Discussed Recognizing Employee Contributions with Pay. Performance management is linked to a businesss incentive reward programs, that are linked to a businesss strategic goals. The purpose of an incentive rewards program is to motivate and incentivize employees behavior towards desired outcomes.

A department manager evaluates the performance of 3 supervisors. These supervisors oversee the performance of 6 employees working in three shifts. The department produces Do-dads. Also, the department received new technology designed to improve production output and quality of product output. This new technology claims to increase productivity by 18%. Before the new technology, the department produces 5,052 Do-dads a product cycle. With the introduction of the new technology, senior management changed the production output goal to 5,950 Do-dads a product cycle, an 18% increase. Senior management granted permission to develop a pay-for-performance incentive program that incentives the performance of the 3 supervisors and an incentive program for the 18 employees who operate the new technology.

(Managers) From the position of the Department Manager: Within the textbook, review the list of Pay for Individual Performance (pp. 406 411), the list of Pay for Group Performance (pp. 412-413), and the list of Pay for Organizational Performance (pp. 413-416) and select a pay-for-performance program or a combination of pay-for-performance programs to incentives the performance of your three supervisors to perform as performance coaches. Argue WHY this pay-for-performance program or the combination of pay-for-performance programs will incentives (motivate) the three supervisors to meet the performance standard of 5,950 Do-dads a product cycle.

____________________________________Page 406-413 Summarize____________________________

Organizations may reward individual performance with a variety of incentives:

• Piecework rates

• Standard hour plans

• Merit pay

• Individual bonuses

• Sales commissions

Group Bonuses and Team Awards

In contrast to gainsharing plans, which typically reward the performance of all employees at a facility, bonuses for group performance tend to be for smaller work groups.²¹ These bonuses reward the members of a group for attaining a specific goal, usually measured in terms of physical output. Team awards are similar to group bonuses, but they are more likely page 413to use a broad range of performance measures, such as cost savings, successful completion of a project, or even meeting deadlines.

Both types of incentives have the advantage that they encourage group or team members to cooperate so that they can achieve their goal. However, depending on the reward system, competition among individuals may be replaced by competition among groups. Competition may be healthy in some situations, as when groups try to outdo one another in satisfying customers. On the downside, competition can also prevent necessary cooperation among groups. To avoid this, the organization should carefully set the performance goals for these incentives so that concern for costs or sales does not obscure other objectives, such as quality, customer service, and ethical behavior.

Profit Sharing

Under profit sharing, payments are a percentage of the organizations profits and do not become part of the employees base salary. For example, General Motors provides for profit sharing in its contract with its workers union, the United Auto Workers. Depending on how large GMs profits are in relation to its total sales for the year, at least 6% of the companys profits are divided among the workers according to how many hours they worked during the year.²⁴ The formula for computing and dividing the profit-sharing bonus is included in the union contract.

*Incentive Pay for Executives

*Performance Measures for Executives