question archive Mini-Case 81: PayforPerformance and Financial Incentives
Mini-Case 81: PayforPerformance and Financial Incentives
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Mini-Case 81: PayforPerformance and Financial Incentives...
Mini-Case 81: PayforPerformance and Financial Incentives
Jennifer Kline is the owner of J.K. Kline, a retail store that started in the basement of her home in Rothesay, New Brunswick, in 2010 and now has more than 100 stores across Canada and the United States. During the growth phase, Jennifer had put into place the necessary structure and organizational design to accompany her growth but it was now time to ensure that the business she had developed and grown would provide financially for her family over the next several years. She recognized that the majority of her employees were going to be the primary point of contact for her customers and it was time to turn her attention to recruiting and retaining the best employees possible. She was well aware of the turnover in the retail industry and she wanted to implement an employee recognition program to reward her employees and keep them motivated to not only continue doing an excellent job but to also stay with her company.
Jennifer placed a call to her brother, Mark Kline, who had worked for a benefits consulting company for the past 15 years and asked him if he could help her design an employee recognition program. She discussed with Mark the unfortunate reality of the retail industry - employees were not well paid and if a competitor offered them as little as fifty cents per hour more, they were apt to leave because for workers at that low pay level, it was enough to convince them to quit and work elsewhere.
Jennifer paid her employees minimum wage but had a generous commission plan in place and employees seemed to be responding well to this incentive. She had, however, lost a few key store managers in the last year and in exit interviews she discovered that they felt their efforts were not recognized. For example, she found out that these particular store managers and some of their employees regularly stayed after hours without pay to ensure the store was in pristine condition when it opened the next morning. As Jennifer thought about their comments, she realized that although the employees had a higher than industry commission incentive, they were human and as such needed recognition and praise in addition to other incentives.
She asked Mark to meet with her the following week and to bring with him a report on the different types of employee recognition programs that might work for employees in a retail environment.
Jennifer was concerned that the programs Mark might suggest would be too expensive for her to implement, but he had briefly told her not to worry because nonfinancial rewards were also very popular and he would tell her more about them when he saw her next week.
- Exit interviews at J.K. Kline indicate that store managers who had worked overtime without pay felt unappreciated. Which of the five elements of total rewards best reflects this? dissatisfaction?
A.performance and recognition
B.benefits
C.compensation
D.development and career opportunities
2.How does variable pay help organizations manage their total compensation? budget?
A.by tying strategy to? skills-based pay
B.by ensuring all performers get top pay
C.by providing the same bonuses to all employees
D. by keeping base pay inflation controlled
3.J.K.? Kline's overhead and administration costs rose by? 25% over a? one-year period, and Jennifer wanted to use a? company-wide incentive to offset the losses. Which of the following would be the most appropriate plan for this? situation?
A.stock ownership
B.capital accumulation
C.?profit-sharing
D.gainsharing
4.Which of the following is NOT a reason that merit pay can? backfire?
A.Merit pay can disrupt team spirit.
B.Merit bonus pool is tied to company performance.
C.Performance appraisals are viewed as unfair.
D. Supervisors are reluctant to give higher merit pay to higher performers because it may alienate other employers.
5.Mark is recommending tuition assistance and apprenticeships to increase retention. These rewards could best be described as which of the? following?
A.development and career opportunities
B.compensation
C.benefits
?D.work-life programs
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Exit interviews at J.K. Kline indicate that store managers who had worked overtime without pay felt unappreciated. Which of the five elements of total rewards best reflects this? dissatisfaction?
The element that best describes this dissatisfaction in the performance and recognition. Employee recognition refers to the acknowledgement of an organization's employee for excellent performance This is aimed at reinforcing particular practices, behavior and activities which result in better performance and good business returns. More appreciation from the employer will make the employees want to stay longer in the organization. Employees can be recognized through bonuses, verbal praise and even by holding their birthdays for them in the offices. From the above case Jennifer had not recognized the performance efforts put by some store managers and employees who would work overtime to ensure the store was in pristine condition the following day. This lack of recognition made most of them leave the work.
How does variable pay help organizations manage their total compensation? budget?
Variable pay help organizations manage their total compensation budget by ensuring all performers get top pay. It refers to the portion of compensation determined by employee's performance and it is commonly referred to as commission. Variable is given to employees whenever they hit their targets and goals, they are paid in form of incentive pay, bonus or commission.
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J.K.? Kline's overhead and administration costs rose by? 25% over a? one-year period, and Jennifer wanted to use a? company-wide incentive to offset the losses. Which of the following would be the most appropriate plan for this? situation?
The most appropriate plan for Jennifer to use is profit sharing. This is a plan whereby the owner of the business undertake to pay a particular portion of net profits to their employees on compliance with certain service qualifications and conditions. It could be in form cash or in shares. This type of scheme motivates the workers and other staffs to work quicker and achieve better results so that the products of the company are increased which in turn increases the share of workers therein. When the employees know that their benefits are tied to the company's success then they will work even harder to achieve high profits and this is the plan that would best offset the losses in Jennifer's company.
.Which of the following is NOT a reason that merit pay can? backfire?
The one that may not cause a merit pay to backfire is that supervisors are reluctant to give higher merit pay to higher performers because it may alienate other employers. Merit pay is whereby the employees are paid based on how they have performed their activities. It is aimed at motivating employees to be more productive when doing their business operations. This type of payment strategy may not work because it may disrupt team spirit because employees will tend to work aiming self recognition rather than achieving goals as a team, it may also backfire because it is tied to company performance whereby without performing well then there is no merit pay. It could also not work because they may be viewed as unfair mainly because some employees may not agree with how the performance is measured or employees who have not performed very well may be rewarded together with those who performed exceptionally good.
Mark is recommending tuition assistance and apprenticeships to increase retention. These rewards could best be described as which of the? following?
This rewards can best be described as development and career opportunities. Tuition assistance is where by employees enroll into colleges or universities with their own money to improve on their knowledge and skills, and after completion of the semester or study program the employer refunds to them the fee or money they spend in studying. Apprenticeships refers to the training and development that employees are given at work places with the aim of improving their skills and abilities.
