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PowerPoint Presentation by Charlie CookPowerPoint Presentation by Charlie CookThe University of West AlabamaThe University of West Alabama
1
Human Resource Human Resource ManagementManagement
Motivation, Performance, and PayMotivation, Performance, and Pay
• IncentivesIncentives
Financial rewards paid to workers whose production Financial rewards paid to workers whose production exceeds a predetermined standard.exceeds a predetermined standard.
• Frederick TaylorFrederick Taylor
Popularized scientific management and the use of Popularized scientific management and the use of financial incentives in the late 1800s.financial incentives in the late 1800s.
Incentives for SalespeopleIncentives for Salespeople
• Salary PlanSalary Plan Straight salariesStraight salaries
Best for: prospecting (finding new clients), account Best for: prospecting (finding new clients), account servicing, training customer’s salesforce, or participating in servicing, training customer’s salesforce, or participating in national and local trade shows.national and local trade shows.
• Commission PlanCommission Plan Pay is a percentage of sales results.Pay is a percentage of sales results.
Keeps sales costs proportionate to sales revenues.Keeps sales costs proportionate to sales revenues. May cause a neglect of nonselling duties.May cause a neglect of nonselling duties. Can create wide variation in salesperson’s income.Can create wide variation in salesperson’s income. Likelihood of sales success may be linked to external factors Likelihood of sales success may be linked to external factors
rather than to salesperson’s performance.rather than to salesperson’s performance. Can increase turnover of salespeople.Can increase turnover of salespeople.
• Commission-plus-Drawing-Account PlanCommission-plus-Drawing-Account Plan Commissions are paid but a draw on future earnings Commissions are paid but a draw on future earnings
helps the salesperson to get through low sales helps the salesperson to get through low sales periods. periods.
• Commission-plus-Bonus PlanCommission-plus-Bonus Plan Pay is mostly based on commissions.Pay is mostly based on commissions. Small bonuses are paid for directed activities like Small bonuses are paid for directed activities like
• Team (or Group) Incentive PlansTeam (or Group) Incentive Plans Incentives are based on team’s performance.Incentives are based on team’s performance.
• How to Design Team IncentivesHow to Design Team Incentives Set individual work standards.Set individual work standards. Set work standards for each team member and then Set work standards for each team member and then
calculate each member’s output.calculate each member’s output. Members are paid based on one of three formulas:Members are paid based on one of three formulas:
All receive the same pay earned by the highest producer.All receive the same pay earned by the highest producer. All receive the same pay earned by the lowest producer.All receive the same pay earned by the lowest producer. All receive the same pay equal to the average pay earned All receive the same pay equal to the average pay earned
• ProsPros Reinforces team planning and problem solvingReinforces team planning and problem solving Helps ensure collaborationHelps ensure collaboration Encourages a sense of cooperationEncourages a sense of cooperation Encourages rapid training of new membersEncourages rapid training of new members
• ConsCons Pay is not proportionate to an individual’s effortPay is not proportionate to an individual’s effort Rewards “free riders”Rewards “free riders”
• Employee Stock Ownership Plan (ESOP)Employee Stock Ownership Plan (ESOP) A firm annually contributes its own stock—or cash A firm annually contributes its own stock—or cash
(with a limit of 15% of compensation) to be used to (with a limit of 15% of compensation) to be used to purchase the stock—to a trust established for the purchase the stock—to a trust established for the employees. employees.
The trust holds the stock in individual employee The trust holds the stock in individual employee accounts and distributes it to employees upon accounts and distributes it to employees upon separation from the firm if the employee has worked separation from the firm if the employee has worked long enough to earn ownership of the stock.long enough to earn ownership of the stock.
• Put some portion of the employee’s Put some portion of the employee’s weekly pay at risk. weekly pay at risk.
If employees meet or exceed their goals, If employees meet or exceed their goals, they earn incentives. they earn incentives.
If they fail to meet their goals, they forgo If they fail to meet their goals, they forgo some of the pay they would normally have some of the pay they would normally have earned.earned.
Incentives for Managers and ExecutivesIncentives for Managers and Executives
• Short-Term Incentives: The Annual BonusShort-Term Incentives: The Annual Bonus
Plans that are designed to motivate short-term Plans that are designed to motivate short-term performance of managers and are tied to company performance of managers and are tied to company profitability.profitability.
• Issues in Awarding Bonuses Issues in Awarding Bonuses