...Individual employee incentive and recognition programs Incentive payments for hourly employees may be determined by the number of units produced, by the achievement of specific performance goals, or by productivity improvements in the organization as a whole. In the majority of incentive plans, incentive payments serve to supplement the employee's basic wage. Piecework One of the oldest incentive plans is based on piecework. Under straight piecework, employees receive a certain rate for each unit produced. Their compensation is determined by the number of units they produce during a pay period. At Steelcase, an office furniture maker, employees can earn more than their base pay, often as much as 35 percent more, through piecework for each slab of metal they cut or chair they upholster. Under a differential piece rate, employees whose production exceeds the standard output receive a higher rate for all of their work than the rate paid to those who do not exceed the standard. Employers will include piecework in their compensation strategy for several reasons. The wage payment for each employee is simple to compute, and the plan permits an organization to predict its labor costs with considerable accuracy, since these costs are the same for each unit of output. The piecework system is more likely to succeed when units of output can be measured readily, when the quality of the product is less critical, when the job is fairly standardized, and when a constant flow of...
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...| | |PART FOUR COMPENSATION | | | | | |CHAPTER | |T Twelve | | | | | |Pay for Performance |12 | | |And Financial | | | |Incentives | | | |Lecture Outline | | | |Strategic Overview |In Brief: This chapter gives an overview of money | | |Money and Motivation: An Introduction ...
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...with guaranteed time rates In this system the payment is at the time rates but adjusted to the cost of living. Merit awards for personal qualities, skill, ability, punctuality etc. are also considered. The employer compensates the high labor cost by increasing the price of the products. Differential Piece rates A wage plan based on a standard task time whereby the worker receives increased or decreased piece rates as his or her production varies from that expected for the standard time. Also known as accelerating incentive. 2. Define Sales Commission, and explain the conditions that should exist/be met within a position for this pay-for-performance methodology to be successful. Answer: The amount of money that an individual receives based on the level of sales he or she has obtained. The sales person is provided a certain amount of money in addition to his/her standard salary based on the amount of sales obtained. Conditions that should exist: 1. Organizations must tailor pay for performance systems to their mission and environment 2. A pay for performance system can only be effective if employees value the pay or recognition that the organization offers in return for high performance, understand what is required of them, believe that they can achieve the desired level of performance, and believe that the organization will actually recognize and reward that performance. Those conditions are not likely to be achieved unless an organization meets certain requirements...
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..."systematic soldiering"—the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level. Diff: 1 Page Ref: 434 Chapter: 12 Objective: 1 Skill: Concept 2) Which of the following terms refers to financial rewards paid to workers whose production exceeds some predetermined standard? A) indirect financial payments B) merit payments C) hardship allowance D) financial incentives E) human capital Answer: D Explanation: Financial incentives are financial rewards paid to workers whose production exceeds some predetermined standard. Indirect financial payments are a type of employee compensation that includes health benefits. Diff: 1 Page Ref: 434 Chapter: 12 Objective: 1 Skill: Concept 3) A management approach based on improving work methods through observation and analysis is known as ________. A) strategic management B) scientific management C) management process D) management by objectives E) performance management Answer: B Explanation: Frederick Taylor spearheaded the scientific management movement, a management approach that emphasized improving work methods through observation and analysis. Taylor also popularized the use of incentive pay as a way to reward employees who produced over standard. Diff: 1 Page Ref: 434 Chapter: 12 Objective: 1...
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...strategies. Some of them are listed below Pay for Performance This is a one system of remuneration program which popular at this moment, it’s depend upon the evaluation if the result is good you will receive more salary increase. Using Merit Pay A merit raise is a salary increase, usually permanent, that is based on the employee’s individual performance. It is a continuing increment rather than a single payment like bonus. Relying heavily on merit rewards can be a problem because the reinforcement benefits of merit pay are usually only determined once per year. Using Spot Awards A spot award is one given to an employee as soon as the laudable performances observed. These rewards are consistent with principles of motivation because they are based on good performance and are awarded immediately. Using Skill-Based Pay With Skill-based pay, employees are paid for the range, depth and types of skills and knowledge they are capable of using there than for the job they currently hold. Skill-based pay is consistent with motivation theory because people have self-concept in which they seek to fulfill their potential. The system also appeals to the employee’s sense-efficiency because the reward is a formal and concrete recognition that the person can do the more challenging job well. Using Recognition Some employees highly value day-to- day recognition from their supervisors, peers and team members because it is important...
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...Business to analyze the problems in performance measurement. The point-based merit system is introduced for the purpose of improving faculty members’ performance in academic research when keeping good performance in teaching and motoring students. The reports will first give a general background of Edwards School of Business and the merit system. It then presents three specific problems that the school encounters, namely faculty members focusing too much on getting points rather than improving outputs, unfairness due to quantifying performance into points and confusions and distrust from faculty members. Besides, how these problems generate is discussed and prediction of results in other organizations is discussed. Introduction Edwards School of Business is the second largest college of The University of Saskatchewan, enrolling about 2,000 students every year. It is now undergoing institutional transformation to enhance academic research, the student experience and faculty engagement. To support the transformation, a new human resource strategy, the merit system, is made to set standards of performance measuring. It is a point-based system where rewards of faculty members are based on points they earn from achieving various activities. Generally, performance of a business school is measured by two aspects, academic achievements and contribution to the world of work (Starkey et al., 2004; Coopey, 2003). However, the merit system focuses mainly on academic achievements such as teaching...
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...that would help them to promote diversity in the workplace. Using the model for goal setting, evaluate Allstate’s goal setting process to determine whether or not Allstate has an effective goal-setting program. After comparing the model for goal setting with the steps that Allstate had put into effect, I believe that they do have a successful goal-setting program already established. Nevertheless, when you are trying to make sure that a business is operating as smoothly and efficiently that it can, there will always be room for improvement. One way they could improve is instead of giving, each manage a twenty-five percent of each manager merit pay, and why not break that down to at least five percent for every employee (Hellriegel. 2010). That way even thought the percentage is lower but all the employees would be getting a reward based on the Diversity Index and QLMS. Everyone in the company, no matter what background that that individual may have, needs to feel like what they do for the company is not taken for granted. Managers at this time are receiving a twenty-five...
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...Business Research Report Compensation Strategies Assessment Code: RWT1 Student Name: Jeannie Altmaier Student ID: 000284655 Date: 04/20/2014 Mentor Name: Kathy Huffman Contents Executive Summary 3 Introduction 4 Research Findings 5 Stock Options 5 Tuition Reimbursement 6 Merit Plans 7 Conclusion 8 References 10 Executive Summary In a business the main focus is become as successful as possible. In order to gain success and maintain the success a business must have a reliable and dependable staff. With this being said it is important to compensate employees to maintain and develop the best work performance possible. The success of the business is depended on the employees. Research has been done on three compensation strategies that benefit the employees and company, those three compensation strategies are implementing stock options, tuition reimbursement, and merit plans. Stock options benefits have been known as an attractive way to reward employee performance. It is important for the organization to claim the stock options to be capitalized on the balance sheet so shareholders can track EPS, which in return is beneficial to the organization as well. This compensation benefit has been around for decades and continued to grow until the increase in accounting rules in 2001. With more rules implemented it allows for the companies to maintain a fairness in the workplace. This option should be offered to all employees but is not...
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... Table of Contents Executive Summary 3 Introduction 4 Research Findings 4 Merit Pay 5 Job Based Pay 6 Skill Based Pay 7 Recommendations 8 Conclusion 8 References 9 Executive Summary After examining several distinct compensation strategies utilized in the manufacturing industry, I have prepared this report to explore three specific plans; Merit Pay, Job Based Pay and Skill Based Pay. When considering a compensation plan, more than just pay should be included. No compensation strategy would be complete without including all forms of compensation from pay, health benefits, retirement savings options and time off. Merit Pay is increasingly becoming prominent in manufacturing. Employers that use Merit Pay bestow pay increases and incentives to employees based on individual performance. This maybe a good way to reward high performers and publicize those behaviors that the organization values. Job Based Pay is a structured pay system that compensates according to the position instead of the employee’s ability or adeptness to do the job. This job based strategy can reduce the likelihood of gender discrimination in pay. Also, it ensures that the employee is being paid a fair market value for the work they perform. Finally, Skill Based Pay focuses on the exact opposite of Job Based Pay by compensating employees on their individual development and contribution. Companies that adopt this strategy have success...
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...RUNNING HEAD: COMPENSATION AND BENEFITS Compensation and Benefits September 7, 2012 Compensation and Benefits Introduction This paper will discuss how to leverage labor relations for the improvement of the quality of health care provided by the corporation. There will be a strategy for compensation practices tailored to corporate needs. Guidelines will be provided for the management of benefits and variable pay specific to hospitals. Further guidelines will be made for the management of merit pay for hospital employees. Leveraging Labor Relations for the Improvement of Quality Care Leveraging of labor relations for the improvement of quality care begin with happy employees. Within health care settings patients expect to be treated with competent and compassionate healthcare employees. These patients deserve our utmost quality care which will lead to healthier patient populations and overall improve their wellbeing. The next step is to seek out employees who will meet the goals set forth by the hospital. These employees will treat each patient with dignity and respect while providing patient care also when dealing with family and friends of the patient. Effective labor relations begin with effective actions provided by management. This may be accomplished by routine job assessments which will seek to determine if the employee is providing quality care to the patients. According to Adelman (2012) it is important that management make their selves visible and available...
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...corporate headquarters in San Jose, California. Riordan's major customers are automotive parts manufacturers, aircraft manufacturers, the Department of Defense, beverage makers and bottlers, and appliance manufacturers. This research paper will discuss the issues being faced by Riordan Manufacturing and provides solution based on various motivation, rewards and performance concepts Situation Analysis Issue and Opportunity Identification – Total reward system The current reward system is barely based on performance, instead recognizing cost-of-living increases, seniority and position. Faced with declining morale and work ethic, Riordan managers have been pressuring the CEO to "do something" about the rewards system. Riordan’s employees comprise three major demographic groups. Baby boomers make up the bulk of the managerial and about half of the manufacturing staff; GenXers make up the majority of the professional staff, as well as some of the manufacturing staff; and the GenY contingent are the newest hires, found primarily in manufacturing, engineering and IT. These three groups have radically different perspectives on rewards and motivation, valuing everything from interesting work to bigger paychecks. Stakeholder...
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...MT203: Human Resources Management Instructor Sarah Scott April 16, 2011 Xcel Energy Pays for Employees who Excel Introduction Excel Energy based in Minneapolis, Minnesota, is a public utility company that generates electric power and transmits and sells electricity and natural gas to customers in Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. Xcel serves 3.3 million electricity customers and 1.8 million natural gas customers in these eight states. In 2007, Xcel was the 260th biggest corporation in the U.S., and the 15th biggest gas & electric utility in the country. Xcel Energy has decided to implement merit bonuses; which are paid for individual, group and corporate performances. Merit pay refers to the process of determining employee compensation “base salary or bonuses,” in part, on the basis of how well each employee performs at work. (Xcel 2011) Review/Analysis of the Case 1. Based on the information given, do you agree with management’s conclusion that merit pay can support Xcel’s strategy better than paying for suggestions? Why or why not? Based on the information given I do agree with managements conclusion that merit pay can support Xcel’s strategy better than paying for suggestions. Management and leaders must continually encourage and reward fresh thinking, promoting and keep open loops of communication in which employees are confortable sharing suggestions. When Xcel first started paying for...
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...Teacher Merit Pay Systems No matter how smart the student is, the efforts and quality of the school they are in, and the efforts and quality of the teacher that is instructing them has a very large influence on how well they will produce in school. If these factors have such a large influence on children’s ability to perform on standardized and non-standardized tests, both teachers and schools should be properly devoted to the children. This is where the idea of merit pay systems comes in. Merit pay systems reward the teachers with salary raises and reward schools with increased funds when their students do well or significantly improve. This process is made to encourage teachers to bring out the best in their students, and when they are properly influenced, it would seem that good results would be produced. The problem with merit pay systems in today’s schools, is that no one has found a “one size fits all” model for a merit pay system. Some systems have had success in some regions, while similar systems have failed in other regions. Merit systems have not worked in the past as well as they should have, this research paper will identify the failed programs, the problems behind those failed programs, the correct way to execute a merit pay system, and what the intended results can be if merit pay systems work to perfection. One of the first merit pay systems came about when British educators realized they needed to change the education system to yield better results. In his...
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...Financial Incentives- Financial rewards paid to workers whose production exceeds standards. 2. Frederick Taylor- scientific management & use financial incentives in the late 1800s 3. Systematic soldering- employees work at the slowest pace possible an produce at the minimum level 4. Fair day’s work- output devised for each job based on careful, scientific analysis 5. People reacted to different incentives in different ways Employee Preference for Noncash Incentives 1. 40% A trip of your choice 2. 20% shopping spree 3. 19% Home Improvement 4. 10% Tickets 5. 4% Electronics Employee Incentive Plans- Pay for Performance Plans 1. Individual Employee Incentives & Recognition 2. Sales Compensation Programs 3. Team/Group based Variable Programs 4. Organization wide Incentives 5. Executive Incentives Compensation Programs Individual Incentive Plans Piecework Plans- Oldest incentive plan, still used widely, these works are paid a sum (piece rate for each unit he or she produces Pros of Piecework 1. Easily understandable, equitable, & powerful 2. Rewards are proportionate to performance Cons of Piecework 1. Employee resistance- to change in standards or work processes affecting output 2. Quality problems-when employees concentrate on output 3. Employee dissatisfaction- when incentives cannot be earned or withdrawn 4. Could violate minimum wage standard Merit Pay 1. A permanent cumulative...
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...Designing and implementing a compensation package that rewards all staff according to performance, and succeeds in appealing to their individual motivations is an enormous challenge for any organisation. Some find it easier to simply pay a percentage increase to all staff, irrespective of their performance. A literature review was undertaken to determine both the current and historical views of performance management. A vast amount of material has been written in journal articles and textbooks. All point to the complexity of the issue and the apparent inability to find a solution that will suit all. For the last 100 years, HR specialists, psychologists and economists have been collaborating to try and develop a system which would have broad appeal for both staff and employers. Many theorists contributed to the discussions, asserting that individual motivations for pay were based on the theory of agency, goal, control, expectancy, or reinforcement. Performance management systems are necessary to enable companies to enable them to attract, retain and motivate the best calibre of employees, thereby assisting companies to achieve their organisational goals. However, different people are motivated by different things. Some by money or other tangible rewards and some by the pleasure of completing tasks, intangible rewards. These are also referred to as extrinsic and intrinsic motivations. Rewards systems can be developed based on...
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