Module 8: Incentive Compensation

What is Incentives?

• 1. Are those that reward employees using the profits of the enterprise as a basis.

• Rewards given to employees for performing beyond the standard requirements.

• Pays individual employees based on the number of units produced by each.

• • Payment given to employees for good performance.

designed to motivate the individual employees to perform beyond standard requirements.

• Individual Incentive Plan

• Piece-rate System

• Merit Pay

• Bonuses

are those designed to reward work teams, project members or departments. Instead of individual output, the emphasis of group incentive is on group output.

• Organizational Incentive Plan

• Profit-Sharing plan

• Group Incentive Plan

• Combination plans

are rewards designed to cover all employees in an organization. It consists of gain sharing, profit sharing, and employee stock ownership.

• Profit-Sharing plan

• Gain Sharing Plans

• Employee Stock Ownership plan

• Organizational Incentive Plan

this type of incentive plan pays individual employees based on the number of units produced by each.

• Merit Pay

• Commissions

• Piece-rate System

• Bonuses

a form of incentive usually paid to sales employees.

• Commissions

• Salary
• Bonus
• Profit Sharing

an extra payment given to employees for good performance.

• salary increase
• commission
• bonuses

• overtime pay

this is an individual pay increase based on the rated performance of individual employees in a previous time period.

• Merit pay

• Cost of living adjustment
• Bonus payment
• Salary cap increase

these are company-wide group incentive plans that provide additional pay to employees based on group performance.

• Gain sharing plans

• Commission-based earnings
• Group sharing plans

• Individual performance bonuses

are those that reward employees using the profits of the enterprise as a basis.

• Profit-sharing plan

• Stock options
• Commission plan

• Profit based plan