After reading chapter 12, you should be able to: Discuss the connection between incentive pay and employee performance, describe how organizations recognize individual performance, identify ways to recognize group performance, explain how organizations link pay to their overall performance,. | FUNDAMENTALS OF HUMAN RESOURCE MANAGEMENT 5TH EDITION BY . NOE, . HOLLENBECK, B. GERHART, AND . WRIGHT CHAPTER 12 RECOGNIZING EMPLOYEE CONTRIBUTIONS WITH PAY Pay for Individual Performance Pay for Group Performance: Gainsharing Gainsharing – group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each to employees. Addresses challenge of identifying appropriate performance measures for complex jobs. Frees employees to determine how to improve their own and their group’s performance. Pay for Group Performance: Group Bonuses and Team Awards Bonuses for group performance tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output. Similar to group bonuses, but more likely to use a broad range of performance measures: Cost savings Successful completion of a project Meeting deadlines Group Bonuses Team Awards Pay for Organizational Performance: Profit Sharing Profit sharing – incentive pay in which payments are a percentage of the organization’s profits and do not become part of the employees’ base salary. Profit sharing may encourage employees to think like owners. Evidence is not clear whether profit sharing helps organizations perform better. Pay for Organizational Performance: Stock Ownership Rights to buy a certain number of shares of stock at a specified price. Traditionally, stock options have been granted to executives. (ESOP) – an arrangement in which the organization distributes shares of stock to all its employees by placing it in a trust. Most common form of employee ownership. Stock Options ESOPs Balanced Scorecard Balanced scorecard – a combination of performance measures directed toward the company’s long- and short-term goals and used as the basis for awarding incentive pay. Four categories of a balanced scorecard include: financial customer internal learning and . | FUNDAMENTALS OF HUMAN RESOURCE MANAGEMENT 5TH EDITION BY . NOE, . HOLLENBECK, B. GERHART, AND . WRIGHT CHAPTER 12 RECOGNIZING EMPLOYEE CONTRIBUTIONS WITH PAY Pay for Individual Performance Pay for Group Performance: Gainsharing Gainsharing – group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each to employees. Addresses challenge of identifying appropriate performance measures for complex jobs. Frees employees to determine how to improve their own and their group’s performance. Pay for Group Performance: Group Bonuses and Team Awards Bonuses for group performance tend to be for smaller work groups. These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output. Similar to group bonuses, but more likely to use a broad range of performance measures: Cost savings Successful completion of a project Meeting deadlines Group Bonuses Team Awards .
