Incentive Related Pay Carrot and stick?Carrot and stick? Chapters 12 &13Chapters 12 &13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice

Incentive Related Pay Incentive Related Pay

• Carrot and stick? Carrot and stick?

• Chapters 12 &13Chapters 12 &13Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 12–1

Mondays Tutorial Mondays Tutorial

• For Monday’s Lecture and Tutorial please read Chapter For Monday’s Lecture and Tutorial please read Chapter 14 and find out what is the meaning of ethics and fair 14 and find out what is the meaning of ethics and fair treatment and justice in the work place . treatment and justice in the work place .

Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 12–2

Mondays Tutorial Mondays Tutorial

• READ THE ARTICLE- NIKE AND CSR on the web site READ THE ARTICLE- NIKE AND CSR on the web site www.uwcentre.ac.cn/hhu -check it out -check it out

CONSIDER CONSIDER • Q.What were the problems at NIKE factories in Vietnam - Q.What were the problems at NIKE factories in Vietnam -

Indonesia and China? Indonesia and China? • Q.What Corporate Social Responsibility Goals has NIKE set for Q.What Corporate Social Responsibility Goals has NIKE set for

its operations around the world not just in China?its operations around the world not just in China?


http://www.uwcentre.ac.cn/hhu

Revision Revision

• Read chapter 1 again Read chapter 1 again


HRM examples HRM examples

• One important thing for the exam is you will be asked to One important thing for the exam is you will be asked to illustrate you answers to some written questions using illustrate you answers to some written questions using examples of HRM in practice .So you should start looking in examples of HRM in practice .So you should start looking in the set text and or on the internet for examples of the set text and or on the internet for examples of organisations using HRM practices .organisations using HRM practices .

• Think about big organisations - smaller organisations Think about big organisations - smaller organisations manufacturing organisations - service organisations even manufacturing organisations - service organisations even universities . Get examples and discuss these with your universities . Get examples and discuss these with your tutors tutors


Incentive PlansIncentive Plans

• Managers often use two terms together with incentive plans. Managers often use two terms together with incentive plans. • Traditionally, all incentive plans are Traditionally, all incentive plans are pay-for-performancepay-for-performance

plans. plans. • They all tie employees’ pay to the employees’ performance. They all tie employees’ pay to the employees’ performance. • Variable pay Variable pay is more specific: It is usually an incentive plan is more specific: It is usually an incentive plan

that ties a group or team’s pay to some measure of the firm’s that ties a group or team’s pay to some measure of the firm’s (or the facility’s) overall profitability.(or the facility’s) overall profitability.



Incentive Pay TerminologyIncentive Pay Terminology

• Pay-for-Performance PlanPay-for-Performance Plan Ties employee’s pay to the employee’s performanceTies employee’s pay to the employee’s performance

• Variable Pay PlanVariable Pay Plan Is an incentive plan that ties a group or team’s pay to some measure of the Is an incentive plan that ties a group or team’s pay to some measure of the

firm’s (or the facility’s) overall profitabilityfirm’s (or the facility’s) overall profitability Example: profit-sharing plansExample: profit-sharing plans

May include incentive plans for individual employeesMay include incentive plans for individual employees

Incentive Plan Incentive Plan

• Managers should seek to choose the incentive plan that Managers should seek to choose the incentive plan that best suits the work that an employee does. best suits the work that an employee does.

• Various incentive plans focus on either individuals, groups Various incentive plans focus on either individuals, groups or teams, or organizationsor teams, or organizations



Types of Employee Incentive Types of Employee Incentive PlansPlans

Individual Employee Incentive and Recognition

Programs

Sales Compensation Programs

Organizationwide Incentive Programs

Executive Incentive Compensation Programs

Team/Group-based Variable Pay Programs

Pay-for-Performance

Plans

PayPay• Piecework Piecework is the oldest and still most popular individual is the oldest and still most popular individual

incentive plan. incentive plan.

• Here the worker is paid a sum (called a Here the worker is paid a sum (called a piece ratepiece rate) for each unit ) for each unit he or she produces. he or she produces.

• The The standard hour plan standard hour plan is like the piece rate plan, except that, is like the piece rate plan, except that, instead of getting a rate per piece, the worker gets a premium instead of getting a rate per piece, the worker gets a premium equal to the percent by which his or her performance exceeds equal to the percent by which his or her performance exceeds the standard.the standard.



Individual Incentive PlansIndividual Incentive Plans

• Piecework PlansPiecework Plans

The worker is paid a sum (“piece rate”) for The worker is paid a sum (“piece rate”) for each unit he or she produces.each unit he or she produces.

Straight pieceworkStraight piecework

Standard hour planStandard hour plan

Piece workPiece work

• Piecework plans are understandable, appear equitable in Piecework plans are understandable, appear equitable in principle, and can be powerful incentives, since rewards principle, and can be powerful incentives, since rewards are proportionate to performance. are proportionate to performance.

• However, employees may not respond positively to However, employees may not respond positively to changes in output or their ability to earn incentives.changes in output or their ability to earn incentives.



Pros and Cons of PieceworkPros and Cons of Piecework• Easily understandable, equitable, and Easily understandable, equitable, and

powerful incentivespowerful incentives

• Employee resistance to changes Employee resistance to changes in standards or work processes in standards or work processes affecting outputaffecting output

• Quality problems caused by Quality problems caused by an overriding output focusan overriding output focus

• Possibility of violating minimum wage Possibility of violating minimum wage standardsstandards

• Employee dissatisfaction when Employee dissatisfaction when incentives either cannot be earned or incentives either cannot be earned or are withdrawnare withdrawn

Merit PayMerit Pay

• Merit pay Merit pay or a or a merit raise merit raise is a permanent salary increase the is a permanent salary increase the firm awards to an individual employee based on his or her firm awards to an individual employee based on his or her individual performance. individual performance.

• Merit pay advocates argue that awarding pay raises across the Merit pay advocates argue that awarding pay raises across the board (without regard to individual merit) may actually detract board (without regard to individual merit) may actually detract from performance, by showing employees they’ll be rewarded from performance, by showing employees they’ll be rewarded regardless of how they perform. regardless of how they perform.


Merit Pay Merit Pay

• The solution is not to throw out merit raises, but to design The solution is not to throw out merit raises, but to design them to be more effective. them to be more effective.

• Among other things, this means establishing effective Among other things, this means establishing effective appraisal procedures and ensuring that managers in fact appraisal procedures and ensuring that managers in fact tie merit pay awards to performance.tie merit pay awards to performance.



Individual Incentive Plans (cont’d)Individual Incentive Plans (cont’d)

• Merit PayMerit Pay Is a permanent cumulative salary increase the firm awards to an Is a permanent cumulative salary increase the firm awards to an

individual employee based on his or her individual performanceindividual employee based on his or her individual performance

Can detract from performance if awarded across the boardCan detract from performance if awarded across the board

Becomes permanent ongoing reward for past performanceBecomes permanent ongoing reward for past performance

• Merit Pay OptionsMerit Pay Options Give annual lump-sum merit raises that do Give annual lump-sum merit raises that do not not make the raise make the raise

part of an employee’s base salary.part of an employee’s base salary.

Tie merit awards to both individual and organizational Tie merit awards to both individual and organizational performance.performance.

Matrix for merit awardMatrix for merit award

• Table 12-1in your set text Table 12-1in your set text presents a sample matrix for presents a sample matrix for merit award determination. merit award determination.

• In this example, the company’s performance is measured In this example, the company’s performance is measured by, say, rate of return, or sales divided by payroll costs. by, say, rate of return, or sales divided by payroll costs.

• Company performance and the employee’s performance Company performance and the employee’s performance (using his or her performance appraisal) receive equal (using his or her performance appraisal) receive equal weight in computing the merit pay.weight in computing the merit pay.


Professional Employees Professional Employees

• Professional employees are those whose work involves the Professional employees are those whose work involves the application of learned knowledge to the solution of the application of learned knowledge to the solution of the employer’s problems. employer’s problems.

They include lawyers, doctors, economists, and engineers.They include lawyers, doctors, economists, and engineers.



Incentives for Professional Incentives for Professional EmployeesEmployees• Professional EmployeesProfessional Employees

Are those whose work involves the application Are those whose work involves the application of learned knowledge to the solution of the employer’s problems.of learned knowledge to the solution of the employer’s problems.

Lawyers, doctors, economists, and engineersLawyers, doctors, economists, and engineers

• Possible IncentivesPossible Incentives Bonuses, stock options and grants, profit sharingBonuses, stock options and grants, profit sharing

Better vacations, more flexible work hoursBetter vacations, more flexible work hours

Improved pension plansImproved pension plans

Equipment for home officesEquipment for home offices

Recognition Programmes Recognition Programmes

• Recognition programs are one of several types of Recognition programs are one of several types of nonfinancial incentives. nonfinancial incentives.

• The term The term recognition program recognition program usually refers to formal usually refers to formal programs, such as employee-of-the-month programs. programs, such as employee-of-the-month programs. Social recognition program Social recognition program generally refers to informal generally refers to informal manager-employee exchanges such as praise, approval, manager-employee exchanges such as praise, approval, or expressions of appreciation for a job well done. or expressions of appreciation for a job well done.


FeedbackFeedback

• Performance feedback Performance feedback means providing quantitative or means providing quantitative or qualitative information on task performance for the qualitative information on task performance for the purpose of changing or maintaining performance; purpose of changing or maintaining performance; showing workers a graph of how their performance is showing workers a graph of how their performance is trending is an example.trending is an example.



Nonfinancial and Recognition AwardsNonfinancial and Recognition Awards

• Effects of Recognition-Based AwardsEffects of Recognition-Based Awards Recognition has a positive impact on performance, Recognition has a positive impact on performance,

either alone or in conjunction with financial rewards.either alone or in conjunction with financial rewards.

Day-to-day recognition from supervisors, peers, and Day-to-day recognition from supervisors, peers, and team members is important.team members is important.

• Ways to Use RecognitionWays to Use Recognition Social recognitionSocial recognition

Performance-based recognitionPerformance-based recognition

Performance feedbackPerformance feedback

Social recognition Social recognition • Figure 12-1 which follows presents a short list of Figure 12-1 which follows presents a short list of social social

recognition recognition (such as compliments) actions that can be (such as compliments) actions that can be used as positive reinforcements on a day-to-day basis.used as positive reinforcements on a day-to-day basis.



FIGURE 12–1 Social Recognition and Related Positive Reinforcement Managers Can Use

• Challenging work assignments

• Freedom to choose own work activity

• Having fun built into work

• More of preferred task

• Role as boss’s stand-in when he or she is away

• Role in presentations to top management

• Job rotation

• Encouragement of learning and continuous improvement

• Being provided with ample encouragement

• Being allowed to set own goals

• Compliments

• Expression of appreciation in front of others

• Note of thanks

• Employee-of-the-month award

• Special commendation

• Bigger desk

• Bigger office or cubicle

Annual BonusAnnual Bonus

• As noted, most firms have As noted, most firms have annual bonus annual bonus plans aimed at plans aimed at motivating managers’ short-term performance. motivating managers’ short-term performance.

• Short-term bonuses can easily result in plus or minus Short-term bonuses can easily result in plus or minus adjustments of 25% or more to total pay. adjustments of 25% or more to total pay.

• Three factors influence one’s bonus: eligibility, fund size, and Three factors influence one’s bonus: eligibility, fund size, and individual performance.individual performance.Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 12–25


Short- and Long-Term IncentivesShort- and Long-Term Incentives• Short-Term Incentives: The Annual BonusShort-Term Incentives: The Annual Bonus

Plans intended to motivate short-term performance Plans intended to motivate short-term performance of managers and tied to company profitability.of managers and tied to company profitability.

Issues in awarding bonuses Issues in awarding bonuses Eligibility basisEligibility basis Fund size basisFund size basis Individual performance awardIndividual performance award

Long-term incentivesLong-term incentives Stock optionsStock options Performance sharesPerformance shares Indexed optionsIndexed options Premium price optionsPremium price options Stock appreciation rightsStock appreciation rights

PerksPerks

Total Reward Package Total Reward Package

• Employers should design long-term incentives that Employers should design long-term incentives that support their firm’s strategy. support their firm’s strategy.

• The executives’ The executives’ total reward packagetotal reward package—base salary, short- —base salary, short- and long-term incentives, and perks—must align with and long-term incentives, and perks—must align with each other and with the goal of achieving the company’s each other and with the goal of achieving the company’s strategic aims.strategic aims.


Question Question

How does merit pay differ from a bonus?How does merit pay differ from a bonus?

• A) Merit pay becomes part of an employee's base pay, but a A) Merit pay becomes part of an employee's base pay, but a bonus does not.bonus does not.

• B) A bonus becomes part of an employee's base pay, but merit B) A bonus becomes part of an employee's base pay, but merit pay does not.pay does not.

• C) Merit pay is linked to individual performance, while a bonus is C) Merit pay is linked to individual performance, while a bonus is linked to profits.linked to profits.

• D) A bonus is linked to individual performance, while merit pay is D) A bonus is linked to individual performance, while merit pay is linked to profits.linked to profits.

• E) Merit pay is limited to a single, lump payment, and a bonus is E) Merit pay is limited to a single, lump payment, and a bonus is spread out over a year. spread out over a year.

• AnswerAnswerCopyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 12–28

Answer Answer

• :Answer A:Answer A

• Explanation: Merit pay is any salary increase the firm Explanation: Merit pay is any salary increase the firm awards to an individual employee based on his or her awards to an individual employee based on his or her individual performance. It is different from a bonus in that it individual performance. It is different from a bonus in that it usually becomes part of the employee's base salary, usually becomes part of the employee's base salary, whereas a bonus is a one-time payment.whereas a bonus is a one-time payment.


• All of the following are disadvantages associated with All of the following are disadvantages associated with piecework plans EXCEPT that workers ________. piecework plans EXCEPT that workers ________.

• A) resist attempts to modify production standardsA) resist attempts to modify production standards• B) focus on production quantity instead of qualityB) focus on production quantity instead of quality• C) view the plans as unfair and complicated C) view the plans as unfair and complicated • D) dislike new technology or processesD) dislike new technology or processes• E) resist changing from job to jobE) resist changing from job to job• AnswerAnswer


Answer Answer

• Answer CAnswer C• Explanation: Piecework plans are understandable, appear Explanation: Piecework plans are understandable, appear

equitable in principle, and can be powerful incentives, since equitable in principle, and can be powerful incentives, since rewards are proportionate to performance. However, workers on rewards are proportionate to performance. However, workers on piecework may resist attempts to revise production standards, piecework may resist attempts to revise production standards, downplay quality, or resist switching from job to job. Attempts to downplay quality, or resist switching from job to job. Attempts to introduce new technology or processes may also trigger introduce new technology or processes may also trigger resistance.resistance.


Question Question

Lump sum merit increases can be a more significant Lump sum merit increases can be a more significant motivator than traditional merit pay because the amount motivator than traditional merit pay because the amount seems greater when received all at once. seems greater when received all at once.

• Answer: TRUE OR FALSE Answer: TRUE OR FALSE


Answer Answer

• Answer TRUEAnswer TRUE• Explanation: Lump-sum merit increases can also be Explanation: Lump-sum merit increases can also be

more dramatic motivators than a traditional merit raise. more dramatic motivators than a traditional merit raise. For example, a 5% lump-sum merit payment to a For example, a 5% lump-sum merit payment to a $30,000 employee is $1,500 cash, as opposed to a $30,000 employee is $1,500 cash, as opposed to a traditional weekly merit payout of $29 for 52 weeks.traditional weekly merit payout of $29 for 52 weeks.


Question Question

Experts assert that stock options encourage executives to Experts assert that stock options encourage executives to take dangerous risks and are to blame for many corporate take dangerous risks and are to blame for many corporate scandals. scandals.

• Answer: True or False Answer: True or False


Answer Answer

• Answer TRUEAnswer TRUE• Explanation: Many blame stock options for contributing to Explanation: Many blame stock options for contributing to

corporate scandals, in which executives allegedly corporate scandals, in which executives allegedly manipulated the dates they received their options to manipulated the dates they received their options to maximize their returns. Options may also encourage maximize their returns. Options may also encourage executives to take perilous risks in pursuit of higher, short-executives to take perilous risks in pursuit of higher, short-term profits.term profits.



Creating an Executive Creating an Executive Compensation PlanCompensation Plan1.1. Define the strategic context for the executive Define the strategic context for the executive

compensation program.compensation program.

2.2. Shape each component of the package to focus Shape each component of the package to focus the manager on achieving the firm’s strategic goals.the manager on achieving the firm’s strategic goals.

3.3. Check the executive compensation plan for compliance Check the executive compensation plan for compliance with all legal and regulatory requirements and for tax with all legal and regulatory requirements and for tax effectiveness.effectiveness.

4.4. Install a process for reviewing and evaluating Install a process for reviewing and evaluating the executive compensation plan whenever the executive compensation plan whenever a major business change occurs.a major business change occurs.

Team /group incentive planTeam /group incentive plan

• Firms increasingly rely on teams to manage their work. Firms increasingly rely on teams to manage their work. • They therefore need incentive plans that encourage They therefore need incentive plans that encourage

teamwork and focus team members’ attention on teamwork and focus team members’ attention on performance. performance.

• Team (or group) incentive plans Team (or group) incentive plans pay incentives to the team pay incentives to the team based on the team’s performance.based on the team’s performance.



Team/Group Incentive PlansTeam/Group Incentive Plans

• Team (or Group) Incentive PlansTeam (or Group) Incentive Plans Incentives are based on team’s performance.Incentives are based on team’s performance.

• How to Design Team IncentivesHow to Design Team Incentives Set individual work standards.Set individual work standards.

Set work standards for each team member Set work standards for each team member and then calculate each member’s output.and then calculate each member’s output.

Members are paid based on one of three formulas: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 highest producer.

All receive the same pay earned by the lowest producer.All receive the same pay earned by the lowest producer.

All receive the same pay equal to the average pay All receive the same pay equal to the average pay earned by the group.earned by the group.

Team Incentives Team Incentives

• Team incentives often make sense. They reinforce team Team incentives often make sense. They reinforce team planning and problem solving, and can help ensure planning and problem solving, and can help ensure collaboration. In Asia in general (and Japan in particular), the collaboration. In Asia in general (and Japan in particular), the tendency is to reward the group—to reduce jealousy, to tendency is to reward the group—to reduce jealousy, to make group members indebted to one another, and to make group members indebted to one another, and to encourage a sense of cooperation. encourage a sense of cooperation.


• Team incentives also facilitate training, since each Team incentives also facilitate training, since each member has an interest in getting new members trained member has an interest in getting new members trained as fast as possible.as fast as possible.

• The main disadvantage is that a good worker’s pay may The main disadvantage is that a good worker’s pay may not be proportionate to his or her personal efforts.not be proportionate to his or her personal efforts.



Pros and Cons of Team IncentivesPros and Cons of Team Incentives

• ProsPros Reinforces team planning and problem solvingReinforces team planning and problem solving Helps ensure collaborationHelps ensure collaboration Encourages a sense of cooperationEncourages a sense of cooperation Encourages rapid training of new membersEncourages rapid training of new members

• ConsCons Pay is not proportionate to an individual’s effortPay is not proportionate to an individual’s effort Rewards “free riders”Rewards “free riders”

Incentive /profit sharing plansIncentive /profit sharing plans

• Organizationwide incentive plans Organizationwide incentive plans are plans in which all are plans in which all or most employees can participate, and which generally or most employees can participate, and which generally tie the reward to some measure of company-wide tie the reward to some measure of company-wide performance.performance.

• Profit-sharing plans Profit-sharing plans are plans in which all or most are plans in which all or most employees receive a share of the firm’s annual profits.employees receive a share of the firm’s annual profits.



Organizationwide Incentive PlansOrganizationwide Incentive Plans

• Profit-Sharing PlansProfit-Sharing Plans Current profit-sharing (cash) plansCurrent profit-sharing (cash) plans

Employees receive cash shares of the firm’s profits at regular Employees receive cash shares of the firm’s profits at regular intervals.intervals.

Deferred profit-sharing plansDeferred profit-sharing plans

A predetermined portion of profits based on the employee’s A predetermined portion of profits based on the employee’s contribution to the firm’s profits is placed in each employee’s contribution to the firm’s profits is placed in each employee’s retirement account under a trustee’s supervision.retirement account under a trustee’s supervision.

Employees’ income taxes on the distributions are deferred, Employees’ income taxes on the distributions are deferred, often until the employee retires.often until the employee retires.


Why Incentive Plans FailWhy Incentive Plans Fail

• Performance pay can’t replace good management.Performance pay can’t replace good management.

• You get what you pay for.You get what you pay for.

• ““Pay is not a motivator.”Pay is not a motivator.”

• Rewards punish.Rewards punish.

• Rewards break relationships.Rewards break relationships.

• Rewards can have unintended consequences.Rewards can have unintended consequences.

• Rewards may undermine responsiveness.Rewards may undermine responsiveness.

• Rewards undermine intrinsic motivation.Rewards undermine intrinsic motivation.

Types of benefits Types of benefits

• There are many benefits and various ways to classify them. There are many benefits and various ways to classify them. • We will classify them as We will classify them as • (1) pay for time not worked, (1) pay for time not worked, • (2) insurance benefits, (2) insurance benefits, • (3) retirement benefits, (3) retirement benefits,

and and

(4) services. (4) services.



Policy Issues in Designing Benefit Policy Issues in Designing Benefit PackagesPackages

Policy Issues

Who will be covered

Coverage during probation

Degree of employee choice

Which benefits to offer

Whether to include retirees

How to finance benefits

Cost containment procedures

Communicating benefits options


Other Benefits IssuesOther Benefits Issues• Long-Term CareLong-Term Care

Insurance for older workers is a growing issue.Insurance for older workers is a growing issue.

• Life InsuranceLife Insurance TypesTypes

Group life insuranceGroup life insurance Accidental death and dismembermentAccidental death and dismemberment

Personnel policy considerationsPersonnel policy considerations Benefits-paid scheduleBenefits-paid schedule Supplemental benefitsSupplemental benefits Financing (employee contribution)Financing (employee contribution)

• Benefits for Part-Time and Contingent WorkersBenefits for Part-Time and Contingent Workers Leave and health benefits available to part-time workers.Leave and health benefits available to part-time workers. Benefits for long-term independent contractors.Benefits for long-term independent contractors.


Pension PlansPension Plans

Membership requirements

Vesting schedule

Benefit formula

Plan funding

Policy Issues in Pension Planning


Employee Assistance ProgramsEmployee Assistance Programs

1

Be aware of legal issues.

Ensure professional staffing.

Steps for Launching an EAP Program

Develop a policy statement.

Maintain confidential record-keeping systems.

2

3

4

Trends Trends • Several trends are changing the benefits landscape in Several trends are changing the benefits landscape in

the USA . the USA . • There are more households where both adults work, There are more households where both adults work,

more one-parent households, more women in the more one-parent households, more women in the workforce, and more workers older than age 55. workforce, and more workers older than age 55.

• Then, there’s the “time bind”—people working more, Then, there’s the “time bind”—people working more, without the time to do all they’d like to do. without the time to do all they’d like to do.

• The issues involve working men, as well as women.The issues involve working men, as well as women.• These pressures have led many employers to bolster These pressures have led many employers to bolster

their their family-friendly (or work–life) benefitsfamily-friendly (or work–life) benefits..



Family-Friendly (Work–Life) Family-Friendly (Work–Life) BenefitsBenefits• Subsidized child careSubsidized child care

• Sick child benefitsSick child benefits

• Elder careElder care

• Time offTime off

• Subsidized employee transportationSubsidized employee transportation

• Food servicesFood services

• Educational subsidiesEducational subsidies

• Fitness and medical facilitiesFitness and medical facilities

• Flexible work schedulingFlexible work scheduling

Plans Plans

• Employees prefer choice in their benefits plans. Employees prefer choice in their benefits plans.

• A A cafeteria plan cafeteria plan is one in which the employer gives each is one in which the employer gives each employee a benefits fund budget, and lets the person spend it on employee a benefits fund budget, and lets the person spend it on the benefits he or she prefers, subject to two constraints. the benefits he or she prefers, subject to two constraints.

• First, the employer must of course limit the total cost for each First, the employer must of course limit the total cost for each employee’s benefits package. Second, each employee’s benefits employee’s benefits package. Second, each employee’s benefits plan must include certain required items—for example, Social plan must include certain required items—for example, Social Security, workers’ compensation, and unemployment insurance.Security, workers’ compensation, and unemployment insurance.

..



Flexible Benefits ProgramsFlexible Benefits Programs• Cafeteria (Flexible Benefits) ApproachCafeteria (Flexible Benefits) Approach

Each employee is given a limited benefits fund budget Each employee is given a limited benefits fund budget to spend on preferred benefits.to spend on preferred benefits.

Types of plansTypes of plans Flexible spending accountsFlexible spending accounts Core plus option plansCore plus option plans

• Employee LeasingEmployee Leasing Professional employer organizations or staff leasing firmsProfessional employer organizations or staff leasing firms Handle human resources functions for leased employees Handle human resources functions for leased employees

of small firmsof small firms Can provide benefits by aggregating employees into Can provide benefits by aggregating employees into

larger insurable groupslarger insurable groups Can raise worker commitment, co-employment, and Can raise worker commitment, co-employment, and

workers’ compensation issuesworkers’ compensation issues


Flexible Work SchedulesFlexible Work Schedules

• FlextimeFlextime

• Compressed workweek schedulesCompressed workweek schedules

• Workplace flexibilityWorkplace flexibility

• Job sharingJob sharing

• Work sharingWork sharing

Question Question

• 1) The indirect financial and nonfinancial payments 1) The indirect financial and nonfinancial payments employees receive for continuing their employment with employees receive for continuing their employment with a company are called ________.a company are called ________.

• A) reimbursementA) reimbursement• B) compensationB) compensation• C) salaryC) salary• D) benefitsD) benefits• E) remunerationE) remuneration• AnswerAnswer


Answer Answer

• ANSWER DANSWER D• Explanation: Benefits—indirect financial and nonfinancial Explanation: Benefits—indirect financial and nonfinancial

payments employees receive for continuing their payments employees receive for continuing their employment with the company—are an important part of employment with the company—are an important part of just about everyone's compensation. They include things just about everyone's compensation. They include things like health and life insurance, pensions, time off with pay, like health and life insurance, pensions, time off with pay, and child-care assistance.and child-care assistance.


• 2) Nonfinancial payments like health and life insurance, 2) Nonfinancial payments like health and life insurance, pensions, time off with pay, and child care facilities are pensions, time off with pay, and child care facilities are examples of ________.examples of ________.

• A) variable payA) variable pay• B) competency-based incentivesB) competency-based incentives• C) benefitsC) benefits• D) salaryD) salary• E) bonusesE) bonuses• Answer:Answer:


Answer Answer

• Answer CAnswer C• Explanation: Benefits are indirect financial and Explanation: Benefits are indirect financial and

nonfinancial payments employees receive for continuing nonfinancial payments employees receive for continuing their employment with the company. They include things their employment with the company. They include things like health and life insurance, pensions, time off with pay, like health and life insurance, pensions, time off with pay, and child-care assistance.and child-care assistance.


Incentives and Change Incentives and Change • Faced with the need to change, managers can change one or Faced with the need to change, managers can change one or

more of five aspects of their companies—their more of five aspects of their companies—their strategystrategy, , cultureculture, , structurestructure, , technologiestechnologies, or the , or the attitudes and skills attitudes and skills of of the employees. Good the employees. Good incentive schemes incentive schemes can also help with can also help with this processthis process



Managing Organizational Managing Organizational Change ProgramsChange Programs

StrategyTechnologi

esCulture

What to Change

Structure Employees

Resistance to change Resistance to change

• Knowing how to deal with resistance to change is the Knowing how to deal with resistance to change is the heart of implementing an organizational change heart of implementing an organizational change program.program.

• Implementing change can mean either reducing the Implementing change can mean either reducing the forces for the status quo[forces for the status quo[AgainstAgainst] or building up the ] or building up the forces forces forfor change. change.



Managing Organizational Managing Organizational Change and DevelopmentChange and Development

Overcoming resistance to

change

Effectively using organizational development

practices

The Human Resource Manager’s Role

Organizing and leading

organizational change

Change Change

• Psychologist Kurt Lewin formulated a model of change Psychologist Kurt Lewin formulated a model of change to summarize what he believed was a three-step to summarize what he believed was a three-step process for implementing a change with minimal process for implementing a change with minimal resistanceresistance



Managing Organizational Managing Organizational Change and Development Change and Development

(cont’d)(cont’d)

1

Moving

Overcoming Resistance to Change: Lewin’s Change Process

Unfreezing

Refreezing

2

3


How to Lead the ChangeHow to Lead the Change• Unfreezing StageUnfreezing Stage

1.1. Establish a sense of urgency (need for change).Establish a sense of urgency (need for change).

2.2. Mobilize commitment to solving problems.Mobilize commitment to solving problems.

• Moving StageMoving Stage3.3. Create a guiding coalition.Create a guiding coalition.

4.4. Develop and communicate a shared vision.Develop and communicate a shared vision.

5.5. Help employees to make the change.Help employees to make the change.

6.6. Consolidate gains and produce more change.Consolidate gains and produce more change.

• Refreezing StageRefreezing Stage7.7. Reinforce new ways of doing things.Reinforce new ways of doing things.

8.8. Monitor and assess progress.Monitor and assess progress.

Documents

Incentive Related Pay Carrot and stick?Carrot and stick? Chapters 12 &13Chapters 12 &13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice