Incentive Plans Rainbow group

‘’Rainbow group Members’’ NAME ID Md. Anishul Islam Shamim 01205865 Mahabubul Alam 01205863 Akidul Islam 01205874 Md. Rabul Hossin 01205873 Avishek Chakraborty 01205910 Rahul Das 01205888 Md. Rahim Uddin 01205889 Addul Maleq 01205886 Md. Giasuddin 01205911 Rafiqul Alam 01205856

Name: md anishul islam shamim ID NO: MBA 01205865

Merit pay: Merit pay's roots lie in behavioural psychology and incentive theory. These theories are based in the belief that people are rational and react to incentives and that you can increase performance with the correct catalyst. One example of a system that uses merit-pay is the Teacher Advancement Program (TAP) created by the Milken Family Foundation in 1999. TAP is currently in place in more than 180 schools all across the United states.

Merit Guidelines Guidelines for awarding merit raises that are tied to performance objectives Here a example

Merit Pay Guidelines Chart QUINTILE (POSITION IN RANGE),% PERFORMANCE LEVEL 1 2 3 4 5 Outstanding (5) 9 9 8 7 6 Superior (4) 7 7 6 5 4 Competent (3) 5 5 4 3 3 Needs improvement (2) 0 0 0 0 0 Unsatisfactory (1) 0 0 0 0 0 MERIT PAY GUIDE CHART

Name: md. Rabiul Hossain ID NO: MBA 01205873

Problems with Merit Raises Inadequate funding for merit increases. Vagueness in how to define and measure performance. Employees not believing that merit compensation is tied to effort and performance Allowing organizational politics to influence merit pay decisions. Failing to differentiate between merit pay and other types of pay increases. Mistrust between management and employees. An “overall” merit pay plan that does not motivate.

Name: Avishek Chakraborty ID NO: MBA 012058910

What Is Motivation ? Motivation is a psychological and human aspect. It is the act of inspiring employees, peoples to devote maximum effort to achieve organizational objectives and goals. Motivation is defined as the process that initiates, guides and maintains goal oriented behaviors. It involves the biological, emotional, social and cognitive forces that activate behavior.

Why Motivation Is Important? This can summarize by saying that motivation is important both to an individual and a business. Motivation is important to an individual as: Motivation will help him achieve his personal goals. If an individual is motivated, he will have job satisfaction. Motivation will help in self-development of individual. An individual would always gain by working with a dynamic team.

Motivation Through Merit Raises Develop employee confidence and trust in performance appraisal. Establish job-related performance criteria. Separate merit pay from regular pay. Distinguish merit payment when performance declines. Withhold merit payments when performance declines.

Name: Akidul Islam ID NO: MBA 01205874

Sales Incentive plan Straight salary :- salesperson compensation method in which only a fixed salary (but not commission) in paid. The amount received by a salesperson in a function of time worked and not of performance as reflected in sales volume.

This method is used where - The firm is aiming at long term presence in the market instead of short term sales volume. 2. The firm is aiming at through formalization of a new market or Geographic area. 3. The performance of each salesperson is difficult to measure.

Straight commission plan :- Salesperson compensation method in which only a percentage of the sales volume, but no fixed salary in paid. The amount received by a salesperson in a function of his or her performance (and not of actual time worked) reflected in sales volume.

This method is used where the objective is to 1. Generate maximum short term sales revenue at the lowest overhead cost. 2. To employee independent sales representative instead of permanent sales staff. see also straight salary plan.

Name: md. rahim uddin ID NO: MBA 01205889

Incentive Plans for Salespersons: Straight Salary Plan: Compensation plan that permits salespeople to be paid for performing various duties that are not reflected immediately in their sales volume. Encourages building customer relationships. Provides compensation during periods of poor sales. May not provide sufficient motivation for maximizing sales volume.

Straight Commission Plan Compensation plan based upon a percentage of sales. Disadvantages Emphasis is on sales volume rather than on profits. Customer service after the sale is neglected. Earnings tend to fluctuate widely between good and poor periods of business. Temptation to grant price concessions to get sales.

Combined Salary and Commission Plan A compensation plan that includes a straight salary and a commission component (“leverage”). Advantages 1. Combines the advantages of straight salary and straight commission forms of compensation. 2. Offers greater design flexibility to develop the most favorable ratio of selling expense to sales. 3. Motivates sales force to achieve specific company marketing objectives in addition to sales volume.

Name: Rahul das ID NO: MBA 01205888

Types of Long-Term Incentive Plans Stock Price Appreciation Plans Stock Options Stock Appreciation Rights (SARS) Stock Purchase Phantom Stock

Performance-Based Plans Types of Long-Term Incentive Plans Performance-Based Plans Performance Units Performance Shares Formula-value Grants Dividend Units Restricted Stock/Cash Plans Restricted Stock Restricted Cash

Name: Giash uddin ID NO: MBA 01205911

Types of Long-Term Incentive Plans

Types of Long-Term Incentive Plans:

Types of Long-Term Incentive Plans

Name: Md. Rafiqul alam ID NO: MBA 01205856

Incentives for Professional Employees Incentive plans are meant to incent employees to perform, not all plans achieve what they were set out to accomplish. That’s why it is important to analyze the advantages and disadvantages of various incentive plan components to determine the plan that will promote the highest levels of performance while at the same time, encourage ethical behavior. This is especially true for salespeople and managers/executives because they work with customers and are responsible for achieving company earnings targets.

Managerial and Executive Incentives Bonuses and merit increases Double-track wage systems Performance incentive bonuses Profit sharing and stock ownership Executive perquisites (perks)

Name: abdul maleq ID NO: MBA 01205886

Executive compensation The Executive Pay Package Base salary Short-term incentives or bonuses Long-term incentives or stock plans Perquisites (perks)

Executive compensation Executive compensation is a broad term for the financial compensation awarded to a firm’s executives. Executive compensation packages by a company’s board of directors specially by the compensation committee consisting of independent directors.

Executives Pay Package Executive pay package differ substantially from typical salaried or hourly employee compensation because unlike typical employee pay.

Short term incentives The purpose of short term incentives, which are typicalls anural incentives is to compensate executive for achieving the company’s business strategy. Annual objective can be include. Development of new products. Increasing revenue or market share. Expanding to a new market. Improving profit margin.

Long term incentive Long term incentive plan is a reward system designed to improve employees long term for performance by providing reward that was not be tied to the company’s share price.

Perquisites Executive perquisites constitute additional compensation for senior executives which are not available to other salaried employees. These extra benefit are normally structured to recognize the value of the executive of the company, extra ordinary demands on his or her time and other unique condition.

Name: mahabubul alam ID NO: MBA 01205863

LUMP –SUM MERIT PAY Lump-sum: A single payment of an amount rather than several payments of smaller amounts. The money can be paid to the winner in a lump sum or in yearly payments. Merit pay: Merit pay also known as pay for performance. This usually involves the employer conducting a review meeting with the employee to discuss the employee’s work performance during a certain time period.

Lump-sum merit program: Program under which employer’s receive a year end merit payment. This is not added to their base pay. Advantage: Provide financial control by maintaining annual salary expenses and not escalating base salary levels. Contains employee benefits costs for levels of benefits normally calculated from current salary levels. Provide a clear link between pay and performance.