Week 4 Discussion

Pay for Performance and Financial Incentives

Remember an HR focus is on developing pay plans based on salaries and wages. Incentives are important in any pay plan. It is extremely bene�cial to understand how managers use incentives to motivate employees. The main topics we’ll discuss here are money’s role in motivation; individual employee incentive and recognition programs; incentives for salespeople, managers, and executives; team- and organization-wide incentive plans; and employee engagement that adds further to other �nancial and non�nancial bene�ts that comprise the third component of employee compensation packages.

Money is Motivation

Many �rms and managers apply different perspectives to motivate the employees above and beyond the scheduled psychological contract commitment that they established with the �rm. Such perspectives include the pay-for-performance or the incentive plan. Incentive plans are pay-for- performance of what each of us accomplish. To go above and beyond what we are paid, �rms apply the term, variable pay, which in other words is an incentive plan. However, this feature is tied into a speci�c type of goal, which is achieved from metrics and measurements that the �rm would have established and exceeded. This is some type of pro�tability, through pro�t sharing or by the money paid in excess of salary for exceeding the speci�c expectations. Research some great incentives, both positive and negative, in order to get a better feel of this concept.

Different Incentives for Different Positions

In some instances, a variable pay incentive could be distributed to all the employees for meeting a targeted goal of the �rm or a speci�c department, or for a speci�c team achievement. In other instances, certain positions are paid only on the basis of an incentive—a motivating metric to achieve goals or sales above the expectations. Employees who work on full commission have an opportunity to earn unlimited income based on sales results. These results of course alternate based on performance quotas and metrics.

It is important to know the law of pay.

How People Prefer to Be Incentivized at

Work

Additional Materials

From your course textbook, Human Resource Management, review the following chapter:

Pay for Performance and Financial Incentives

From the South University Online Library, read the following article:

Financial Incentives, Professional Values, and Performance: A Study of Pay-for-Performance in a Professional Organization (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com.southuniversity.libproxy.edmc.edu/login.aspx? direct=true&db=edsjsr&AN=edsjsr.41683978&site=eds-live)

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