ECE _ DSST Organizational Behavior

Esops have the potential to increase job satisfaction

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ESOPs have the potential to increase job satisfaction and work motivation.
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Variable -pay programs are where a portion of an employee’s pay is based on some individual and/or organizational measure of performance. Piece-rate plans, wage incentives, profit sharing, bonuses, and gain sharing are all forms of variable-pay programs. Unlike more traditional base-pay programs, variable pay is not an annuity. There is no guarantee that just because a person made $60,000 last year, they’ll make the same amount this year. With variable pay, earnings fluctuate up and down with the measure of performance. In piece-rate plans, workers are paid a fixed sum for each unit of production completed. When an employee gets no base salary and is paid only for what he or she produces, this is a pure piece-rate plan. People who work ballparks selling peanuts and soda pop are frequently paid this way. The harder they work and the more they sell, the more they earn. Many organizations use a modified piece-rate plan, where employees earn a base hourly wage plus a piece-rate differential. Profit-sharing plans are organization-wide programs that distribute compensation based on some established formula designed around a company’s profitability. These can be direct cash outlays or, particularly in the case of top managers, allocated as stock options. When one reads about executives and CEOs earning over $200 million in one year, almost all of this comes from cashing in stock options previously granted based on company profit performance Gainsharing is an incentive plan where improvements in group productivity determines the total amount of money that is allocated. This formula-based group incentive plan can vary from one period to another based on improvements in group productivity. The decision of productivity savings can be split between the company and employees in any number of ways, but 50-50 is fairly typical. By focusing on productivity gains rather than profits, gain-sharing rewards specific behaviors that are less influenced by external factors. Employees in gainsharing programs can receive incentive awards even when the organization isn’t profitable. Rather than having an individual’s job title define his or her pay category, skill-based pay sets pay levels on the basis of how many skills employees have or how many jobs they can do. For example, at the Polaroid Corporation, the highest pay that can be earned as a machine operator is $14 an hour, but the company has a skill-based plan. If machine operators can broaden their competencies to include additional skills like material accounting, equipment maintenance, or quality inspection, they can earn up to 10 percent more. Skill-based pay encourages employees to acquire a broader range of skills, therefore making it easier for management to fill staffing needs. Skill-based plans are consistent with several motivation theories such as the ERG theory.
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