© 2008 Prentice Hall, Inc.
© 2008 Prentice Hall, Inc.
All rights reserved.
All rights reserved.
PowerPoint Presentation by Charlie Cook
PowerPoint Presentation by Charlie Cook
The University of West Alabama
The University of West Alabama
1
Human Resource
Human Resource
Management
Management
ELEVENTH EDITION
ELEVENTH EDITION
G A R Y D E S S L E R
G A R Y D E S S L E R
Pay for Performance and
Pay for Performance and
Financial Incentives
Financial Incentives
Chapter
Chapter
12
12
Part 4 | Compensation
Part 4 | Compensation
© 2008 Prentice Hall, Inc. All
rights reserved. 12–2
After studying this chapter, you should be able to:
1.
1. Discuss the main incentives for individual employees.
Discuss the main incentives for individual employees.
2.
2. Discuss the pros and cons of incentives for
Discuss the pros and cons of incentives for
salespeople.
salespeople.
3.
3. Name and define the most popular organizationwide
Name and define the most popular organizationwide
variable pay plans.
variable pay plans.
4.
4. Describe the main incentives for managers and
Describe the main incentives for managers and
executives.
executives.
5.
5. Outline the steps in developing effective incentive
Outline the steps in developing effective incentive
plans.
plans.
© 2008 Prentice Hall, Inc. All
rights reserved. 12–3
Motivation, Performance, and Pay
Motivation, Performance, and Pay
•Incentives
Incentives
Financial rewards paid to workers whose production
Financial rewards paid to workers whose production
exceeds a predetermined standard.
exceeds a predetermined standard.
•Frederick Taylor
Frederick Taylor
Popularized scientific management and the use of
Popularized scientific management and the use of
financial incentives in the late 1800s.
financial incentives in the late 1800s.
Systematic soldiering
Systematic soldiering
Fair day’s work
Fair day’s work
© 2008 Prentice Hall, Inc. All
rights reserved. 12–4
Employee Incentive Plans
Employee Incentive Plans
Individual Employee Incentive
and Recognition Programs
Sales Compensation
Programs
Organizationwide Incentive
Programs
Executive Incentive
Compensation Programs
Team/Group-based Variable
Pay Programs
Pay-for-Performance
Plans
© 2008 Prentice Hall, Inc. All
rights reserved. 12–5
Incentives for Salespeople
Incentives for Salespeople
•Salary Plan
Salary Plan
Straight salaries
Straight salaries
Best for: prospecting (finding new clients), account servicing,
Best for: prospecting (finding new clients), account servicing,
training customer’s salesforce, or participating in national
training customer’s salesforce, or participating in national
and local trade shows.
and local trade shows.
•Commission Plan
Commission Plan
Pay is a percentage of sales results.
Pay is a percentage of sales results.
Keeps sales costs proportionate to sales revenues.
Keeps sales costs proportionate to sales revenues.
May cause a neglect of nonselling duties.
May cause a neglect of nonselling duties.
Can create wide variation in salesperson’s income.
Can create wide variation in salesperson’s income.
Likelihood of sales success may be linked to external factors
Likelihood of sales success may be linked to external factors
rather than to salesperson’s performance.
rather than to salesperson’s performance.
Can increase turnover of salespeople.
Can increase turnover of salespeople.
