Date post: | 13-Feb-2018 |
Category: |
Documents |
Upload: | sweeti-destiny |
View: | 219 times |
Download: | 0 times |
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 1/20
Plans
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 2/20
Pay influences employees
throughReinforcement theory
Expectancy theory
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 3/20
Reinforcement
Theory
Behavior that isrewarded will be
repeated.
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 4/20
Expectancy Theory
ExpectancyIf I attempt this level of
performance, am I likely to
succeed?
InstrumentalityIf I achieve this level of
performance, am I likely to be
rewarded?
ValenceWhat value do I place on the
rewards available to me?
Motivational Force =
E * I *
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 5/20
ncentive Programs
Dier by
– payment method
– frequency of payout
–ways of measuring performance
– choice of which employees are covered
Fitting program to situation depends on
–
organiational structure– management style
– type of wor!
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 6/20
Types of Plans
"erit #ay
$ndividual $ncentives
#ro%t &haring'wnership
(ainsharing
(roup $ncentives)lternative Reward &ystems
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 7/20
Merit Pay Programs
lin! performance appraisal ratingsto annual pay increases
focus* identifying individualdierences in performance
better performance results inhigher reward+ contingent onposition in the range ,compra-ratio
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 8/20
Criticisms of Merit Pay
merit pay systems focusing on individualperformance discourage teamwor!
if performance is not measured fairly and
accurately+ the whole process will becontaminated
apparent dierences between people arisealmost entirely from the system that they
wor! in+ not the people themselves– cowor!ers+ /ob materials+ customers+ management+
supervision
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 9/20
ndividual ncentives
reward individualperformance
payments are 0'1 rolled intobase pay
performance is usually
measured as a physical outputrather than sub/ective ratings
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 10/20
ndividual ncentives are rare
because
most /obs have no physical output measure administrative problems of setting and
maintaining acceptable standards
plans may be inconsistent with other goals ,e.g.
acquiring multiple s!ills+ proactive problemsolving
people may focus on what they get paid for andnothing else
plans may reward output at the expense ofquality
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 11/20
Profit Sharing
payments are based on a measure oforganiational performance ,pro%ts
payments do 0'1 become a part of base pay
)dvantage* may encourage wor!ers to thin!more li!e owners
Drawbac!s*
– wor!ers may perceive their performance has
little to do with pro%t– deferred nature of payouts
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 12/20
Onership
encourages employees to focus on thesuccess of the organiation as a wholebut may not result in motivation for high
individual performancegains not realied until stoc! sold
,employees leaving company2
"ethods*
–stoc! options
– E&'#s ,employee stoc! ownership plans
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 13/20
!ainsharing
sharing productivity gains with employees diers from pro%t sharing in that instead of
using an organiation-level performancemeasure ,pro%ts plans measure group or plant
performance better for motivation
Examples*
– &canlon plan+ Ruc!er plan+ $mproshare
goes beyond money -- participation in problemsolving 3 !ey
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 14/20
Conditions for effective
!ainsharing
management commitment need to change or a process of continuous improvement
management acceptance 4 encouragement of employee input
high levels of cooperation and interaction
employment security
information sharing on all productivity and costs goal setting
commitment of all involved parties to change and improvement
agreement on a performance standard
calculation that is understandable+ perceived as fair+ closely
related to managerial ob/ectives
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 15/20
!roup ncentives
Focus 3 smaller wor! groups
5hile gainsharing typically measuresphysical output+ group incentives tend to
measure performance in terms of abroader array such as– cost savings
– successful completion of product design
– meeting deadlines
Drawbac!* competition among teams
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 16/20
"lternative Reard
Systems
alternatives to cash --
travel
merchandiseearned time o
symbolic awards
–plaques+ coee cups+ bananas
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 17/20
ncentive Plans
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 18/20
Conditions for Effective
ncentive Plans
#lan is clearly communicated.
#lan is understood by employees andmanagement.
Bonuses are easy to calculate.
Employees participate in administrating the plan.
Employees believe they are being treated fairly.
Employees believe they can trust the companyand that they have security.
Bonuses are awarded as soon as possible after thedesired performance.
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 19/20
Pay for Performance
Plans
7/23/2019 Incentives Stucture
http://slidepdf.com/reader/full/incentives-stucture 20/20
Conditions for Effective
Performance#$ased Pay
Systems
#ay-performance lin!age must be perceived by employees #ay is valued by employees
Employees must perceive that eort and ability lead torewarded behavior
#erformance measurement must be fair
Employees must trust the organiation
#ay program must be understood
Employees must be able to control their performance
#erformance appraisal system cannot be biased
1here must be enough money to fund incentives
) valid /ob evaluation must have been conducted