Individual Pay Programs:Design Features Payment Frequency Performance Programs Method of Payout Measures Coverage Merit Pay Change Annually Boss' -All in base appraisal Incentive Pay Bonus -Weekly Output, -Direct productivity labor Profit Sharing Bonus -Semiannual -Profit -All or annual Ownership Equity -Sale of Stock value -All changes stock Gainsharing Bonus Monthly Production Production quarterly costs /service unit Skill-based -Change when skill Skill -All in base is acquired acquisition ©2004 by UIBE Liu yuxin 9-11
© 2004 by UIBE Liu yuxin 9-11 Individual Pay Programs: Design Features Payment Method Frequency of Payout Performance Programs Measures Coverage - All - Direct labor - All - All - Production /service unit - All - Boss’ appraisal - Output, productivity - Profit - Stock value - Production costs - Skill acquisition - Annually - Weekly - Semiannual or annual - Sale of stock - Monthly / quarterly - when skill is acquired Merit Pay Incentive Pay Profit Sharing Ownership Gainsharing Skill-based - Change in base - Bonus - Bonus - Equity changes - Bonus - Change in base
Individual Pay Programs:Consequences Performance Programs Motivation Attraction Culture Costs Merit Pay -Change -High Individual -High in base performers competition maintenance Incentive Pay little -High Intra-group Good system performers competition of appraisal Profit Sharing some in -All Cooperation Variable small units Ownership Little -All Knowledge Ability to of business pay Gainsharing Little Retain Sense of Cost not employees ownership variable Skill-based Learning those who -Learning can be high want to learn ©2004 by UIBE Liu yuxin 9-12
© 2004 by UIBE Liu yuxin 9-12 Individual Pay Programs: Consequences Performance Programs Motivation Attraction Culture Costs - High maintenance - Good system of appraisal - Variable - Ability to pay - Cost not variable - can be high - Individual competition - Intra-group competition - Cooperation - Knowledge of business - Sense of ownership - Learning - High performers - High performers - All - All - Retain employees - those who want to learn Merit Pay Incentive Pay Profit Sharing Ownership Gainsharing Skill-based - Change in base - little - some in small units - Little - Little - Learning
Individual Pay Programs: Contingencies Organization Management Programs Structure Style Type of Work Merit Pay -Independent Control Individual,easy jobs to measure Incentive Pay Measurable -Participation Individual jobs units desirable appraisal Profit Sharing Autonomous Participation All types units Ownership Any company Participation All types Gainsharing Most companies Participation All types Skill-based Most companies Participation -Professional ©2004 by UIBE Liu yuxin 9-13
© 2004 by UIBE Liu yuxin 9-13 Individual Pay Programs: Contingencies Organization Structure Management Programs Style Type of Work - Individual, easy to measure - Individual appraisal - All types - All types - All types - Professional - Control - Participation desirable - Participation - Participation - Participation - Participation Merit Pay Incentive Pay Profit Sharing Ownership Gainsharing Skill-based - Independent jobs - Measurable jobs / units - Autonomous units - Any company - Most companies - Most companies
Types of Incentive Plans ·Individual Group Profit sharing ·Employee group Variable pay ©2004 by UIBE Liu yuxin 9-14
© 2004 by UIBE Liu yuxin 9-14 Types of Incentive Plans Individual Group Profit sharing Employee group Variable pay
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