Question

Identify a company which has an incentive plan in place. You can use your own company, as well. How does the company culture affect the compensation philosophy? Discuss the strategy behind the compensation model and outline the plan design. Include the reasons to implement an incentive plan and the different types as it relates to individuals, groups and enterprise-wide. Why are these plans important and what make them successful. Discuss with your peers.

Answer 1

The company that would be referred here is is my employer who is a multinational publishing company that publishes scholarly journals and articles. There is an incentive plan for the employees. It is performance-based performance plan. The company culture is innovation for business efficiency. Every employee is encouraged to innovative and create visibility for recognition and career advancements. Based on the employees’ contribution, the employees are rated annually based on their performance. Then, based on the performance rating scale, the employees are rated. The compensation model is outlined as bonus plan linked to the rating scale and is provided to the employees accordingly. The reasons to implement incentive plans is to foster happiness, increase productivity, and reduce the turnover rate and also to reduce the recruiting and hiring cost.

It is essential for the organization to customize its compensation plan according to the different types of individuals as it relates to individuals, groups and enterprise-wide. The compensation model is designed for different types of individuals as their roles and responsibilities differs. For example, the target for a sales person is to achieve monthly sales whereas for software teams, the incentivized based on their delivery of projects within a specified due date.

These incentive plans are important because it has the potential to raise morale that increases productivity in a company. It results in job satisfaction thus making the employees to be loyal to the company. Thus, decreased turnover rate is associated with reduced cost in hiring and training costs.