Hrm Ch. 12 Recognizing Employee Contributions With Pay

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incentive pay

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forms of pay linked to an employee's performance as an individual, group, or organization member; specifically designed to energize, direct, or control employees' behavior; amount paid is linked to certain preefined behaviors or outcomes EX: commission or bonus

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piecework rates, standard hour plans, merit pay, individual bonuses, sales commissions

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organizations may reward individual performance with incentives such as: (5)

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piecework rate

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wage based on the amount workers produce

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straight piecework plan

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incentive pay in which the employer pays the same rate per piece, no matter how much the worker produces

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differential piecework rates

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incentive pay in which the piece rate is higher when a greater amount is produced

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standard hour plan

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an incentive plan that pays workers extra for work done in less than a preset "standard time"; EX: mechanic

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merit pay

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system of linking pay increases to ratings on performance appraisals

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commissions

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incentive pay calculated as a percentage of sales

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gainsharing

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group incentive program that measure improvements in productivity and effectiveness and distributes a portion of each gain to employees; scanlon plans, rucker plans, emproshare programs

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page 401

Back 10

know conditions for gainsharing

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scanlon plan

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a gainsharing program in which employees receive a bonus if the ratio of labor costs to the sales value or production is below a set standard

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rucker plan

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a gainsharing program in which the ratio measuring the gain compares labor costs to the value added in production (output minus the cost of materials, supplies, and services)

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Improshare

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a gainsharing program in which the gain is the decrease in the labor hours needed to produce one unit of product, with the gains split equally between the org and its employees

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profit sharing

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payments are a percentage of the org's profits and do not become part of hte employees' base salary

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ADV of profit sharing

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-encourages employees to think more like owners, taking a broad view of what they need to do in order to make the org more effective
-costing less when the org is experiencing financial difficulties

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stock options

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rights to buy a certain number of shares of stock at a specified price

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profit sharing, stock options, employee stock ownership plans (ESOPs)

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types of pay for organizational performance p 406

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Employee Stock Ownership Plans (ESOPs)

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an arrangement in which the org distributes shares of stock to all its employees by placing it in a trust

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balanced scorecard

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a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive pay