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Chapter 12: Pay for Performance and Financial Incentives.docx

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Human Resources Management
HRM 200
Katrina Di Gravio

Chapter 12Pay for Performance and Financial IncentivesMoney and MotivationMoney is a great motivator at the beginning but it is not the thing that keeps employees going to workVariable Pay o Any plan that ties pay to productivity orprofitability o Has to be tied with something measurableincreased sale productivity Types of Incentive Plansincentives for operations employeesfront lineincentives for senior managers and executivesincentives for salespeople incentives for other managers and professional employees organization wide incentivesIncentives for Operations EmployeesPiecework PlansPieceworko asystem of pay based on the number of items processed by each individual worker in a unit of time such as items per hour or items per day o pay for every item produced The more they produced the more they get paid A numberhour or a numberdayStraight Piecework Plano a set payment for each piece produced or processed in a factory or shopGuaranteed Piecework Plano the minimum hourly wage plus an incentive for each piece produced above a set number of pieces per hourIncentives for Operations EmployeesStandard Hour Plana plan by which a worker is paid a basic hourly rate plus an extra percentage of his or her base rate for production exceeding the standard per hour or per day o if you need to produce 160 widgets in a day but you produce 200 that is 25 higher than what is expected 40 pieces more therefore your base rate of pay would go up by 25 o If you were normally paid 8 per hour you would now be paid 10hour with the 25 increasesimilar to piecework payment but is based on a percentage premium Incentives for Operations EmployeesTeam or Group Incentivesa plan in which a production standard is set for a specific work group and its members are paid incentives if the group exceeds the production standard
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