SUBMITTED TO:Prof. Randhir Kr.


SUBMITTED BY:Pallavi Gupta Piyush Nigam Nidhi Bajpai Neeraj Agarwal Priyanka Basu Nidhi Wadhwa Prateet Srivastava

Money And Motivation :An Introduction
y Financial rewards paid t w rkers wh se pr ducti n

exceeds s me predetermined standards in the late 1800s . y Systematic S ldiering the tendency f empl yees t w rk at the sl west pace p ssible and t pr duce at the minimum acceptable level

conditional cash transfer programs pay monthly subsidies to households conditional on defined actions such as taking children for well-care visits or keeping them in school. For example.PERFORMANCE And PAY y W rking definiti n f Pay-f r. y .perf rmance r P4P is: Transfer of money or material goods conditional on taking a measurable action or achieving a predetermined performance target. .

y In India. active and alert. .MOTIVATION And INCENTIVES y The manager devising an incentive plan should first remember that different people react to different incentives in different ways y High positive affective(PAs) are energetic .Pay for performance is gaining wide acceptance and having a performance linked pay(P P) plan is considered a good H practice. Low PAs are lethargic . listless and apathetic.In this study the low PAs actually responded much more favourably to merit raises then did the high PAs.

.FREDRICK HERZBERG y Freddick Herzberg said the best way to motivate someone is to organize the job so that doing it provides the feedback and challenge that helps satisfy the persons higher level needs for things like accomplishment and recognition. y Herzberg says the employer interested in creating aself motivated workforce should emphasize job content or motivator factors.

.EDWARD DECI Psychologist Edward Deci s work highlights another potential downside to relying too heavily on extrinsic rewards: they may back fire. Deci found that extrinsic rewards could at times actually detract from the persons intrinsic motivations.

Motivation=(Expectancy*Instrumentality*Valence).VICTOR VROOM Vroom says a person s motivation to exert some level of effort depends on three things: the persons instrumentality. or the perceived connection (if any) between successful performance actually obtaining the rewards: and the valence which represents the perceived value the person attaches to the rewards.If E or I or V is zero then there is no motivation .

while behaviour that appears tp lead to a negative consequence tends not to be repeated 2) Managers can get someone to change his or her behaviour by providing the properly scheduled rewards or punishment.REINFORCEMENT THEORY y Behaviour modification means changing behaviour through rewards or punishments that are contingent on performance. . y Behaviour modification has two basic principles 1) That behaviour that appears to lead to a positive consequence tends to be repeated.

some sales people get straight salaries. SALARY PLAN C MMISI N PLAN C MBINATI N PLAN SALES AWARDS . and most receive a combination of salary and commissions.INCENTIVES FOR SALES PEOPLE y Sales compensation plans typically rely heavily on y y y y incentives in the form of sales commissions. However.

Develop the involvement system.TEAM/GROUP INCENTIVE PLANS y DESIGN TEAM INCENTIVES:encourage teamwork & focus team y y y y y y y y y y members attention on performance. 7). the piece rate or standard hour plan. 1). GAINSHARING PLAN:There are eight basic steps in implementing a gainsharing plan. 5).Choose the form of payment 6). 8). .Establish general plan objectives 2). 4).Decide how often to pay bonuses.Decide on a method for dividing & distributing the employees share of the gains.Implement the plan.Decide on a funding formula.Choose specific performance measures 3).

PR FIT SHARING PLAN:A plan whereby employees share in the company s profit. and Scanslon/gainsharing plans.ORAGANIZATION WIDE VARIABLE PAY PLANS y Profit sharing employee stock ownership (ESOP). y TYPES F PR FIT SHARING PLAN 1) CASH PLAN 2) LINC LN INCENTIVE SYSTEM 3) DEFERRED PR FIT SHARING PLANS .

.EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) y A corporation contributes share of its own stock to a trust in which additional contribution are made annually.The trust distribute the stock to employees on retirement or sepration from service. y ESOP has serval advantages:A tax detection.there must be employee involvement in the plant development and execution. The employee retirement income security act(E ISA) y GAIN SHARING PLANS:Gain sharing plan are based on the assumption that better cooperation among worker and between workers and manger will result in greater effectiveness to maximize cost saving and productivity increases.

Gain sharing plan are different from Profit sharing in 2 major ways: .

employee incentive programs can be an excellent strategic human resources tool to promote employee confidence and boost measurable performance. In fact. employee incentive programs have become an integral part of any company's competitiveness and desirability. y Most managers get short term and long term incentives in addition To salary.INCENTIVES FOR MANAGERS AND EXECUTIVES y When designed and implemented effectively. .

Short term bonuses can easily result in plus or minus adjustments of 25% or more to total pay. fund size. There are three basic issues to consider when awarding short term incentives: eligibility. and individual awards.SHORT TERM INCENTIVES y The Annual Bonus Most firms have annual bonus plans aimed at motivating managers and executives short term performance. .

including job level/title. y ELIGIBILITY : most firms include both top and lower level managers. and compares the total amount of money required with bonus fund available . Fund Size. y INDIVIDUAL AWARDS: A target bonus is set for each eligible position.Eligibility. Most base eligibility on a combination of factors. Individual Awards. and many decide who s eligible in several ways. and discretionary considerations y FUND SIZE: The firm must also decide the total amount of bonus money to make available. computes preliminary total bonus size. The actual award then reflects the person s performance. base salary. The firm computes performance ratings for each manager.

LONG TERM INCENTIVES y Long term incentives are also golden handcuffs . which either gives the executive free company stock. y The most common long-term incentive is the stock option. or allows him or her to purchase company stock at a reduced price for a period of time .they motivate executives to stay with the company. by letting them accumulate that they can only cash in after a certain number of years.

y Stock option problem: enormous stock options in part for incentivizing questionable managerial decision and for helping to trigger the numerous corporate scandals in the past few years. . They may also be offered to non-executive level staff. y Employee stock options are mostly offered to management as part of their executive compensation package.THE STOCK OPTIONS y An employee stock option is a call option on the common stock of a company. issued as a form of noncash compensation. especially by businesses that are not yet profitable.

y Parachutes provide three main benefits: 1) Golden parachutes make it easier to hire and retain executives. .GOLDEN PARACHUTE y A golden parachute is an agreement between a company and an employee (usually upper executive) specifying that the employee will receive certain significant benefits if employment is terminated. 2) They help an executive to remain objective about the company during the takeover process. 3) They dissuade takeover attempts by increasing the cost of a takeover. often part of a Poison Pill strategy. especially in industries more prone to mergers.

y Finally.STRATEGIES AND EXECUTIVES COMPENSATION y One concern about the high pay level for American executives is that they may encourage executives to make business decisions that benefit themselves rather than the organization in order to meet performance goals necessary to receive incentive pay. y A second concern with the ethics of high executive pay is the use of stock options as an incentive. some question the ethics of the high level of executive pay when lower-level employee pay has not risen at the same rate .

Incentive programs must be separated from the employee's regular pay. Ensure mutual understanding with the employee. . Periodically evaluate employee incentive programs. Design an employee incentive program that is realistic.DESIGNING EFFECTIVE INCENTIVE PROGRAMS y how one can design your company's employee incentive y y y y y y y programs effectively on the get go: Determine the objective of the employee incentive program Design a home-grown incentive program that's unique to your organization. Ensure mutual understanding with the employee.

the government (today more than ever) and people's behaviour. programs are supposed to get result.WHY INCENTIVE PLANS FAIL y . It is known that what we're thinking is that. pricing. competitors. esults are the "result" of the interaction of a lot of things . . The error seen most often is designing a program to reward a specific result. Only one thing on that list do you can control rewarding and that's the behaviour of the audience you're