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Hr presentation

  1. 1. Page 1
  2. 2. Introduction Incentives are variable reward granted to employeesaccording to variations in their performance. Financial rewards paidto workers whose production exceeds a predetermined standard. Payment by result Achievement of specific result Motivational context Page 2
  3. 3. In short, total reward programmers, which integrateboth financial and non-financial incentives to reward staff, can offeran organization the building blocks to help incentivize, recognizeand motivate employees to deliver improved levels of performance. Incentives are the additional payment to employeesbesides the payment of wages and salaries. Often, these are linkedwith productivity, either in terms of higher production or cost savingor both. Page 3
  4. 4. Q: Is money the only motivator? What is your motivator?Let’s see an example of non-cash incentives….. Page 4
  5. 5. Employee Preferences for Noncash Incentives Page 5
  6. 6. Importance• Higher efficiency• Greater output• Positive response• Improve standard of living• Reduction in total as well as unit cost of production Page 6
  7. 7. Advantages• Reduce supervision• Reduce absenteeism and turnover• Increased output• Improved recruitment of better-quality staff.• Improvements in business performance.• Reinforcing appropriate behavior.• Reinforced commitment through allowing employees choice over what they want from their employer Page 7
  8. 8. Disadvantages• Checking & inspection expenses• New machines and models• Jealousy and conflict among workers• Difficulties in determining standard performance• Spoil workers health Page 8
  9. 9. Prerequisites for an effective incentive system• Co-operation of workers• Scheme must be based on scientific work measurement• Indirect workers must be covered by incentive scheme• Greater need for planning• Appropriate to the type of work• Operate by means of well defined and easily understood formula• Make sure the program is motivational• Make the incentive plan committed oriented approach Page 9
  11. 11. ORGANIZATIONWIDE INCENTIVE PLANSProfit-sharing plans.Employee stock ownership plan(ESOP).Gain sharing plans.At risk variable pay plans. Page 11
  12. 12. PROFIT SHARING PLANS A plan that gives employees a share in the profits of thecompany. Each employee receives a percentage of those profits based onthe company’s earnings. Cash plans. Lincoln incentive plans. Deferred profit-sharing plans. Page 12
  13. 13. EMPLOYEE STOCK OWNERSHIP PLAN(ESOP)A qualified, defined contribution, employee benefit plan designed toinvest primarily in the stock of the sponsoring employer. ESOPsare "qualified" in the sense that the ESOPs sponsoring company, theselling shareholder and participants receive various tax benefits. ESOPsare often used as a corporate finance strategy and are also used to alignthe interests of a companys employees with those of the companys shareholders. Page 13
  14. 14. GAIN SHARING PLANEstablish general plan objectives.Choose specific performance measuresDecide on a funding formula.Choose the form of payment.Decide how often to pay bonuses.Develop the involvement system.Implement the plan. Page 14
  15. 15. AT-RISK VARIABLE PAY PLAN Variable pay is used to recognize and reward employee contributions tothe companys success. Examples include: profit sharing, bonuses and otherbenefits. Page 15
  16. 16. INCENTIVES FOR MANAGERS AND EXECUTIVES1) SHORT TERM INCENTIVES: Annual bonus Eligibility Fund size2) LONG TERM INCENTIVES Stock option Stock option problems Broad based stock options Page 16
  17. 17. Incentives for Salespeople Salary Plan – Straight salaries • This type of plan is Best for: prospecting (finding new clients), account servicing, training customer’s sales force, or participating in national and local trade shows. Commission Plan – Pay is a percentage of sales results. • Keeps sales costs proportionate to sales revenues. • May cause a neglect of no selling duties. • Can create wide variation in salesperson’s income. • Can increase turnover of salespeople. Page 17
  18. 18.  Combination Plan  Pay is a combination of salary and commissions, usually with a sizable salary component.  Plan gives salespeople a floor (safety net) to their earnings.  Salary component covers company-specified service activities.  Plans tend to become complicated, and misunderstandings can result. Page 18
  19. 19. Specialized Combination Plans Commission-plus-Drawing-Account Plan  Commissions are paid but a draw on future earnings helps the salesperson to get through low sales periods. Commission-plus-Bonus Plan  Pay is mostly based on commissions.  Small bonuses are paid for directed activities like selling slow-moving items. Page 19
  20. 20. Team/Group Incentive Plans• Team (or Group) Incentive Plans – Incentives are based on team’s performance.• How to Design Team Incentives – Set individual work standards. – Set work standards for each team member and then calculate each member’s output. – Members are paid based on one of three formulas: • All receive the same pay earned by the highest producer. • All receive the same pay earned by the lowest producer. • All receive the same pay equal to the average pay earned by the group. Page 20
  21. 21. Pros and cons of group Incentives Pros  Reinforces team planning and problem solving  Helps ensure collaboration  Encourages a sense of cooperation  Encourages rapid training of new members Cons  Pay is not proportionate to an individual’s effort  Rewards “free riders” Page 21