ADMN 2230H Chapter Notes - Chapter 10: Profit Sharing, Merit Pay, Piece Work
24 Mar 2017
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Strategic reasons for incentive plans: variable pay (tying pay to some measure of performance) Incentive pay (establishing a performance threshold to qualify for incentive payments) Incentives focus on employee efforts & provide motivation. Incentive payouts are costs linked to achievement of results. Incentives foster teamwork when pay is based on team results. Incentives reward top performers when budgets are low. Requirements for incentive plan: employee must have desire for plan & be involved, employees see connection btwn payment and job performance. Identify important organizational metrics that encourage employee beh. Incentives are based on actual differences: annual incentive budgets are large enough to reward and reinforce exceptional performance, overhead costs are controllable. Incentives for executives (executive pay package: 5 basic components: base salary, benefits, perks, short term incentives/bonuses, long term incentives/stock plans. Group incentive plans: team compensation, gain sharing, profit sharing, employee stock options, employee stock ownership plans (esops)
