Chapter 5 Person-focused Pay Job Examples

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VIII. Discussion Questions and Suggested Answers

5.1. “Person-focused pay plans are least preferable compared with individual

incentive pay programs.” Indicate whether you agree or disagree with this

statement. Detail your arguments to support your position.

Individual incentive pay programs are indeed more preferable than pay-for-knowledge in

the fact that they pay employees based upon performance and completion or obtainment

5.2. Person-focused pay is becoming more prevalent in companies; however,

person-focused pay programs are not always an appropriate basis for

compensation. Discuss the conditions under which incentive pay is more

appropriate than pay-for-knowledge pay programs. Be sure to include your

justification.

Answer to this question can be found in the MyLab

5.3. The use of drones has been proposed by retailers like Amazon.com as a

method for package delivery. If drones eventually become a widely

adopted technology for this purpose, some workers who are employed by

delivery services or warehouses might become displaced. If the displaced

workers were to become drone operators, explain some of the key

knowledge and skill sets they could ascertain in a person-focused pay

program.

A person-focused pay program requires employers to define specific knowledge and

skills of workers. Some examples of knowledge and skills drone operators would

need that could provide the basis for a person-focused pay program include:

Knowledge about laws related to drone operations, company policies and

5.4. Discuss your reaction to the following statement: “Companies should not

provide training to employees because it is the responsibility of individuals to

possess the necessary knowledge and skills prior to becoming employed.”

5.5. As discussed in the chapter, person-focused pay programs are not suitable for

all kinds of jobs. Based on your understanding of person-focused pay

concepts, identify at least three jobs for which this basis for pay is

inappropriate. Be sure to provide your rationale.

Person-focused pay programs are not suitable for jobs such as store cashier, docker,

IX. End of Chapter Case; Instructor Notes, and Questions and Suggested

Student Responses

Case Name: Person-focused Pay at Mitron Computers

Instructor Notes

A well-designed person-focused pay system has the potential to increase employee

commitment, enhance motivation and improve employee satisfaction because they

promote skill variety and autonomy. In this case, there is no incentive for the Technicians

to further their skill development, which creates problems when a limited number of

Technicians are able to complete the more complex steps in the computer building

process. A person-focused pay system would create an incentive for the Technicians to

attend training to develop their skills. However, the system is in conflict with their

current team incentives and this issue would need to be addressed.

Suggested Student Responses:

5.6. What are some advantages of a person-focused pay system at Mitron?

Such a system could create an incentive to broaden the Technician’s skills and as a result,

they will have more variety in their work, which could lead to higher levels of motivation

and job satisfaction. Employees will also have more job security because of the

5.7. What are some disadvantages?

The system could cause an increase in labor costs for Mitron. As more Technicians raise

their pay rates, their labor costs will rise. The company’s training costs will also increase

5.8. What approach would you recommend for Holly to take in designing a

person-focused pay system?

Answer to this question can be found in the MyLab

X. Crunch the Numbers! Questions and Suggested Student Responses

Training Budget Costs

5.9. What is the total cost of training based on the current budget?

5.10. Let’s assume that 100 employees will participate in this training program.

What is the average training cost per employee?

The total cost of the training is $577,500. If you divide that by 100 employees, the

5.11. Employee salaries are based on an hourly rate of $20 and 100 employees

receive training. Based on total compensation for employees while in training

(line D), how many hours does each employee spend in training?

XI. Assisted-graded Questions

5.12. As manufacturing companies continue to use even more advanced

robotics that have human-like traits, what are some of the skills that

employees will have to learn?

5.13. Compare and contrast person-focused pay and job-based pay. Discuss the

advantages of person-focused pay to employers.

5.14. MyManagementLab Only – comprehensive writing assignment for this

chapter

X. Additional Cases from the MyManagementLab Website; Instructor Notes,

and Questions and Suggested Student Responses

Case: Gain Sharing at CircleWorks

Instructor Notes

Gain sharing plans reward employees with an incentive payment that is passed on factors

such as improved performance, productivity, lower costs or better safety. However, gain

sharing plans must have a supportive leadership philosophy and an opportunity for

employee involvement in order to be successful. If a supportive organizational culture

does not exist, an alternative group incentive plan may be more appropriate such as team

bonuses.

Suggested Student Responses:

5.15. What are some factors that will influence the success of a gain sharing plan

in improving employee involvement and productivity?

Gain sharing plans work in a cooperative organizational environment characterized

by open communication, trust and employee participation. Employees must have the

opportunity to provide input into production processes so that they can have an

5.16. Do you think a gain sharing plan would be successful at CircleWorks?

At this time it seems that the organizational culture at CircleWorks does not align

with a gain-sharing plan. The management philosophy does not seem open to