Total Compensation Methods
MGT/431: Human Resources Management
January 23, 2011
Compensation methods and incentive programs provide motivation for employees to be more productive and focused on business objectives. It can also provide incentive for workers to remain loyal to their company. Health benefits and bonus programs are examples of compensation methods and incentive programs used today. In addition to motivating workers, compensation and benefits bring a sense of stability to families. Americans implementation of employee’s benefits started as far back as the 1600s. The first plans noted in American history were the retirement benefits for military soldiers. After the great depression the government used various compensation methods and provided better incentive programs for labors and their families. After the First World War more private companies started to offer total benefit packages to their employees to be more competitive. Incentive plans and fringe benefits also remain important today and have become part of American business culture. Although companies have the option of providing certain incentive or benefit plans, most American workers view many benefits as entitlements or validate a reason to work for one employer versus another. In this paper team “B” will explore and provide explanation of several types of compensation methods and incentive programs important to employees. Bonuses
Bonuses are compensation for employees for work performed; they are paid in addition to salary or wages (Murray, 2011). Bonus compensation plans follow a structured program based on predetermined goals and objectives. Typically, a bonus is given in monetary form. The purpose of a bonus compensation plan is to encourage employees to exceed normal job expectations to meet the organizational goals.
Successfully implementing a bonus compensation plan will directly affect productivity in the workplace. Bonus plans can be implemented in a number of ways. Most commonly, organizations will distribute bonuses at the end of the calendar year. Other bonus programs are designed to reward employees who meet a specific goal or objective and may distributed upon the achievement of these targets. Although both plans will increase productivity in the workplace, offering a bonus once an employee meets a specific goal or objective is the more effective strategy. Employees tend to stay more focused on a specific goal or objective that they know they will receive extra compensation for completing, as opposed to the employees who waits patiently at the end of each year for a bonus check.
Providing a bonus can also affect the organizational culture of a business by controlling and setting a pattern of behavior in the employees (VEBSAR, 2010). In other words, offering a performance based reward system helps an employee understand exactly what is expected in the workplace. Acting as a form of feedback, a bonus given to an employee lets the individual know that work is not being overlooked and efforts are rewarded for a job well done. This employee will have a tendency to feel more indebted to the organization and hence, be more productive in the workplace. Employees who do not receive bonuses need additional support from supervisors because they are not receiving the monetary compensation. These employees need to understand that they are doing what is expected of them in the workplace. Without the proper feedback from a superior, the employees may believe they are unappreciated and job satisfaction will decrease. For this reason, bonus programs can help increase morale and productivity in the workplace. Commissions
Companies use commission-based pay plans to incent workers to perform at higher levels and enable them to earn monies in addition to their regular base pay. Commission pay is typically used for salespeople and is different from a bonus...
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