Management and Organizational Studies 3342A/B Chapter 11: Chapter 11.doc

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3342A/B
• Professor: Linda Eligh

Document Summary

North american producers to cut costs and/or increase productivity well designed variable plans have known to motivate employees and even cut costs. What the employee does this year in terms of performance is rewarded every year he/she remains with the employer. Some people say that it is expensive and it doesn"t achieve its desired goal improving individual and corporate performance. Must improve the accuracy of performance ratings, allocate enough merit money to truly reward performance, and make sure the size of the merit increase differentiates across performance levels: lump sum bonuses. Employees receive an end of year bonus that does not build into base pay. Viewed less of an entitlement than merit pay because it has to be earned every year. By giving lump sum bonuses, the company is essentially freezing the base pay employees not fond of this: individual spot awards. Awarded for exceptional performance that top management is notified about. In a large company, formal recognition might occur.