ORGB 423 Lecture Notes - Lecture 15: Unemployment Benefits, Employee Assistance Program, Employee Benefits
12 Jun 2018
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Lecture 15 2018-03-01 8:51:00 PM
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Lecture 16 2018-03-01 8:51:00 PM
Strategic Reasons for incentive plans
Variable pay: Tying pay to some measure of individual, group or org.
performance.
Incentive plans: Establishing performance threshold in order to qualify for
incentive payments
Do incentive plans work?
They can, but we have to take in consideration these following concepts:
• Identify important organizational metrics that encourage employee
behaviour.
• Involve employees.
• Find the right incentive payout.
• Establish a clear link between performance and payout
Incentive systems are effective when:
• Incentives are based on actual differences
• Annual incentive budgets are large enough to reward and reinforce
exceptional performance
• Overhead costs are controllable
Individual incentive plans
Straight Piecework
• An incentive plan under which employees receive a certain rate for
each unit produced
Differential Piece Rate
• A compensation rate under which employees whose production
exceeds the standard amount of output receive a higher rate for all
of their work than the rate paid to those who do not exceed the
standard amount
Standard Hour Plan
• An incentive plan that sets pay rates based on the completion of a
job in a predetermined “standard time”
• E.g. If it takes 4 hours for an employee to complete a specific
task/job, but s/he is able to do it in 3.5 hours, s/he will still be paid
the 4 hours
Bonus:
• Incentive payment that is supplemental to the base wage for cost
reduction, quality improvement, or other performance criteria
Spot bonus:
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Document Summary
Variable pay: tying pay to some measure of individual, group or org. performance. Incentive plans: establishing performance threshold in order to qualify for incentive payments. They can, but we have to take in consideration these following concepts: identify important organizational metrics that encourage employee behaviour, involve employees, find the right incentive payout, establish a clear link between performance and payout. Incentive systems are effective when: incentives are based on actual differences, annual incentive budgets are large enough to reward and reinforce exceptional performance, overhead costs are controllable. Straight piecework: an incentive plan under which employees receive a certain rate for each unit produced. Standard hour plan: an incentive plan that sets pay rates based on the completion of a job in a predetermined standard time , e. g. If it takes 4 hours for an employee to complete a specific task/job, but s/he is able to do it in 3. 5 hours, s/he will still be paid the 4 hours.
