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