Incentive Pay

Powerful Essays
Incentive Pay
(Research Paper)

Outline

I. Introduction

II. Body A. Importance of incentive Pay plan. B. Types of incentive pay. 1. Individual incentive plans 2. Group incentive plans. 3. Companywide incentive plans. C. Advantages of Incentive Pay D. Designing incentive pay plans. E. Incentive pay and the motivational models. F. Problems.

III. Conclusion.

Abstract Quality of employees work is very critical for company’s success. If planned properly, incentive pay plans may increase employee’s interest in providing better service. This paper discusses the importance of incentive pay plans. The objective of this paper is to show how use of incentive pay plans motivates employees to give their best. This paper analyzes and determines the importance of incentive pay, kinds of incentive pay, advantages of incentive pay, designing incentive pay plans, motivational models and some problems that an incentive pay plan can create.

Introduction Incentive pay, also known as pay for performance is generally given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase workers performance.
A good incentive pay scheme can motivate employees to work better for the organization. A badly thought out scheme, on the other hand, can be divisive and demoralizing. As competitive pressures mount, organizations are compelled to consider strategies that will help them become more innovative, productive and efficient. The main ingredient of a successful incentive pay plans is the condition of regular, honest communication to employees.

Body

Importance of Incentive Pay Plan Incentive pay can be defined as a wage system that rewards



References: • Incentive pay by Frederick W. Taylor. • Gomez-Mejia, L.R., & Balkin, D.R., (1992). Compensation, Organizational Strategy and Firm Performance. Cincinnati, OH: South-Western. • Strategic Compensation, A Human Resource Management Approach, 5th Edition, Joseph J. Martocchio. • Stone, D. & Zeibart, A. 1995. A model of financial incentive effects in decision making. Organizational Behavior and Human Decision Process, 61: 250-261. • Gerhart, B. & Trevor, C. 1996. Employment variability under different managerial compensation systems. Academy of Management Journal, 39: 1692-1712. • H. K. Von Kaas, Making Wage Incentives Work, New York: American Management Assn., 1971. • W. F. Whyte, Skinnerian Theory in Organizations, Psychology Today, April 1972, pp. 67-68. • H. Meyer, The Pay for Performance Dilemma, Organizational Dynamics, winter 1975, pp. 22-38. • Benefits and Compensation Administration, Thomas J. Atchison, David W. Belcher, David J. Thomsen, ERI Economic Research Institute, 2000-2004.

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