Pay Increases and Adjustments

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What is the purpose of Key Performance Indicators (KPIs) in compensation?

To set strategic compensation decisions

To calculate labor costs

To evaluate individual employee performance (correct)

To determine the rate of tax wedge

Which compensation approach provides a variable bonus based on individual performance?

Straight piece-rate system

Salary plus commission

Profit sharing

Spot bonuses (correct)

What type of rewards are intangible and difficult to quantify?

Intangible rewards (correct)

Nonmonetary rewards

Monetary rewards

Tangible rewards

In a piece-rate system, what is the basis for calculating employee pay?

Pieces produced Signup and view all the answers

What is the primary goal of individual incentives in compensation?

To motivate high performance Signup and view all the answers

What is the term for paying employees a fixed amount for each unit produced?

Straight piece-rate system Signup and view all the answers

What type of pay increase is based on an employee's level of performance, position in the pay range, and seniority?

Performance-Based Increases Signup and view all the answers

What is the primary goal of using Variable Pay in an organization?

To encourage or motivate action through tangible rewards Signup and view all the answers

Which type of bonus is awarded at any time, without a predetermined schedule?

Spot Bonus Signup and view all the answers

What is the primary purpose of Nonmonetary Incentives?

To recognize individual employees for their work Signup and view all the answers

What type of system determines wages by multiplying the number of units produced by the piece rate for one unit?

Straight Piece-Rate System Signup and view all the answers

What is the primary factor in determining the effectiveness of Variable Pay Plans?

Key Performance Indicators (KPIs) Signup and view all the answers

What is the main difference between a Performance Award and a Recognition Award?

Performance Awards recognize individual employees for their work, while Recognition Awards incentivize performance Signup and view all the answers

What is the primary challenge in implementing Work Unit/Team Variable Pay?

Measuring team performance and distributing incentives accordingly Signup and view all the answers

What is the primary purpose of using Cost-of-Living Adjustments (COLA)?

To compensate for inflation and rising prices Signup and view all the answers

What is the primary objective of a competency-based pay system?

To reward individuals for demonstrating new skills and capabilities Signup and view all the answers

What is the primary assumption behind Variable Pay Plans?

Some people or groups contribute more to organizational success than others Signup and view all the answers

Which of the following is a common issue in designing compensation programs for teams?

balancing individual and team rewards Signup and view all the answers

What is the primary advantage of using market pricing in compensation design?

It ties organizational pay levels to the external job market Signup and view all the answers

What is a pay survey, and what is its purpose in compensation design?

A collection of data on compensation rates for similar jobs in other organizations Signup and view all the answers

What is the purpose of a market line in compensation design?

To show the relationship between job value and pay survey rates Signup and view all the answers

What is the term for grouping jobs into pay grades based on similar market survey amounts?

Market banding Signup and view all the answers

What is the term for an incumbent who is paid above the range set for the job?

Red-circled employee Signup and view all the answers

What is the term for the practice of using fewer pay grades with broader ranges than in traditional compensation systems?

Broadbanding Signup and view all the answers

What is the term for the situation where the pay differences among individuals with different levels of experience and performance become small?

Pay compression Signup and view all the answers

What is the term for when the pay given to new hires is higher than the compensation provided to more senior employees?

Salary inversion Signup and view all the answers