Submitted By: Group 7

Kamran (PGPJ01035)
Dhruv Gandhi (PGPJ02017)
IB Anand (PGPJ02027)
Nikhil Aduri (PGPJ02037)
Roopveer (PGPJ02047)
Tejas Patil (PGPJ02057)

Pay for Performance &

Financial Incentives
HRM Presentation Submitted To Prof. Ajay Singh
 Money’s Role in Motivation

 Terminology - Pay-for-performance and Profit-sharing plans.

 Linking strategy, performance and incentive pay.
 Motivation and Incentives
1. Motivators and Frederick Herzberg
2. De-motivators and Edward Deci
3. Expectancy theory and Victor Vroom (M = E x I x V)
4. Behavior modification/Reinforcement and B.F. Skinner
Incentive Plan for Individuals
Piece Work
Pay based on number of items processed by an individual in a unit of time

Guaranteed Standard hour

Straight Piece
Work
An incentive plan in which a
person is paid a sum for
each item he or she makes
Piecework
plan
Minimum hourly rate is determined
and incentive per piece is given for
extra output over and above
standard production
plan
A plan by which a worker is
paid a basic hourly rate but
is paid an extra percentage
of his standard units per hour
or per day
Professional Employees
• Lawyers and Engineers
• Extra incentives for employees taking up more theoretical subjects
• Giving stock options for employees working on their projects

Non Financial and Recognition based rewards

• Employee of the month, Praise, Approval etc.
• Combination of Financial and Non Financial Incentives
• Skandia, IIM Ahmedabad, HCL, Infosys etc.

Job Design
• Not considered as an incentive, however it is instrumental in employee motivation
and retention
Merit Pay
• Any salary increase awarded to an employee based on individual performance
Incentives for Salespeople
Incentives for salespeople are typically sales commissions. It
is vary accordingly.
So it is important how the salespeople are being measured
and rewarded with their firms strategic goals

• Salary plan
• Commission plan
• Combination plan
• Maximizing sales results
• Sales Incentives in action
• Performance pay for the Government of India
Incentives for Managers and Executives

 Strategy
and the Executive’s Long Term and Total Rewards
Package
Criteria includes: financial performance, number of strategic goals met, employees
productivity
measures, customer satisfaction surveys and employees morale surveys

 Remuneration of Key Managerial Personnel in India

It is governed by Company’s Act,2013 which is 11% of the net profit of the company

 Short term incentives and the Annual Bonus

Individual Awards and Stock Options
 Team and Organization-Wide Incentive Plans

A. Profit Sharing Plans:

 Most employees receive a share of firms annual profits

B. Scanlon Plan
 Sharing of benefits formula
 Assume that normal monthly payroll to sales ratio is 50%
 In next month Sales = 10000
 Payroll = 4000
 Total savings = 1000
 So a percentage of savings is split amongst the workers, and remaining amount goes
to the firm

C. Risk Pay Plans

 Some portion of employees normal pay is at risk if they don’t meet their goals
 Much larger bonus if they exceed their goals

D. Employee Stock Ownership Plan

Incentives and Engagement

According to a survey conducted to get insights into the

role of incentive pay in fostering employee engagement,
following points were concluded
1. We should make improving employee engagement a
formal target of our compensation plan.
2. Appraise and incentivize our supervisors partly based on
whether they take steps to improve their subordinates’
engagement.
3. And, if possible employees should be allowed to
participate in devising the compensation plan.