Hrm240 Incentive Plans

Incentive Plan

How important a job is to a said company, has a great impact in determining
the rate of pay for that job. It has been successfully argued that pay based
solely on what a job is perceived to be worth, is not enough to motivate a worker to give his all, most times. Thus many companies find it appropriate
to offer some form of incentive which are linked closely to employee
performance and company’s objectives. These incentives plans take
three basic forms individual, group or enterprise incentive plans.

Individual Incentive Plans: An individual incentive plan could come in may varieties such as Piecework, Standard Hour Plan, Bonuses, and Merit
pay. Under piecework one of the oldest plans, employee receive a certain
rate for every job completed. There are benefits to that plan where the
wage payments are easy to compute and the company can predict labor cost
very accurately. With piecework and employee can earn up to 35 percent than their base pay, a good motivational aspect. The problem with piecework
is that, the employer may change the rate for a particular job, if the employees are consistently beating the given rate by large amounts. So
employees may not want to put the pedal to the metal at all times so as not to be termed “rate busters”. Some employees may stay away from jobs they
think has a poor rate.

  Bonuses: A bonus as explained in the text book is an incentive payment outside of the normal base pay. It is usually given at the end of the year
and they have the advantage of giving the employee more pay for excellent
performance numbers. Bonus payments which were usually doled out to managers and executive employees are being routinely given out to the
rank and file.

  Merit pay: Merit Pay or merit raise links salary increases to how productive an employee is or how well he does hid job. Merit raises seem to do a good job of motivating employees if they think it is because of how they do their
jobs. Merit...