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Incentive Plans

According to an essay published on the BusinessTown.com website, the right incentive plan properly implemented can quickly drive an organization ahead and a poorly designed plan can cause problems and create resentment. Years ago, the only employees offered incentive pay were sales personnel and people working on piece meal workers and senior management. Today, incentive plans are becoming the norm rather than the exception in corporate America. Incentive compensation is an important part of any compensation plan. Incentive pay shows appreciation and creates a sense of participation in the organization's well-being. A properly designed incentive plan can also help encourage teamwork and give each employee an extra push to excel. Profit-sharing plans are probably the most widespread incentive-pay programs at larger corporations. An alternative is an individual bonus incentive program. The annual payout under this program is determined by a subjective evaluation of each person's performance throughout the year. The advantage of this arrangement is that there is complete flexibility if an employee has an extraordinary accomplishment or makes a significant contribution (Managing People - Compensation - Choosing Incentive Plans, 2003).

According to Thomas J. Atchison published on the ERI Economic Research Institute website, most reports of experience with incentive pay plans suggest that wage incentives result in greater output per hour worked, lower unit costs, and higher employee earnings. Reports of incentive pay plan results often cite employee earnings increases of 10 percent to 70 percent and cost decreases of 25 percent to 65 percent. Typically, these reports are anecdotal rather than scientific since usually organizations do not attempt to determine the source of change, or bother to compare results generated by employees eligible for incentive compensation and the work performance of a control group not entit

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Incentive Plans. (1969, December 31). In LotsofEssays.com. Retrieved 05:53, March 28, 2024, from https://www.lotsofessays.com/viewpaper/1696524.html