Best Performance Incentive Plan

The Pay for Performance incentive program is a new program being implemented across the United States to measure the quality of care within health care organizations. There are both positive and negative aspects of the Pay for Performance program that are based on information received from organizations who have implemented the program within their organization. The regulations the Federal Government has developed requirements for hospitals who serve Medicare patients as well as establishing four metrics that are used to measure the quality of the employee. Employees who work at an organization are given the opportunity to opt out of the Pay for Performance incentive program. This gives the employee the ability to make decisions on their income potential. Pay for Performance is a new aspect of the health care industry and will be used within the industry to measure quality of employees for the foreseeable future.

Having buy-in from key stakeholders is crucial for the success of an incentive pay system. For example, if top management does not support such a program, lower-level managers will place little importance on effectively administering the program. Hence, a lack of top management support often leads to a lack of accountability. (Gordon, Kaswin)

Traditionally, most employers compensated their employees based on a set hourly wage or annual salary (Martocchio, 2013). Today, there are many companies that utilize incentive pay programs to replace part or all of the base pay to manage payroll expenses and to connect pay to performance. Incentive pay, also referred to as pay-for-performance or variable pay, rewards individuals for partly or completely achieving a predetermined goal (Martocchio, 2013). Basically, incentive pay is compensation, outside of the employee’s regular wages, which can vary depending on whether or not the employee achieves predetermined goals (Martocchio, 2013).

Rewarding employees with bonuses for a job well done is one of the more popular ways of streamlining the payroll budget. As an employer you tie several stipulations to the employees’ job duties for them to obtain in order to receive the bonus. Bonus structures are no longer as popular as they were during the boom years, however, some employers still employ the idea and the performance of their employees proves that it still works. Although bonus plans have begun to disappear, the increased performance of individual employees through the rewarding of set goals has allowed bonus structures to withstand the test of time in the workplace. A structured bonus plan is a great way of rewarding those employees that are producers without killing a company’s budget. Implementing a sound bonus plan is a great way to encourage performance as long as the employee’s goals are attainable. Be careful however because a simple bonus plan to motivate employee’s performance can also be demotivating due to employee’s inability to attain the set goal. Implementing a ratio significantly outside of what is normal for the industry

Incentive plans are beneficial to an organization because it provides high productive results through teamwork; teamwork is an effective tool in an organization. For that reason, it is important to build an effective team and motivate them. The supervisor has the responsibility to motivate the employees; however, when incentives are given it will motivate the employee to do his or her best and in return the company will gain the maximum productivity of the employees (Businesstown.com, 2001). In the department I work for monetary incentives motivate the employees but nonmonetary incentives as simple as a candy bar or PTO work too.

Providing recognition to employees that have met the expectations of the company and give small rewards such as a day off, Starbucks gift card or a flexible schedule is one of the many ways a company to get results. In France there is a company who has done remarkably well with motivating their employees in a pharmaceutical company. “Our experience suggests that bonus schemes can be very motivational and result in a ‘win-win’ for company and employees alike — as long as they are well designed and properly implemented. (Turner et al., 2007).” This company’s strategy was to be fair across the board and allow the salespersons to make up to 40% in bonuses. Their process was known as the “Commitment Process” which aligns the interests of the individual and company harmoniously and incentive sales people to stretch their performance and maximize sales results; this resulted in low turnover rate and the employees felt that they were valued employees. In Ayame’s position it would be to her benefit to find a company with these values or convince management to change their style or they would lose her as an employee and others who might feel the same way.

Incentive pay is an important concept that allows an employee to be rewarded based on exceptional job performance. This is used to motivate employees into working both quickly and efficiently. In order to effectively utilize incentive pay, one must balance out payments between individual performances, group performances, and organizational performances.

A recommendation in this situation is to offer a monetary bonus to motivate employees. Most of the team members indicate that his or her employer benefit packages are highly competitive after reviewing the objectives. One team member indicates that having some of the nonmonetary benefits are just as important as the monetary benefits such as discounts on various items, opportunities for corporate travel, and appreciation events. One may also benefit from offering an annual bonus, which will give employees more initiative to provide better job performance. As an employee for a small, local government, understanding that many organizations must offer a smaller compensation package because of limitations on income sources is easy. Minimal travel time, lower costs for services, flexible work schedules, ability to earn and use “comp” time rather than using sick or vacation time, and having the chance to help a community and family are positive reasons to remain in such an organization.

Traditionally, all incentive plans are “pay-for-performance” plans. They pay all employees based on the employee’s performance (Dessler). Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them both in terms of salary and other benefits accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of rewarding employees for performance. It is very important for organizations to make sure that the incentive plans are well structured to need the needs of the employee and in return make the organization profitable. Giving incentive pay to employees that has not earned them destroys

A good manager or supervisor will implement a reward system. Employee award systems are used for motivation to ones employees, with the goal being not to just meet expectations but to exceed them performing at their best capabilities. This system includes all benefits monetary and non-monetary that proves to be worth something to the employee. Implementing a reward system for a human services organization will help ensure basic needs are met, competitive benefits are offered, benefits are equally distributed, and empoyees are treated as individuals. I will include intrinsic and extrinsic rewards in my system. “A suitable reward systems is essential to ensuring that an

Through my own personal experience, rewards are certainly a motivator of performance. I went from being rewarded for my performance through bonuses and annual merit increases, to being rewarded by the same variable pay program through the use of merit increases and an intrinsic reward system. Four years ago my organization was providing its top performers with decent pay including bonuses, annual merit increases, and job enlargement. However in the past three years my previous employer, a private for-profit higher education institution, went bankrupt and sold the company and most of their holdings to a private non-profit higher education institution. Leading up to the sale of the company, the previous employer informed us that they could no longer provide merit increases until there was improved performance from the employees. This was unacceptable for most of us in lower paying roles, however, they wanted us to work on employee motivation can

Compensating employees financially will often result in better performance and higher levels of motivation. Pay for performance plans are the most popular incentive plans in businesses today and would be ideal for Plastec to integrate into their new compensation plan. "For a compensation plan to motivate performance, employees must believe that good performance will lead to more pay, want more pay, not believe that good performance will leads to negative consequences, see that other desired rewards besides pay

The rewards, or lack of rewards, are not helpful for motivating behavior for this position. With nothing to strive for but a weekly paycheck, or keeping a job, there is nothing happening in this company that can motivate employees to perform above and beyond for the managers.

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.

An incentive pay program can reward employees who continue to produce superior work or encourage employees who already produce good work to best. Sometimes, use an incentive system when employees are lack of enthusiasm of getting down to work and improving things. If everyone in the same job classification gets the same pay, there is no real incentive to do an outstanding job (French, 1990). Various incentive plans used to motivate all employees such as production staff, sales staff, administrative staff and managerial and professional staff on an individual basis. To be improved employee work performance, the incentive pay programs need to be fairly matched with the employees’ expectation. Properly designed and maintained incentive pay program has the potential to increase employees’ productivity and work performance.