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Employee Incentives (Purpose (Improves the composition of organisation’s…
Employee Incentives
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Types of incentives
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Company
Profit Sharing
Deferred Plan
It involves placing company contributions in an irreversible trust, credited to the employees’ accounts.
Combination Plan
It allows employees to receive payments on part of their share of profits on a current basis, while deferring part of their share.
Current plan
As soons as profits of the company has been determined, current plan will provide payment to employees in cash or stock
Gainsharing
Scanlon Plan
It provides financial rewards to employees from their suggestions and ideas for saving labour costs.
Improshare
Improshare uses a specific mathematical formula for determining staff bonuses. It compares the baseline with actual productivity during a given period.
Stock Ownership Plan
Stock ownership plan refers to the right of the employees to purchase a certain amount of stock in the future at an agreed price. It allows employees to become owners of stock in the company they are currently working for.
Individual
Piecework Plan
Straight piecework plan
Employees are guaranteed a minimal hourly rate for meeting the pre-established standards output. It occurs when the employee’s output exceeds the standard, the employee earns so much for each piece produced.
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Definition
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An incentive compensation refers to a monetary gift provided to an employee based on performance. Incentive compensation may come in the form of a bonus, profit-sharing, or commission.