TABLE OF CONTENTS
Employee Stock Option Plan
Reward management is the process of formulating and implementation of strategies and policies in order to reward people fairly, equitably and constantly in accordance with the values of the organization. Such system enables to meet the requirements of both the organization and its stakeholders. Reward management strategies should be designed to encourage motivation, commitment, engagement and development of employees. The strength of an employee’s motivation depends on the value of rewards available to individuals for achieving goals. Employee motivation is the psychological factor that arouses an employee to behave in a certain manner for achieving certain organizational goals. It is imperative for the organization to enhance motivation level of the employees in order to bring out the best in them. Reward management is the framework that envisions formulation of different types of reward systems to boost the motivation of the employees. The degree to which the reward management motivates the employees will depend on the effectiveness of the strategy that was adopted. Motivation can be intrinsic or extrinsic. The intrinsic factors are directly related to the job and
Iintrinsic motivators can be opportunity to achieve job satisfaction, Challenge, career prospects, personal
ect. (ww.en.wikipedia.org/wiki/Motivation #intrinsic _motivation) The methods of rewards could be monetary or non-monetary rewards. Monetary rewards include pay rise, commissions and bonuses and any other cash rewards. Non-monetary, on the other hand, include complements, promotions and others. Types of incentive plans are
Individual - Piecework, Standard hour plan, Bonuses, Merit pay, Lump-sum merit pay, Incentive awards, Sales incentives, Incentives for professional employees, Executive compensation Group - Team compensation, Scanlon Plan, Rucker Plan, Improshare, Earnings-at-risk plans Enterprise - Profit sharing, Stock options, Employee stock ownership plans (ESOPs) More descriptive analysis in respect of above mentioned reward plans are given during next chapters. And the remainder of this assignment is structured as follows.
A detailed analysis of separate reward management tools with examples.
EMPLOYEE STOCK OPTION PLAN (ESOP)
Employee stock option plan is an employee benefit plan which gives the option to own shares share of the company they work for. There are different ways in which employees can receive stocks and shares of their company. Employee stock option plans are a component of the compensation package of many executives and employees. Stock options can facilitate the recruitment and retention of employees as well as providing a mechanism for linking pay with the performance of the company’s stock price. Companies grant stock options to attract, retain, and motivate employees and executives. Advantages
Share ownership encourages employee loyalty and retention.
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