Organizational Rewards and Pay Structures

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Questions and Answers

What is the key takeaway regarding organizational rewards?

You get what you reward. (correct)

You lose what you do not evaluate.

You get what you ignore.

You gain what you invest.

Why is human capital considered central to competitive advantage?

It is easily replaceable.

It is a significant investment for organizations. (correct)

It increases organizational expenses without benefits.

It represents a minor cost to organizations.

What emphasis is placed on reward systems in organizations?

Sustaining and leveraging human capital. (correct)

Focusing solely on material rewards.

Maximizing financial returns only.

Eliminating all forms of compensation.

How has the attention to human capital shifted in organizational analysis?

It is now analyzed primarily for its return on investment. Signup and view all the answers

Which of the following statements reflects the significance of organizational rewards?

Organizational rewards need to be aligned with employee interests. Signup and view all the answers

What is the primary objective organizations must define when establishing a reward system?

What outcomes they are seeking Signup and view all the answers

What must organizations be able to do in relation to the outcomes of their reward systems?

Measure these results Signup and view all the answers

Which pay administration method is traditionally used to provide employees with compensation?

Base pay Signup and view all the answers

What business concept does Lawler emphasize as more important than pay differences among individual players?

Team performance rewards Signup and view all the answers

What defines 'base pay' in a typical organizational context?

The primary compensation based on hours worked or salary Signup and view all the answers

What trend is observed regarding corporate shareholders' views on CEO pay?

They advocate for tying CEO pay to employee wages Signup and view all the answers

How is base pay for employees typically determined?

According to market conditions Signup and view all the answers

Which of the following is NOT a traditional method of administering pay?

Commission-based pay Signup and view all the answers

What percentage of the public believes that executives have profited at the expense of ordinary workers?

87 percent Signup and view all the answers

What issue do many organizations face regarding their goals for reward systems?

They do not know what they want to achieve Signup and view all the answers

What have corporate shareholders increasingly demanded regarding the relationship between CEO compensation and worker wages?

They want a cap on CEO pay tied to worker wages Signup and view all the answers

How is money perceived in the context of Maslow’s hierarchy of needs?

Only related to basic survival needs Signup and view all the answers

What example illustrates base pay for a part-time worker?

$12.00 per hour Signup and view all the answers

Which of the following statements reflects a common misconception about money in management theory?

It is not important for motivation Signup and view all the answers

What has been emphasized in classical management theory concerning money?

Money is overemphasized as a motivator Signup and view all the answers

Why do some people believe there are disparities in CEO compensation?

Because firm performance does not justify the pay Signup and view all the answers

What is a consequence of treating managers as financially self-interested automatons?

It creates a self-fulfilling attitude in management. Signup and view all the answers

What was found about CEOs who hold stock options according to the research?

They tend to take higher variance risks. Signup and view all the answers

What is a limitation of reward systems like pay for performance?

They are practical only when performance is measurable. Signup and view all the answers

How can individual incentive rewards negatively impact sales behaviors?

They may push salespeople to prioritize commission over customer needs. Signup and view all the answers

What can be an effect of stock options on corporate outcomes?

They can lead to extreme performance variations. Signup and view all the answers

Which factor may limit the effectiveness of individual incentive rewards?

The inability to quantify subjective job performance. Signup and view all the answers

What is a critical outcome observed with option-loaded CEOs?

They often incur more losses than profits. Signup and view all the answers

Which scenario reflects a potential issue with individual incentive plans?

Salespeople might ignore customer feedback in pursuit of higher commissions. Signup and view all the answers

What is the primary objective of Dierbergs' recognition program?

To enhance customer satisfaction and improve retention Signup and view all the answers

Which of the following actions exemplifies the type of customer service that Dierbergs rewards?

An employee changing a customer's flat tire Signup and view all the answers

What type of rewards does Dierbergs provide to employees for their exceptional service?

Gift certificates and personal interactions with executives Signup and view all the answers

How does Dierbergs view the relationship between customer service and employee satisfaction?

They see a direct correlation between high employee satisfaction and excellent customer service. Signup and view all the answers

What has been a notable outcome of Dierbergs’ recognition program according to customer feedback?

Complimentary feedback from customers Signup and view all the answers

Why was Dierbergs awarded for its business practices?

For motivating and retaining employees effectively Signup and view all the answers

What can be inferred about the labor turnover rate at Dierbergs compared to the industry average?

It is lower than the industry average. Signup and view all the answers

What effect has word-of-mouth advertising had on Dierbergs according to the recognition program's outcomes?

It has enhanced customer retention and increased revenues. Signup and view all the answers

Study Notes

Importance of Organizational Rewards

Organizations need to reward desired behavior to encourage employees to engage in it.
The importance of human capital as a driver of competitive advantage highlights the significance of rewarding employees appropriately.
The return on human capital needs to be carefully analyzed, similar to other investments.

Base Pay

Base pay is determined by factors such as market conditions and the individual's experience and qualifications.
Organizations may use hourly, weekly, monthly, or annual pay structures depending on the nature of the position.

Challenges of Pay for Performance

Pay for performance systems work best when outcomes can be readily measured and tied to specific behaviors.
In situations where performance is subjective or difficult to quantify, pay for performance may not be an effective strategy.
Individual incentivization can lead to narrow behavior, such as salespeople focusing on sales numbers over customer needs.
Stock option plans can incentivize CEOs to take high-risk actions, leading to potentially large gains and losses.

Employee Recognition Programs

Organizations are increasingly adopting employee recognition programs to reward employees for going above and beyond to meet customer needs.
Such programs aim to foster a positive work environment, enhance customer satisfaction, and boost employee morale and retention.
Dierbergs, a company that implemented a successful employee recognition program, received an award for its best-in-class practices.
The program utilizes various reward types, including gift certificates, movie passes, and even lunches with the CEO.
Positive feedback, low turnover, and increased revenue all indicate the success of the program.

The Importance of Money as a Motivator

While money may be overemphasized in some management theories, its importance as a motivator remains significant.
It is crucial to remember that money is often seen as a basic need according to Maslow's hierarchy of needs.
When implementing reward systems, organizations should consider potential outcomes, their measurability, and the connection between rewards and desired outcomes.

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Description

Explore the significance of rewards in organizations and how they foster desired employee behavior. Understand the complexities of base pay and the challenges associated with pay-for-performance systems. This quiz delves into key concepts related to human capital and compensation strategies.