dessler_ch12 - PARTFOURCOMPENSATION CHAPTER TTwelve...

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PART FOUR                                                              COMPENSATION C H A P T E R   T w e l v e Pay for Performance  And Financial  Incentives 12 Lecture Outline 164
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Strategic Overview Money and Motivation:  An Introduction Performance and Pay Motivation and Incentives  Behavior Modification / Reinforcement Theory        Incentive Pay Terminology  Individual Employee Incentives and Recognition  Piecework Plans Merit Pay as an Incentive Merit Pay Options Incentives for Professional Employees Recognition—based Awards Supporting Incentives and Recognition Programs  with Technology  Incentives for Salespeople Salary Plan Commission Plan Combination Plan Setting Sales Quotas Strategic Sales Incentives  Team or Group Variable Pay Incentive Plans How to Design Team Incentives Pros and Cons of Team Incentives Organization-Wide Incentive Plans Profit-Sharing Plans Employee Stock Ownership Plan (ESOP) Scanlon and Other Gainsharing Plans At-Risk Variable Pay Plans Incentives for Managers and Executives Short-Term Incentives: The Annual Bonus  Long-Term Incentives Other Executive Incentives Strategy and Executive Compensation Designing Effective Incentive Plans Why Incentive Plans Fail How to Implement Incentive Plans  Research Insight Incentive Plans in Practice In Brief: This chapter gives an overview of money and motivation, and then outlines different incentive programs that are used for different types of employees. It also discusses organization-wide incentive plans. Interesting Issues: There is tension between the concept of providing employees with a secure, stable income (which some feel allows them the ability to be entrepreneurial and take appropriate risks for the company), and the idea of linking pay directly to performance. Improved employee performance must be linked to improved organizational performance if incentive pay is to be more than just another labor cost. ANNOTATED OUTLINE I. Money and Motivation: An Introduction Frederick Taylor made three contributions in the late 1800s: standards of output defining a fair day’s work, the scientific management approach which emphasized improvement of work methods, and the use of financial incentives for those whose output exceeded standards. A. Performance and Pay – Compensation, shareholder value, and turbulence are factors that characterize business today, and they have produced a renaissance for financial incentive/pay-for-performance plans. B. Motivation and Incentives – The law of individual differences means that people differ in personality, abilities, values, and needs. They therefore react to different 165
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incentives in different ways. Several theorists have contributed relevance to designing incentive plans. 1.
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dessler_ch12 - PARTFOURCOMPENSATION CHAPTER TTwelve...

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