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C12: total rewards and variable pay Exam|Questions with Accurate Answers
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C12: total rewards and variable payExam|Questions with Accurate Answers
total rewards - -monetary and non-monetary returns provided to employees
for their time, talents, efforts and results
- total rewards strategy - -the art of combining the five key elements into
tailored packages designed to achieve optimal engagement.
- five elements of total rewards strategy - -compensation, benefits, work-
life, performance an recognition, development and career opportunities.
- elements of compensation - -fixed pay and variable pay
- fixed pay - -nondiscretionary compensation that does not regulary vary
according to performance or results achieved. based on employee value:
market based, performance based, skill based
- variable pay - -discretionary or contingent on performance or results
achieved and can be designed for any individual or combination of
individuals. rewards for accomplishments, and results
- three categories of variable pay - -incentives, bonuses and recongition
- incentives - -criteria determined in advance, amount of payment varies,
monetary or non-monetary, self-funded or budgeted, non-discretionary.
- Bonuses - -reward the completion of a specific task, amount is determined
in advance, budgeted, non-discretionary
- Recognition - -criteria broadly defined and subjective, awarded
spontaneously, decisions made after the fact, focused on behaviors,
budgeted, discretionary
- Short term incentive - -consist of plans for which desired results will be
achieved in one year or LESS. profit sharing, performance sharing, individual
performance based.
- Profit sharing plans - -share profits with employees, base rewards on fiscal
performance, typically include the entire organization, payout in equal or
graduated amounted. Objects of profit sharing are to foster EE indentification
with org success and create a common focus.
, - Profit sharing plan approaches - -first return plans, threshold plans,
operating budget, peer comparisons
- Profit sharing plan considerations - -promote awareness/focus, payout only
when the company has profit, EE ability to influence overall profit, SIMPLE
administration.
- Performance sharing plans - -define performance by selected criteria,
focus on more than fiscal results, exist at all organizational levels, measure
performance based on predetermined objectives, defined for a specific
period.
- Performance sharing plan appproaches - -improve org performance, foster
EE identification with org success, increase EE understanding, promote a
more balanced approach.
- Performance sharing plan considerations - -promote focus, self-funding, EE
ability to influence overall performance, flexibility of design, increases
administrative requirements
- Individual performance based plans - -base payouts on individual
performance, focus on more than fiscal results
- Individual performance sharing plans objectives - -fosus on personal
performance improvement, increase employee understanding, link rewards
with personal performance.
- Individual performance sharing plans approaches - -performance agains
predetermined objectives, output based, commission based.
- Individual performance sharing plans considerations - -reinforcement of a
performance culture, narrow vision, wide variations in pay, high levels of
administration
- Long term incentive plans - -results achieved in more than one year,
typical measurement periods are three to five years. Equity base and non-
equity based
- equity based plans - -create equity interest, based on stock performance,
payout using stock or cash
- equity based plan objectives - -align EE's with shareholders, conserve
cash, create wealth, increase retention,
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