TEAM BASED INCENTIVES

A plan in which a production standard is set for a specific work group. Incentives or benefits are availed by the team that has fulfiled the performance standard Example: leisure trips, luxury items, items off or cash bonus

ENGINEERED STANDARDS
Setting an engineered production standard based on the output of the group. The employer uses PIECE RATE OR STANDARD HOUR PLAN. All the members receive the same share of incentive pay. payment is made on the basis of affixed amount per fixed units produced without regard to the time taken Thus, Earnings = Number of units x rate per unit. The Fixation of piece rate generally depends upon: 1) The comparable time rate for the same class of workers 2) The expected output in given time.

PROS & CONS

PROS It boosts the morale , reduces jealousy among team members Creates group cohesiveness CONS Inequality , according to a research one person does a lions share of work whereas some are free riders .

ORGANIZATION WIDE INCENTIVE PLANS

Incentive plans in which all or most employees can participate PROFIT SHARING PLANS

CASH PLANS
Share of annual profits are received by the employees , usually 15 to 20%. A company by the name Home Depot institutionalized this plan in 2003

Deferred Profit Sharing

The employer puts cash awards into trust accounts for the employees retirement Employees can avail tax benefit in case of deferred profit sharing.

Scanlon plans
An incentive plan developed by Joseph Scanlon Synchronizing the companys goals with those of its employees It was designed to encourage cooperation , involvement and sharing of benefits

Features of this plan

Philosophy of cooperation: The feeling of oneness ( it is us and not me) Identity: Mission or purpose has to be understood by the Competence: Is expected from the employees Involvement: At various levels from departmental level and finally transmitting the valuable suggestions to the executive level Sharing of benefits: Mostly 75% of the savings ,if a suggestion is implemented and successful

GAINSHARING PLANS
An incentive plan that engages employees in a common effort to achieve productivity objectives and share the gains. The 8 steps in gain sharing plan 1-Establishing general plan objectives such as boosting productivity or lowering labour costs 2- Choose specific performance measures 3-Decide the portion of gains employees will receive

4-Decide on a method for dividing and distributing the employees share of gains 5-Choose the form of payment (usually cash) 6- Decide how often to pay bonuses. 7-Decide the involvement system 8- Implement the plan

At Risk Plans Plans that put some portion of the employee s weekly pay at risk subject to the firms meeting its financial goals.

Employee Stock Plans A corporation contributes shares of its own stock to a trust in which additional contributions are made annually. The trust distributes the stock to employees on retirement or separation from service

Broad based stock options The Basic thinking is that ownership in the company with employers makes motivational and practical sense.