13,14 Rewarding Business Performance

7/28/2019 13,14 Rewarding Business Performance

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Ch 13 Rewarding for Businessperformance


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Rewarding for Business performance

Here financial reward are given related tobusiness or organizational performance.


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Types of schemes

1. Profit sharing

2. Share ownership scheme

3. Gain sharing


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Meaning of Profit sharing

Is a scheme whereby certain percentage of theprofit is distributed at fixed intervals usuallyannually or semi- annually in some definite ratioto all employees who have been the employees ofthe firm for a stated term.


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Basis of calculation

1. Pre- determine formula : a fixed % of profit isdistributed.

2. No predetermine formula : top managementdecides how much to distribute.

3. Threshold formula : a threshold is set below

which no profits will be distributed and amaximum limit is defined.


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Methods of profit sharing

1. Cash payment plan profit in cash

2. Deferred payment plan profit is held in trustfor him , to be paid either in installments or asretirement benefits.

3. Combination payment plan : cash + deferred

payment plan .4. Stock ownership Plan : enables employees to

acquire company stock at concessional rates.


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Share ownership schemes / ESOP

Also called as employee stock ownership plan(ESOP)

It allows employees to become owners of stockin the company they work for.

Shareholder can sell stock tax free.


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Forms of share ownership plan

1. Share Incentive schemes

2. Save as you earn ( SAYE)


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1. Share Incentive schemes

It allows employees to buy share or companygives them directly to employees.

It includes :

1. Free share

2. Partnership share

3. Matching shares : company gives 2matching share for each partnership share anemployee buys.

4. Dividend shares


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2. Save as you earn ( SAYE)

Employees enter a special saving contract thatdeducts money from their pay to buy optionsthat allow them to buy company share in 3, 5, or7 years time at today's price or at a discount ofup to 20 % of that price.


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3. Gain sharing

An improvement or gain in companyperformance it distributes sharing of benefitswith employees.

Generally it is done in group or all employees.


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Ch 14 Recognition Scheme

The scheme recognize the past performance.

It is a non cash reward.

It even includes Thank you or public recognitionfrom leader or CEO.


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Principles of Recognition

1. It should be immediate

2. Delivered personally

3. Should be valuable

4. Should be direct and not on phone.


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Types of Recognition

1. Day to day Recognition

2. Public Recognition

3. Formal Recognition


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Prepared by : Ms. Shirufi Daruwala

Documents

13,14 Rewarding Business Performance