C10_Performance & Rewards

8/3/2019 C10_Performance & Rewards

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GROUP : C10

Deepankar Sharma U111133

Dibyaroop Padhi U111135

Manjit Prasad Mihanty U111145

Sampat Patnaik U111162

Manu Vats U111167

Sreenath A R U111172


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Dear Bo$$

In thi$ life, we all need $ome thing mo$t de$perately. Ithink you should be under$tanding of the need$ of u$

worker$who have given$o much $upport including$weat

and$ervice to your company.

Performan$e and Reward$ should match.

I am$ure you will gue$$ what I mean and re$pond$oon.

Your$$incerely,

Norman$oh


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DearNOrman,

I kNOw you have been working very hard.NOwadays,NOthing much has changed. You must haveNOticed that

our company is NOt doingNOticeably well as yet.NOw you

see the newspaper are saying that the world`s leadingecoNOmists areNOt sure if the United States may go into

another recession. After theNOvember presidential

elections things may turn bad. I haveNOthing more to addNOw. You kNOw what I mean.

Yours truly,

Manager


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Total

Compensation

Pay

Incentives

Indirect

Compensation/

Benefits

Base

Compensation

The Elements ofTotal Compensation


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Remuneration & Rewards

Financial Non-Financial

DIRECT

(cash)

Salaries

Incentives Bonuses

INDIRECT

(benefits)

Insurance

Holidays

Medical andhealth

Child care

Employee

assistance

JOB

Interesting

work

Challenge

Responsibility

Recognition

Advancement

ENVIRONMENT

Good policies

and practices

Competent

supervision

Congenial

co-workers

Safe and

healthy work

environment

Fair treatment

Components of Employee Remuneration


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Performance & Rewards Cycle


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Competency Based Pay


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Competencies :Competencies : Demonstrable characteristics of a person, including

knowledge, skills, and behaviors, that enable performance.

CompetencyCompetency--basedbased pay :pay : Where the company pays for the employees range,

depth, and types of skills and knowledge, rather than for the job title he or she

holds.

Why Competency based pay

Competency Based Pay

Higher quality

Lower absenteeism and fewer

accidents

x Pay program implementation problems

x Cost implications of paying for unused

knowledge, skills and behaviors

x Complexity of program

x Uncertainty that the program improves

productivity


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INDIVIDUAL GROUP ENTERPRISE

Piecework Team Plan Profit sharing

Standard hour Gainsharing Stock options

Bonuses ESOPs

Merit pay

Sales incentives

Types of Incentive Plans


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When the contributions of individual

employees can be accurately isolated.

When the job demands autonomy.

When cooperation is less critical to

successful performance or when

competition is to be encouraged.

When work tasks are so intertwined

that it is difficult to single out who did

what.

When the firms structure and systems

facilitate the implementation of team-

based incentives.

When the objective is to foster

entrepreneurship in self-managed work

groups.

Conditions Under Which Team-

Based Plans Are Most Likely to

Succeed

Conditions Under Which Individual-

Based Plans Are Most Likely to

Succeed


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A programme under which many or all employees are engaged in a

common effort to achieve an organizations objectives and share the

financial gains from it according to a predetermined formula that

reflects improved productivity or attainment of the objective.

GAINSHARING PLANS

Scanlon Plan Rewards come from employee participation in improving

productivity and reducing costs.

Rucker Plan Shared rewards come from the difference between labor

costs and sales value of production.

Impro-share Gainsharing based on increases in productivity of the

standard hour out ut of work teams.


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Gainsharing is most appropriate in situations where the

demand for the firms product or service is relatively stable.

If a firm has multiple plants with varying levels of efficiency,

the plan must take this variance into account so that efficient

plants are not penalized and inefficient plants rewarded.

Less likely to work well when technology limits

improvements in efficiency.

Conditions Favoring Gainsharing Plans


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Any procedure by which an employer pays, or makes available to

all regular employees, in addition to base pay, special current or

deferred sums based upon the profits of the enterprise

Profit Sharing


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Most attractive to firms facing highly cyclical ups and downs inthe demand for their product.

When used in conjunction with other incentives, corporate

wide programs can promote greater commitment to the

organization by creating common goals and a sense of

partnership among managers and workers.

Conditions Favoring Profit- sharing Plans


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The right to purchase a certain amount of shares of a companys

stock at todays price within a specified period of time.

Employee Stock Options


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Plans in which a trust funded by the employer owns company stock

and employees cash out after they leave. The trust holds the stock

in the name of individual employees and distributes it to them on

retirement or separation.

Employee Stock Ownership Plans (ESOPs)


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Agency theory is a theory of governance in the workplace.

It tries to solve the problem of separation of ownership

(atomistic shareholders) and control (professional executives

and non-owners)

Agency Theory

1. Principals = owners or managers who delegate responsibilities

2. Agents = managers or employees who manage firm assets for

owners or other principals.3. Information asymmetry = managers or other agents have

greater access to strategic information than principals, who are

not willing to bear the cost of directly monitoring the agents

due to steep agency costs.


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Pay for Performance


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1. Single Mindedness you get what you pay for no more,

no less. Example: The dysfunctional behaviors that are

observed when a sales representative is put on straight

commission.

2. Control externalities can control the outcomes, positive ornegative. Employee performance results may be magnified

or diluted by the effects on stock markets.

3. Measurement error some measures can be gamed ormanipulated and may not reflect true performance.

Managers can use creative accounting measures to report

greater profits than were actually experienced by the firm.

Controversies that Surround Pay for Performance Plans


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4. Inflexibility managers or employees may resist change of the

basis of compensation because they are comfortable withcurrent basis for pay and want to avoid risk of taking reduction

in earnings in new system.

5. Misalignment of incentives managers may emphasize short-term goals, even if long-term goals are more relevant, until

the pay system recognizes long-term goals to a greater extent

than short-term goals.

6. Line of Sight problem - If division performance and corporate

performance are closely linked than both division and

corporate performance should contribute incentives to the

managers pay for performance plan.

Controversies that Surround Pay for Performance Plans


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Link Pay and Performance appropriately

Build Employee Trust

Use Multiple Layers of Rewards

Increase Employee Involvement

Use Motivation and Non-financial incentives

Pay for Performance systems should be designed to fit each

firms unique situation imitation of other firms plans should be

avoided

Suggestions for More Effective Pay For Performance Plans


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Nike's pay philosophy is to target total compensation, and to pay for

performance.

There are many opportunities to add to base pay, such as merit increases

and promotions.

Performance Sharing Plan (PSP)

Nike has an annual bonus plan that rewards employees based on Nike's

performance and individual performance

Employee Stock Purchase Plan

Contribute 1% to 10% of your pay through payroll deduction to buy NIKE

stock at 15% off the fair market value.


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Top- Performance Based Rewards :

1. Top 10 Asia performers gets holiday in Thailand- Pattaya Beach

2. Rewards comparable to high-end FMCG Company policies like

Coca-Cola, Reckitt Benkiser, Godrej, Marico, Emami etc

3. Cash(10-25% of Basic Pay) & Promotions handed to employees

according to Performance

Ref- Sales & Procurement Manager-

Delhi NCR- Amit Kr.Swain


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Creating a community.

Co-creations with customers.

Customers working along with employees.

Better creativity and trend capture.

Most of the work done by free lancers.


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Community Page


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Customers are the employees.

Customers doing the marketing for the company.

A cult status dedicated fan following.

Word of mouth publicity.

Employer can select the best work.

Talent spotting and recruitment is made easier.

Benefits


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The Reward


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GROUP : C10

Date post:	06-Apr-2018
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C10_Performance & Rewards

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