REWARDS &

INCENTIVES
RASHMI . S
 STATISTICS
• An employee's positive attitude can affect a
company's bottom line.
• Gallup Poll, 2009 - Organizations with employees
pleased with their work life reported customer
satisfaction scores 38% higher than those with
less satisfied workers.
• These companies also enjoyed 22% higher
productivity ratings and 27% higher profits.
• Gallup estimates these disengaged workers cost
employers $292 billion to $355 billion a year
•Hewitt India Annual Salary Increase
Survey 2005 - 06
Industry 2001 Variable Pay 2005 Variable Pay

Manufacturing 11% 16.20%

Banking 13.50% 23.30%

IT 10.90% 13.70%

ITeS 12.90% 16.40%

Telecommunications 14% 17.80%

Financial Services 19.20% 23.50%

FMCG 13.30% 16.50%

 10 WAYS OF APPRECIATING
EMPLOYEES THIS RECESSION
• Praise something your coworker has done well. Identify the specific actions that you found
admirable.
• Say "thank you." Show your appreciation for their hard work and contributions. And, don't forget to
say "please" often as well. Social niceties do belong at work. A more gracious, polite workplace is
appreciated by all.
• Ask your coworkers about their family, their hobby, their weekend or a special event they attended.
Your genuine interest - as opposed to being nosey – causes people to feel valued and cared about.
• Offer staff members flexible scheduling for the holidays, if feasible. If work coverage is critical, post a
calendar so people can balance their time off with that of their coworkers.
• Know your coworker’s interests well enough to present a small gift occasionally. An appreciated gift,
and the gesture of providing it, will light up your coworker’s day.
• If you can afford to, give staff money. End of the year bonuses, attendance bonuses, quarterly
bonuses and gift certificates say "thank you" quite nicely. TechSmith staff receive a percentage of
their annual salary for their end of year bonus.
• Almost everyone appreciates food. Take coworkers or staff to lunch for a birthday, a special
occasion or for no reason at all. Let your guest pick the restaurant
• Create a fun tradition for a seasonal holiday. ReCellular employees draw names for their
Secret Santa gift exchange. Alison Doyle, About's Guide to Job Searching, also works in
Career Services at Skidmore College where they do a "gift grab" at their holiday party.
LuAnn Johnson who works in Human Resources at the
Schaller Anderson Mercy Care Plan says, "We celebrate Treat Tuesday, every Tuesday
between Thanksgiving and Christmas. We match up departments or people who don't
normally work together as a unit and assign a day to provide gooey, healthy or
scrumptious treats for the other groups. It's a great mixer, an opportunity to show off our
culinary skills and a morale builder - to say nothing of the sugar high!"
• Bring in bagels, doughnuts or another treat for staff and coworkers. Offerings such as cookies
or cupcakes, that you've baked personally, are a huge hit. (Have you tried baking cupcakes
in ice cream cones? People love them.) Another hit? Bring chocolate - chocolate anything.
• Last, but not least, provide opportunity. People want chances for training and cross-training.
They want to participate on a special committee where their talents are noticed. They like
to attend professional association meetings and represent your organization at civic and
philanthropic events.
•
 ESSENTIALS !!!
• WAGE : fair day’s remuneration for fair day’s work.
• WAGE INCENTIVE SCHEME : a method of payment for work of an
acceptable quality produced over & above a specified quantity or
standard.
• REWARDS : rooted in behavioural sciences. Part of broader strategy
to enhance loyalty, motivation & satisfaction.
• PAY BY RESULTS : direct linking of employee’s earnings to a
measure of their performance.
• INCENTIVE SCHEME : Plan or performance to motivate individuals
& group performance.
• INCENTIVE PROGRAMME : Built on monetary rewards. Includes
non monetary rewards & prizes.
 INCENTIVES CLASSIFICATION
Ø Direct compensation
 Basic pay, overtime, holiday premium, bonus,
ESOP.
Ø

Ø Indirect compensation
 Protection programmes (insurance, pensions), services ,
perquisites.



Ø Monetary : overtime wages , higher basic pay, promotion,

fringe benefits, allowances.

Ø Non- monetary : good human relations, work ambience,

recognition, self-respect, status, higher responsibility…


Ø Individual - individual output

Ø Group – bonus proportionate to all
Ø Organization – wide – pre – determined profit share to
employees.
 PRE-REQUISITES OF AN EFFECTIVE
INCENTIVE SCHEME
• Co- operation of workers – 1. methods in measuring the results on
which output will be based.
 2. methods in setting wage rates for diff. classes of work.
 3. appropriate safeguards – job security, dispute settlements….
• Scientific work measurement – realistic standards, necessary tools &
equipment….
• Indirect workers – foreman, helpers, crane operators… - covered under
incentive scheme.
• Management commitment
• Detailed planning.

 INCENTIVE – TYPES
 International labour organization (ILO)
• Schemes where workers earnings are proportionate to
the output.
• Schemes where earnings vary less than the output.
• Schemes where earnings vary proportionately more
than the output.
• Schemes where earnings differ at diff. levels of output.
• Also called Shop floor Incentives & Bonus
schemes.
 EARNINGS α OUTPUT
• Any gains or losses resulting directly from a worker’s output accrue to
him; employer – gains / losses in overhead costs / unit.
• Output measurement- extremely accurate.
• Straight piece – work : rate/ unit is fixed & total earnings = output *
rate/ unit.
• Worker’s time rate – modification of the above. Yield earnings below
the expected avg.earnings . Protects the worker when he fails to
produce the requirements.
• Standard hour System : standard time for job completion is fixed.
Rate /hr – determined . Worker paid for standard time or less .
• Condition : Workers are paid same wages if they take more than
standard time , unless there is guarantee of time wages.
 EARNINGS < α OUTPUT
• Time is used as a measure of output.

• Bonus is paid on time saved ie , Standard time set for job – actual time taken.

• Also called “Gain sharing schemes”. Applied where output measurement is difficult.

• Employee – paid half of time saved; employer – remaining.

• HALSEY SYSTEM : standard time & rate – fixed. Min. wages are thus ensured –
output less.
 BONUS = ½ (time saved / time taken ) * Daily wage.

• ROWAN SYSTEM : similar to HALSEY ‘s.

 BONUS = [time saved / time allowed ]* time taken * hourly rate.

• BEDAUX POINT SYSTEM: standard time set is divided into no.ofpoints at the rate
of one minute per point.
 BONUS = 75% (Bonus earned in excess of 60/hr ) .


 EARNINGS > α OUTPUT
• 2 categories.

•
• 1. High piece rate – earnings are in proportion to
output & increment in earnings for each unit of
output above standard is greater.

•
• 2. High Standard Hour System : similar to the
above method.
 EARNINGS DIFFERING AT DIFF.
LEVELS OF OUTPUT.
• Earnings vary from min to max levels of output.
• The Taylor Differential Piece-Rate system :
 1. who reach the standard - higher rate ; 2. below standard –
lower rate to motivate them to perform higher.
• The Merrick Differential Piece- Rate : slight modification of the
Taylor system.
• One large step is broken into 2 , to encourage new & avg. workers.
• 83% of standard output = Standard piece-rate; Bonus = 10% of
time rate.
• 100% = High piece rates ; Bonus = 10% of time rate +extra 10%.
 CONTD…..
• Profit Sharing System.
• Emerson’s Plan: standard time fixed & efficiency of each
worker is determined .
• Efficiency = time taken / standard time.
• 67% of efficiency = time rate. after 67% ,
 bonus= graduated bonus upto 20% at 100% efficiency.
After 100% = 1% added for additional 1% efficiency.


•
 OTHERS
• Skill Based Pay – 1. Conventional job slotting – unskilled, skilled,
semi-skilled.
 2 . Progression of skills = progression to the acquisition of skills.
• Employee Stock Options :Opportunities to buy stock at a set price
immediately or in the future.
• It is a variable compensation pay.
• Infosys, Wipro, Godrej , GE, P & G, Dr.Reddy’s, Global Trust Bank,
Starbucks.
• Economic Value Added (EVA):The return on a company’s capital -
the cost of capital.
• Calculated by a combination of 3 basic factors –
net operating after taxes, capital & cost of
capital.
• EVA = positive ; Co has created value for
shareholders.
• EVA= negative ; it is contrary.
• EVA links individual performance to Co. profits
and vice versa.
 FINE POINTS !!!
• Benefits & Services are Indirect Compensation.
• Extended as condition of employment or with intention of inducement or
motivation.
• Benefits – Substantial elements of compensation provided to employee in non-
cash form. - Perquisites, fringe benefits
• Applies to those items for which a direct monetary value to the employees can
be ascertained – pension, insurance…
• Services – Direct monetary value cannot be ascertained – Co. holiday homes
etc.
• Perks – something in addition to payment – Car fuel.
• Allowance – sum of money given at regular intervals to cover special
circumstances – canteen allowance….
 WHY BENEFITS???
• Altruistic / Paternalistic consideration.

• Statutory requirements

• Concern for well being

• Tax planning consideration

• Quality of work life

• Build company image

• Reduce attrition

• Attract ,retain , motivate employees

• Discourage labour unrest

• Hazards of industrial working…

 STATUTORY EMPLOYEE BENEFITS
• Employee benefits are given under 7 major groups;

• 1. Disability income continuation : accident or health related problem .

Provide weekly / monthly payments.

• Short term, long term disability, Workers compensation, Social

Security, Sick Leave, Travel accident insurance, Accidental death…

• 2. Loss of Job Income Continuation : assist workers during short term

periods of unemployment due to lay offs & termination.

• Consist of Unemployment Insurance, Supplemental Unemployment

Benefit Insurance , Guaranteed Annual Income, Guaranteed
Income Stream.
• Deferred Income : components which help employees accumulate capital & meet future
financial goals.

• Social security, ESOP, Pension plan, Retirement plan….

• Spouse & Family Income Protection : future welfare of dependants.

• life insurance, Social Security, Medicare, Travel Accident Insurance, Health care coverage…

• Health & Accident Protection: Insurance services to cover medical, surgical & hospital bills –
accident/illness.

• Property & Liability Protection : provide employees with personal property & liability
protection – group home, group umbrella liability, Fidelity bond insurance…

• Fringe Benefits: wide array of services that enhance the lifestyle of employees.

• ex: grant employees time off with pay.

• Employers get tax benefits.

• 3 major components –

• Pay for time not worked - more paid holidays & longer vacations. Employees receive daily
base pay rate – during time off opportunities.

• Time off from Work without Pay: employees are
provided sabbaticals without pay to pursue some
special interest area.
• Income equivalent Payments & Reimbursements for
Incurred Expenses : these are non-statutory benefits.
• Include most diverse & desirable kinds of goods &
services.
• Introduced due to tax demands & economic changes for
an improved & enjoyable lifestyle.
• Child care, Subsidized food service, Travel expenses,
Car reimbursement , Emergency loans…
•
 NON MONETARY REWARDS
• TREATS – free lunches, festival bashes, coffee breaks, picnics, b’day treats…

• KNICK KNACKS - Decoratives, Wallets, T-shirts, Diaries, Brooches…

• AWARDS – Trophies, plaques, certificates, Letters of Appreciation, Scrolls…

• ENVIRONMENT – Flexible hrs, Music..

• SOCIAL ACKNOWLEDGEMENT - Informal recognition, Recognition at

office get togethers, club memberships….

• TOKENS – Movie tickets, Vacation trips, Cupons…

• ON THE JOB REWARDS – job rotation, Special assignments, more

responsibility…
 STATUTORY WELFARE
PROVISIONS
Ø Amenities that are necessary to be provided to the employees under diff labour
legislations.

Ø Factories Act : washing facilities, facilities for storing & dry clothing, canteens
for more than 250 workers, shelters, rest rooms, creche (30 women ),
welfare officer…

Ø Mines Act : crèches (50 women), shelter for food & rest (150 workers),
canteens, welfare officer…

Ø Plantation Labour Act : Recreational facilities, canteens, creche, Educational

arrangements, Housing facilities, Medical Aid, welfare officer (> 300
workers).

Ø Employees State Insurance Act: sickness, maternity, dependants, funeral….

Ø Motor transport Workers Act: canteen, ventilated rest rooms, uniforms, medical & first
aid facilities…
Ø Contract Labour (Regulation & Abolition Act): canteens, rest rooms, washing facilities,
first aid box.
Ø Labour officer: statutory appointment of welfare officer (>500 workers) – labour
welfare, labour administration , labour relations..
Ø Social Security : protection which society provides against substantial reduction of
earnings from sickness, maternity , employment injury, unemployment….
Ø Workman’s Compensation Act: Compensation limits for accidents arising out of & in the
course of employment.
Ø Employees Provident Fund & Miscellaneous Act: employees -6.25% - 8% contribution &
equal contribution from employers.
Ø Employees Deposit linked Insurance Scheme
Ø Payment of Gratuity Act : Payable on termination of employment on the completion of 5
yrs of continuous service. Applicable to workers who do not draw wages of more
than Rs.1600 / month.
 VOLUNTARY WELFARE AMENITIES
• Educational facilities
• Housing facilities
• Transport facilities
• Recreational facilities
• Consumer co-operative Socities.- fair price
shops – essential items are available to all
workers.
REWARDS USED IN DIFF.
INDUSTRIES
 HOSPITALITY INDUSTRY


OBEROI  TAJ
• Outstanding Performance • TAJ people philosophy
Award • Special thanks & Recognition

• Employee in Spotlight loyalty program (STARS)

• Peer Recognition Program • TAJ Charter- communication

• Star of The Month
• Champions Programme
• Roll of Honour
transperancy, Balanced
Score Card, Employee
Satisfaction & tracking
system.

• WOW Awards • Hermes Award.

 FOOD & BEVERAGE INDUSTRY
 COCA COLA  PEPSICO
• Johnston Legacy scholarship • Chairman’s Award
program – youth • Educational facilities
development
• Medical assessments
• Educational Assistance
• New smoking cessation
Program – reimbursements
program – rewards
for employee education &
training. • Fitness, nutrition & stress
management programs
• Employee homes loans
– rewards &
• Awards for Safe workplace.
opportunities.
 MEDICAL SECTOR
• A floater policy of insurance – dependants – min. 1
lakh
• Co funds 70% of premium
• Maternity coverage
• Credit Card facilities
• Coupons
• Reimbursement options – bills.
 - Dr. H.K. Venkatesh.
 MANUFACTURING INDUSTRY
• Trophies for best BestKaizen & OPL of the month, quarter year.

• Best TPM team of the year. the winners of the yearly awards get
the privilege to dine with the MD .

• Publish articles & contributions of executives & workers on various

creative dimensions in internal company magazine along with
pictures & write-ups in the canteen & notice boards.

• workshops for children of employees .

• organisecompetitions for the kids from time to time at campus....

- Swetha working in a German Manufacturing Plant.
 AVIATION INDUSTRY
• Indian Air force – more incentives to attract pilots.

• Each year, the air force will allow an unspecified number of senior pilots
(including generals, who are still qualified to fly) to leave the service and
take an airline job. An air force general in his mid 50s makes about
$17,000 a year (after taxes), but can quickly make twice that as a co-pilot
in an airliner. The older air force pilots can fly commercial aircraft until
they are 65.

• The higher pay, plus their military pension, gives younger military pilots
something to look forward to.

• Experience appreciated more & increasing morale of military pilots.

• Program has been initiated to combat the morale & severe shortage of airliner
pilots worldwide. In many countries, including the United States, this is
forcing airlines to cancel an increasing number of flights.
 BANKING INDUSTRY
• Kotak Mahindra Bank & i-mint partner to launch employee rewards program for
KOTAK employees.

• B2E (Business-to-Employee): the new way to employ, engage and manage talent.

• “The STARS” and will be launched with a co-branded card. Kotak’s9000+ employees
will be eligible to receive i-mint (STARS) points as a part of the “Appreciation and
Recognition” program.

• They can earn points across the i-mint network of brands and merchant partners such
as HPCL, Bookmyshow.com, Enrich, Monginis, Makemytrip.com, Zoomin.com,
Ferns and Petals, Planet Fashion etc

• Employees will be able to redeem their points from a large array of products/services
listed on the catalogue on the Kotak customized micro-site.

• Also being introduced in the BPO industry by INFOSYS in partnership with i- mint.

•
 SOFTWARE INDUSTRY
 

TCS INFOSYS
• Knick Knacks • Educational facilities
• Insurance
• Fitness program
• Reimbursement options

• Education facilities
• Memberships
• new practices: • Reimburesments.
• 1. Flexible work hours option
• ESOP
• 2. Work from home.
• Also followed by
• ALSO USED BY COGNIZANT &
MPHASIS Starbucks & Dr.
 Reddy’s Lab.
 FUTURE REWARDS & INCENTIVES
PROGRAMS
• 1. NANO – ANTIDOTE TO BEAT RECESSION .

• Shree Cement – 1000 cars advance bookings on Wednesday – burn min. fuel.

• Allotted to employees as part of HR strategy

• Employees – Nano instead of 2- wheelers with allowance.

• Linc Pen – 11 Nano’s on Monday.

• IT, FMCG, Pharma, Telecom, Healthcare – Nano instead of foreign tours .

• Financial sector – estimated to order 1000- 1500 Nano’s .

• 2. Karma Yatra – imbibing song & dance into the confines of work.

• Essentially involves getting the employees and their families to participate in various events
like singing, dancing, plays and games.

• Reduces employee attrition & motivation – promotion close communication with peers &
senior management.
THANK YOU