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Copyright © 2015 Pearson Education, Inc. Learning Objectives Explain how you would apply four motivation theories in formulating an incentive plan. Discuss the main incentives for individual employees. Discuss the pros and cons of commissions versus straight pay for salespeople. Describe the main incentives for managers and executives. Name and describe the most popular organization-wide incentive plans. After studying this chapter, you will be able to: 1. Explain how you would apply four motivation theories in formulating an incentive plan. 2. Discuss the main incentives for individual employees. 3. Discuss the pros and cons of commissions versus straight pay for salespeople. 4. Describe the main incentives for managers and executives. 5. Name and describe the most popular organization-wide incentive plans. Copyright © 2015 Pearson Education, Inc.
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Copyright © 2015 Pearson Education, Inc. 12-1
Benefits and Services
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Copyright © 2015 Pearson Education, Inc.
1. Explain how you would apply four motivation theories in formulating an incentive plan.
2. Discuss the main incentives for individual employees.
3. Discuss the pros and cons of commissions versus straight pay for salespeople.
4. Describe the main incentives for managers and executives.
5. Name and describe the most popular organization-wide incentive plans.
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Learning Objectives
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Explain how you would apply four motivation theories in
formulating an incentive plan.
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Copyright © 2015 Pearson Education, Inc. 12-4
Money and Motivation
Strategy
Performance
Incentive Pay
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Copyright © 2015 Pearson Education, Inc. 12-5
Motivation and Incentives
Herzberg’s
Two-Factory
Theory
Deci and
demotivators
Hygiene
Motivators
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• Expectancy
Theory, Victor
Vroom
Motivation and Incentives
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o Behavior modificationo Incentive pay terminologyo Employee incentives and the law
Motivation and Incentives
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Copyright © 2015 Pearson Education, Inc. 12-8
• Money and motivation• Motivation theories• Incentives• Terminology• The law
Review
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Copyright © 2015 Pearson Education, Inc. 12-9
Discuss the main incentives for individual
employees.
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Copyright © 2015 Pearson Education, Inc. 12-10
Individual Employee Incentive and Recognition Programs
• Piecework planso Straight
pieceworko Standard hour
planso Pros and cons
• Merit pay as an
incentiveo Differential pay
increaseso Merit pay options
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• Incentives for professional employees• Nonfinancial and recognition-based
awardso Incentives managers can use
• Online and apps supported awards• Job design
Individual Employee Incentive and Recognition Programs
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Copyright © 2015 Pearson Education, Inc.
IMPROVING PERFORMANCE: HR Tools for Line Managers and Entrepreneurs
For motivation:
1. Employees need a doable goal and agree
with it
2. Recognition either alone or in combination
with financial rewards
3. Social recognition (such as compliments)
as positive reinforcement on a day-to-day
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IMPROVING PERFORMANCE: HR as a Profit Center
Research:• Performance was compared in stores using
and not using financial and nonfinancial incentives
• Measured gross profitability, drive-through time, and employee turnover
• Financial and nonfinancial incentives improved employee and store performance
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• Piecework• Merit pay• Incentives for professionals• Nonfinancial rewards• Online• Job design
Review
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Copyright © 2015 Pearson Education, Inc. 12-15
Discuss the pros and cons of commissions
versus straight pay for salespeople.
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Copyright © 2015 Pearson Education, Inc. 12-16
• Salary plan• Commission plan• Combination plan• Maximizing sales force results• How effective are your
incentives?
Incentives for Salespeople
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Improving Performance Through HRIS: How Effective Are Your Incentives?
• With the aid of VUE Compensation
Management® the sales manager can
analyze compensation and performance
data, conduct “what-if” analyses and
reports, and conduct trend analyses.
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Copyright © 2015 Pearson Education, Inc. 12-18
• Types of sales
incentives• Maximizing results• Effectiveness
Review
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Copyright © 2015 Pearson Education, Inc. 12-19
Describe the main incentives for managers
and executives.
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Copyright © 2015 Pearson Education, Inc. 12-20
• Strategy and the executive’s long-term and total rewards package
• Sarbanes-Oxley Act• Short-term incentives, annual bonus
o Eligibilityo Fund sizeo Individual performanceo Formula
Incentives for Managers and Executives
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Incentives for Managers and Executives
• Strategic long-term incentiveso Stock optionso Stock option problemso Other stock planso Ethics and incentives
• Other executive incentives
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IMPROVING PERFORMANCE: HR Practices Around the Globe
• Chinese companies studied to determine if new incentive plans affected company performance
• Researchers compared performance of those with management stock-option plans and a control group without plans
• Differences found between private and government controlled companies
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• Strategy and long-term incentives• Federal law• Short-term incentives• Strategic long-term incentives• Other incentives
Review
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Copyright © 2015 Pearson Education, Inc. 12-24
Name and describe the most popular
organization-wide incentive plans.
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• Designing team incentiveso Engineered standardso Pros and cons
• HR inequities that undercut team
incentives
Team and Organization-Wide Incentive Plans
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Team and Organization-Wide Incentive Plans
• Profit-sharing plans• Scanlon plans• Other gain-sharing plans• At-risk pay plans• Employee stock ownership plansBroad based
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Incentive Plans in Practice: Nucor
• The production incentive plan at Nucor steel also has a:o Department manager incentive plano Professional and clerical bonus
plano Senior officer incentive plan
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• Team incentives• Inequities• Profit-sharing• Scanlon and gain-sharing• At-risk• ESOPs
Review
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Copyright © 2015 Pearson Education, Inc.
Improving Performance at The Hotel Paris
• Do you agree with the measurable criteria Lisa set for the new incentive plan?
• Given what you know about the Hotel Paris’s strategic goals, list specific behaviors you would incentivize for front-desk clerks, hotel managers, valets and housekeepers.
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Hotel ParisStrategy Chapter 12
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