Test2-compensationch4.odt - CH 4 Incentive Pay Incentive Pay Compensation fluctuates according to A pre established formula individual\/group goals

Test2-compensationch4.odt - CH 4 Incentive Pay Incentive...

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CH 4) Incentive Pay Incentive Pay Compensation fluctuates according to:A pre established formula individual/group goalsCompany earningsAdds to base pay on a nonrecurringbasis Controls costsMotivates employees through explicit goal setting Incentive Pay assumptionsIndividual employees & work teams differ in how much they contribute to the company (in what they do and how they do it)The company’s overall performance depends to a large degree on the performance of individuals & groups w/in company To attract, maintain, & motivate high performers & to to fair to all employees (a company needs to reward employees on the basis of their relative performance Contrasting Incentive Pay with Traditional PayTraditional pay usually includes: annual salary/hourly wageIncreased periodically on a seniority or merit basis w/ permanentincrease to base payIncentive PayIncreases base pay on goal attainment w/ pay increase nonrecurringCompanies use incentive pay to reward individual employees, teams of employees, or whole companies based on their performance Incentive Pay Plan Categories
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Individual: reward employees whose work is performed independently Quantity of work outputQuality of work outputMonthly salesWork safety record Work attendanceGroup: promote supportive, collaborative behavior among employees
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  • Fall '12
  • Davison
  • Management, Employment compensation, Profit sharing, Employee stock option, Traditional Pay

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