H.R. Use financial incentive for different levels of organizational hierarchy

1. Pay for
Performance and
Financial Incentive
BY: PAYAM NASEHI
CGA120079

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

9. 

10. References
 Human Resource Management , Gary Dessler