Chapter 12 - Pay-for-performance and financial incentives
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Created by:
sam2thewise on April 20, 2010
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16 terms
Terms | Definitions |
|---|---|
 Variable Pay | plan that links pay to productivity |
| Long-term incentives | stock options, book value plane, stock appreciation rights, performance achievement plan, restricted stock plans, phantom stock plans, performance plans |
| Organization-wide incentive plans | profit-sharing plans, employee share purchase/stock ownership plans, gainsharing plans |
| Scanlon plan | developed in 1937 by Joseph Scanlon, engages many or all employeees in a common effort to achieve a company's productivity objectives, cost-savings shared among employees and company |
| Gainsharing plans | cooperation btwn mgmt and labour, joint development of plan, effective communication, clear guidelines regarding plan changes, setting achievable goals |
| When to use incentives | 1. Performance pay cannot replace good management. 2. Firms get what they pay for. 3. Pay is not a motivator 4. Rewards rupture relationships 5. Rewards may undermine responsiveness |
| How to implement incentive plans | 1. Pay for performance 2. Link incentives to other activities that engage employees in business 3. Link incentives to measurable competencies that are valued by org. 4. Match incentives to culture 5. keep group incentives clear and simple 6. Overcommunicate 7. greatest incentive is the work itself |
| ESOP (Employee share purchase/stock ownership plans) | trust is established to hold shares of company stock purchased for or issued to employees. distributed on retirement/seperation from service |
| Profit-sharing plan | plan whereby most or all employees share in the company's profits |
| merit pay | any salary increase awarded to an employee based on his/her performance |
| capital-accumulation programs | long term incentives most often reserved for senior execs. |
| piecework | system of pay based on the number of items processed by each individual worker in a unit of time, such as items per hour or day. |
| straight piecework | set payment for each piece produced or processed in a factory or shop |
| guaranteed piecework plan | the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hour |
| spot bonus | spontaneous incentive awarded to individuals for accomplishments not readily measured by a standard |
| variable pay | any plan that ties pay to productivity |
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