Motivating Employees Through Performance Incentives

1. Presented by:
Alegre, Jhunilen
De Leon, Claire Ann
Villareal, Ma. Nessa
6.5 Motivating
Employees Through
Performance
Incentives

2. Incentive
Systems
 Piece Rate Systems
 Individual Bonuses
 Merit Pay
 Sales Commissions
 Awards
 Gainsharing
 Profit Sharing
 Stock Options

3. 1. Have you ever been rewarded under any of the
incentive systems described in this chapter? What
was your experience with them?
Former: Individual Bonus
Current: Perfect Attendance
Received: Php 10, 000

4. 2. What are the advantages
and disadvantages of
bonuses compared to merit
pay? Which one would you
use if you were a manager
at a company?
Advantages of using awards as opposed to cash as an
incentive:
• Serves as a tangible symbol of the company’s
appreciation for outstanding work or service
• Improved Productivity
• Better Office Morale
• Building Teamwork
3. What are the advantages
of using awards as
opposed to cash as an
incentive?
Merit pay is often used interchangeably with incentive pay, but
they're different. Incentive pay is a bonus based on team or
company performance.
Advantages
• Employee motivation
• Higher productivity, profits, and customer service
Disadvantages
• Incentives may create a risk-averse environment that
diminishes creativity
• Behaviors such as helping team members or being a good
citizen of the company may be neglected

5.  When employees exercise stock options, they get to
buy shares of the company's stock at the locked-in
price.
 If they immediately sell the shares after buying them,
they get to pocket the difference between the old price
and the current price.
 Employees benefit from the company's success.
Companies offer them for following reasons:
 Establish a long-term relationship with
employees
 Create More Dedicated Employees
 Attract and Keep Talented Employees
 Cost Effective Company Benefit
 Enables a corporation to provide financial
incentives to employees today while deferring
payment till later
4. How effective are stock
options in motivating
employees? Why do
companies offer them?

6. WORST
PIECE RATE SYSTEMS
 Stressful Working
Environment
 Output of poor quality
 Cost of production will
increase
BEST
INDIVIDUAL BONUSES
 Employees are individually motivated
for a higher level of performance in
the organization
 Individual incentives will result in
greater job satisfaction and
organizational productivity
5. Which of the incentive systems in this section do the best
job of tying pay to individual performance? Which ones do the
worst job?