World at Work Variable Pay C12 / GR6 Exam Study Guide Solutions

World at Work Variable Pay C12 / GR6 Exam Study Guide Solutions What are the three categories of variable pay - ANSWER-1-Incentives 2-Bonuses 3-recognition What are the main characteristics of Incentives - ANSWER-1-Criteria determined in advance 2-Amount of pay can vary 3-Monetary or non-monetary 4-Self-funded or budgeted 5-Non-discretionary What are the main characteristics of Bonuses - ANSWER-1-Task completion 2-Amount determined in advance Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 2/32 3-Monetary 4-Budgeted 5-Non-discretionary What are the main characteristics of Recognition - ANSWER-1-Criteria broadly defined and subjective 2-Awarded spontaneously 3-Decision after the fact 4-Focused on behaviors 5-Monetary or non-monetary 6-Budgeted 7-Discretionary What are short-term incentive plans - ANSWER-1-Profit Sharing 2-Performance Sharing 3-Individual performance based Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 3/32 What are the main characteristics of Profit sharing plans - ANSWER- Share profits with employees, base rewards on financial performance, typically include entire organization and payout is equal or graduated amounts What are the objectives of profit sharing plans - ANSWER-Foster employee identification with the organization's success and create a common focus What are the considerations of profit sharing plans - ANSWER-Promote awareness / focus, pay out only when company has a profit, employee ability to influence overall profits, ease of administration What are the main characteristics of Performance sharing plans - ANSWER-Define performance by select criteria, focus on more than financial results, exists at all organizational levels, measure performance based on predetermined objectives and are defined for a specific period What are the objectives of a performance sharing plan - ANSWER-1- Improve organization's performance 2-Foster employee identification with the organization's success Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 4/32 3-Increase employee understanding 4-Promote a more balanced approach What are the considerations for a performance sharing plan - ANSWER-1-Promote awareness / focus 2-Self-funding 3-Employee ability to influence overall performance 4-Flexibility of design 5-May increase administrative requirements What are the main characteristics of individual performance based plans - ANSWER-Based payouts on individual performance and focus on more than financial results What are the objectives of an individual performance based plan - ANSWER-Focus on personal performance improvement, increase employee understanding and link rewards with personal performance Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 5/32 What are three types of individual performance based plan approaches - ANSWER-Performance against predetermined objectives (MBO), Output-based and commissions Define Performance against predetermined objectives (MBO) - ANSWER-Rewards are earned for the accomplishment of predetermined goals and objectives set for the individual Define Output based individual performance plan - ANSWER-Rewards are earned based on a predetermined amount for each unit (piece-rate plan) - used when scope is narrow, produce output in a repetitive fashion and individual has some control over output Define a Commission based individual performance plan - ANSWER-A predetermined incentive amount for each discrete unit of sales. Designed to reward individual effort and drive results, create singular focus on sales volume and motivate the sales success by tying the incentive directly to sales results What are the considerations for Individual performance based plans - ANSWER-1-Reinforcement of performance culture Copyright ©EMILLYCHARLOTE 2025 ACADEMIC YEAR, ALL RIGHTS RESERVED. Page 6/32 2-Narrow vision 3-wide variations in pay 4-High levels of administration What are some approaches of profit sharing plans - ANSWER-First- return plans, Threshold plans, Operating Budget Plans and Peer company comparisons What are the two categories of Long-Term Incentive Plans - ANSWER- Equity based and Non-equity based What are the main characteristics of Long Term Equity Based Plans - ANSWER-Create Equity interest, based