Textbook Notes (363,460)
Canada (158,372)
MHR 523 (319)
Chapter 12

Chapter 12 - Pay for Performance and Financial Incentives

3 Pages
Unlock Document

Ryerson University
Human Resources
MHR 523
Margaret Yap

Chapter 12: Pay for Performance and Financial incentives MONEY AND MOTIVATION Variable pay: any plan that ties pay to productivity or profitability More than 80% of Canadian employees have one or more variable pay plans Line of sight: extent to which an employee can relate his/her daily work to the achievement of overall corporate goals Incentives for operations employees Piecework plans: oldest, most common. Earnings are tied directly to what the worker produces (per piece) o Straight piecework plan: payment for each piece produced o Guaranteed piecework plan: minimum wage plus per piece o Advantages: simple to calculate, performance increases o Disadvantages: employers may up production standards if employees are earning too much; rigidity; not willing to rotate jobs; machines wear out; quality standards aren’t met Standard hour plan: premium that equals the percentage by which workers’ performance exceeds the standard Team/group incentives: 1. All are paid wage of highest producer 2. All are paid wage of lowest producer 3. All are paid average wage of all production Incentives for senior managers and executives Short-term incentives: The annual bonus o Eligibility: Key position Salary-level cut-off point Salary grade o How much to pay out (fund size) o Determining individual awards: many different approaches One approach: split-award method – 2 bonuses; one based on individual performance, one on company performance Long-term incentives: o Stock options: right to purchase a specific number of shares of company stock at a specific price during a period of time o Plans providing share “units”: paid if financial targets are achieved Performance share unit plan: as above Restricted share plan: executive can’t leave before vesting period or $ won’t be paid out Deferred share plan: only payable when exec leaves o Relating strategy to executive compensation www.notesolution.com Page 334 for *4 steps* Incentives for salespeople Salary plan: o Great for selling technical products o Focus on building relationships with customers vs. just making the sale o Disadvantage: likely to be based on seniority
More Less

Related notes for MHR 523

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.