This document discusses different types of incentive compensation plans. It defines incentives as rewards given to employees for exceeding standard requirements. There are three main types of incentive plans: individual, group, and organizational. Individual plans reward individual performance using methods like piece-rate, commissions, bonuses, and merit pay. Group plans incentivize work teams or departments. Organizational plans cover all employees through gain sharing, profit sharing, and employee stock ownership programs. Factors like tying incentives to performance and catering to individual needs must be considered when establishing an incentive system.
This document discusses different types of incentive compensation plans. It defines incentives as rewards given to employees for exceeding standard requirements. There are three main types of incentive plans: individual, group, and organizational. Individual plans reward individual performance using methods like piece-rate, commissions, bonuses, and merit pay. Group plans incentivize work teams or departments. Organizational plans cover all employees through gain sharing, profit sharing, and employee stock ownership programs. Factors like tying incentives to performance and catering to individual needs must be considered when establishing an incentive system.
This document discusses different types of incentive compensation plans. It defines incentives as rewards given to employees for exceeding standard requirements. There are three main types of incentive plans: individual, group, and organizational. Individual plans reward individual performance using methods like piece-rate, commissions, bonuses, and merit pay. Group plans incentivize work teams or departments. Organizational plans cover all employees through gain sharing, profit sharing, and employee stock ownership programs. Factors like tying incentives to performance and catering to individual needs must be considered when establishing an incentive system.
This document discusses different types of incentive compensation plans. It defines incentives as rewards given to employees for exceeding standard requirements. There are three main types of incentive plans: individual, group, and organizational. Individual plans reward individual performance using methods like piece-rate, commissions, bonuses, and merit pay. Group plans incentivize work teams or departments. Organizational plans cover all employees through gain sharing, profit sharing, and employee stock ownership programs. Factors like tying incentives to performance and catering to individual needs must be considered when establishing an incentive system.
Download as PPTX, PDF, TXT or read online from Scribd
Download as pptx, pdf, or txt
You are on page 1of 16
INCENTIVE COMPENSATION
RYAN M. ISRAEL - Reporter
WHAT ARE INCENTIVES Incentives are rewards given to employees for performing beyond the standard requirements. Incentives are also sometimes referred to as variable pay. Factors to consider in establishing and maintaining incentive system They must be tied to performance.
They must be designed to cater individuals who have
different needs. Factors to consider in establishing and maintaining incentive system They must consider the specific environment and limitations of the organizations.
They must be reviewed periodically.
Types of incentives - Individual incentive plan - Group incentive plan - Organizational incentive plan Individual incentive plan Individual incentive plans are those designed to motivate the individual employees to perform beyond standard requirements. CLASSIFICATION OF Individual incentive plans:
PIECE-RATE SYSTEM – THIS TYPE OF INCENTIVE PLAN PAYS
INDIVIDUAL EMPLOYEES BASED ON THE NUMBER OF UNITS PRODUCED BY EACH. CLASSIFICATION OF Individual incentive plans:
COMMISSIONS – IS A FORM OF INCENTIVE USUALLY PAID TO
SALES EMPLOYEES. IT IS BASED ON A PERCENTAGE OF SALES IN UNITS OR PESOS. CLASSIFICATION OF Individual incentive plans:
Bonuses – is a extra payment given to employees for
good performance. CLASSIFICATION OF Individual incentive plans:
Merit pay – this term may be defined as individual pay
increases based on the rated performance of individual employees in a previous time period. Group incentive plan Group incentive plans are those designed to reward work teams, project member, or departments. Organizational incentive plan Organizational incentive plan are rewards designed to cover all employees in an organization. Organization-wide incentive plan consist of gain sharing, profit sharing and employee stock ownership. gain sharing These are company-wide group incentive plans that provide additional pay to employees based on group performance. Profit-sharing plans Are those that reward employees using the profits of the enterprise as basis. Employee stock ownership plan Some company stocks as an incentive to employees for good performance. Stocks not only represent ownership in the company but also a chance to share in the profit, or in the income generated by the appreciation of the stocks’ value. SALAMAT