INCENTIVE AND

EMPLOYEE BENEFIT
INCENTIVES
In the words of Burack & Smith, "An incentive scheme
is a plan or program to motivate individual or group
performance. An incentive program is most frequently
built on monetary rewards (incentive pay or a monetary
bonus), but may also include a variety of non-monetary
rewards or prizes.

On the other hand, French says, the term incentive
system has a limited meaning that excludes many kinds
of inducements offered to people to perform work, or to
work up to or beyond acceptable standards.

TYPES OF PLANS
Merit Pay
Individual Incentives
Profit Sharing
Ownership
Gain sharing
Group Incentives
Alternative Reward Systems

MERIT PAY
link performance appraisal ratings to annual pay
increases
focus: identifying individual differences in performance
better performance results in higher reward, contingent
on position in the range (compare-ratio)

INDIVIDUAL INCENTIVES
reward individual performance
payments are NOT rolled into base pay
performance is usually measured as a physical output
rather than subjective ratings

PROFIT SHARING
payments are based on a measure of organizational
performance (profits)
payments do NOT become a part of base pay
Advantage: may encourage workers to think more like
owners
Drawbacks:
workers may perceive their performance has little to
do with profit
deferred nature of payouts

OWNERSHIP
encourages employees to focus on the success of the
organization as a whole but may not result in motivation
for high individual performance
gains not realized until stock sold (employees leaving
company?)
Methods:
stock options
ESOPs (employee stock ownership plans)

GAIN SHARING
sharing productivity gains with employees
differs from profit sharing in that instead of using an
organization-level performance measure (profits) plans
measure group or plant performance
better for motivation
Examples:
Scanlon plan, Rucker plan, Improshare

GROUP INCENTIVES
Focus = smaller work groups
While gain sharing typically measures physical output,
group incentives tend to measure performance in terms
of a broader array such as
cost savings
successful completion of product design
meeting deadlines
Drawback: competition among teams

ALTERNATIVE REWARD SYSTEMS
alternatives to cash
travel
merchandise
earned time off
symbolic awards

MERITS AND DEMERIT OF INCENTIVE PLAN
Sr. Merits of Incentive based
Remuneration
Demerits of Incentive based
Remuneration
1. It is accepted as a sound technique for
the achievement of greater productivity
It is not considered a very good scheme
in countries in the West where it is
mostly prevalent.
2. For employers the need of vigorous
supervision is reduced.
It tends to create tension among different
workers in an organization.
3. Workers have the advantage of working
in a relatively calm atmosphere because
of minimum vigilance on them by the
superior.
A poor performer will earn very little.
4. The incentive is directly linked with the
productivity of the worker.
Tensions caused by incentive schemes
would give rise to internal relations
problems which would be a serious
matter of concern for the management.
5. The more the worker produces the
more he earns.
The tension created would eventually
affect the total output.
EMPLOYEE BENEFITS
Employee benefits encompass a broad range of
benefitsother than salarythat companies provide
to their employees. Some of these benefits, such as
workers 'compensation, social security, and
unemployment insurance, are required by law.



OVERVIEW OF EMPLOYEE BENEFIT SCENARIO
IN INDIA
Employee Benefits
Pay for
time not
worked
INSURANCE
BENEFITS
Retirement
Benefits
EMPLOYEE
SERVICES
PAY FOR TIME NOT WORKED

Pay for time not worked also called supplemental pay
benefits is one of the most costly benefits.
Common time off with pay periods include:
Unemployment insurance
Vacations and holidays
Personal days sick leave
Maternity leave
Funeral leave
Family and medical leave act(FMLA)


EMPLOYEE BENEFITS INSURANCE COS
VIEWPOINT
Employee Benefits
Insurance Retirement
Defined
Contribution
Defined
Benefit
Life Accident Mediclaim
Leave
Encashment
Gratuity
Superannuation
INSURANCE BENEFITS
Insurance is the equitable transfer of the risk of a loss,
from one entity to another in exchange for payment. It is
a form of risk management primarily used to hedge
against the risk of a contingent, uncertain loss
CTD..
Life insurance
Health care insurance
Legal insurance
Long term care
worker compensation

RETIREMENT BENEFITS

Retirement benefits are financial instruments designed to
help individuals after they stop working. Individuals
typically receive retirement benefits in the form of
regular cash installments or as protection in the form of
insurance coverage.



CONTD.
Pension
Gratuity
Leave Encashment
Voluntary Retirement Compensation
Social security
EMPLOYEE SERVICES
o Employee assistance program
o Counseling services
o Educational assistance plans
o Child care
o Elder care
o Food services
o Health services
o Legal services
o Financial planning
o Housing and moving expenses
o Transportation pooling/parking
o Purchasing assistance
o Credit unions
o Social and recreational services
o Awards