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Chapter 5

BUS 272 Chapter Notes - Chapter 5: Organizational Architecture, Mobile Computing, Flextime

Business Administration
Course Code
BUS 272
Lieketen Brummelhuis

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Tuesday, January 31, 2017
Ch. 5 - Motivation in Action
From Theory to Practise: The Role of Money
-What to Pay: Establishing a Pay Structure
Internal Balance: the worst of the job to the organization (Usually established
through a technical process call job evaluation)
External Equity: the external competitiveness of an organizations pay relative to
pay elsewhere in its industry (usually established through pay surveys)
-How to Pay: Rewarding Individuals through Variable-Pay Programs
variable-pay programs: base a portion of an employee’s pay on some individual,
group, and/or organizational measure of performance (eg. piece-wage rates, merit
based pay, bonuses, gainsharing, profit-sharing planes, stock options)
Individual-Based Incentives
-Piece Wage Rates
paying a fixed sum for each unit of production completed - pure piece-rate plan
provides no base salary, pays the employee only for what they produce
-Merit Based Pay
pay for individual performance based on performance appraisal ratings -
people with high performances are given larger raises
reward employees for recent performance rather than historical performance -
one time rewards
-Skill Based Pay (competency-based or knowledge-based)
bases pay levels on the basis of how many skills employees have or how
many jobs they can do
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Tuesday, January 31, 2017
Group Based Incentives
a formula based group incentive plan that uses improvements in group
productivity from one period to another to determine the total amount of money
to be shared
Organization Based Incentives
-Profit Sharing Plan
an organization wide plan in which the employer shares profit with employees
based on a predetermined formula
most effective when there is more involvement from employees, more
teamwork, and a managerial philosophy that encourages participation
-Employee Stock Ownership Plan (ESOP)
a company established benefit plan in which employees acquire stock as part
of their benefits
employees will be more likely to think about the consequences of their
performance if they own part of the company
Teamwork, Unions, Public Sector Employees, and Ethical Considerations present
distinct challenges to pay-for-performance programs
Flexible Benefits: individualize rewards by allowing each employee to choose the
compensation package that best satisfies his or her current needs
modular plans - predesigned packages of benefits
core-plus plans - consist of a core of essential benefits and a menu like selection of
other benefit options for employees
flexible spending - allow employees to set aside pretax dollars up to the dollar
amount offered in the plan to pay for particular benefits
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