Types of Individual Incentive Plans

Piecework plans Management incentive plans Behavior encouragement plans Referral plans

Individual Incentive Plan Advantages

Helps relate pay to performance Promotes equitable distribution of compensation

Helps retain best performers

Compatible with Americas individualistic culture

Group Incentive Plans

Rewards employees for their collective performance Use has increased in industry

2 types

Team - based or small group Gain sharing

Allocation Methods

Equal incentive payments Differential payments based on contribution to goals Differential payments according to base pay

Company - Wide Incentive Plans

Rewards employees when company meets performance standards

2 Types

Profit sharing plans Employee stock option plans

Profit Sharing Plans

Current profit sharing plans Deferred profit sharing plans

Profit Sharing Formulas

Fixed-first-dollar-of-profits Graduated first-dollar-of profits Probability threshold formula

Competitive Strategies

Lowest - cost

Lower output costs per employee Individual & group incentive plans Behavioral encouragement plans Unique product or services Creative, risk - taking employees Long - term focus Team - based incentives

Differentiation

But Now, Back to Kohn

To Review + Deming Pay is NOT a Motivator + Herzberg Pay CAN BE a De-motivator

So Kohn suggests: Pay People Fairly and Generously Do Your Best To Make Sure They Do NOT Feel Exploited Do Away with Incentives