2. History
Fredrick Taylor , 1800s , Midvale Steel Co.
Used financial reward for workers who produce more than standard.
Scientific Management Movement introduced by Taylor.
Financial incentive to Boost Employee performance and enjoy
Productivity gain
Not successful , because worker reduce quality to achieve more
quantity of goods / Managers did not satisfied in this way
3. Motivation and Incentives
The Hierarchy of needs theory by Maslow
Motivators theory by Herzberg
Demotivators Theory by Edward Deci
Expectancy theory by Victor Vroom
4. Individual employee incentive and
recognition programs
Piecework plans: employee will receive piece rate for each unit
they produce.
Straight piecework: strict proportionality between result and reward
regardless of output.
Standard Hours Plan: Worker will get a premium equal to the
percent by which his performance exceed the standard.
PRO: More goods will manufacture , Cons: Quality possibly decline
5. Incentive for Professional
Employees
Financial and recognition :
Higher payment for expert who works on important projects for
company
Non Financial and Recognition based award: ( Recognition program)
Employee recognition
Gift certificates
Special events
Merchandise incentive
Group/ Individual Travel
6. Incentive for salespeople
Salary Plan : Hard to keep good salespeople
Commission Plan : S.P. salary will fluctuate during recession and
boom time.
Combination Plan : Company give a floor for salespeople income ,
some managers believe that this method reduce salesperson's
incentive for more activities.
7. Incentive for managers and
executives
Long term and total rewards package
Short term incentive and annual bonus:
Eligibility : annually received by employees with attention to their
job/ title and position
Fund size : There is not any rule for this part.
Individual Performance: Mostly managers and executive will receive
more than lower levels.
( Split- Award Plan: 2 kinds of bonus for managers , first: base on
Individual effort , second: organization overall performance)
8. Incentive for managers and
executives (cont.)
Stock Option : The right to purchase specific number of shares of
company at specific price and during specific period.
Problems of Stock Option :
1- Manipulated by managers
2- Volatility of economic circumstances