) Managing Compensation
Pay-for-Performance: Incentive Rewards
Is the success of an incentive pay plan depends on the organizational climate in which it must operate employee confidence in it, and its suitability to employee and organizational needs. Importantly, employees must view their incentive pay as being equitable and related to their performance. Performance measures should be quantifiable, be easily understood, and bear a demonstrated relationship to organizational performance. Types of Incentive Plans it have individual, group, enterprise. Individual is Piecework, Bonuses Merit pay, Incentive awards, Professional employee incentive plans, Sales incentives, Executive incentive plans and Lump sum merit pay. Group is Team compensation, Scanlon Plan, Improshare. Enterprise is Profit sharing, Stock options; Employee stock ownership plans (ESOPs). The advantages of Incentive Pay Programs it can Incentive compensation is directly related to operating performance. If performance objectives (quantity and/or quality) are met, incentives are paid. If objectives are not achieved, incentives are withheld. And incentives are a means to reward or attract top performers when salary budgets are low.