RSM361H1 Lecture 10: Chapter 10 NOTES
Document Summary
Chapter 10 - pay for performance: incentive rewards. Variable pay: tying pay to some measure of individual, group or organizational performance. It is a form of incentive plan that is widely used by companies. Incentive rewards are based on the pay for performance philosophy. A performance threshold" has to be reached by the employee or group of employees to qualify for the incentive payments. This is the minimum level an employee must reach to be entitled to the variable pay. Variable pay emphasizes the shared commitment of all workers towards organizational performance and success. Contemporary arguments for incentive plans focus on linking compensation rewards, both individual and group, to organizational goals. By meshing compensation and organizational objectives, managers believe that employees will assume ownership of their jobs, hence increasing effort and overall performance. Incentives are designed to encourage employees to put more effort to complete their job task; effort they might not otherwise exert when being paid the regular compensation.
