Highest rated workers receive bonuses of as much 110

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Highest rated workers receive bonuses of as much 110% of their piecework compensation. Google Google Employees are provided with free food, unlimited ice cream, pool and Ping-Pong tables, and complimentary massages. Employees are allowed to spend 20% of their work time on any outside activity. Examples: Motivational Practices
Xilinx Xilinx New hires receive stock option grants. CEO responds promptly to employee e-mails. During hard times management takes a 20% pay cut instead of laying off employees. JM Family Enterprises JM Family Enterprises Benefits for employees include: a great lease on new Toyotas, cruises in the Bahamas on the 172-foot company yacht, office facility has a heated lap pool, a fitness center, and a free nail salon, and professionally made take-home dinners. Examples: Motivational Practices
Examples: Motivational Practices Nordstrom Nordstrom Pay salespeople higher than prevailing rates, plus commission. “Rule #1: Use good judgment in all situations. There will be no additional rules.” Amazon.com Amazon.com Hands out Just Do It awards to employees who do something they think will help Amazon without getting their boss’s permission; the action has to be well thought through but doesn’t have to succeed.
Elements of both are necessary Challenge and competition are necessary for self-satisfaction Prevailing view Positive approaches work better than negative ones in terms of Enthusiasm Effort Creativity Initiative Balancing Positive vs. Negative Rewards
Tying rewards to the achievement of strategic and financial objectives is management’s single most powerful tool to win commitment of employees to effective strategy execution Objectives in designing a reward system Generously reward those achieving objectives Deny rewards to those who don’t Make the desired strategic and financial outcomes the dominant basis for designing incentives, evaluating efforts, and handing out rewards Linking the Reward System to Performance Outcomes
Create a results-oriented system Reward people for results, not for activity Define jobs in terms of what to achieve Incorporate several performance measures Tie incentive compensation to relevant outcomes Top executives – Incentives tied to overall firm performance Department heads, teams, and individuals – Incentives tied to achieving performance targets in their areas of responsibility Key Considerations in Designing Reward Systems
Guidelines for Designing an Effective Compensation System 1. Payoff must be a major, not minor, piece of total compensation package 2. Incentive plan should extend to all employees 3. Administer system with scrupulous fairness 4. Link incentives to achieving only the performance targets in strategic plan 5. Targets a person is expected to achieve must involve outcomes that can be personally affected 6. Keep time between performance review and payment short 7. Make liberal use of non-monetary rewards 8. Avoid ways of rewarding non-performers
    STRATEGIC   STRATEGIC   LEADERSHIP LEADERSHIP
Visionary Chief Entrepreneur & Strategist Capabilities Builder Resource Acquirer & Allocator Culture Builder Chief Administrator & Strategy Implementer Process Integrator Coach

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