end of chapter 9 and 10

Incentive plans for work groups and teams should ..

motivate teams to accomplish group goals and align the groups' objectives with organizational goals.

Return on Investment

n incentive program should improve performance

technology

Assists in tracking timely and accurate performance feedback

an incentive pay plan designed to motivate performance, must consider...

---Preference of individual employees ---Size of the rewards for high performance ---Method of motivating individual job performance ---Objectivity of the evaluation process that determines the rewards

Top four reasons for tying pay to performance

---Recognize and reward high performers ---Increase the likelihood of achieving corporate goals ---Improve productivity ---Move away from an entitlement culture

types of short term incentives

Bonuses and profit sharing Attendance, customer service, safety behaviors, production quality and quantity.

Evaluating the Effectiveness of an Incentive Program

Feedback from participants and program administrators on the program's clarity, motivational appeal, and success at rewarding the intended behaviors in order to understand the strengths and weaknesses of the program

What Differentiated Rewards Can Influence..

Focus on assessing outcomes related to business strategy execution and business performance. Rewards should be fair and based on multiple measures that capture employees' actual contributions to organizational success. (Goals and Measures)

Incenting innovation

Incentives that motivate employees by inspiring enthusiasm and compensating them for the risks and inevitable failures involved in developing innovations

Differentiating Rewards

Rewards are based on performance rather than giving all employees the same reward.

budgeting

The incentive pay program should motivate employees and also create a positive return on investment for the organization.

identify goals for the incentive plan

The organization must determine what it really wants people to do such as safety, performance, productivity, customer service, skill building, etc

vesting the point at which employees...

can sell or transfer the stock options

Improshare

a gainsharing plan based on a mathematical formula that compares a performance baseline with actual productivity during a given period with the goal of reducing production time

workers' compensation

a type of insurance that replaces wages and medical benefits for employees injured on the job in exchange for relinquishing the employee's right to sue the employer for negligence

incentive errors

accurate decision, error of commission, error of omission , accurate decision

Variable rewards

also called incentives, links rewards to factors identified as valuable, including performance, skills, competence, and contribution

fixed rewards

are all types of predetermined compensation including salary and benefits.

intrinsic motivation

comes from an interest in or enjoyment from doing a task ---when motivated by the task rather than by tangible external rewards for doing it ---when people engage in a hobby

extrinsic motivation

comes from outside the individual, including performance bonuses ---when motivated to do a task because doing so will lead to a valued reward

two types of skill-based pay

competency-based pay, multi-crafting

Organizational incentive plans

designed to align employee goals with organizational goals by rewarding employees for organizational-level performance.

error of omission

does not receive an award, deserves award

accurate decision

does not receive award, does not deserve award

incentive plans for special situations

executive incentives, sales incentives, incentive innocation

The Fair Labor Standards Act

federal law that sets standards for minimum wages, overtime pay, and equal pay for men and women performing the same jobs (Exempt vs. Non-Exempt).

Sales incentives

focus on the value of sales made by an employee or focus broader on the customer relationship management process

multi-crafting

gaining proficiency in two or more trades

Scanlon plans

gainsharing programs based on implementing employee suggestions for lowering the cost per unit produced

Spot awards

given immediately, or "on the spot," as soon as a desired behavior is seen

designing incentive plans

identify goals for the incentive plan, budgeting, differentiating rewards

what can incentive plans influence?

individual performance, team performance, organizational performance, customer service, production quality, production quality, teamwork, attendance, safety, revenue growth, increase in market share, cost reductions, productivity improvements

Long-term incentives

intended to motivate employee behaviors and performance that support company value (e.g., share price) and long-term organizational health.

competency-based pay

is used to evaluate the skills and knowledge of professional workers

Alternative rewards

noncash awards, incentives, and recognition programs that supplement pay and improve total reward programs (flextime, telecommuting)

recognition awards

often used to reward specific achievements like tenure with the organization, helping a coworker, and safety or wellness behaviors

short term incentives

one-time variable rewards used to motivate short-term employee behavior and performance (typically one year or less).

The Equal Pay Act

prohibits gender-based wage discrimination

variable pay plans

put a small amount of base pay at risk, in exchange for the opportunity to earn additional pay if performance meets or exceeds a standard

accurate decision

receives award, deserves award

error of commission

receives award, does not deserve award

pay for performance (merit pay)

rewards employees based on some specific measure of their individual performance

Skill-based pay

rewards employees for the range and/or depth of their knowledge and skills 1. limited/partial/full 2. beginner/moderate/expert

executive incentives

special plans designed to attract, motivate, and retain top managerial talent

types of long-term incentives

stock options and vested at various durations

underwater

stock worth less than the exercise price of the option

Employee stock ownership plans (ESOPs)

tax-exempt, employer-established employee trusts that hold company stock for employees. ---Employees can sell the stocks to the organization or within the market after they leave or retire.

managing incentive systems

technology, evaluating the effectiveness of an incentive program, return on investment

compensation laws and regulations

the fair labor standards act, the equal pay act, workers' compensation

Gainsharing

the firm shares the value of productivity gains with employees

stock options

the right of an employee to buy shares of the company's stock at a certain price (the exercise price) during some future period of time

types of pay for performance

variable pay plans, spot awards