MHR 749 Lecture Notes - Lecture 11: Fasttrack, Profit Sharing, Independent Contractor
7 Dec 2017
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Document Summary
Specific pay-for-performance plans: short term: merit pay, lump-sum bonuses, individual spot awards, individual incentive plans. Improve accuracy of performance ratings: allocate enough money to truly reward performance, make sure size of merit increase differentiates across performance levels. How to create a merit pay grid: merit grids combine 3 variables, level of performance, distribution of employees within pay ranges, merit budget increase percentage. Lump sum bonuses: used as a substitute for merit pay, based on performance and received as an end-of-year bonus. Not built into base pay: viewed as less of an entitlement than merit pay, less expensive than merit pay over the long run. Individual spot awards: viewed as highly or moderately effective, typically awarded for exceptional performance. Individual incentive plans: offer a promise of pay for some objective, pre-established level of performance, all plans use an established standard for comparing worker performance to determine magnitude of the incentive pay. Challenges: team variety, the level problem , complexity, control, communications.
