Incentive Plans Essay - 953 Words

Employee incentive plans go by many names. Successful company incentive programs will accomplish exactly what you want them to do if you plan them properly. In general, studies have shown that individual incentives are more effective than group incentives. Incentive pay, also known as â€Å"pay for performance† is generally given for specific performance results rather than simply for time worked (Dessler, 2011, p. 212). While incentives are not the answer to all personnel challenges, they can do much to increase worker performance (Dessler, 2011). Some kind of incentive pay is an important part of any compensation plan. Incentive pay shows appreciation and creates a sense of participation in the companys well-being that straight salary†¦show more content†¦The only drawback is if your sales area is unable to meet the goal and you miss the incentive, you have to be budget savvy for those months when there are no extra funds being generated from the incentive. If the e mployee works harder, but the work doesnt result in any increase in the profitability of the company, no additional compensation is paid (ABS, 2010). Under these dynamic compensation plans, employees are internally motivated to make more money which in turn drives profit-producing activities within the business (ABS, 2010). The key to turning these compensation plans into win-win situations for both the owner and the employee is having a professional review of the relationship between activities and costs so that the owner be sure that the plans are financially sound rather than being nothing more than guesswork where payouts are made without the certainty that profitability has been increased (ABS, 2010). Profit-sharing plans are probably the most widespread incentive-pay programs at larger corporations. They are generally company-wide and made available at least to all full-time employees (Dessler, 2011). The use of employee profit-sharing plans as an employee compensation scheme has increased significantly in the workplace. In the U.S., for example, about one in every four companies offers some type of profit-sharing plan.Show MoreRelatedIncentive Plans927 Words   |  4 PagesIncentive Plans MGT/431 February 21, 2012 Incentive Plans Organizations provide incentive plans to employees as motivation to reach the objectives and goals of the company. Incentives are given to personnel to encourage them to do his or her best. Incentive plans in any business might include bonuses or raises, stock option plans, or other forms of incentives. This is in exchange for the employees who work harder, better, or faster in accordance with the organizations goals and objectivesRead MoreBenefits Of Employees And Employees At The Workplace Is The Utilization Of Incentive Pay Plans1254 Words   |  6 Pagesworkplace is the utilization of incentive pay plans. 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