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Motivation

&Monetary Rewards

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INCENTIVES

INTRODUCTION

IMPORTANCE FOR EMPLOYEES

EXAMPLES

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INDIVIDUAL INCENTIVES

Under a system of individual incentives,all or a portion of an individuals pay is tied

to their performance

Examples

Piece Rate incentive plans

Sales Commission plans

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PAY FOR PERFORMANCE SYSTEM Merit System also called Pay for performance System

is a system in which employees receive rewards astheir performance improves

Successful if performance standards are clearlyexplained:

PURPOSES:

Attain strategic goals

Reinforce Organizational norms

Motivate Performance of individual at group andOrganizational level.

Recognition of employees contribution

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PAY FOR KNOWLEDGE SYSTEM

A System in which employees receive rewards

as they learn to perform additional tasks oracquire new skills

Satisfied higher level needs e.g Recognition :

FEATURES : Top Management desired continual learning

Simplicity in rearwards

Individual focus. Generate healthy competition among

employees

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ADVANTAGES OF INDIVIDUALIZED

INCENTIVE PLANS

Raise Productivity :

Lower production costs:

Increase earning of workers Less Direct supervision is required

Payments by results

Optimum accuracy standards

Costing and Budgetary control

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DISADVANTAGES OF INDIVIDUALIZED

INCENTIVE PLANS

Detoriation in Quality level

Resistance in implementation of change

Low creativityMaintenance problems in Production floor

Difficulty in adjustment of new employees

Stereotype thinking

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GROUP INCENTIVES

Under a system of group incentives,performance of an individuals

Compensation is tied to group

performance

Examples

Pepsi Co: Stocks to employees (10% ofBasic Pay)

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PROFIT SHARING

A reward system in which employees receivebonuses based on the organizations profitability

FEATURES:

Profit = Revenue

Expense

Employees are paid in cash or deferred into aretirement plane

Encourage employees to thin about all aspects of thebusiness and act accordingly

Less direct control

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GAIN SHARING

A reward system in which employees receive

bonuses based on their units profitability

FEATURES:

Productivity standards Perceived fairness of the formula

Monthly or quarterly payouts

Formula is tied to Group or Deptt performancemeasures

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ADVANTAGES OF GROUP INCENTIVEPLANS

Positive impact on Organizational &Individual performance

Easier to measure Group incentives thanIndividual plans

Improvement in organizational harmony

Participation of employees in DecisionMaking

Teamwork meets with enthusiasm

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DISADVANTAGES OF GROUP

INCENTIVE PLANS

Individual performance affects

May lead to increased turnover

Lack of supervision may cause mutinyDominated Roles on past performance

Unfair credit to senior

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EMPLOYEE STOCK OWNERSHIP PLAN

(ESOP)

A reward system in which mangers encourageremployees to own stock in their own companiesproviding an incentive for employees to increasethe value of that stock through higher

performance

FLEXIBLE REWARD SYSTEM

A reward system that offers employees theoption of selecting the rewards they considervaluable

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SCANLON PLAN

Is the type of gain-sharing plan in which the

distribution of rewards for costs savings gains intitled toward employees and spread across the

entire organization. The plan focus on

improvements in productivity (Cost reduction)and not on profitability

EXECUTIVE COMPENSATION

Stock Options Bonuses

Base Salaries

perquisites

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THANKYOU

Hardwork is key to success