Theories in designing incentives plan

What is the theory of Abraham Maslow

What is the theory of Abraham Maslow

Hierarchy of need

Frederick herzberge motivators lower level

hygiene,working conditions, salary, incentives

Frederick herzberge motivators Higher level

job content, challenges, recognition. (used this to create self-motivated workforce)

Victor Vrooms expectancy theory

Motivation= E x I x V

Bf skinner modification and reinforcement

• reward and punishment

• high performance=reward (more likely to repeat)

PIECEWORK PLANS

• worker is paid based on quantity produced

• commonly used in factories, garments, food businesses.

MERIT PAY

incentive plan where a salary increase is awarded based on performance.

Termed as annual increase

Merit pay

merit pay becomes part of the?

Basic pay

other adaptation of merit pay plan

Lump sum

SALARY PLAN

• company pays salespeople FIXED SALARY.

• can foster loyalty.

STRAIGHT COMMISSION PLAN

• pays people for result and only for result

• car sales industry (may commission every car na mabebenta)

COMBINATION PLAN

combination of salary and commission (70% base salary, 30% commission)

GAINSHARING

- form of compensation based on group or plant performance that doesn't become part of employee salary.

Joseph scanlon type in 1930

Scanlon Plan

Philosophy of Cooperation

manager and workers should rid of "we" and "us" bcoz it inhibits sense of ownership

company express their purpose and employees fully understand it

Identity

there should be careful selection and training of employees

Competence

employees should suggest improvement to the org, and executives decide if implement it.

Involvement system

if suggestion is implemented, all employees usually share in the savings

Sharing the benefit formula

underlaying principle for setting the org position and the reasons for providing such salaries to employees.

COMPENSATION PHILOSOPHY

2 TYPES OF COMPENSATION PHILOSOPHY

ENTITLEMENT PHILOSOPHY

PERFORMANCE PHILOSOPHY

employees receive salary increase every year regardless of performance

ENTITLEMENT PHILOSOPHY

this reflects pay increases base on differences in performance

PERFORMANCE PHILOSOPHY

additional pay to the base pay which is usually based on past performance/performance.

CONTINGENT PAY

employee is paid for every unit produced and the wage is determine by multiplying the number of units by the rate per unit.

PIECE RATE PLAN

tandard plan is set to complete a task. A bonus is given.

STANDARD HOUR PLAN

gives incentives to employees based on competency or knowledge in accomplishing their task. (E.g passing licensure examination etc.) (E.g teachers)

COMPENTENCY BASED PAY

org thinks what particular set of skills they want to pay.

SKILL BASED PAY

holistic approach to determine pay, look at all aspects of performance and how they contribute to the org.

CONTRIBUTION BASED PAY

belief that employees should be rewarded as stakeholders

ORGANIZATIONAL BASED PAY

pay scheme which gives credit to it's people on the achievement of the org high level of performance.

GAINSHARING

Employees are given special amounts or bonuses based on the profit of the organization. org set aside a portion of their profit for employees

PROFIT SHARING

- org use this pay scheme for products with fluctuating demands (shoes or clothes) just basic salary, no commission received per product sold

STRAIGHT SALARY OR NO COMMISSION

- most common type of payment for salespeople. guaranteed salary with commission on every sale.

SALARY PLUS COMMISSION

pay scheme which salespeople do not receive basic salary. They are paid only when they make sales so income is not guaranteed. They are encouraged to put more efforts to seal in more sales.

COMMISSION ONLY

- also a commission only scheme.

- allotted commission is already given in advance for a given period.

- each time a sale is made, the commission is deducted from the advance.

DRAW AGAINST COMMISSION

- commissions are based on the performance of the org. There is no definite rate or amount employees can rely on.

PROFIT MARGIN

- pay scheme usually done in teams

- whatever total sales achieved in particular territory or area, commissions are equally paid for each sales representatives.

TERRITORY VOLUME

- there's a basic salary and commission but the commission has capped or limit.

CAPPED COMMISSION

- for aggressive and hardworking sales representatives

- more sales higher commission percentage rate they get

PERFORMANCE GATE

WHAT IS YOUR COMFORT FOOD

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