HRM 2600 Chapter 10: Chapter 10
Document Summary
Strategic reasons for incentive plans: variable pay tying pay to some measure of individual, group, or organizational performance. Incentive rewards that based entirely upon a pay-for-performance philosophy. Incentive plans emphasize a shared focus on organizational objectives by broadening the opportunities for incentives to employees throughout the organization. Incentive plans as links to organizational objectives: specific company goals might be to lower labour costs, improve customer satisfaction, expand product markets, or maintain high levels of productivity and quality. By meshing compensation and organizational objectives managers believe that employees will assume ownership of their jobs by improving their effort and overall job performance: studies show a measurable relationship between incentive plans and improved organizational performance. Setting performance measures: measurement is key to the success of incentive plans because it communicates the importance of established organizational goals. Flexibility describes the design of individual incentive plans.