The major objective of incentive plans is to preserve a company most capable people. In order to maintain the competitive edge, companies have to award incentive plans and bonuses that are similar or greater than other companies. The retentive of the best talent is merely a one benefits with offering incentive plans, when employees receive incentive for their work production tend to increase along with the company’s profits. This author can remember when his former company offered profit sharing for achieving production and it was motivation to do better job. Smart companies recognize that motivated employees are productive employees, which inspires them to create tactics to keep their workforces gratified and inspired. Therefore, it is wise to offer Incentive plans for performance. With that said there are several incentive plans that can be utilized by companies such as “team and group incentives”, “piecework plans”, “stock options”, “non-tangible and recognition based awards”, “employee stock ownership” ,“merit pay”, and “profit sharing plans” (Dessler, 2011). The focus of this paper is to researching different types of incentive plans offered by companies as a means to retain the best and brightest employees. Additionally, this author will research and discuss two of the incentive plans previously mentioned. Moreover, this author will emphasize the possible advantages and disadvantages of each of those incentive plans. “Stock Options” The first incentive plan this author will discuss is “stock option”. “Stock Options” according to Dessler (2011) is normally the type incentive received by executive and sometime lower lever employees of a company. When employees have stock option it give them the right to procure a... ... middle of paper ... ... Reference Dessler, G. (2011). A framework for human resource management (6th ed.). Upper Saddle River, NJ: Prentice Hall. ISBN: 9780132556378 Jayaratnam, A. (2007). Prosecuting stock-option backdating: The ethics of enforcement techniques. The Georgetown Journal of Legal Ethics, 20(3), 755-767. Retrieved from http://search.proquest.com/docview/227360941?accountid=32521 Kunkel, J. G., & Lau, R. T. (2005). Compensation plans and the new stock option accounting rules. The CPA Journal, 75(1), 28-30. Retrieved from http://search.proquest.com/docview/212341182?accountid=32521 Wilkerson, J. L. (1995). Merit pay-performance reviews: They just don't work! Management Accounting, 76(12), 40. Retrieved from http://search.proquest.com/docview/229841643?accountid=32521
Employees protested, “that supervisors should have received a reduced bonus because they were not working as hard as they are and the company might be playing with the numbers” (Beer & Collins, 2008 p.6). A beneficial system for the new Scanlon Plan is to rearranged payout count. This will help to regain trust amongst employees and management. Equity Theory stresses integrity to all compensation arrangement and if this is effectively executed, then this will resolve the mistrust issue that employees have with their management team. The rewards should not be paid on a consistent month-to-month basis, instead, on a settled proportion plan, which gives rewards "each nth time the right behavior is demonstrated" (Bauer and Erdogan, 2013, p. 112). Traditionally, this would imply that workers are paid reward each time a specific measure of cash in permitted payroll is met. “The current permitted payroll is at 38% of sales value” (Engstrom, 2008). This requires no change. Instead, when Engstrom comes to a permitted payroll of one million dollars, then 10% of that sum should naturally disbursed to workers as rewards. This tackles numerous past issues with the Scanlon
Noe, Raymond A., et al. Human Resource Management: Gaining a Competitive Advantage. 7th ed. New York: McGraw-Hill/Irwin, 2010. Print.
employee stock ownership can create a burden of long-term planning for the sustainability and repurchase program; not all employees can be able to purchase stock. According to the case, Atul believes in a total compensation between 0-10 percent based on employee’s salaries could play as a “trade-off” for a “supportive and respective work environment” (Calo et al., n.d.).
The compensation committee has a difficult task upon its shoulders. It must construct pay programs that attract and retain the best talent to address the individual organization’s needs. It must design a strategy that generates superior returns for investors, appropriately measure managerial performance, and institute a pay practice which is fair to both employees and shareholders and which really drives business results (Mercer p.4). There is abundant theory and research on the strategies thought to accomplish these goals, and the emerging trends in executive compensation seem to be highly successful.
Reasons being their job in an organization or a corporation is very crucial and not easy to replace. Due to this, companies often go to great lengths spending hundreds of thousands of dollars searching and recruiting for someone who is able to help their company grow in value and continue to be successful. In order to attract the best and highly skilled employees, companies cannot just focus on their salary offers anymore. Competitive hiring practices are now focusing on various compensation and benefit packages that will make potential employees favor them to other competitive companies (“Executive Benefits and Compensation”, 2016). Companies must offer benefits that will have a positive effect on the organization without being counterproductive, meaning offering benefits that employees will use appropriately and will consequently have a positive impact on their effectiveness at work. Some concerns about executive compensation include making business decisions in order to meet business goals under the premise of personal gain in order to receive their incentive (“Executive Benefits and Compensation”, 2016). In order to combat this concern companies should tie the employee’s incentives to the value of their firm
The company Steel Co, which has been established for around 30 years, has been in a steady decline during the current recession and although a Divisional Director has been employed by the owner the fortunes of the company have not improved. The staff is unhappy, unproductive and unimpressed by the Human Resource system that currently exists in the company. The pay structure that currently exists within the organisation has been much debated among employees who feel it is unsatisfactory. The Business Adviser will research Performance and Reward management tools in order to help the company develop a more suitable Performance and Reward system to use. A variety of sources will be used in order to evaluate the system and tools against other organisational frameworks. The pay structure within the company will also be looked at in order to identify any possible changes that could be made.
Prendergast, Canice. 1999. The Provision of Incentives in Firms, Journal of Economic Literature, 37:1, 7-63
...r investigate what sort of rewards or fringes would their employee’s desire compared to the old method of monetary incentives for the beneficial for the company”.
Fisher, C., Schoefeldt, L., & Shaw, J. (1996). Human resource management. (3rd Edition). Princeton, NJ: Houghton Mifflin Company.
A well-structured compensation system could have a major impact on employee’s behavior, performance and effectiveness in that company. Most compensation systems reflect the value of the company and how the company treats their employees. Employees look at the pay system of any company and they get a general idea about the company. A well strategist compensation system will bring in the right kind of employees because it says a lot about the organization values and practices. The company has to show in their compensation system that they help motive employees by offering some sort of security, advancement opportunity, and ...
Incentive reward engagement offers a win-win situation for the employees and the company. Kelleher believes that incentive is a form of recognition and builds engagement through company’s and employee’s obligations towards a common goal (2014). The company has a “Growth Incentive Scheme” for the production workers. Special monetary incentives are provided should the workers achieve the monthly output target. Through the rewards, employees feel motivated towards their work and thus, contribute towards the company’s
Reward systems have been evolving and growing throughout the years, but there are many types that have always been there. Base pay is the most common, which is an employee’s base wages and salary that they are paid on hourly, weekly, monthly, or annually (Luthans, 2011, p.94). Merit based pay is another type of incentive, which rewards and motivates an individual to perform their jobs to the standards of their employers. According to the text Organizational Behaviors, by Fred Luthans, there are three other options for paying an employee for their performance: individual incentives pay plans, using of bonuses, and the use of stock options. Individual based pay plans are based on the employees output and/or quality. Some organizations use bonuses as incentives to their employees. These are offered sometimes as op...
Management spends a huge amount of time to design incentive systems and schemes to motivate their workers and to ensure they work in their best possible manner. Motivating workers by giving them decent pay helps in winning employees heart to make the work done efficiently, significantly and effectively. The most effective way to motivate people to work productively is through individual incentive compensation (Pfeffer, 1998). An attraction of getting more is a powerful incentive to people for high performance. While most people agree that money plays a major role in motivating people, in organizations there is a widespread belief that money may also have some undesirable effects on morale.
There is considerable debate over merit pay and the effect it has on employees within an organization. Psychologists believe merit pay is related to the incentive theory of psychology; people respond to rewards and with the proper motivation, it increases performance (Cherry). Employers consider merit pay an effective tool and a form of competition strategy for motivating employees to achieve positive performance outcomes. Many employers ignore the fact that incentive plans may motivate some individuals while others have high work ethics and do not need motivation. The intent of this paper is to discuss merit pay used by companies, the motivational factors on employees to reach high achievement, and the challenges that employees face due
Formalized compensation goals serve as guidelines for managers to ensure that wage and benefit policies achieve their intended pur¬pose. The more common goals of compensation policy include to reward employees’ past performance, to remain competitive in the labor market, to maintain salary equity among employees, to motivate employees’ future performance, to maintain the budget, to attract new employees, and to reduce unnecessary turnover. It is important for the organ...