Management and Organizational Studies 3342A/B Chapter 11: Designing Performance Pay Plans

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

Document Summary

> company stocks can be risky but the original emps of microsoft who accepted shares back in 1980 were all millionaires by 1996. Measures: criteria used as comparison to indicate if an improvement has been made somewhere in efficiency etc. Modifiers: constraints, used to control undesirable behaviours: gain sharing plans. > when emps are able to reduce costs or increase productivity, a portion of the gains are returned to the emps for their effort and ingenuity. The scanlon plan: joseph scanlon- united steel workers. The 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. 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.