| Term | Definition |
|---|
| Variable Pay: plan that links pay to productivity, profitability, or some other measure of organizational performance, accurate performance appraisal or measurable outcomes is a precondition for effective pay-for-performance plans | Money and Motivation |
| individual incentive programs, group incentive programs :profit sharing plans and gainsharing plans | Types of Incentive Plans |
| Piecework plans – straight; guaranteed, Standard hour plan, Team or group incentive plan | Incentives for Operations Employees |
| stock options, book value plan, stock appreciation rights, performance achievement plan, restricted stock plans, phantom stock plans, performance plans | Long-Term Incentives |
| Merit Pay: salary increase awarded to an employee, based on individual performance, effectiveness based on validity of performance appraisal system, sometimes paid as a lump sum without changing base salary | Incentives for Other Managers and Professionals |
| bonus represents small portion of total pay, incentives based on results longer than one year, up-to-date equipment and facilities, supportive management style, support for research publications | Incentives for Professional Employees |
| profit-sharing plans, employee share purchase/stock ownership plans ,Scanlon plans, gainsharing plans | Organization-Wide Incentive Plans |
| engages many or all employees in a common effort to achieve a company | Scanlon Plan |
| Cooperation between management and labour ,Joint development of the plan ,Effective communication,Clear guidelines regarding plan changes,Setting achievable goals | Gainsharing Plans: Success Factors |
| units of output can be measured,clear relationship between employee effort and quantity of output,standardized job, regular workflow with few/consistent delays,quality less important than quantity | When to Use Incentives |
| cost-effective: praise and modest gifts ,improves employee attitudes and productivity ,creates strategic change if recognition criteria aligned with strategy ,fuels achievement of high performers ,important communication tool | Employee Recognition Programs: Benefits |
| benefits are indirect financial payments (such as insurance and pensions) traditionally used to reward loyalty and tenure ,employee services more important today in post-job security era | Strategic Role of Employee Benefits |
| choose benefits to suit individual needs ,meet changing needs of workforce, increased employee involvement improves understanding, introduction of new benefits less costly (merely a new option), cost containment: firm sets a dollar maximum | Flexible Benefit Programs advantages |
| employees make bad choices (not covered for predictable emergencies),increased administrative cost,adverse selection: employees pick only benefits they will use (subsequent high benefit utilization increases cost) | Flexible Benefit Programs disadvantages |
Combine with other sets
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