Chapter 11: Designing Performance Pay Plans

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Management and Organizational Studies
Management and Organizational Studies 3342A/B
Jody Merritt

MOS3342 Chapter 11 Pg 396421 Designing Performance Pay PlansCS Who Wants To Be a MillionaireCompany stocks can be risky but the original emps of Microsoft who accepted shares back in 1980 were all millionaires by 1996Chapter focuses on group performance plansWork Groups Gain sharing and Goal sharingOrganization Profit sharing and Emp stock plans Measures Criteria used as comparison to indicate if an improvement has been made somewhere in efficiency etc Modifiers Constraints used to control undesirable behaviours 397 Gain Sharing PlansWhen emps are able to reduce costs or increase productivity a portion of the gains are returned to the emps for their effort and ingenuityTypes of Gain Sharing Plans4 Main Types Joseph Scanlon United Steel Workers 1 The Scanlon PlanThe firm computes a normal labour cost based on past experience and expressed as a percentage of the sales value of production if this percent is improved the emps share the financial gain Ex If labour costs are 50 of the sales value of production and workers lower this to 47 they share the productivity gain of 3 Of the gain typically 25 for the company and 75 for emps
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