12-1

P A R T P A R T Compensating Human Resources Establishing a Pay Structure Recognizing Employee Contributions with Pay Providing Employee Benefits 4

12-3 Incentive Pay Pay for Individual Performance Pay for Group Performance Pay for Organizational Performance Processes that Make Incentives Work Incentive Pay for Executives Recognizing Employee Contributions with Pay PA E TR HC 12

12-4 Ch. 12 Learning Objectives 1. Discuss the connection between incentive pay and employee performance. 2. Describe how organizations recognize individual performance. 3. Identify ways to recognize group performance. 4. Explain how organizations link pay to their overall performance.

12-5 Ch. 12 Learning Objectives 5. Describe how organizations combine incentive plans in a “balanced scorecard.” 6. Summarize processes that can contribute to the success of incentive programs. 7. Discuss issues related to performance-based pay for executives.

12-6 Incentive Pay  Forms of pay linked to an employee’s performance as an individual, group member, or organization member.  What types of incentive pay are you familiar with?  How do companies determine if incentive pay is the best compensation approach?

12-7 Principles of Effective Incentive Pay Plans

12-8 Three Categories of Incentive Pay Plans  Individual  Group  Organizational

12-9 Types of Individual Incentives

12-10 Test Your Knowledge  John works twisting pretzels in a pretzel factory. Pablo works on IT systems integration at a credit card company. The best pay plans for these individuals would be ________ and _______, respectively. a. Merit pay, individual bonus b. Sales commissions; merit pay c. Piecework, Merit pay d. Individual bonus, sales commissions

12-11 Team Incentives

12-12 Group Incentives  Gainsharing  Group incentive program that measures improvements in productivity and effectiveness and distributes a portion of each gain to employees.  What conditions are required for gainsharing plans to work?

12-13 Organizational Incentives

12-14 Test Your Knowledge  For each of the following jobs, identify the best type of incentive (e.g., individual, group, organizational). Be prepared to explain your answer. 1. Director of Marketing, Pepsi 2. Recruiter, Verizon 3. Cashier, CVS (drugstore) 4. Salesperson, Macy’s a. Individual b. Group c. Organizational

12-15 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.

12-16 Balanced Scorecard Table 12.2

12-17 Processes that Make Incentives Work  What process will ensure buy-in and agreement with the compensation system?  What process will ensure employees engage in the desired behaviors?

12-18 Incentive Pay for Executives Table 12.3

12-19 Video – Container Store 1. Discuss how employees’ achievements can be recognized through an organization’s monetary compensation system. Does this always provide motivation for employees? Explain. 2. As the Container Store is noted for paying above average wages in the industry, does employment with this organization interest you? Why or why not? Explain your response.

12-20 Video – Container Store 3. Discuss what factors has provided motivation for you to do your best work. Discuss what factors has discouraged you from doing your best. 4. Discuss how the pay strategy in effect at the Container Store supports its overall organizational strategy.