Traditionally, all incentive plans are “pay-for-performance” plans. They pay all employees based on the employee’s performance (Dessler). Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them both in terms of salary and other benefits accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of rewarding employees for performance. It is very important for organizations to make sure that the incentive plans are well structured to need the needs of the employee and in return make the organization profitable. Giving incentive pay to employees that has not earned them destroys the motivation and moral of employees which leads to less productivity.
Thanks to public outcry, shareholder outrage, and increased government scrutiny, companies are making some adjustments to their executive incentive programs. At the very least, it gives the appearance of linking pay to performance. Most managers get short-term bonuses and long-term incentives in addition to salary.50 For firms offering short-term incentive plans, virtually all 96% provide those incentives in cash. For those offering long-term incentive plans, about 48% offer stock options. These aim to motivate and reward management for long-term corporate growth in shareholder value. The size of the bonus (in terms of percentage of salary) is usually greater for top-level executives (Dessler). Often times top level management incentives are just a bit too much.
They are given large stock options, cash bonuses, and other high price incentives and often times they take advantage of the situation. Enron executives are a great example of taking advantage of a good thing. This is just one down fall of the incentive program, another issue would be employee moral decrease because they often times feels like management should not receive such large rewards when they the employee feels like they are going all the work. Enron officials manipulated information to protect their interests and to deceive the public, although the extent of their deception is still to be determined.
Both executives and board members claim that they weren’t aware of the company’s off-the-books partnerships and shaky financial standing. However, both Skilling and Lay were warned that the firm’s accounting tactics were suspect, and the Senate Permanent Subcommittee on Investigations concluded, “Much that was wrong with Enron was known to the board.” Enron’s leaders acted irresponsibly by failing to take needed action, failing to exercise proper oversight, and failing to shoulder responsibility for the ethical miscues of their organization. Enron officials put loyalty to themselves above loyalty to everyone else with a stake in the company’s fate-stockholders, business partners, ratepayers, local communities, and foreign governments.
They also abused the trust of those who worked for them. Employees felt betrayed, in addition to losing their jobs and retirement savings. America has an ethical issue because knowledge and techniques has been used to manipulate people unethically as well as to help them develop their potential. People who lack respect for the basic dignity of the human being could learn organizational behavior ideas and use them for selfish ends. Merit pay is a plan that most state agencies use. As times have changed and budgets are tight state government has cut back on merit play. The state merit programs were used to compensate employees for exceeding their work expectations. It has been over eight years since the state has given out merit pay.
Employee’s moral is very low because top level management has found ways to get their friends pay raises. Another misuse of the merit system is when an employee has performed above the call of duty and is over looked and an increase is given to a person that has been less productive but is good friends with the boss. When times are tough economically, it is more important than ever for companies to clearly communicate their commitment to employees,” said Rich Sperling, a senior consultant with Hay Group. “Employers can leverage a variety of financial and nonfinancial rewards to engage employees through tough times when budgets are tight, but communicating and reinforcing those messages through a variety of channels is critical.”(HR Focus).
How do you keep an employee motivated when there is nothing extra to give them for doing a job well done? Often times just a simple recognition of a job well done will keep an employee motivated. In my office we use to have a program called “Shout Outs”. Being that funding was tight and there were no pay raises being given out due to budget cuts our Deputy Director came up with this program. Giving employee’s recognition for going above and beyond to get a job done. It was amazing how the employees reacted to this program because so many people were never given credit for a job well done.
What I found out through this program was that when people are given credit for going a great job they are willing to go that extra mile above and beyond to make sure they job is done and it is quality work that is produced. Often time managers would take the credit for a job they did not perform and were given incentives and they ones that had really done the job was left in the cold. Organizations have to make sure that when incentives are given out that they people receiving the incentives are the ones that deserve them.
When an employee feels appreciated they are more willing to go without the incentive pay and get the job done it’s when they feel like the organization does not value them is when they start to look for employment with a company that appreciate them and make them feel like they are valuable to the organization. In conclusion incentives are environmental factors that are established for the purpose of motivating a person. Individual incentive programs give performance-based pay to individual employees.
Team-based incentives of course aim to incentivize work teams. Variable pay refers to group pay plans that tie payments to productivity or to some other measure of the firm’s profitability. Incentives play an important part in motivating employees to do a good job. When an employee feels like the organizations appreciate them rather it is with bonus pay, paid time off, recognition, family leave, or good health benefits that are more willing to go that extra mile to make sure quality service is provided. Benefits and incentives pay also helps to motivate employees they call in sick less are healthier happier people all because they feel more appreciated!!