3

Pay for Performance

and Financial Incentives

Copyright 2013 Pearson Education

Chapter 12-1

Learning Objectives
1. Explain how you would apply five
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
incentives for salespeople.
Copyright 2013 Pearson Education

Chapter 12-2

Learning Objectives
4. Describe the main incentives for
managers and executives.
5. Name and define the most popular
organization-wide variable pay
plans.
6. Outline the steps in designing
effective incentive plans.
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Chapter 12-3

Money and Motivation

Strategy

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Chapter 12-4

Explain how you would apply

five motivation theories in
formulating an incentive
plan.

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Chapter 12-5

Motivation and Incentives

Maslows
Hierarchy of
Needs

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Chapter 12-6

Motivation and Incentives

Hygiene

Herzbergs
Two-Factory
Theory
Deci and
demotivators
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Chapter 12-7

Motivation and Incentives

Expectancy
Theory, Victor
Vroom

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Chapter 12-8

Motivation and Incentives

Behavior modification
Incentive pay terminology
Employee incentives and the law

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Chapter 12-9

Review

Money and motivation

Motivation theories
Incentives
Terminology
The law

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Chapter 12-10

Discuss the main incentives

for individual employees.

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Chapter 12-11

Individual Employee Incentive

and Recognition Programs
Piecework plans Merit pay as an
o Straight
incentive
piecework
o Standard hour
plans
o Pros and cons
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o Differential pay
increases
o Merit pay options

Chapter 12-12

Individual Employee Incentive

and Recognition Programs
Incentives for professional employees
Nonfinancial and recognition-based
awards
o Incentives managers can use

Online and IT-supported awards

Job design
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Chapter 12-13

Review

Piecework
Merit pay
Incentives for professionals
Nonfinancial rewards
Online
Job design

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Chapter 12-14

ThePros and Cons of

Commissions vs. Straight
Pay Incentives for
Salespeople

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Chapter 12-15

Incentives for Salespeople

Salary plan
Commission plan
Combination plan
Maximizing sales force results
How effective are your incentives?

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Chapter 12-16

Review
Types of sales
incentives
Maximizing results
Effectiveness

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Chapter 12-17

Describe the main incentives

for managers and executives.

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Chapter 12-18

Incentives for Managers

and Executives
Strategy and the executives long-term and
total rewards package
Sarbanes-Oxley Act
Short-term incentives, annual bonus
o Eligibility
o Fund size
o Individual performance
o Formula
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Chapter 12-19

Incentives for Managers

and Executives
Strategic long-term incentives
o Stock options
o Stock option problems
o Other stock plans
o Ethics and incentives

Other executive incentives

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Chapter 12-20

Review

Strategy and long-term incentives

Federal law
Short-term incentives
Strategic long-term incentives
Other incentives

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Chapter 12-21

TheMost Popular
Organization-wide Variable
Pay Plans

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Chapter 12-22

Team &Organization-wide
Incentive Plans
Designing team incentives
o Engineered standards
o Pros and cons

HR inequities that undercut team

incentives

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Chapter 12-23

Team &Organization-wide
Incentive Plans

Profit-sharing plans
Scanlon plans
Othergainsharingplans
At-risk pay plans
Employee stock ownership plans

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Chapter 12-24

Review

Team incentives
Inequities
Profit-sharing
Scanlon and gainsharing
At-risk
ESOPs

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Chapter 12-25

The Steps in Designing

Effective Incentive Plans

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Chapter 12-26

The Five Building Blocks of

Effective Incentive Plans

Common sense
Linkages
Effort
Rewards
Standards
Contract
Measurement

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Chapter 12-27

Review

Copyright 2013 Pearson Education

Chapter 12-28

All rights reserved. No part of this publication may be

reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America.

Copyright 2013 Pearson Education

Chapter 12-29