Human resource exam

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1. Identify the characteristics and advantages of effective incentive programs.

2. Describe several common individual incentive programs and situations in which such programs might be effective or ineffective.

3. Describe several common group incentive programs and situations in which such programs might be effective or ineffective.

4. Identify four general categories of employee benefits and several factors to consider when developing benefit plans.

Managing Hospitality Human Resources Chapter 9: Incentive and Benefits Administration

General Compensation Policy

• Incentives or benefits often combined with wages or salaries to form a total compensation package

• Pay and performance have been linked together

• Question is?? – not whether to offer incentives – BUT how to structure such programs

Effective Incentive Programs • Must be directed with clear specific goals • Must be room for improvement • Tied to increases in the desired performance • Goals must be

– Fair and measurable – Attainable

• Rewards must be – Substantial enough to encourage effort – Linked to output, not time invested – Administered quickly to reinforce its reason – Valuable to those earning it

Advantages of Incentive Programs

• Retain quality employees • Increase productivity • Reduce labor costs • Increase employee focus on company goals What else???

Individual Incentive Programs Most useful when the work involved is

independent 6 different types: • Piecework incentive programs

– rewards employees who exceed established minimums of productivity

• Standard hour incentive programs – number of units completed per hour

• Commission programs – provide a series of rewards for each goal attainment

Individual Incentive Programs

• Bonus plans – Based on combination of base and incentive pay

• Pay for knowledge (or skills) – Determines employee base wages and rewards on

goals employee reaches beyond those required by the current job

• Merit pay – Links rewards to performance – Can be one time payment or base pay % increase

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What Would You Do?? • You are an Executive Housekeeper at a mid-size

property. You currently have a system in place housekeeping staff is paid by the hour. Recently, a group of employees approached the GM about eliminating this compensation program and replacing it with a piecework system. The GM wants you to: – develop a theoretical piecework system for

room attendants – analyze the advantages and disadvantages of

such a system

Group Incentive Programs

• Most useful when cooperation and coordination are the program’s goals

& • When managers believe that teamwork is an

appropriate part of the organizational goal – The most common types of group incentives are

generally characterized as gainsharing programs – Cost-saving plans reduce the amount of cash

required to operate a business

Group Incentive Plans

• Profit-sharing plans – which contend that if employees can improve

profits by reducing costs or streamlining productivity, they should share in that profit.

– The three common types of profit sharing plans • cash plans • deferred plans • combination plans

Group Incentive Plans

• Employee stock ownership plans (ESOPs) – used in many hospitality companies including

Marriott – establishes an account for each employee in a

company – the company distributes either cash or stock into

employee accounts based on employee contributions to the company or its profits

• Two common ESOPs are ordinary ESOPs and leveraged ESOPs

Money vs. Merchandise • Merchandise

– Has a longer lasting effect than money – Constantly reminds employees of the incentive for

the reward – Can be a source of pride for an employee

• Money – Allows an employee to purchase whatever goods

or services are needed or desired – May be particularly attractive to employees who

have difficulty making ends meet on a regular basis

Disadvantages of Group Incentive Plans

• Even when employee performance exceeds expectations, employees suffer when the company has a bad year

• Free riders • Group incentive plans result in an indistinct

connection between pay and the individual efforts of each group member

• Group incentives can cause resentment

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Employee Benefits

• 70% of employee compensation in the U.S. is paid in salaries and wages

• 30% of employee compensation is paid in benefits

• Benefits offered by most companies include – Mandatory benefits – Optional or voluntary benefits – Pension and retirement benefits – Miscellaneous benefits

Mandatory Benefits

• Social Security – provides retirement income, disability income,

Medicare, and survivor benefits

• Unemployment compensation • Workers’ compensation provides

– compensation for employees who become disabled or who die at work, regardless of who is at fault

Voluntary Benefits • Group life insurance coverage

– usually based on annual earnings of the employee – most plans provide employees the opportunity to

purchase additional coverage

• Group health insurance – most costly benefit

• Health maintenance organizations • Preferred provider organizations • Self-insurance

Pension and Retirement Benefits

• Contributory retirement plans – which both the employer and employee

contribute to retirement accounts – most popular 50 cents contributed by company

for every dollar contributed by employee

• Non-contributory retirement plans – only the employer contributes to employee

retirement programs.

Pension and Retirement Benefits • Defined contribution plans

– “money purchase” or “profit-sharing” plans – require an account to be created for each employee, where

fixed-rate contributions are made

• Under defined benefit plans – retirement benefits depend on length of service and average

earnings of employees during employment

• The Employee Retirement Income Security Act of 1974 (ERISA) established – reporting requirements, fiduciary responsibilities and

guidelines for participation, vesting, and funding for retirement and pension plans

Pension and Retirement Benefits

• Individual Retirement Accounts (IRAs) – many of these tax-deductible accounts became

available to employees who already had retirement accounts with their employers

• Salary reduction plans – also known as 401(k) plans and capital accumulation

plans – allow employees to make tax-deferred contributions to

retirement accounts in company profit-sharing plans

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Other Benefits

• Education benefits • Employee assistance

programs (EAPs) • Child care programs • Flexible benefits plans • Long-term care

policies

• Pay for time not worked

• Paid leave bank • Flexible work

schedule • Maximum work hours