BU354 Chapter Notes - Chapter 12: Mimus, Management System, Industrial Engineering
Document Summary
Financial incentives are financial rewards paid to workers whose production exceeds some predetermined standard: popularized by frederick taylor late 1800s. Todays efforts to achieve orgs strategy through motivated employees include fixed and variable compensation plans. Fixed pay compensation that is independent of the performance level of the individual, group, or organization: includes base pay and other forms of relatively consistent compensation that satisfy the need for income stability. Variable pay any plan that links pay with productivity, profitability, or some other measure of organizational performance: employers continue to increase use of variable pay plans while holding salary increases or fixed compensation at modest levels. Cash bonuses or incentives are most common form of short-term incentives. Variable pay keeps base pay inflation controlled. Fundamental premise of variable pay plans is that top performers must get top pay to secure commitment to organization. Accurate appraisal/measureable outcomes is necessary for effective p4p plans.
