HRM CASE 2
ANALYSIS & PRESENTATION
DONE BY
[Link]
Siva Sankar.S
Karthik Rajgopal
Saravana prabhu.K.M
Mohan
Does an incentive payment motivate
people?
YES
An incentive payment obviously motivates
people to increase their productivity in
quantity and in quality.
In fact there is a risk of reduction in quality.
Incentives have an indirect effect of the profit of the company
Since the incentives are provided in adequate
just for achieving the quantity of output for
sales, the quality gets reduced as employees
only seek for higher incentive and not on their
quality of delivery.
Contd…
Since people also are getting used to incentives incentive
becomes a fixed cost when followed by a company over a
period of time and employees do not only compare salary
levels with the employees of same level at other companies
This is a factor for the effective HR loss of the company .
Types of incentive plans
1) Individual Incentive Plans
• Straight Piecework - incentive plan in which employees receive a
certain rate for each unit produced. This plan is usually used when
quality is more important than quantity
• Standard Hour Plan - a plan that sets pay rates based on the
completion of a job in a predetermined standard time.
• Bonuses are commonly used. Spot bonuses are unplanned bonuses
given for an employee’s efforts
2) Merit Pay Program
• Merit Pay - increase in base pay to how successful an employee
achieved some performance standard.
• Merit guidelines - are the guidelines for awarding these merit raises.
• Lum-sum merit pay - a program where employees receive a year-end
merit paymentwhich is not added to their base pay.
• Awards - help employees to feel appreciated by recognizing their
productivity.
• Noncash Incentive Awards - anything like gym memberships or
basketball tickets,etc..
3) Sales Incentives
• Straight Salary Plans - common used sale incentive
plans.
• Straight Commission Plan - a compensation plan
based on the percentage of sales.
• Combined Salary & Commission Plan - a mix of both
straight salary and commission.
• Executive Compensation - a base salary, short-term
incentives or bonuses,
• long-term incentives or stock plans, or prerequisites
(perks)
4) Group Incentive Plans
• Team incentive plans - are compensation plans where all team members receive an
incentive bonus payment when performance standards are met or exceeded.
• Gainsharing plans- are programs under which both employees and the organization share
the financial gains according to a predetermined formula that reflects improved
productivity and profitability.
• Scanlon Plan. Rewards come from employee participation in improving productivity and
reducing costs.
• Rucker Plan (SOP). The shared rewards come from the difference between labour costs and
sales value of production.
• Improshare. Gainsharing based on increases in productivity in the standard hour output of
work teams.
5) Enterprise Incentive Plans
• Profit Sharing- is any procedure by which an employer
pays or makes available, current or deferred sums based
on the profits of the enterprise.
• Stock Options- grant employees the right to purchase a
specified number of company shares during a designated
period of time.
• Employee Stock Ownership Plans (ESOP`s - )are stock plans
in which an organization contributes shares of its stock to
an established trust for the purpose of stock purchases by
its employees.
Earnings-at-risk plan
Earnings-at-risk plan is an incentive plan that
allows employees to recapture lower wages or
reap additional income above full base pay
when quality, service, or productivity goals are
met or exceeded
Advantages of incentives schemes
• Potential to bring in more competitive hr
• Employee retainment
• Maintain employee loyalty
• Get a competitive advantage by making higher
level of production
Disadvantages of incentive schemes
• Reduction in the incentives will create
problems
• Demotivate people thus reducing qualitative
and quantitative productivity
• Creates misunderstanding between
employees/peers
• Group incentive plans create problems while
dividing
Contd…
• Does not encourage employees to advance in
their work or career
• Not suitable for all levels of hr in a company
• Increases the risk of stagnant inventory
• Incentives have become a norm
Other recommendations for incentive plans and motivation
• Provide incentives according to employee
interests/ requirements
• Does not make incentives a fixed cost
• Change the level of incentives and the type of
incentives now and then
• CSR is to ensure the wealth maximization of
the employees
Incentive Software
Other solution for effectively incenting
employees is to make use of the growing IT
and systems technologies like this software
suite
Contd…
• Paramax creates point-based incentive, loyalty and
recognition programs for employees, sales teams and
channel partners.
• AchievaSUITE is a web-based technology written in
Microsoft .NET that provides a complete offering of
incentive driven point-based program solutions.
• AchievaSUITE is an incentive program management
platform with multiple language and enterprise reporting
capabilities.
Contd..
• Intuitive user interfaces assure quick adaptation by participants and
support programs such as surveys and quizzes add interest and
excitement
• You can choose the awards fulfilment model that best meets your
needs. However it is used, Achieva SUITE will save you time and
money and make managing reward programs much easier.
• Clients include over one hundred Global companies based in the U.S.,
Canada, England, Australia, and Mexico.
• Performance evaluated on point scale basis
• Awards claimable based on point scored
Helping people helps in the long run.
Thank you
