DISIGNING SOUND INCENTIVE SCHEMES,

PARAMETERS AND REQUREMENT

Presented By : Mukesh Upadhyay Roll No. 39

MPM 3rd Sem.

What Is Incentive

• Incentives are Reward Relating to Certain goals. Incentives can be Financial Or Non-financial.

• Incentive is the stimulation of effort and effectiveness by offering monetary or extra facilities.

• Wage incentives include all the plans that provide extra pay for extra performance In addition to regular wages for the job.

• It implies monetary inducements offered to

employees to perform beyond acceptance standards.

ADVANTAGES OF INCENTIVES

Benefits to the business

• Support to staff for joining business• Retain existing staff• Goodwill• Increase staff motivation, morale and loyalty• Boost productivity• Reduce absenteeism• Link individual and business performance• Focus employees on achieving targets• Build teamwork• Get Best Out Of Employee

For Example: Free health assessments may reduce absences.

BENEFITS TO STAFF

• Enhancing the quality of working life• Rewarding staff efforts• Adding value to the employment contract

Incentives Must Be

• Affordable• Transparent and • Appropriate to business • Incentives Should not seen as a Substitute of

Good Pay

Incentive schemes

Types of Incentive Schemes

• Financial and Non-Financial Schemes• Individual And Group Schemes• Short Term And Long Term Schemes

Financial Incentive can help improve performance And

Self Financing

I. Profit Related And Share Option Scheme

II. Bonuses

III. Commission

IV. Prizes

Non-Financial And Non Pay Include V. Formal Recognition / Award

VI. Training Schemes

VII.Promotion Plan

VIII.Gift Vouchers

IX. Extra Holidays

X. Company Car

Advantages and disadvantages of incentive schemes

INCENTIVE ADVANTEGS DISADVANTEGES

FINANCIALCan focus employees on hitting a target.

Places a value on achievement.

Rewards are sometimes small.

Can demoralise if not earned.

NON-FINANCIALCan recognise employee priorities and lifestyles.

Can encourage attachment to business.

Can be taken for granted.

May be inappropriate.

INDIVIDUALCan focus the individual on achievement.

Links extra pay with extra output.

Can be divisive.

Individual earnings can fluctuate.

GROUPCan encourage team working..

Can correct individual under-performance.

Can undervalue individual skills..

May encourage bullying of under-performers.

Factors in Incentive Scheme

• Productivity• Effect on Labour• Incidence of Fixed Overhead

Steps to Designing Incentive Scheme

• Identify the scheme's objectives.• Consult with staff and trade unions.• Relate the scheme to the business' remuneration

system.• Ensure that the planned scheme is competitive.• Decide on performance measures for staff.• Evaluate results.• Regularly review scheme and obtain feedback.

Parameters for Sound Incentive Scheme• The Reward Must be linked with the effort

involved and should be faire for both(E,E)

• It should provide for worthwhile and attainable objectives with Std. of performance not beyond the capability of Avg. worker.

• There shouldn't limit for additional earning.• Scheme should be permanent basis and shouldn’t

be changed without workers approval.

Continue………………

Continue………………

• Employee’s earning should not be affected by matter beyond their control. like Breakdown.

• The scheme should be in accordance with relevant national or local trade agreement.

• The scheme should facilitate supervision and

assist in production control.

Requirements for Effective Incentives SCHEMES

Schemes is clearly communicated. Schemes are understood. Rewards are easy to calculate. Employees participate in administering the plan. Employees believe they are being treated fairly. Employees believe they can trust the company

and that they have security. Rewards are awarded as soon as possible after

the desired performance.

QUESTIONS

THANK

YOU