Motivation

& Monetary Rewards

INCENTIVES
INTRODUCTION IMPORTANCE EXAMPLES

FOR EMPLOYEES

INDIVIDUAL INCENTIVES
Under

a system of individual incentives, all or a portion of an individuals pay is tied to their performance

Examples Piece

Rate incentive plans Sales Commission plans

PAY FOR PERFORMANCE SYSTEM

Merit System also called Pay for performance System is a system in which employees receive rewards as their performance improves

Successful if performance standards are clearly explained:

PURPOSES: Attain strategic goals Reinforce Organizational norms Motivate Performance of individual at group and Organizational level. Recognition of employees contribution

PAY FOR KNOWLEDGE SYSTEM

A System in which employees receive rewards as they learn to perform additional tasks or acquire new skills

Satisfied higher level needs e.g Recognition : FEATURES : Top Management desired continual learning Simplicity in rearwards Individual focus. Generate healthy competition among employees

ADVANTAGES OF INDIVIDUALIZED INCENTIVE PLANS

Raise

Productivity : Lower production costs: Increase earning of workers Less Direct supervision is required Payments by results Optimum accuracy standards Costing and Budgetary control

DISADVANTAGES OF INDIVIDUALIZED INCENTIVE PLANS

Detoriation

in Quality level Resistance in implementation of change Low creativity Maintenance problems in Production floor Difficulty in adjustment of new employees Stereotype thinking

GROUP INCENTIVES
Under

a system of group incentives, performance of an individuals Compensation is tied to group performance

Examples Pepsi

Co: Stocks to employees (10% of Basic Pay)

PROFIT SHARING A reward system in which employees receive bonuses based on the organizations profitability

FEATURES:

Profit = Revenue Expense Employees are paid in cash or deferred into a retirement plane Encourage employees to thin about all aspects of the business and act accordingly Less direct control

GAIN SHARING

A reward system in which employees receive bonuses based on their units profitability

FEATURES:

Productivity standards

Perceived fairness of the formula

Monthly or quarterly payouts

Formula is tied to Group or Deptt performance measures

ADVANTAGES OF GROUP INCENTIVE PLANS

Positive

impact on Organizational & Individual performance Easier to measure Group incentives than Individual plans Improvement in organizational harmony Participation of employees in Decision Making Teamwork meets with enthusiasm

DISADVANTAGES OF GROUP INCENTIVE PLANS

Individual

performance affects May lead to increased turnover Lack of supervision may cause mutiny Dominated Roles on past performance Unfair credit to senior

EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

A reward system in which mangers encourager employees to own stock in their own companies providing an incentive for employees to increase the value of that stock through higher performance
FLEXIBLE REWARD SYSTEM

A reward system that offers employees the option of selecting the rewards they consider valuable

SCANLON PLAN

Is the type of gain-sharing plan in which the distribution of rewards for costs savings gains in titled toward employees and spread across the entire organization. The plan focus on improvements in productivity (Cost reduction) and not on profitability
EXECUTIVE COMPENSATION
Stock Options Bonuses Base Salaries perquisites

THANK YOU
Hardwork is key to success