administration Incentive Pay & other pay systems Group 5: Araman, Princess Shantelle R. Dave, Kyla Ann A. Fontecha, Shiela Marie M. Gernale, Hannah Lee Incentive Pay
- Compensation strategy rewarding performance or
goal achievement. - Additional pay over regular salary, tied to clear metrics like sales targets or productivity quotas. Purpose of Incentive Pay - Motivates employees to boost productivity and performance. - Aligns employee efforts with company goals. - Fosters a high-performance culture. Incentive Pay vs. Traditional Pay 1. Definition Incentive Pay Traditional Pay
Pay based on Fixed salary, performance unrelated to (bonuses, commissions). performance. Incentive Pay vs. Traditional Pay 2. Motivation & Performance Incentive Pay Traditional Pay
Provides stability, Directly motivates less performance- high performance. driven. Incentive Pay vs. Traditional Pay 3. Flexibility Incentive Pay Traditional Pay
Adjusts with Inflexible, limited performance and to set raises. goals. Incentive Pay vs. Traditional Pay 4. Risk Incentive Pay Traditional Pay
Higher risk, income Stable and
fluctuates with predictable performance. income. Incentive Pay vs. Traditional Pay 5. Employee Satisfaction Incentive Pay Traditional Pay
Satisfying for high Stability-based
achievers, but can satisfaction, less cause dissatisfaction performance if perceived unfair. recognition. Incentive Pay vs. Traditional Pay 6. Pay Structure Incentive Pay Traditional Pay
Fixed base salary
Combines bonuses, with limited commissions, etc. additional rewards. Incentive Pay vs. Traditional Pay 7. Impact on Behavior Incentive Pay Traditional Pay
Promotes goal-focused Focuses on stability, behavior, possibly less pressure on leading to short-term thinking. performance. Incentive Pay vs. Traditional Pay 8. Implementation Costs Incentive Pay Traditional Pay
Complex to manage, Simpler and easier higher costs in peak to budget for. performance periods. Incentive Pay vs. Traditional Pay 9. Alignment with Company Goals Incentive Pay Traditional Pay
Directly aligns with Less alignment with
company targets. performance-based objectives. Incentive Pay vs. Traditional Pay 10. Long-term Career Growth Incentive Pay Traditional Pay
Career advancement Predictable career
tied to consistent growth through performance. promotions. individual incentives
Individual incentives are rewards or benefits offered
to an employee based on their personal performance or achievements. Types of Individual Incentive: MONETARY INCENTIVES 1. Bonuses - One-time payments given for meeting or exceeding performance standards. 2. Commissions - Pay based on a percentage of sales or productivity metrics. 3. Piece Rate Pay - Payment based on the number of units produced. 4. Merit Pay - Permanent salary increases based on performance evaluations. Types of Individual Incentive: NON- MONETARY INCENTIVES 1. Recognition- Acknowledging and praising an employee's achievements. 2. Awards- Giving tangible rewards like plaques, trophies, or certificates. 3. Time Off- Offering additional vacation days or flexible work arrangements. 4. Promotions- Advancing an employee to a higher position. 5. Job Flexibility- Allowing employees to customize their work schedules or locations. Advantages of Individual Incentives
1. Directly ties rewards to individual performance.
2. Encourages personal responsibility and high motivation. 3. Easy to monitor and administer. Disadvantages of Individual Incentives
1. Can create unhealthy competition among employees.
2. May neglect team collaboration. 3. Performance may fluctuate, leading to unpredictable earnings for employees . group incentives
Group incentives are rewards or benefits given to
a team of employees for achieving a specific goal or objective. Types of Group Incentives: MONETARY INCENTIVES 1. Gainsharing - Employees share in the financial gains resulting from improved productivity or efficiency. 2. Team Bonuses - Bonuses awarded to teams that meet or exceed group performance goals. 3. Profit Sharing - Employees receive a share of the company's profits based on the team’s or company’s overall success. Types of Group Incentives: NON-MONETARY INCENTIVES 1. Extra Time Off- Additional vacation days, extended weekends, or flexible work arrangements. 2. Recognition and Awards - Public recognition, plaques, trophies, or certificates. 3. Company-Sponsored Events- Team-building activities, parties, or outings. Advantages of Group Incentives
1. Encourages teamwork . 2. Create a cooperative environment. 3. All members benefit from the success of the group, promoting unity. Disadvantages of Group Incentives 1. High performers may feel undervalued if rewards are equally shared. 2. Group conflict can arise if some members do not contribute equally. 3. Difficult to assess individual contributions to the group effort. companywide incentives
Companywide incentives are rewards and recognition
programs aimed at motivating and aligning the efforts of all employees across an organization to achieve common goals. They can include both monetary and non-monetary rewards, fostering a unified and productive work environment. Types of companywide incentives: 1. Monetary Incentives: These include bonuses, profit sharing, and stock options. They're effective for boosting short-term performance and retaining high performers. 2. Non-Monetary Incentives: These involve recognition programs, career advancement opportunities, and additional paid time off. They foster long-term employee satisfaction and loyalty. 3. Team-Based Incentives: These are rewards given to groups based on collective performance. They encourage collaboration and shared responsibility. 4. Individual-Based Incentives: Rewards tied to personal achievements or KPIs. They drive personal accountability and performance. Designing Incentive Pay Program: 1. Identify Objectives: Clearly define what you want to achieve with the incentive program, such as increased sales, improved customer satisfaction, or higher employee engagement. 2. Select Appropriate Incentives: Choose the type of incentive that aligns with your objectives and company culture. A mix of monetary and non-monetary incentives often works best. 3. Set Clear Criteria: Establish measurable criteria for earning incentives. This ensures transparency and fairness. 4. Communicate the Program: Ensure all employees understand how the program works and what they need to do to earn incentives. 5. Monitor and Adjust: Regularly review the program’s effectiveness and make necessary adjustments. Gather feedback from employees to improve its design and implementation. Person focused pay programs are not for all organizations or all positions. The model implies that employees need to move away from viewing pay as an entitlement. treat compensation as a reward earned for acquiring and implementing job relevant knowledge and skills. Advocates of the person focused pay program state there are two main reasons to choose this model The person focused pay program has four models. The four models of person focused pay programs are:
Stair Step Skills Block Job point accrual Cross departmental
Model Model model model
The jobs differ in The employee can
progress quicker by this model encourages encourages employees complexity and a person employees to develop to learn the jobs within can climb the stairwell by learning the necessary skills and not necessarily skills and learn to a department in able obtaining the necessary in order. Employees can perform jobs from the to assist during skills and knowledge. The skip a level if they have the same job family skills build on one another downtimes. skills. Person focused pay
·Person focused pay ·The person based pay plan offers
plans, encourage job enrichment and variety, and growth, not just of the potentially flexibility in scheduling. employee but of the It can also allow a person to remain organization. with one organization and learn the organization thoroughly. What is competency-based pay? An organization that uses competency-based pay structures compensates employees based on their obtained skills and competencies in the workplace, compared to traditional pay structures, which compensate employees based on job title, seniority, or position. This approach encourages employees to improve their skills and knowledge. It is usually used in fields that require specialized knowledge. What are the main elements of competency-based pay?
knowledge skills This is the information an This is an employee’s ability to employee has accumulated apply the knowledge to throughout their career and different work situations. It education. describes what an employee is capable of doing.
Together, knowledge and skills form an employee’s competencies.
These elements are usually listed in a job description. What is the difference between skill-based pay and competency-based pay? skill-based pay Skill-based pay describes a system where employees are rewarded based on their skills and how they perform. It is popular in skilled work like construction or plumbing, where workers often follow a path from apprentice to supervisor. Employees are promoted and rewarded for their increased skills and performance along the way.
competency based pay
Competency-based pay is a system where an employee is rewarded without consideration for results based on their perceived competence. The logic is that an employee will perform their job to a high level as they have the necessary competencies. PAY FOR KNOWLEDGE Pay for knowledge and pay for skill compensation systems reward employees with higher pay as an incentive for the increased knowledge or skills they acquire. Employees are rewarded for each new knowledge or skill. These learning based pay system evaluate the employee’s worth to the employer. Increased skills and job mastery give management greater staffing flexibility. The increased employee knowledge also may reduce the total number of workers needed and may lead to higher quality results. skill- based pay Skill-based pay is a beneficial compensation model for both employees and organizations. Unlike job-based pay, skill-based pay considers a person's skills and experience, rather than their position or title. a model of compensation in which a person's skills and experience determine their salary. For example, under the skill-based pay model, a team lead with several decades of management experience may earn higher compensation than a less-experienced candidate applying for the same position. The goal of skill-based pay is to attract candidates with more experience while encouraging professionals within the company to continue their self- development and training. What Is Team-Based Pay? Team-based pay is a system of compensation in which managers at a company reward members of a project or a department team with bonus compensation or pay increases based on their performance or the successful completion of goals. Unlike individual reward schemes, such as commission-based pay, team-based pay rewards the output of the team as a whole and divides the rewards equally among team members.
Team-based pay may help -Team-based pay can also
some companies promote the encourage workers to acquire transfer of knowledge new skills they may not have between employees learned otherwise. thank you!!!
