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Bus 384: Chapter 11
| Term | Definition |
|---|---|
| Piece rates | a compensation system in which employees are paid per unit produced |
| merit pay | an increase in base pay normally given once a year |
| credibility gap | when EE do not believe the pay-for-performance programs are fair or that they truly reward performance |
| profit sharing | most common corporate wide pay-for-performance plan |
| ESOP | Employee stock ownership plan: a corporate wide pay-for=performance plan that rewards employees with company stock either as an outright grant or at a favorable price that may be below market value |
| Rucker plan | a gainsharing program where worker-management committees to solicit and screen ideas |
| Scanlon plan | gain sharing program where a committee of employees, union leaders, and top managers generate and evaluate cost saving ideas |
| Non financial rewards | public/nonpublic praise, honorary titles, expanded job responsibilities, paid/unpaid sabbatical leaves, mentoring programs, and 1oo% tuition reimbursements |
| free-riders | those who contribute little to the team either because of low effort or limited ability |
| problems managing PFP | -do only what you get paid for syndrome -unethical behavior -neg effects on spirit of cooperation -lack of control -dificulties in measure perf -psych contracts -credibility gap -job dissatisfaction & stress -potential reduction of intrinsic drive |
| Type of PFP plans | Individual based, team-based, plantwide, corporate |
| Individual Based Plan | -contribution of individual can be isolated -autonomy -successful perf does not depend on cooperation & competition should be encouraged |
| Team-Based Plans | -work tasks are so intertwined, can't tell who did what -organization support team-based incentives -firm objective is to foster entrepreneurship in self-managed work groups |
| Plantwide Plans | -firm is small to midsize -technology does not limit efficiency improvements -clear records of historical performance -stable product market |
| Corporate plans | -firm size is large -different parts of business are independent -relatively unstable/cyclical product market -other incentives are present |
Created by:
mbarnum3
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