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Performance based scheme/INCENTIVES: to be successful, performance must…
Performance based scheme/INCENTIVES: to be successful, performance must LINK to pay
Ad.
promote HEALTHY competition
↑ productivity [purpose]
↑ emp earnings
↓ turnover
Indi based: designed for indi
3 types
Merit Pay: emp who show MERIT will receive a SUM of money added to BASE salary [only for those who perform better]
Piecework plans:
Straight: min. hourly rate for meeting PRE-established standard OUTPUT
Differential: 2 rates, 1 up to standard & another when EXCEED standard
Commission plans: SALES commission norm is a percentage of sales price & added to LOWER BASE salary
Ad.
Link pay to performance
promote EQUAL rate of compensation
suitable for org who focus on INDI
RETAIN BEST emp
Disad
time consuming to establish standard
UNREALISTIC standard = ↓ motivation
Dysfunctional competition
Team based: pay incentive to 2/more emp for COMBINED performance
2 types
Gainsharing: design to BIND emp to org PRODUCTIVITY [provide incentive based on IMPROVED org performance]
#
Scanlon plan[service industry]: provide incentive for SAVINGS in LABOUR cost cause of suggestions & ideas [eg. Quality Control Circle, Work Improvement Team, Suggestion Scheme]
Improshare: share PHYSICAL productivity GAINS with emp, use specific mathematical formula to determine bonus
[gain from either working faster/efficiently]
Group bonus: group of emp rewarded/given bonus when get a job completed
Ad:
Encourage teamwork
↑ productivity: push each other to complete task
↓ absenteeism & turnover: emp more committed to shared goals
↓ stress: work is shared
Disad:
Peer pressure: indi FOLLOW/LEAVE
Company wide: base on improved company performance
3 types
Gainsharing
Profti sharing: distribute PREDETERMINED percentage of company profit
Current plan: provide payment in CASH/STOCK when profit determined
Deferred plan: put company contribution in FIXED trust, CREDIT to emp a/c [norm invest in SECURITIES & become avail. on retirement, termination, death]
Combination plan: allow emp to get PART of payment while DEFERRING part of share
Emp stock ownership plan: com offer FREE shares/ at DISCOUNTED price to emp
Ad:
↑ sense of ownership & commitment
Financial flexibility
Disad: emp at risk cause not FIXED