BU354 Lecture Notes - Lecture 17: Piece Work, High Tech, Millennials
Pay-for-Performance and Finance Incentives
Targeting Incentives for Life Stage
a) Traditionalists (1922-1946) – flexible schedules, health/fitness rewards,
entertainment rewards
b) Boomers (1946-1965) – recognition and being appreciated, travel rewards
c) Generation X (1966-1980) – high-tech rewards, work/life balance,
flexibility
d) Generation Y (1981+) – relationship enhancers, time off to volunteer
Incentives for Operations Employees
a) Piecework Plans – a system 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
Straight Piecework Plan – a set payment for each piece produced or
processed in a factory/shop
Guaranteed Piecework Plan – the minimum hourly wage + an incentive for
each piece produced above a set number of pieces per hour
b) Standard Hour Plan – a plan by which a worker is paid a basic hourly rate
+ an extra percentage of his/her base rate for production exceeding the
standard per hour or per day
- similar to piecework payment but is based on a percentage premium
c) Team or Group Incentive Plans – a 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
Incentives for Senior Managers and Executives
a) Short-Term Incentives: The Annual Bonus
Three basic issues should be considered when awarding short-term
incentives:
1) Eligibility – Decided in one of three ways:
- key position
- salary-level
- salary grade
2) Fund-Size Determination – Some companies use:
- non-deductible formula – straight percentage is used
- deductible formula – assumes that the short-term incentive should
begin to accumulate only
after the firm has met a specified level of
earnings
3) Individual Awards
- split-award method – breaks the bonus into two parts; individual
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Incentives for operations employees: piecework plans a system 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. Straight piecework plan a set payment for each piece produced or processed in a factory/shop. Guaranteed piecework plan the minimum hourly wage + an incentive for each piece produced above a set number of pieces per hour. B) standard hour plan a plan by which a worker is paid a basic hourly rate. + an extra percentage of his/her base rate for production exceeding the standard per hour or per day. Similar to piecework payment but is based on a percentage premium. C) team or group incentive plans a 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.
