...Individual employee incentive and recognition programs Incentive payments for hourly employees may be determined by the number of units produced, by the achievement of specific performance goals, or by productivity improvements in the organization as a whole. In the majority of incentive plans, incentive payments serve to supplement the employee's basic wage. Piecework One of the oldest incentive plans is based on piecework. Under straight piecework, employees receive a certain rate for each unit produced. Their compensation is determined by the number of units they produce during a pay period. At Steelcase, an office furniture maker, employees can earn more than their base pay, often as much as 35 percent more, through piecework for each slab of metal they cut or chair they upholster. Under a differential piece rate, employees whose production exceeds the standard output receive a higher rate for all of their work than the rate paid to those who do not exceed the standard. Employers will include piecework in their compensation strategy for several reasons. The wage payment for each employee is simple to compute, and the plan permits an organization to predict its labor costs with considerable accuracy, since these costs are the same for each unit of output. The piecework system is more likely to succeed when units of output can be measured readily, when the quality of the product is less critical, when the job is fairly standardized, and when a constant flow of...
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...rate 2) Piece rates with guaranteed time rates and 3) Differential Piece rates Straight Piece rate In this method payment is made on the basis of affixed amount per fixed units produced without regard to the time taken Earnings = Number of units x rate per unit. Piece rates with guaranteed time rates In this system the payment is at the time rates but adjusted to the cost of living. Merit awards for personal qualities, skill, ability, punctuality etc. are also considered. The employer compensates the high labor cost by increasing the price of the products. Differential Piece rates A wage plan based on a standard task time whereby the worker receives increased or decreased piece rates as his or her production varies from that expected for the standard time. Also known as accelerating incentive. 2. Define Sales Commission, and explain the conditions that should exist/be met within a position for this pay-for-performance methodology to be successful. Answer: The amount of money that an individual receives based on the level of sales he or she has obtained. The sales person is provided a certain amount of money in addition to his/her standard salary based on the amount of sales obtained. Conditions that should exist: 1. Organizations must tailor pay for performance systems to their mission and environment 2. A pay for performance system can only be effective if employees value the pay or recognition that the organization offers in return for high performance...
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...Human Resource Management, 12e (Dessler) Chapter 12 Pay for Performance and Financial Incentives 1) Frederick Taylor referred to the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level as ________. A) social loafing B) systematic soldiering C) human nature D) group shift E) group norms Answer: B Explanation: Frederick Taylor popularized using financial incentives in the late 1800s. As a supervisory employee of the Midvale Steel Company, Taylor was concerned with what he called "systematic soldiering"—the tendency of employees to work at the slowest pace possible and to produce at the minimum acceptable level. Diff: 1 Page Ref: 434 Chapter: 12 Objective: 1 Skill: Concept 2) Which of the following terms refers to financial rewards paid to workers whose production exceeds some predetermined standard? A) indirect financial payments B) merit payments C) hardship allowance D) financial incentives E) human capital Answer: D Explanation: Financial incentives are financial rewards paid to workers whose production exceeds some predetermined standard. Indirect financial payments are a type of employee compensation that includes health benefits. Diff: 1 Page Ref: 434 Chapter: 12 Objective: 1 Skill: Concept 3) A management approach based on improving work methods through observation and analysis is known as ________. A) strategic management B) scientific management C) management process D)...
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... | | | |Pay for Performance |12 | | |And Financial | | | |Incentives | | | |Lecture Outline | | | |Strategic Overview |In Brief: This chapter gives an overview of money | | |Money and Motivation: An Introduction |and motivation, and then outlines different | | |Performance and Pay |incentive programs that are used for different | | |Individual Differences |types of employees. It also discusses | | |Psychological Needs and Intrinsic vs. Extrinsic...
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...compensation systems, some advantages and disadvantages of compensation benefits, comparable worth, and some polices. The information will be used to further understand all topics discussed and addressed for management's purpose. KEYWORDS: Compensation systems, advantages and disadvantages of compensation systems, benefits, comparable worth, compensation policies INTRODUCTION This report is to review Compensation and all related information to better understand the advantages and disadvantages of different compensation systems. Compensation and or the benefits worker's get are a reflection of the organization's value of the worker’s worth, and to the position or the duties required to accomplish the job duties. Compensation could and should provide motivation for the worker or applicant to perform to the best of their abilities, not simply clock in and clock out. WHAT IS COMPENSATION The meaning of compensation is as followed, a fundamental component of employment and a critical issue for management and policies set in place. It traditionally refers to wages of employment, to include base pay or salary, bonus or incentives, benefits, and non-cash compensations. Organizations need to set and communicate clear principles by which workers are paid. In the least, they should ensure compensation policies adheres to employment standards and legislation. Some compensation elements governed by regulations are Minimum wage, holiday pay rates, overtime pay, payment methods...
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...Four Incentive Methods Comparison Introduction To motivate staff contribute more to the company, companies use their own incentive methods. British firms prefer share scheme, merit pay is often used in French companies (David & Richard, 2010) while In China, a large amount of corporations perform EVA-based scheme. (Yongjian, Lei &Donghua, 2015) For executives, formula-based arrangement is often used. (Robert, David & Richard, 1995). This leads to the question of what’s the advantage and disadvantage of the four payments. In the literature, I only discuss about individual incentives. Knowledge Gap The share scheme is extended rapidly these years. The incentive helps the employees perform as the shareholders do. When the company’s retained earnings increases, they are also benefited. Another advantage of this incentive is tax-avoiding. Merit pay is a traditional but effective motivating method. How much one earns depends on his performance. However, it is also difficult to determine what kind of expectation should be rewarded and how to reward. If the standard is not fair enough, it might lead to contradiction between the employees and executives. (David & Richard, 2010) EVA-based mechanism grantees the profit of the company. EVA defines company profit as the part of the return exceeds the capital cost. Under the mechanism, the more profit the company earns, the more incentive the staff will have. Also, when the company’s revenue is negative, the incentive will...
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...Compensation and reward system plays vital role in a business organization.since, among four Ms, i.e. men, material, machine and money, men has been most important factor, it is impossible to imagine a business process without men. Every factor contributes to the process without men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the labourexpects wages from the process. Labor plays vital role in bringing about the process of production /business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labor therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following: 1) An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed. 2) It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable. 3) Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system. 4) The system should be simple and...
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...performance based pay should fit within the organizations external and internal environments. The “two external environmental components that have had a substantial effect on performance based pay are technology and laws and regulations” (Jackson, Schuler, & Werner, 2012, p. 402). Today, technology is helping to make performance management more accurate and laws and regulations can influence performance based pay as they help “change the cost of incentives to employers and the value of incentives to the employee” (Jackson, Schuler, & Werner, 2012, p. 429). In addition to this, performance based pay not only reduces labor costs but it helps attract, retain, and motivate employees. There can be many challenges with performance based pay. Two disadvantages of merit pay are measurement problems (how actual performance is measured) and the cost to the organization in giving merit raises instead of lump sum payments. A bonus program can also be costly and at times structured in a way that employees do not view it as fair. In my company we all receive a holiday bonus. The amount is determined not only by work performance but by seniority. In my experience this tends to create an issue of fairness amongst employees and can be a challenge. For example: there can be an employee who has been with the organization for years but puts in less work then an employee who may have been with us for 3 years and puts in more work. Employees don’t love that bonuses are partly based on seniority...
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...Incentive Pay HR Management Foundations December 14, 2014 Determining Incentive Pay All organizations and companies have a pay structure. This pay structure is often very rigid and dependent upon many factors. This pay scale is something that applies to all employees and helps dictate base pay and any future raises. While this pay scale is not adjustable, setting performance-related pay is often at the discretion of the company. This is called incentive pay (Noe, 2011). Often, incentive pay is tied to performance or other metrics set by the company. In general, incentive pay is a way to bolster employee production while helping the company meet profit goals. However, the incentive pay must comply with HR policies and standards. According to Noe (2014), a study of 150 companies and organizations revealed that the way a company paid their employees was strongly linked to employee satisfaction and their level of profitability. As mentioned before, incentive pay is monetary compensation beyond the employee’s regular salary. It is often used to energize or direct an employees’ behavior as it is often linked to predetermined behaviors or outcomes (Noe, 2014). Incentive pay can be found as a commission for those in sales, or a bonus for those in other fields. Offering incentive pay can be beneficial to the company for many reasons. Employees are often willing to work harder or find creative ways to problem solve when money is on the line. In addition, incentive...
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...Compensation and Benefits Strategies Recommendations Elizabeth Copeland, Emily Krzyzaniak, Frederick McFarland, and Mary Thomas HRM/531 9/23/15 Maria Ziegler Compensation and Benefits Strategies Recommendations Landslide Limousines will be opening soon and they will be employing twenty-five people to keep the business in operation. The owner, Bradley Stonefield, wants to be comparable to the other limousine services around town so this must be considered when recommendations for compensation and benefits are made. Although the company is projected to see a 5% revenue growth over the first few years, they are estimating to have a net revenue of -$50,000 for the first year. The recommendations provided in this paper shall assist Landslide with securing their place in the transportation market in Austin, Texas. Market Research Evaluating companies in the relevant market will keep you competitive. We have researched 2 established car service companies in Austin, Texas operating with 25 employees or less. We started with a company you may be familiar with. Founded in 1989 by Tony Alyassin, Royal Carriages Limousine operates a substantial fleet of more than 25 vehicles (http://royalcarriages.com/). Employee are independent contractors with a compensation package of a flat wage rate and a corporate contribution to the National Taxi Drivers Association of Austin. The National Taxi Drivers Association is an organization that was founded in 2009 that focuses on taxi and limousine...
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...Compensation Questions – Practice Exam 1 1. Employment compensation payments to unemployed individuals vary according to: (updated answers) a. the type of job held before lay-off and the regional unemployment rate. b. their previous wage rate and total number of hours worked during last 52 weeks. c. total earnings plus number of hours worked during last 26 weeks, and regional unemployment rate. d. their previous wage rate and the type of previous job. The answer is c. total earnings plus number of hours worked during last 26 weeks, and regional unemployment rate. RPC CODE: C 2. All of the following statements about CPP/QPP are true, except: a. these plans cover almost all Canadian employees between the ages of 18 and 65. b. a flat rate benefit is available to each dependent child of a disabled contributor until age 18 or age 25 if attending school. c. individuals may start to collect benefits at age 60 or defer receiving benefits until age 75. d. on termination of a marriage or common-law relationship, pension credits earned by one or both spouses may have to be divided. The answer is c. individuals may start to collect benefits at age 60 or defer receiving benefits until age 75. RPC CODE: C 4. All of the following are advantages of group incentive plans except: a. They reduce complaints over "tight" or "loose" individual standards b. They encourage cross training c. They are easy to understand d. They build a team culture The answer is c. They...
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...Project Management Plan Employee Incentive Program CPMGT/301 October 13, 2014 Project Management Plan Attracting skilled employees is often important and often difficult. Employers face major challenges when they consider the increasing difficulty of finding skilled people every company should have an employee incentive program if it is sales and especially for university enrollment advisors because they are the ones that bring business into the university. The project scope of Title IV of the Higher Education Act of 1965 strict accreditation regulations and laws prevent the university from offering bonuses to employees who enroll students. The work breakdown structure for the employee incentive program consists of activities/attributes, milestones stakeholders, stakeholder’s needs, tools and techniques. • Activities/attributes – Create a list of creative ideas o Have employees take a survey once a year o Boost employee morale and set a goal for employees o Provide a positive working environment o Retain employees o Diversity of activities o Develop skills and potential o Employees need to be more involved and engaged o Communication to employees • Milestones – o Approval of incentive program o Incentives must follow rules/regulations ...
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...Human Resource Management, 12e (Dessler) Chapter 10 Coaching, Careers, and Talent Management 1) Which of the following terms refers to educating, instructing, and training subordinates? A) mentoring B) coaching C) appraising D) grading E) recruiting Answer: B Explanation: Coaching means educating, instructing, and training subordinates. Mentoring means advising, counseling, and guiding. Recruiting refers to searching for job candidates. Diff: 1 Page Ref: 344 Chapter: 10 Objective: 1 Skill: Concept 2) The process of advising, counseling, and guiding employees is known as ________. A) coaching B) appraising C) assessing D) mentoring E) training Answer: D Explanation: Mentoring means advising, counseling, and guiding. Coaching means educating, instructing, and training subordinates. Both coaching and mentoring skills are needed for appraising employees, but appraising and assessing refer to rating an employee. Diff: 1 Page Ref: 344 Chapter: 10 Objective: 1 Skill: Concept 3) ________ focuses on helping an employee make long-term career plans, while ________ addresses an employee's short-term job skills. A) Mentoring, coaching B) Coaching, mentoring C) Recruiting, coaching D) Recruiting, mentoring E) Mentoring, recruiting Answer: A Explanation: Mentoring means advising, counseling, and guiding an employee towards long-term career goals. Coaching means educating, instructing, and training subordinates in performing short-term job-related...
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...Human Resource Studies (CAHRS) at DigitalCommons@ILR. It has been accepted for inclusion in CAHRS Working Paper Series by an authorized administrator of DigitalCommons@ILR. For more information, please contact jdd10@cornell.edu. Employee Compensation: Theory, Practice, and Evidence Abstract [Excerpt] As organizations continue to face mounting competitive pressures, they seek to do more with less and do it with better quality. As goals for sales volume, profits, innovation, and quality are raised, employment growth is often tightly controlled and in many cases, substantial cuts in employment have been made. To accomplish more with fewer employees calls for effective management of human resources. Typically, the employee compensation system, the focus of this chapter, plays a major role in efforts to manage human resources better. Keywords employee, compensation, organization, profit, human, resource, manage, pay, market Disciplines Human Resources Management Comments Suggested Citation Gerhart, B., Minkoff, H. B. & Olsen, R. N. (1995). Employee compensation: Theory, practice, and evidence (CAHRS Working Paper #95-04). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced Human Resource Studies. http://digitalcommons.ilr.cornell.edu/cahrswp/194 This article is available at...
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...Resource Studies (CAHRS) at DigitalCommons@ILR. It has been accepted for inclusion in CAHRS Working Paper Series by an authorized administrator of DigitalCommons@ILR. For more information, please contact hlmdigital@cornell.edu. Employee Compensation: Theory, Practice, and Evidence Abstract [Excerpt] As organizations continue to face mounting competitive pressures, they seek to do more with less and do it with better quality. As goals for sales volume, profits, innovation, and quality are raised, employment growth is often tightly controlled and in many cases, substantial cuts in employment have been made. To accomplish more with fewer employees calls for effective management of human resources. Typically, the employee compensation system, the focus of this chapter, plays a major role in efforts to manage human resources better. Keywords employee, compensation, organization, profit, human, resource, manage, pay, market Disciplines Human Resources Management Comments Suggested Citation Gerhart, B., Minkoff, H. B. & Olsen, R. N. (1995). Employee compensation: Theory, practice, and evidence (CAHRS Working Paper #95-04). Ithaca, NY: Cornell University, School of Industrial and Labor Relations, Center for Advanced...
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