Discuss how incentive pay plans both individual and group motivate employees to achieve high levels of performance.

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Original Question: Discuss how incentive pay plans both individual and group motivate employees to achieve high levels of performance. Identify potential weaknesses of these plans and suggest steps that can be taken to make these plans highly effective. Then, choose one industry that either an individual or group incentive pay plan would work best providing support for your reasoning (using personal examples to illustrate your point if possible). Explain your answer. Respond to at least two of your fellow students postings.

Response 1 – .5 Page:
Motivating employees (both individual and group) through achieving high levels of performance requires innovative incentive plans for the specific purpose of incentivizing and encouraging employees to higher achievement levels. This weeks discussions and lecture directly links the relationship between performance management and compensation. We have learned that employee incentive compensation programs grew from the philosophy that employees will be driven by rewards, and thus, incentive compensation programs are designed to produce targeted results organizations reward employees who produce. Accordingly, incentive pay plans rewards employees for partially or completely attaining a predetermined work objective (Martocchio, 2017). Rewarding employees for attaining stated goals and objectives incentivizes employees to become high performing employees; especially if the incentive plan is desirable in terms of salary and extrinsic and intrinsic rewards.

One potential weakness in incentive pay plans is how to motivate employees who are under achievers or those who cannot perform at a high level as their peers? This is a difficult question that faces benefits and compensations teams tasked with creating incentive plans that will motivate and cater to the organization. For a plan to be highly effective, the incentive or reward must be enticing or motivating enough such that it gives the employees an added benefit. For example, an annual bonus plan that would provide a significant raise above their current salary, and in addition, an incentive to add to their 401k retirement plan paid by the employer if they reach certain performance goals. According to Ogbonnaya, Daniels and Nielsen (2017), performance-related pay was positively associated with job satisfaction, organizational commitment, and trust in management (Ogbonnaya, et al, 2017). Employees view the incentives (increase in pay or a bonus) as a trade-off for contributing to the organizations success. Thus, individual or group incentive pay plans can influence employee job satisfaction and well-being in a sustainable manner.

As an example, in my organization, our annual incentive/bonus structure is designed on a two-tier plan. In the first tier, the annual bonus is linked to individual performance. Depending on the individuals role and performance for the year, the incentive payout can be anywhere from 10-25% of our annual compensation. In the second tier, there is an added annual bonus we are eligible to earn. If our company accomplishes (and exceeds) its overall annual goals, the board of directors will grant an additional amount of bonus to individuals in the organization. Additionally, depending on the companys performance, we can receive additional funds in our retirement plan and pension plan for the year.

Response 2 – .5 Page:

Individual incentive pay plans reward employees for meeting work-related performance standards like productivity, customer satisfaction, attendance, quality, or safety (Martocchio, 2017). Their main aim is to motivate workers on performing better and achieving organizational goals and objectives. Group incentive plans refer to award programs towards groups of employees who meet or exceed various pre-established organizational performance levels. Generally, incentive programs aim at leveraging human behavior. The rewards increase employees intrinsic motivation by connecting activity and an objective, making rewarded employees get the motivation to complete the expected tasks r goals (Cook et al., 2019).

A weakness of the incentive pay plans is that not all workers find motivation in the incentives. This means that a group or an individual may not feel motivated by the incentives despite the organizations effort to acknowledge their work. Hence, organizations should the best ways to motivate different employees and not only dwell on a certain incentive. Incentive programs may also lead to resentment (Martocchio, 2017). Employees may resent their colleagues who attain goals with less effort. Similarly, in team-based incentives, workers may resent coworkers who seem to be doing less than their fair share. In addition, incentives may also motivate workers to undermine other peoples efforts instead of working as a group to attain organizational objectives.

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