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Recognising and Rewarding Employees with Pay (effective plans (performance…
Recognising and Rewarding Employees with Pay
performance-related pay
(incentive)
tied to profis or measures of success
selected based on:costs, expected influence
on performance & fit with HR and
company policies and goals.
to energise, direct or
maintain behaviour/outcomes
effective plans
performance measures linked to organisation goals
employees believe they can meet performance standards
employees must have resources they need to meet goals
employees value the rewards given
employees believe the reward system is fair
takes into account that employees might ignore goals that are not rewarded
Individual Performance
Peicework rates-
amount of work produced
Straight peicework plan- same rate per peice
Differiential- rising/falling
produce more = higher rate
produce less = lower rate
Direct link, easy to understand, seems fair,
should include standards for product quality
difficult for complex jobs without physical output
Standard-hour plan
encourage speed, complete job in less time
but still receive same hourly rate
succeed if employees want the money more than a comfortable pace of work
Merit-pay
linking pay to performance appraisal
merit increase grid with scale of increase % to performance ratings & compa-ratio( pay relative to average pay)
revisit grid in light of changing economic conditions
increase in permanent to base pay
may be affected by external forces
manager bias, level of cooperation from co-workers
degree of training, resources & authority.
performance bonus
one-time reward
offers organisation more flexibility
group incentives
reward cooperation and sharing of knowledge
Gain-sharing
focus on efficiency, measuring increases in productivity
help the company become more productive
employees look for ways to work
more efficiently,improving operations
Conditions required:
management commitment
need for change to continuous improvement
goal setting
high levels of cooperation and interaction
group bonuses
for smaller work groups attaining
specific goals towards physical output
team awards
broader performance measures:
cost savings,successful completion of project
meeting deadlines
organisation incentives
profit sharing
encourage employees to think like owners
can costs less when experiencing financial difficulties
comparison with similar companies with greater payout
makes employees feel unfair treatment
employees must feel that their actions affect profit
stock ownership
part owners of the companies
financial benefits comes when they sell stock
may result in unethical behaviour (insider trading)
or tricking investors to think the company is more profitable now
need to educate employees on how to use stock ownership
Employee Stock Ownership Plans (ESOPs)
distribute stock to a trust, keeping employees informed on value
able to sell to company or open market when they retire/leave.
Balanced Scorecard
combination of performance measures
directed to company short and long term goals
together with % of incentive pay targets for the goals.
financial, quality & price, efficiency
skill and knowledge goals