Exam (elaborations)
CCP 7 - Variable Pay: Improving Performance with Variable Pay Exam Questions and Answers
- Course
- Institution
CCP 7 - Variable Pay: Improving Performance with Variable Pay Exam Questions and Answers
[Show more]
Seller
Follow
Victorious23
Reviews received
Content preview
CCP 7 - Variable Pay: Improving Performancewith Variable Pay Exam Questions and
Answers
Variable Pay - -based on an individual, group or organizational results
flexible, adaptable
Performance based compensation
Goal: improve organizational performance
Purpose: differentiate the pay of individuals who achieve results vs those
who do not
Compensation that is discretionary or contingent on performance or results
achieved, and can be designed for any individual or combination of
individuals. The amount actually paid will vary based on whatever criteria
the organization chooses.
- Elements of Compensation - -Fixed Pay - nondiscretionary
Variable Pay - discretionary
- Fixed Pay - -Non Discretionary compensation that does not regularly vary
according to performance of results achieved.
- Designing a Variable Pay Plan - -Start with business strategy
-Operational excellence
-Product service leadership
-Customer intimacy
- operational excellence - -Combination of price, quality, dependability and
ease of purchase other competitors cannot match
Primarily a price / cost based strategy
Minimize waste and reward efficiency
Strategy: product quality, operational efficiency improvement, process
improvement, cost reduction
- product service leadership - -Time to market shorter than 90 days (time
from innovation to market)
Primarily an innovation based strategy
Focuses on innovation, product development and market exploitation
Strategy: market share, market penetration, product development, tie from
innovation to market
- customer intimacy - -Measure guest satisfaction scores
Guest retention score
Primarily a solutions based strategy
,Deep and lasting relationships with customers - build customer loyalty
Strategy: customer opinion of products, product quality, customer retention,
customer satisfaction
- start-up - -new with little or no formal policies or procedures. Focus is
obtaining capital, marketing products or services, initial sales growth and
cash conservation.
- growth - -focused on growing sales, increasing distribution capability and
determining how to efficiently produce products or services to meet growing
demand. Need to begin standardizing procedures through policy creation
- maturity - -focus on maintaining / increasing market share, improving
productivity and reducing cost of sales. Improvements to products are more
evolutionary than revolutionary. Higher levels of bureaucracy and greater
amounts of cash on hand than at other stages.
- decline - -revenues are declining. Must decide to reinvest in current
products, create new products or maximize profits with current products as
long as possible.
- Variable Pay helps achieve business objectives in 4 ways - -focus your
employees
aligns them with tasks
provides motivation
reinforce the behavior
focus, alignment, motivation, reinforcement
- high variable low base - -Sales people
Keep base low to conserve fixed cash expenses while providing the
opportunity to receive high levels of variable pay based on company growth
objectives
- High variable high base - -High potential employees, hard to hire, want
them aligned with company success, CEOs, Research and Development, &
technological types
Attract the very best talent
- Low variable high base - -Precision effort - doctors
Promote retention
- 3 Types of Variable Pay - -Incentives
Bonus
Recognition
, - incentives - -Criteria determined in advance
Amount of payment can vary
Monetary or nonmonetary
Self-funded or budgeted
Nondiscretionary
Formulaic
If you do X,Y,Z then you get A,B,C
- Bonuses - -Completion of specific task
Amount determined in advance
Monetary
Budgeted
Nondiscretionary
One amount
- recognition plan - -Criteria broadly defined and subjective
Awarded spontaneously
Decision made after the fact
Focused on behaviors
Monetary or nonmonetary
Budgeted
Discretionary
- 2 types of incentive plans - -short term plan is one year or less
long term plan is 3-5 years
- profit sharing - -based on financial performance
-common performance measures include: revenue, net income, earnings per
share, or other financial ratios
includes entire org
equal percentages and equal distribution (not equal dollars)
- profit sharing plan objectives - -Foster employee's identification with org
success
-If company if profitable, employees get paid
Create a common focus
-Financial measure education for employees
- profit sharing plan approaches - -first return plan
threshold plan
operating budget plan
peer company comparison
- first return plan - -As soon as I make profit, I'm going to share it with you
Start paying on first profit earned
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Victorious23. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75057 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now