cost reduction.
Product/Service Leadership Business Objectives Right Ans - Market share
product development, time to market
Customer Intimacy Business Objectives Right Ans - Opinion of products,
quality, retention and satisfaction
, Business Life Cycle Right Ans - Start up, growth, mature and decline
Start Up Objectives Right Ans - Obtain capital, conserve cash, develop
brand awareness and marketing plan
Growth Objectives Right Ans - Production capability market penetration
and revenue growth
Mature Objectives Right Ans - Improve efficiency, stock price appreciation,
and increase market share
Decline Objective Right Ans - Maximize profits, extend product demand
and develop new products
Variable Pay Provides: Right Ans - Focus on important tasks by
establishing measures and objectives. Align employees with business goals by
balancing success between individual and organization. Motivates by
providing feedback which facilitates change. Reinforces desired behaviors by
showing the employees the businesses commitment to them.
3 categories of variable pay Right Ans - Incentives, Bonuses and
Recognition
Characteristics of Incentives Right Ans - Criteria determined in advance,
payment can vary, monetary or not, self funded or budgeted non-
discretionary
Characteristics of Bonuses Right Ans - Completion of task, amount
determined in advance, monetary, budgeted and nondiscretionary
Characteristics of Recognition Right Ans - Criteria broadly defined,
awarded spontaneously, after the fact, focused on behaviors, monetary or not,
budgeted and discretionary.
2 Types of Incentives Right Ans - Short (less than 12 months) and Long
Term (more than 1 year)
Short Term Incentives Right Ans - Profit sharing, performance sharing and
individual performance based
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