Human Resource Professionals : Design And Install Incentive Pay Systems

Individual incentive pay plans reward employees for meeting one or a combination of performance standards (e.g. productivity, safety, or attendance) set by the employer (Martocchio. 2013). Piece- rate pay is one of four individual incentive plans offered in the employment industry. Employers have two options to select from when choosing this incentive plan. The first option is compensating the employee hourly for each piece over the given production number. The second option is compensating employees based on established subjective (quality) and objective (quantity) performance standards. In both options the employee is, essentially, being compensated for the work he or she does and not what could have been completed (Gibbons. 1987).  Motivation,

The right compensation program will depend on the organization’s business strategy and goals. To achieve these, an organization must recruit and select the best possible employees. To attract such employees, there must be an attractive compensation plan. Competitors will be offering different payment options, this may be based on pay rate or special perks, and a company’s stock options. Organizations must be aggressive yet reasonable to compete with competitors. Retaining and encouraging employees to perform at their best may be achieved through an immediate incentive award

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

Managers and supervisor design compensation packages to promote team work and team building among co-workers. Managers also use incentives programs to entice recruitment of new candidates. The purpose of these incentive is to hire talented candidates through employment relation such as recruiting and selection, by shaping the flow of workers through performance evaluation, training, career advance, termination and labor relation (Martocchio, 2011).

Incentive pay, also known as "pay for performance" is generally given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase worker performance. (Billikopf) Performance pay has various names: merit pay, pay for performance, knowledge-and-skill- based pay, or individual or group incentive pay. (Delisio)

Reward Management (RM) has been defined as the distribution of monetary and non-monetary rewards to employees in an effort to align the interests of the employees, the organisation, and its shareholders (O’Neil, 1998). In addition O’Neil (1998) also suggests that a RM system can serve the purpose of attracting prospective job applicants, retaining valuable employees, motivating employees, ensuring legal requirements relating to direct and indirect rewards are not violated, assisting the company in achieving human resource and business objectives, and ultimately assisting the organisation in obtaining a competitive advantage.

In many cases different type of rewards has different type of effects on different organizations.

A profit sharing plan could be considered a group incentive because the employee has to work together, cooperate and share knowledge to receive individual bonuses. However, a group incentive program, such as gainsharing is measured by improvement in productivity and effectiveness. This is unlike the profit-sharing program in Bob’s Red Mill. In the profit-sharing program, employee’s bonuses depend on the company’s profits. If the company has increased profits, then employees get a percentage of these earnings. On the other hand, if the company performs poorly than employees receive nothing. Yes, this requires employees to work together as a group, but in general, the profits are dependent on the company’s success, not the group’s success. Likewise, the last incentive offered, the employee stock ownership program, is based on the company’s performance as well. Here, employee's incentive pay is solely based on the company’s performance. Yes, both the individual and group performance play into how the company performs. The individuals and teams must work together and perform sufficiently in order for the company to perform well. Yet, if an employee or team performance slacked, the direct result would be a hardship against the company. In which case, would cause the employee's stock to plummet. In general, how the company performs, as a whole, depends on the employee’s stock worth. Thus the stock ownership program is dependant on the

4. Providing group rewards based on collective achievement also encourages cultural control. Reward plans based on collective achievement come in various forms. Good examples are bonuses, profit sharing, and other compensation that is based on entity performance. These returns help keep employees motivated, which helps foster improved performance. Al should also ensure that employees

A monetary incentive can be described as a fiscal price given to top performers in a company. It is a fact that these top performers are an asset to the business and should be treated well for them to stay longer. The prize is awarded in the form of project bonuses, health insurance agendas courtesy of the company, program bonuses, profit sharing and paid vacation time among others. The bottom line here is to ensure that the company’s objectives are observed. As an organization, you cannot expect a worker with financial problems to concentrate on his job but once you take care of the problem and the employee is happy, the employer will gain, and this can be evidenced in the profits the company receives. The purpose of the assignment would offer a persuasive debate on the pros and cons of Monetary incentive plan from employee motivation perspective. Additionally, the paper would discuss two companies that have implemented successful motivation plan that does not involve Monetary reward or compensation.

Team-based incentive programs are designed to motivate employees in addition to holding each other accountable for job responsibilities and activities, while working toward a common goal within an organization (McQuerrey, n.d.). When utilized, team-based incentive programs have the ability to improve the productivity and performance at all levels within an organization. Teams can be categorized into many groups and at any level, such as management teams, quality circle teams, problem-solving teams, and department teams (Bethel University, 2013). Therefore, teams can be studied and suggestions can be made on meeting criteria in order to qualify for customized pay plans.

Since pay honest vigorously impact enlistment, turnover, and representative efficiency, it is critical that candidates and workers see these practices in an ideal light. In the accompanying segment, we talk about how individuals structure discernments around an association 's remuneration framework and how these observations at last influence their conduct.

Incentives are paid in addition to wages and salaries and are also called ‘payments by results’. Incentives depend upon productivity, sales, profit, or cost reduction efforts. There are: (a) Individual incentive schemes, and (b) Group incentive programmes. Individual incentives are applicable to specific employee performance. Where a given task demands group efforts for completion, incentives are paid to the group as a whole. The amount is later divided among group members on an equitable basis.

An effective reward system can improve the 'trust, morale and satisfaction among employees ' (Sandelands 1994, p. 32), and hence it is important to find the optimal way to divide bonuses. The two broad categories of how to divide a bonus between groups are splitting it equally for each member or unequally based on factors such as performance, seniority, commission or as proportionally to salary. Individual bonus systems cover a range of different ways to distribute the reward, varying in impact. Companies can set a criteria for individual bonuses which align workers ' targets with the company’s values and goals for an efficient workplace (Heneman and von Hippel 1995). These individual bonuses also tend to motivate workers more, with the incentive of higher pay. This, however, comes with the drawback of competition amongst team members, damaging group cohesion. As an executive remarked in a study for the University of Bath, 'we talk

To foster competitiveness and deliver better results, there is a program called STACK where employees are ranked based on the work done and their incentive is decided based on it. Better the rank, better the incentives.