C12: Variable Pay - Improving Performance
with Variable Pay (part 2) Study Guide
Solutions
Two Primary Elements of Compensation - ANSWER✔✔-Fixed pay
rewards are based on an employee's value
- Market based = rewards ind for their value relative to the labor market
- Performance based = rewards ind for their sustained performance over
time
- Skill based = rewards ind for their acquisition of new skills and
competencies
Variable pay rewards for accomplishments and results
- Organizational, group or individual results
- Performance-based compensation
- Flexible and adaptable
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,The Goal of Variable Pay - ANSWER✔✔-The ultimate goal of variable pay
is to improve organizational performance.
Once an organization has identified its key business objectives, the proper
design and implementation of variable pay programs will help motivate
employees to behave in ways that accomplish those objectives.
Variable pay influences organizational performance by providing:
- Focus
- Alignment
- Motivation
- Reinforcement
Business Strategies - ANSWER✔✔-Operational Excellence
primarily a price-cost-based strategy. This strategy often includes a
combination of price, quality, dependability and ease of purchase that
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,competitors cannot match. The corp culture typically strives to minimize
waste and reward efficiency. (Fast food rest)
Product/Service Leadership
primarily an innovation-based strategy. This strategy focuses on
innovation, product development and market exploitation. The corp
culture encourages imagination and a mind-set driven by the prospect of
creating the future. (High tech companies)
Customer Intimacy
primarily a solutions-based strategy. This strategy focuses on creating
results for carefully selected customers (making them successful.) The corp
culture encourages deep and lasting relationships with customers. (High
end hotel chains)
Business Strategies' Business Objectives - ANSWER✔✔-Operational
Excellence
- Product quality
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, - Operational efficiency improvement
- Process improvement
- Cost reduction
Product/Service Leadership
- Market share/market penetration
- Product development
- Cost reduction
Customer Intimacy
- Customer opinion of products
- Product quality
- Customer retention
- Customer satisfaction
Business Life Cycles' Business Objectives - ANSWER✔✔-Start-up
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with Variable Pay (part 2) Study Guide
Solutions
Two Primary Elements of Compensation - ANSWER✔✔-Fixed pay
rewards are based on an employee's value
- Market based = rewards ind for their value relative to the labor market
- Performance based = rewards ind for their sustained performance over
time
- Skill based = rewards ind for their acquisition of new skills and
competencies
Variable pay rewards for accomplishments and results
- Organizational, group or individual results
- Performance-based compensation
- Flexible and adaptable
Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 1/44
,The Goal of Variable Pay - ANSWER✔✔-The ultimate goal of variable pay
is to improve organizational performance.
Once an organization has identified its key business objectives, the proper
design and implementation of variable pay programs will help motivate
employees to behave in ways that accomplish those objectives.
Variable pay influences organizational performance by providing:
- Focus
- Alignment
- Motivation
- Reinforcement
Business Strategies - ANSWER✔✔-Operational Excellence
primarily a price-cost-based strategy. This strategy often includes a
combination of price, quality, dependability and ease of purchase that
Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 2/44
,competitors cannot match. The corp culture typically strives to minimize
waste and reward efficiency. (Fast food rest)
Product/Service Leadership
primarily an innovation-based strategy. This strategy focuses on
innovation, product development and market exploitation. The corp
culture encourages imagination and a mind-set driven by the prospect of
creating the future. (High tech companies)
Customer Intimacy
primarily a solutions-based strategy. This strategy focuses on creating
results for carefully selected customers (making them successful.) The corp
culture encourages deep and lasting relationships with customers. (High
end hotel chains)
Business Strategies' Business Objectives - ANSWER✔✔-Operational
Excellence
- Product quality
Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 3/44
, - Operational efficiency improvement
- Process improvement
- Cost reduction
Product/Service Leadership
- Market share/market penetration
- Product development
- Cost reduction
Customer Intimacy
- Customer opinion of products
- Product quality
- Customer retention
- Customer satisfaction
Business Life Cycles' Business Objectives - ANSWER✔✔-Start-up
Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 4/44
