Kish Monetary Benefits

“Incentives are the cornerstone of modern life”(Levitt and Dubner 12). Levitt and Dubner once mentioned in their book “Freakonomics”. According to Oxford dictionary, incentives are something tends to incite to action or greater effort, as a reward offered for increased productivity (“incentives”). In business field, incentives are something given by bosses to encourage their employees to endeavour in bringing benefits to their business. For a simple example, the employee who hits the monthly or year sales target will get cash or prizes as incentives. Apparently, these incentives are something that motivates employees maintains their great performance and also to motivate other employee, whoever wants to get the incentives, work harder.

Employee compensation is critical for the satisfaction, motivation, and preservation of the workforce within an organization. HR managers plan, direct, and coordinate salaries, retirement plans, health insurance, and other employee benefits that an organization offers its employees. An organization should spend a great deal of time and resources to plan, create, and implement effective employee compensation strategies. Accordingly, in my opinion HR managers need to carefully examine these strategies that will ultimately effect and meet the organization’s targets and objectives. According to Gerade (2003), the implementation of reward and compensation within an organization will alter an employee’s thought toward organizations view of

The right compensation program will depend on the organization’s business strategy and goals. To achieve these, an organization must recruit and select the best possible employees. To attract such employees, there must be an attractive compensation plan. Competitors will be offering different payment options, this may be based on pay rate or special perks, and a company’s stock options. Organizations must be aggressive yet reasonable to compete with competitors. Retaining and encouraging employees to perform at their best may be achieved through an immediate incentive award

In a free market, such as the one used in the United States of America, competition between companies is cutthroat as businesses look for every possible way to have the edge over competitors. One of the major ways that businesses stay ahead of the competition is attracting and retaining the most talented employees. It is common practice for companies in the United States of America to provide several non-wage compensations to employees with the aim of sweetening the employment and reducing turnover (entrepreneur.com, n.d). Employees have come to appreciate the benefits offered by companies and consider benefits just as important as their salary.

In order to construct a new pay structure and benefit system we must first look at the five major components that will factor into our decisions. These components are compensation and benefit philosophy, pay grades, ratio of base pay to incentive pay, external equity and internal equity and other types of benefits such as deferred compensation, health insurance vacation and sick leave. “There are a number of components that need to be addressed when developing your compensation systems to ensure they align with your organizational strategy and objectives. One key to remember is that your compensation strategy must help to create the work culture you want. How you structure your systems and manage the internal and external equity issues, will directly inform the culture of your organization…”A compensation philosophy is developed to guide the design and complexity of your compensation programs; this is done by identifying your goals and

It appears that the employee incentive program works for your organization. That’s nice to know. I find that employees are very appreciative of what you give them whether big or small, and others just like to complain. I found an article that talked about incentives used in healthcare are not an effective motivator for healthcare professional and wastes an estimated $20 billion in resources. The article said, seventy five percent of compensation incentives are so small or poorly communicated that staff do not produce the work outcomes employers expect from their staff. Among 4,500 healthcare providers and payers who use pay-for performance incentives, many of them were not aware of the awards being offered or were not able to distinguish incentive

Pay structures, regardless of the size of the organization, must have two things going for them, which are external and internal equities. In order to give employees purpose to continue to give their loyalty and retention, there must be incentives as paying for education, experience and training, job tenure, demonstrated skills, or a combination of these attributes consistently. Organizations should develop a well written compensation program which includes incentives, and addresses both external and internal equities.

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).

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.

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 objectives (Businesstown.com, 2001). The majority of incentives are performance-based policies in which workers receive additional cash or benefits centered on a worker’s performance.

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.

Human Resource Professionals also design and install incentive pay systems. Incentives are pay systems that reward employees for their efforts beyond normal performance expectations. In order to pay incentives, organizations measure employee performance at three levels; Individual level, Group level, and Organizational level. Individual level incentives are merit pay, skill-based pay, competency-based pay, piece rate pay, standard hour systems, employee suggestion systems and commissions (Heneman & Gresham, 1998). Merit pay is provided to employees for their individual behavioural contributions to organization. In skill based pay, pay increases are based on skill mastery. It is used by organizations in order to improve organizational

One of the fundamental purposes of management accounting and control research is to motivate employees to operate for the firm’s interest. It is clear that incentives affect overall performance, and thus, managers and accountants by providing monetary incentives and compensation systems aim to improve their employees’ performance. However, the inequity is produced by the design of compensation contracts and by managers’ performance evaluation biases, is perceived to be one of the main problems of firm’s prosperity.

These incentives are granted to employees to encourage with a stress free environment and allow a creativity atmosphere. These types of incentives helps with retention, and healthier life styles. The atmosphere that Google has created was well thought out plan when starting Google. They first understand what works in the workplace and how to run a successful business. They cultivate an environment for employees where they like their job and create loyalty, flexible, and transparency. With all the perks and benefits that are offered it inspires you to work hard, stay motivated and creates challenges. With all the incentives and freedom to work independently with very minimum supervision, along with human resources screening for the right candidate to come on board, only allows for their employees to be innovative, clear thinkers, and creative to continue moving the company in

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.