Sup- Unit 3
Cross-utilization:
Employees trained to do other jobs
Profit Indexed Performance Pay: Compensation based on:
1. Employee performance 2. Organizational performance
PIPP Components (4)
1. employee salary 2. incentive pay basis percent 3. performance index score 4. company multiplier
steps for creating organizational scorecards:
1. identify goals 2. determine goal weights 3. select goal measures 4. identify measure ranges 5. assign job weights
Exposure: What is it?
Cost of full PFP bonus before company multiplier
Organizational scorecard helps you...
Develop employee performance scorecards
Performance index score:
Employee score derived from performance scorecard
Open book management: Goal:
Link nonfinancial measures and financial results
Annual bonus:
Once-a-year compensation added to base pay
Work prospecting
Paying employees to build business
Improving and sustaining employee performance: Work hard:
Persuade employees that working hard is in their best interest
Sales commission:
Portion of sales profit goes to salesperson
PIPP stands for:
Profit indexed performance pay
Multiplier scale:
Profitability index that determines company multiplier
Incentive pay basis percent
Proportion of employee salary eligible for incentive pay
Open book management: What is it?
Sharing financial data with employees
Threshold:
minimum funds needed to run the business
PFP stands for
pay for performance
Merit increase:
Salary raise without performance review
Closed system
does NOT receive input from outside its boundaries
Profit sharing:
portion of year-end profit given to employees
Open system
receives input from outside its boundaries
Improving and sustaining employee performance: Performance system:
reengineer the organization's performance system to maximize and sustain performance
Flexible scheduling:
1. reduce work hours 2. compensate for productivity
Steps for transitioning to pay-for- performance system:
1. results focus 2. stakeholder pay 3. Job enrichment 4. Self- managed
goal sharing
1. set goals 2. Provide compensation for goal completion
Company multiplier
1. used to calculate PIPP 2. Based on profits
Piece rate:
Fixed amount for each unit created or performance completed
Improving and sustaining employee performance: Hire/ Fire:
Hire only good employees and fire the bad ones
performance scorecard
Identifies performance areas important to organizational objectives
Stock options, profit sharing, gain sharing: Examples of:
Incentive plans
Exposure: Calculation:
Wages MULTIPLIED BY incentive pay basis percent
Fix- cost pay, pay for time, corporate socialism, performance - based promotions, management by perception, management by exception, entitlement thinking: Known as
abernathy's seven sins of wages
Stock options:
allowing employees to buy company stock
pay for performance
compensation based on employee and organizational performance
Gain sharing:
employees receive saved funds from expense reduction
job enrichment
increasing authority within a position
job enlargement
increasing job functions in a position
