Question

There are a range of incentive plans for individuals and groups or teams. Think like an HR director who is responding to a work situation with a pay solution. Consider different types of pay plans along with their advantages and disadvantages.

Complete the following:

Select one individual plan, one team plan, and one long-term incentive plan.

Describe a situation in which each of these plans would be most appropriate, and justify why it is appropriate. In your descriptions, include the type of company and type of work as well as the position or positions that would be affected by your plan.

Answer 1

Part 1:

Incentive plans play as an important tool for motivating employees. Being the HR director who is responding to a work situation with a pay solution, Some of the incentive pay plans,that I will consider are as follows:

• Bonuses: As a token of appreciation, cash reward is given this is known as bonus. It has both advantages as well as disadvantages.

Advantages:

• It motivates employees,
• It improves performance,
• It improves employees morale,
• It helps in retaining employee

Disadvantages:

• It adds to extra expense, if employee don’t perform in desired manner,
• If not consistent, it can lead employee disappointment.
• If compared, can down other employees morale.

Profit Sharing: Based on the profitability of a particular period, organizations award employees with monitory rewards.

Advantages:

• Brings employees together,
• Motivates employees,
• Organizational commitment is increased,
• Gap between employer and employee are reduced,

Disadvantages:

• Even non-performers are benefited,
• Focus may sift from quality to profit,
• It might develop segmentation between upper and lower level of employees,

Stock options: Employees are given opportunity of buying companies stock they work for:

Advantages:

• Employee loyalty and commitment are increased,
• Helps in attracting talented employees,

Disadvantages:

• Employees might cash out their shares,
• If market price of stock falls, employees might feel dissatisfied.

Part 2:

One individual plan that I have selected is Bonus:

Situation: Sales Person is given bonus for achieving his sales targets.

Justification: It is most appropriate for individuals because no comparison will be made, and hence, will not lead to dissatisfaction.

One team plan that I have selected is Profit Sharing:

Situation: In an event management company, all the employers are rewarded with profit-sharing scheme.

Justification: This pay plan will help in building and strengthening team. It will motivate employees to work together for making maximum profits.

One long-term incentive plan that I have selected is 401(k) retirement plan:

Situation: In order to retain top performing employees, in a manufacturing firm.

Justification: By offering the 401(k) retirement plan that will ensure that workers feel loyal as they can save tax as well as invest for future at the same time.

All the above mentioned pay plans motivate employees and enhances their performance.