Comparison of the incentive structures

Sl Area
.

Earlier Plan CIPP

Consequences

Suggest
ion

4) Reward
Structure

Not fully
proportional,
and
employees
are rewarded
only for
following the
one best
method.

Reward
Structure is
proportional,
since if the
team exceeds
the benchmark
the team is
allowed to
retain extra
earnings due to
higher
productivity

Teams were not motivated in the

Positive
earlier structure to strive for
producing more output, CIPP provides
them with extra incentive to do so.

5) Focus

Focus is on
the
individual.

Focus is on the
group.

a)The earlier plan encouraged

internal competition among the team
members proved detrimental to the
team while CIPP shifted the focus to
closer collaboration within teams
b)However with CIPP internal
differentiation based on performance

Promotin
g
employe
es can be
problem
in CIPP.

Comparison of the incentive structures

Sl Area
.

Earlier Plan CIPP

Consequences

Suggest
ion

6) Cost

Costly

Cost Effective

Earlier plan required significant

investment to create and audit
performance standards. CIPP
mitigates this cost since
benchmarking performance is a one
time investment and will not require
creating and auditing standards on a
regular basis.

Positive

7) Measurement
of
Performance

Performance
is measured
keeping the
industry
standard
performance
as base.

Performance is
measured
keeping the
teams earlier
performance as
the benchmark.

In CIPP, the performance benchmark Negative

is the teams earlier performance and
not the industry standard. Since
teams benchmark performance may
be below industry standard this
method of measurement is unreliable

8) Involvement
of nonincentive
workers

No
correlation of
their
performance

Correlation
exists between
their
performance

In the earlier plan there was a very

high subjectivity in the measurement
of performance of non incentive
workers, however in CIPP this issue is

Negative