ADM 2337 Lecture Notes - Lecture 10: Job Performance, Standard Streams, Total Quality Management
Document Summary
Because many organizations have implemented broad-based incentive programs, incentive plans can be grouped into individual incentive plans, group incentive plans, and enterprise incentive plans. A major element of strategic compensation management is the use of incentive plans, also called variable pay programs: based entirely on a pay-for-performance philosophy. Incentive plans are effective when they are based on actual differences, when annual incentive budgets are large enough to reward and reinforce exceptional performance, and when overhead costs are controllable. The standard hour plan sets incentive rates on the basis of a predetermined. Employees may come to expect an increase and see merit pay as an entitlement, unrelated to their performance; may create feelings of pay inequity. Money for merit increases may be inadequate to satisfactory raise all employees" base pay. Managers may have no guidance in how to de ne and measure performance.