Human Resources: Requirements For A Successful Incentive Plan

Submitted By roz112
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Pages: 3
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Chapter 12
Human Resources

Requirements for a successful incentive plan
-link between incentives and performance must be salient
-incentive program must be perceives as being fair
-incentive program must be communicated clearly

individual incentive plans
-piecework
-straight piecework: give employees a certain amount of money for what they produce. When there was no minimum wage employees were paid a certain weight for everything they produced. -Differential piece rate: set a standard for employees , employees would be paid beyond that if they exceed the rate.
-piecework may not always be an effective motivator -rate buster: all employees try to get the same output so they do not get hated by other employees

other individual incentive plan
-standard hour plan: The average amount of time it takes to compete a job, the ones that finish job sooner get extra
-employees get paid for their full time despite them not working for the full time
-bonuses:
-merit pay: based on how successful you are… they will set some sort of expectation standard… if employee exceeds expectation they get rewarded a raise or extra pay
-sales incentives: when someone exceeds sales goal they may get a bonus.. .. commission is another example, may get 1 percent of sales back into salary

executive compensation
-four basic components
(1) Base salary
(2) short term incentives
(3) long term incentives – individual performance, individual performance
(4) perquisites – special extras, company car, access to company jet

group incentive plans
-team compensation
-gainsharing – employees benefit when the organization as a whole is doing a good job. -Scanlon plan: when employees offer up suggestions that help the organizations performance; brainstorming, participation
-earnings-at-risk: some of the employees base pay is actually at risk but when they exceed their expectations they exceed their base pay

enterprise incentive plans
-profit sharing ; employees benefit from whatever profit the company makes
-stock options: may make stock available to employees at a usually lower price than market value and will allow employees to buy them employee stock ownership plans: some sort of retirement benefit, separate from stock options.

Strategic role of employee benefits
Employee benefits
-Indirect financial payments given to employees
-may include supplementary health and life insurance, vacation, pension, education plans, and discounts on company products

government sponsored benefits
-employment insurance (EI) : designed by the government to help employees
-Canada/Quebec pension plan (C/QPP)
-workers compensation: compensation if employees are injured on the job
-vacations and holidays : depends on the jurisdiction, statutory holidays (new years, good Friday, Canada day, labour day etc)
-leaves of absence
-pay on termination of employment: only Ontario and federal government have legislation
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