Avoid Vs Incentive Pay

The salary of professional athletes is a widely debated topic across the United States in this current period of time. Many people are undecided on the matter; are the wages that professional athletes are paid reasonable, or ridiculous? Though it is commonly argued that these athletes don’t deserve the impressive salaries they receive, when all the facts have been stated, it is only logical to say that they do.

Quality of employees work is very critical for company’s success. If planned properly, incentive pay plans may increase employee’s interest in providing better service. This paper discusses

Compensation systems can take on many forms, all of which have positives and negatives related to it. However, certain components are noted to be determinants of solid compensation plans. One agreement of a solid compensation system is the use of incentives. “Clearly a successful companies set objectives that will provide incentives to increase profitability” (Needles & Powers, 2011). Incentive bonuses should be measures that the company finds important to long-term growth. According to Needles & Powers (2011) the most successful companies long term focused on profitability measures. For large for-profit firms, compensation programs should offer stock options. The interweaving between the market value of a company’s stock and company’s performance both motivate and increase compensation to employees As the market value of the stock goes up, the difference between the option price and the market price grows, which increases the amount of compensation” (Needles & Powers, 2011). Conclusively, a compensation plan should serve all stakeholders, be simple, group employees properly, reflect company culture and values, and be flexible (Davis & Hardy, 1999; The Basics of a Compensation Program).

The challenges of an organization can influence the performance of an organization from a satisfaction with pay (Gomez-Mejia, Balkin, & Cardy, 2016, p. 296). The employee salary within an organization is a huge cause for turnover of employees (p. 296). First, the topic of employee salary is of great importance for the current and potential workforce (Lee & Lin, 2014, p. 1577). In addition, employees that have the perception on receiving lower compensation that others within their market will lack in performance and have a desire to leave the organization (p. 1577). In retrospect, the regular evaluation of compensation within the organization is vital to the reduction of employee turnover (p. 1577).

This paper looks at the opinions and issues involved within executive compensation. This is important because executive compensation is such an integral part of a company or organization’s functions. Executives are the ones tasked with making the decisions within an organization, and their pay can sometimes be linked to how well or how not well their decisions pan out. To look at these opinions, research and high quality analyses from various data sources were used. Some of these sources included the in-class textbook, “Compensation” by George Milkovich, Jerry Newman, and Barry Gerhart. While other sources used, included peer reviewed journals as preferred by the professor. All of these sources were used to show the relevance between executive compensation and compensation management as an entirety. The results are across the board; there are issues and opinions that clearly contradict each other and individuals take many different stances on the topic of executive compensation. The conclusion is that this will continue to be an ongoing and sensitive topic to discuss within organization structures and plenty more research and data will arise for individuals to gain further and deeper understanding of the complex nature of executive compensation.

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

While these citizen protests and legislative actions could be an overreaction to a few isolated cases of executive compensation excess, the data suggests otherwise. According to the AFL-CIO (2013), executive pay has increased dramatically over the past several decades compared to worker compensation. In 1982, the pay ratio between executives and workers was 42:1, but by 2012 it had increased to 354:1. This 8.4-fold differential in compensation suggests that the productivity of executives has also increased 8.4-fold relative to productivity of workers. If executive pay is positively correlated with a firm's bottom line, then higher pay should predict success. Unfortunately, researchers have found the opposite to be true.

Pay for performance systems have further been proven to have two advantages for organizations: attracting more high-quality employees and motivating employees to exert more effort at their jobs. (Gordon, Kaswin) This paper will show the positive benefits of performance pay as

This article examined the necessity of changes required to traditional reward systems in order for employees to remain motivated and productive in the workplace (Lawler & Worley, 2006).The changes that must occur are in response to shifting environmental demands, with reward systems and motivational tactics holding exceptional importance to the ongoing success and longevity to the organization. The article then emphasizes the ineffectiveness of traditional reward systems, such as merit pay. This is largely attributed to how merit pay salary increases are small and become a permanent part of an individual’s pay (Lawler & Worley, 2006). As a result, the relationship between pay and performance is weak and not particularly motivating. As a more effective alternative, companies should look to implement reward systems such as bonuses in the form of short-cycle business periods, as they have shown to be effective motivators as well as flexible enough to compensate for organizational changes. Lawler & Worley (2006) concluded that “traditional reward systems lead to lack lustre performance, and that in order to create a high performance organization, companies must employ different reward systems that motivate performance, reward change, and encourage the development of individual and organizational capabilities” (p.5).

The goal of compensation in our case, is to attract and encourage executives to diligently pursue the interest of the shareholders that have a stake within the firm. Richard Long (2010) discuses the steps of formulating a strategic compensation plan which involves; the defining the required behavior, role of compensation, determine the compensation mix, compensation level, and evaluating the proposed strategy. If we want to attract the best and most talented individual to work as the executive of a firm, the package must be attractive enough to pull the individual already making millions to work at another firm. Some typical compensation packages for executive pays include; cash/base salaries, bonuses, stock options, and stock ownership (Richard, 2010). The executive compensation proposal from the board of directors / shareholders consist of mainly stock options, restricted stock, and long term- contracts and retirement plans, which shareholders use to motivate the CEO to maximize the firm value (Martin, 2006). Most of the wealth comes from the stock options, in which the CEO is more inclined to raise the firm’s stock value over time to produce better value for shareholders which in return, better compensation for the CEO. Martin (2006) also noted it is important the stock options are more for long term

The relationship between executive compensation and firm performance is a topic of major concern amongst academics, professionals, and regulators. In an effort to identify a relationship between executive pay and firm performance, scholars have conducted research since 1925 and have established that compensation packages are the primary means of incentivizing managers to achieve certain financial targets or goals. These goals include certain performance measures that can be broken down into three main categories: accounting based, measures, market based measures, and non-financial based measures. Additionally, compensation packages have become an increasingly researched topic due to the surge in levels of compensation in

Incentive based compensation plans are one of the most conversed topics organizations that have been dealing with for quite some time. There have been several philosophies, formulas, and plans used but in the end, each type of plan has created unfavorable and optimistic results. The questions have always been whether the positive that comes from incentives plans are worth the challenges they create. In examining some of the plans that offer individuals, team based, and long-term incentives, they all vary in different ways that they are applicable, administered and designed, and beneficial to the organization’s objectives.

The purpose of this report is to review 3 different analyzed employee compensation strategies that could potentially benefit your corporation if accurately executed. As a business you must remember that Employee Compensation is key to identifying as well as rewarding your employees, for their exceptional performance and contributions to the company’s success rate

To motivate employees to work towards reaching organizational goals, managers frequently depend on some form of enticement. Beyond monetary compensation, awards and additional types of acknowledgment can be given, and the ability to choose a work schedule is a possibility. A reasonable pay system, which would be an incentive for individuals and groups to achieve organizational goals, is a hardship manager’s face (Jones & George, 2011). Within the company that I work for, every quarter awards are presented to Customer Service Agents who have maintained a 95 percent or above quality score. Monetary awards are given out as well as time off coupons.

Compensation: Definition, Please? Society Stockholders Managers Employees Global Views—Vive la différence Forms of Pay Cash Compensation: Base Cash Compensation: Merit Pay/ Cost-of-Living Adjustments Cash Compensation: Incentives Long-Term Incentives Benefits: Income Protection Benefits: Work/Life Focus Benefits: Allowances Total Earnings Opportunities: Present Value of a Stream of Earnings Relational Returns from Work The Employment Relationship Combines Transactional and Relational Returns Variations in Transactional and Relational Expectations A Pay Model Compensation