Presentation 1

 PERSENTAION
 GROUP D
 NAME
 SADAK DURAN ALI
 ABSHIRO ISAK ABDI
 HAMDI IBRAHIN HASSAN
 COURSE : HRM
 LECTURER: ABDIRAHMAN (DIINAARI)
 DATE 1/6/2023
PERSENTAION
PAY PERFORMANCE AND

FINANCIAL INCENTIVE
AFTER STUDY THIS CHAPTER YOU SHOULD BE ABLE
TO
 Discuss the main incentives for operations employees

 Describe the main incentives for managers and
executives
 Discuss the pros and cons of incentives for salespeople
 Name and define the most popular organization-wide
variable pay plans
 Outline the steps in developing effective incentive plans
 Establish an incentive plan
PAY AND PERFORMANCE
 is the practice of offering employees financial rewards

for optimizing their performance.
 Competition, shareholder value, and turbulence.
 Businesses need an edge • Question:
What do you think that edge is?
 Pay attention.
Money and Motivation
 Incentives motivate workers

 See “systematic soldiering” without them
 Taylor standardized a fair day’s work
 Which led to the scientific management movement
 Which in turn led to modern day HR practice
Types of Incentive Plans
1) Individual
2) Group
3) Profit sharing
4) Employee group
5) Variable pay
Manager’s Performance Bonus
 Bonus for managers is either individual or

corporate performance based or both
 Split it with part based on individual
performance rest on corporate performance
 Never give outstanding performers too little
 Never give poor performers normal or average
awards Multiplier approach for bonus
Performance Plans
 Executives do not prosper unless the company

does.
 Executives have some “skin in the game”.
 Value is contingent on financial performance.
Long Term Incentives.
 Stock options
 Different stock option plans
 Performance plans
 Cash plans
 Other plans
Long Term Incentives (Cont.)..
• Other Plans
• Stock appreciation
• Performance achievement
• Stock options
• Phantom stock
• Performance Plans
• Cash Versus Stock Options
Stock Option
 Definition
 Astock optionis the right to purchase a stated
number of shares of a company stock at a
preset price at some time in the future.
 A mega-option grantis a large, upfront stock
option grant in lieu of annual grants .
 Some stock plans are different for each
employee .
 A restricted stock option is an option grant
which has constraints on its use.
Incentives for Managers and Executives
 Long-term incentives:
 Stock options
 is the right to purchase a specific number of shares of
company stock at a specific price during specific period.
 Stock option problems
 the chronic problem with stock options is that they often
reward event managers who have lackluster
performance.
 Individual performance
 the third task is deciding the actual individual awards
Incentives for Managers and Executives (CONT…)
 Short-Term Incentives: The Annual Bonus

 As noted, most firms have annual bonus plans aimed at
motivating managers’ short-term performance.
 Short-term bonuses can easily result in plus or minus
adjustments of 25% or more to total pay.
 Three factors influence one's bonus:
1. Eligiblity.
2. Fund size.
3. Individual performance
Team and Group organization wide Incentive Plans
 How to Design Team Incentives:

 Firms increasingly rely on teams to manage their work.
 - They therefore need incentive plans that encourage
 teamwork and focus team members’ attention on
 performance.
Cont…
• Engineered standard:
• Given the costs and the ,it's sensible to analyze the
situation.
• Some employers set an engineered production standard
based on the output
The Impact of financial and no financial Incentives:
1. Financial Incentives.
2. Non financial Incentives .
3. Results
The five Building Blocks of Effective Incentive plans
1. Ask: Does it make sense to use an incentive here?

2. Link the incentive with your strategy.
3. Make sure the program is motivational.
4. Set complete standards.
5. Be scientific in analyzing the effects of the plan.
Incentives for Professional Employees
 Professional employees are those whose work involves

the application of learned knowledge to the solution of
the employer’s problems.
 They include lawyers, doctors, economists,
• and engineers.
Motivation and incentives
 The hierarchy of needs and abraham maslow:

 He made what may be the most popular observation on
with motivates people. he said that people have a
hierarchy of five types of needs:
1. Physiological (food, water, warmth)
2. Security (a secure income, knowing one has a job)
3. Social (friendships and camaraderie)
4. Self-esteem (respect)
5. Self-actualization (becoming a whole person)
Incentives for Salespeople
 Salary Plan:
 Straight salaries
• some firm pay salespeople fixed salarics the straight
salary approach makes it easier to switch territories or to
reassign salespeople, and it can foster sales staff loyalty.
• - the main disadvantage ,of course, is the straight salary
can demotivate high - performing salespeople
Cont…
• Commission Plan:
• straight commission plans pay salespeople for results,
and only for results.
• under these plan salespeople have the greatest
incentive.
Cont…
 Combination Plan:
 Most companies pay salespeople a combination of salary
and commissions, usually with a sizable salary
component.
 An incentive mix of about 70% base salary.
END
•END
THNKS FOR LISTENING AND
ATTENTION

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 PERSENTAION

PAY PERFORMANCE AND

 Discuss the main incentives for operations employees

 is the practice of offering employees financial rewards

 Incentives motivate workers

 Bonus for managers is either individual or

 Executives do not prosper unless the company

 Short-Term Incentives: The Annual Bonus

 How to Design Team Incentives:

1. Ask: Does it make sense to use an incentive here?

 Professional employees are those whose work involves

 The hierarchy of needs and abraham maslow:

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