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HRM 2600 (78)
Chapter 10

Chapter 10 - Pay for Performance/Incentive Rewards

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York University
Human Resources Management
HRM 2600
Indira Somwaru

Chapter 10Incentive payvariable payPurpose of pay for performancevariable pay systemsIncentive rewards are based entirely upon a payforperformance philosophyEstablish a performance threshold a baseline performance level that an employee or group of employees must reach in order to qualify for incentive pay Advantages of incentive systemsPromotes employee achievement Controls labour costsif you dont perform there is no payoutPromotes employee ownershipstockPromotes teamwork by offering team bonusesif everyone in team meets targetsCan attract top talent when salary budget is limited stockFeatures of successful incentive systems1Employees have a desire for an incentive plan 2Employees should participate in developing plan3Employees should see a clear connection between incentive pay and performance4Standards for getting pay should be challenging but achievable and fair5Pay outs should be valued6Payout formulas are simple and understandable7Payouts are a separate distinct part of compensationTypes of individualgroup and organizational level incentive plansGROUPINDIVIDUALENTERPRISEGainsharing Plansplans PieceworkProfit Sharingwhere both employee and BonusesStock Optionsorganization share the gains from increased productivity and Merit payEmployee Stock profitabilityOwnership PlanAwardsESOPsEg Give a company an idea to Sales incentivessave 50000 and they do save Executive that amount the company splits compensationit25000 for them 25000 for employees Scanlonfocuses on improving
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