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    Chapter 9

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    FTU.CS2 Trần Vinh Quang

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    © All Rights Reserved
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    Chapter 9

    Uploaded by

    FTU.CS2 Trần Vinh Quang
    186 views38 pages

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    186 views38 pages

    Chapter 9

    Uploaded by

    FTU.CS2 Trần Vinh Quang

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 38

    Human Resource Management

    Sixteenth Edition, Global Edition

    Chapter 12

    Pay for Performance and


    Financial Incentives

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objectives (1 of 2)
    12.1 Explain how you would apply four motivation theories
    in formulating an incentive plan.
    12.2 Discuss the main incentives for individual employees.
    12.3 Discuss the pros and cons of commissions versus
    straight pay for salespeople.

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objectives (2 of 2)
    12.4 Describe the main incentives for managers and
    executives.
    12.5 Name and describe the most popular organization-wide
    incentive plans.
    12.6 Explain how to use incentives to improve employee
    engagement.

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.1: Explain How You
    Would Apply Four Motivation Theories in
    Formulating an Incentive Plan

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    Money’s Role in Motivation
    • Frederick Taylor
    • Popularized financial incentives
    • Need for formulating a “fair day’s work”
    • Spearheaded the scientific management movement
    • Popularized using incentive pay

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Incentive Pay Terminology
    • Pay-for Performance
    – Tie employees’ pay to the employees’ performance
    • Variable Pay
    – Performance-based incentive plan

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Linking Strategy, Performance, and
    Incentive Pay
    • Incentive pay
    • Tying worker pay to performance
    • Easier said than done
    • Sketchy research
    • Many plans incentivize the wrong behavior
    • Don’t motivate everyone

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Motivation and Incentives
    Theories that have relevance to designing incentive plans
    • Motivators and Fredrick Herzberg
    • Demotivators and Edward Deci
    • Expectancy Theory and Victor Vroom
    • Behavior Modification / Reinforcement and B.F. Skinner

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Know Your Employment Law

    Employee Incentives and the Law

    Let’s take a look…

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.2: Discuss the Main
    Incentives for Individual Employees

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    Individual Employee Incentive and
    Recognition Programs
    • Piecework
    – Earnings tied directly to what the worker produces
    – Straight piecework
    – Standard hour plan
    – Advantages and disadvantages

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Merit Pay as an Incentive
    • Merit pay as an incentive
    – Based on performance
    – Evidence is mixed
    • Merit pay options
    – Lump-sum merit increases
    – Tied to individual and organizational performance

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Incentive for Professional Employees
    • Making incentive pay decisions for professional
    employees is challenging
    • Dual-career ladders
    – One path for managers and another for technical
    experts

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Non-Financial and Recognition-Base
    Awards
    • Recognition program
    • Social recognition program
    • Performance feedback
    – Qualitative information
    – Quantitative information

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Trends Shaping HR: Digital and Social
    Media

    Recognition Programs

    Let’s take a look…

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Improving Performance: HR Tools for
    Line Managers and Small Businesses

    Financial Incentives for Motivation

    Let’s talk about it…

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    List of Recognition
    Figure 12-1 Social Recognition and Related Positive Reinforcement Managers
    Can Use
    • Challenging work assignments • Being provided with ample
    • Freedom to choose own work activity encouragement
    • Having fun built into work • Being allowed to set own goals
    • More of preferred task • Compliments
    • Role as boss’s stand-in when he or • Expression of appreciation in front of
    she is away others
    • Role in presentations to top • Note of thanks
    management • Employee-of-the-month award
    • Job rotation • Special commendation
    • Encouragement of learning and • Bigger desk
    continuous improvement • Bigger office or cubicle
    Source: Based on Bob Nelson, 1001 Ways to Reward Employees (New York: Workman Pub, 1994), p age

    19; Sunny C. L. Fong and Margaret A. Shaffer, "The Dimensionality and Determinants of Pay
    Satisfaction: A Cross-Cultural Investigation of a Group Incentive Plan," International Journal of Human
    Resource Management 14, no. 4 (June 2003), p 559 (22).
    age

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Job Design
    • Can significantly impact employee motivation and retention
    • Primary driver of employee engagement
    • Useful part of an employer’s total rewards program

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Improving Performance: The Strategic
    Context

    The Fast-Food Chain

    Let’s talk about it…

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.3: Discuss the Pros
    and Cons of Commissions Versus Straight
    Pay for Salespeople

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Incentives for Salespeople
    • Align:
    – how they measure and reward their salespeople
    – with their firms’ strategic goals.

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Types of Sales Incentive Plans
    • Salary plan
    – When the main task involves prospecting or account
    serving
    • Commission plan
    – Pays only for results
    • Combination plan
    – 60-70% base salary with 30-40% incentive

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Maximizing Sales Force Results
    • In setting sales quotas and commission rates, the goal is to
    motivate sales activity but avoid excessive commissions
    – Set Effective Quotas
    – Distinguish Among Performers
    • Enterprise Incentive Management (EIM)

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Sales Incentives in Action

    A car salesperson’s commission

    Let’s take a look . . .

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.4: Describe the
    Main Incentives for Managers and
    Executives

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Incentives for Managers and Executives
    • Managers play a crucial role in divisional and company-
    wide profitability, and employers therefore put
    considerable thought into how to reward them. Most
    managers get short-term and long-term incentives in
    addition to salary.
    – Short-term Incentives
    – Long-term Incentives

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Strategy and the Executive’s Long-Term
    and Total Rewards Package (1 of 4)
    • Sarbanes-Oxley Act
    – Affects how employers formulate their executive
    incentive programs
    – Personal liability

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Strategy and the Executive’s Long-Term
    and Total Rewards Package (2 of 4)
    • Short-term incentives and the annual bonus
    – Eligibility
    – Fund size
    – Individual awards

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Strategy and the Executive’s Long-Term
    and Total Rewards Package (3 of 4)
    • Long-term incentives
    – Stock options
    ▪ right to purchase a specific number of shares of
    company stock at a specific price during a specific
    period

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Strategy and the Executive’s Long-Term
    and Total Rewards Package (4 of 4)
    • Potential Problems
    – Short termism
    – Lack of range
    • Ethics
    – “People put their efforts where they know they’ll be
    rewarded.”

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Improving Performance: HR Practices
    Around the Globe

    International HR – Stock options

    Let’s talk about it…

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.5: Name and
    Describe the Most Popular
    Organization-Wide Incentive Plans

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Team and Organization-Wide Incentive
    Plans
    • How to Design Team Incentives
    – Pay incentives to the team based on the team’s
    performance
    • Evidence-Based HR: Inequities That Undercut Team
    Incentives
    – Often counterproductive

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    Organization-Wide Incentive Plans
    • Profit-sharing plans
    • Scanlon plans
    • Other gainsharing plans
    • At-Risk pay plans
    • Employee Stock Ownership Plans (ESOPs)
    • Broad-based stock options

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Incentive Plans in Practice: Nucor
    • Employees can earn bonuses of 100% or more of base
    salary, and
    • All Nucor employees participate in one of four
    performance-based incentive plans.

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Learning Objective 12.6: Explain How to
    Use Incentives to Improve Employee
    Engagement

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Employee Engagement Guide for
    Managers
    • Make improving employee engagement a formal target of
    your compensation plan
    • Appraise and incentivize your supervisors partly based on
    whether they take steps to improve their subordinates’
    engagement
    • Let employees participate in devising the compensation
    plan

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved


    Chapter 12 Review

    What you should now know….

    Copyright © 2020 Pearson Education Ltd. All Rights Reserved

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