5 Written Questions

1. follow expectancy theory (expectancy x instrumentality x valence)
2. indivudual: piece-rate, sales commissions
   group: gainsharing, group incentives
3. 1. culture (structure) of organization
   a. traditional
   b. involvement
   2. strategic direction of organization
4. 1. financial problems
   2. team doesn't reach goal
   3. biases/political motives by supervisor (if merit based)
5. Scanlon Plan
   -EEs get bonus as long as they reach their target ratio (payroll/sales)

5 Matching Questions

1. What plan should we have (based on strategic direction): employee development?
2. overall profit:
3. Customer service:
4. CP design considerations:
5. CP Plans for different organizational cultures (or structures)

1. a 1. expectancy theory
   2. define & measure performance first and then allocate rewards
   3. only use rewards that are available
   4. make sure all EEs are eligible
   5. rewards should include both financial and non-financial
2. b 1. Traditional Organizations
   -piece rate
   -sales commissions
   -group incentives
   2. Involvement Organizations
   -profit sharing
   -skill-based pay
   -team-based bonuses
3. c competency-based pay or gainsharing
4. d skill-based pay
5. e executive pay or profit/stock sharing

5 Multiple Choice Questions

1. pay and salary increases that are based on job performance
   -pay for performance
   -incentive pay
   1. CP design considerations:
   2. Expectancy Theory
   3. Contingent Pay (definition)
   4. Contingent Pay (examples)
2. 1. visible
   2. contingent
   3. timely
   4. reversible (to some extent)
   1. Customer service:
   2. Rewards should be:
   3. overall profit:
   4. teamwork:
3. 1. performance ratings linked to salary raise (merit-based pay raises)
   2. performance ratings linked to bonuses
   3. performance ratings linked to stock options
   4. performance ratings linked to termination of lowest performers
   *no effect on forced distribution systems
   1. Reasons why you might have low expectancy?
   2. Contingent Pay (definition)
   3. Performance Management systems are more effective when...
   4. Designing contingent pay plans (how do we design it):
4. -guaranteed employment for those with 1+ years of service
   -profit-sharing bonus plan (avg EE bonus is 40% of base wage)
   -standard hourly piece-rate pay
   1. Tangible Rewards
   2. Lincoln Electric
   3. Involvement Culture
   4. teamwork:
5. higher paid EEs get more of the profit share
   *you as an EE don't necessarily have to do anything to receive this, company overall just must reach its profit goal
   1. productivity:
   2. Traditional Culture
   3. Gainsharing Plans
   4. Profit-Sharing Plans

5 True/False Questions

1. Traditional Culture → -top-down decision making
   -vertical communication
   -jobs that are clearly defined

   True        False

2. Tangible Rewards → 1. cash compensation (base pay, seniority-based pay raises, contingent pay)
   2. benefits
   -insurance & retirement protection
   -pay for time not worked
   -work/life services

   True        False

3. Expectancy Theory → EE effort => performance level => reward (valence)
   ^ ^
   (expectancy) (instrumentality)

   True        False

4. Possible problems with contingent pay plans: → 1. poor performance management system (expectancy/instrumentality problems)
   2. manager's not accountable for developing EE's performance goals (expectancy problem)
   3. insignificant rewards (no valence)
   4. may reward counterproductive behavior (ex. reward sales not customer service)
   5. extrinsic replaces intrinsic motivation
   6. disproportionately large rewards for executives

   True        False

5. teamwork: → executive pay or profit/stock sharing

   True        False