This website uses cookies to ensure you have the best experience. Learn more

Bonus Vs Individual Incentive Plan Essay

1068 words - 5 pages

Group Bonus Incentive Plan
* Help to build a unity amongst the workers, therefore a more work friendly environment.
* Eliminates the segregation between high bonus earners and low bonus earners. This helps to reduce the uncertainty of future bonus payouts.
* Helps individuals of different ages to learn new skill sets from their peers through group bonding.
* Improves the overall morality of the workers.
* Help to create a brand image that may be attractive to potential new employees.
* Team competition will drive the members in the group to reach deeper into their skill sets to make the group succeed.
* Paying bonus’ as a team encourages them ...view middle of the document...

* The ability to work for the prestige of an individual bonus granted disappears with the team / group bonus schedule
* With group bonus schedules allow people to take advantage of a free ride to the bonus granted to the group. Slacking will prevail in less motivated people

Individual Bonus Incentive Plan
* Reflects the actual amount of individual performance.
* Helps to motivate individuals when a high level of competitive nature.
* Easier to evaluate the individuals based on performance.
* Allows for higher payouts to top performing employees.
* Employees who do perform at the top-level will feel more satisfied about their rewards and will be motivated to continue to perform in the future.
* Do not need to rely on others for better bonus.
* Company can use it as a punishment for a bad employee ex. No bonus for missing too much work.
* Certain employees could feel left out if they’re getting a lesser bonus, even though they are performing, at what they feel, is an adequate level of output.
* Can have a negative effect in which all the employee cares about is obtaining a bonus, not actually caring about the company’s corporate culture.
* Employees could neglect the quality of the product if only focused on reaching a production goal.
* Payments can fluctuate by up to 70% from one period to the next.
* Time consuming and expensive for the company.
* Monitor bias, might not receive the proper bonus.
* Company can increase production standards and the employee will receive a lesser bonus than expected.
* Company can use it as a punishment for a bad employee, rather than addressing that particular employee’s problems.
* May have to hire a full-time employee to be in charge of employee evaluations.

Which system should prevail?
Each system has its own set of advantages and disadvantages. Having goals set for performance will help employees function more efficiently on a personal level. With the team bonus structure, the employees will feel more important to the company and not feeling left out if the goals are not met. However, the team bonus structure can cause a sort of laziness in people with weaker work ethic, under the belief that they will receive the bonus...

Other Papers Like Bonus Vs Individual Incentive Plan

Incentive Plans Essay

610 words - 3 pages categories are: 1) team gainsharing profit-sharing, 2) team goal-based incentive systems. 3) Team discretionary bonus systems, 4) team skill incentive systems. 5) Team member skill incentive systems, 6) team member goal incentive systems, and 7) team member merit incentive systems. Team gainsharing and profit-sharing incentive are an incentive plan that is tied to potential profits from the organizational. Team goal-based incentive is an incentive

Pay System Essay

1087 words - 5 pages performance. Also, an important TDR related to this position is that of generating and monitoring one’s own sales ideas. The organization should provide individual bonuses to the employees who are proactive in generating different sales ideas for the firm. As this is a subjective offering by the employee rather than a physical output, again, the individual bonus incentive pay seems to be the most effective way to motivate employees in this field

Strategic Cost Management

1313 words - 6 pages Variance (materials, labor, variable overhead) + Labor Rate Variance + V&F Overhead Spending Variances] (if favorable) Net Production Efficiency Variances + Net Production Rate/Spending Variances = $1,171,859 Unfavorable Bill Wilford’s bonus = $0 3) What role do you think the new incentive compensation plan played in how the purchasing, marketing, and production departments performed? We think the new incentive compensation plan put

Management Compensation

1296 words - 6 pages punishment. A managers total compensation package consists of salaries, benefits and an incentive compensation. Incentive compensation plans are divided into short-term and long-term plans. Under a short-term plan, managers are usually paid in cash. The total amount that can be paid out to employees in a given year is called the “bonus pool” and relates to the overall profitability in a current year. Bonus pools can be established setting

Engstrom Auto Mirror Plant 2

595 words - 3 pages measured through chain of command, such as the person who signs off for employee to get bonuses. It should be noted that bonus rate is determined by consistent or above average productivity, it is not given to workers just because they show up to work, it is not a part of regular compensation. • Create incentive plan or re-design Scanlon Plan to give bonuses based on the company’s increased revenue with the extra incentive to the individual

Engstrom Plant

653 words - 3 pages Problem Statement The Engstrom Auto Mirror plant is a small privately owned business that supplies mirrors for trucks and cars. The plant had suffered several years of downturn before Robert Benton introduced the Scalon plan. The Scalon plan, an employee incentive program, was created to boost employee morale, increase productivity, produce quality inventory and lead the plant to a turn around. Now, the plant manager, Robert Benton, must

Pioneer Savings and Loan

3254 words - 14 pages the executive salary committee. Generally speaking, the committee used the following guidelines to approve individual awards: 1. The first 50% of the bonus pool should be allocated to an eligible employee based on his or her salary’s percentage of the total salaries of all eligible employees in the incentive plan. 2. The second 50% of the bonus pool should be distributed at the discretion of the committee. 3. No bonus should exceed 40% of

Linkedin Case

4118 words - 17 pages years. Managers must earn back any negative bonuses accumulated in the bank before any bonus payment can be made. See the table at the end of this report for an example of the bonus bank system.     In an EVA incentive compensation plan, managers and shareholders face similar risks. With EVA, compensation is tied to meeting investor expectations, and not to meeting a plan or budget. By disconnecting incentive compensation from planning and

Hrm240 Insentive Plans

568 words - 3 pages (“Incentive Pay (pay for performance),” 2006). This type of incentive is a way of letting an employee know that the company notice their efforts and appreciate them. People thrive on positive feedback. Casual incentives are characterized by the inexact or unexpected timing and amount of the reward. Disadvantages to this plan could be envy amount employees, views from employees of favoritism, and social distance between employees (“Incentive Pay

Project Management

1337 words - 6 pages division/department should consult with the HR office and obtain the necessary approvals o Incentive - Payments predefined in an approved plan document should be confirmed by the Plan Administrator and HR office. o Tax treatment of bonus payment - Employee recognition awards may be grossed up to cover taxes if the documented award plan provisions indicate that such payment will be grossed up • Reason for

Innovation and Knowledge

1561 words - 7 pages Individual employee incentive and recognition programs Incentive payments for hourly employees may be determined by the number of units produced, by the achievement of specific performance goals, or by productivity improvements in the organization as a whole. In the majority of incentive plans, incentive payments serve to supplement the employee's basic wage. Piecework One of the oldest incentive plans is based on piecework. Under

Related Essays

Incentive Compensation Essay

1126 words - 5 pages hardly ever satisfied with the amount given. Pay for performance is not the same as a bonus. Pay for performance is usually an incentive plan that is based on the performance of each individual as well as the performance of the company. The incentive plan supports the pay-for-performance philosophy by aligning a percentage of total compensation with the attainment of annual business goals and individual performance objectives. The plan is also

Houston Fearless 76 Case Study

1298 words - 6 pages implement and the complexity of the changes to be undertaken, the newly proposed plan focuses more on the company’s goal rather than individual staff problems. It may also not be liked by the salespersons as they are used to having an easy to calculate bonus system that was based on sales. The new incentive is somewhat complicated in arriving at what a salesperson would make from a sale of a product. A “commission based on product gross margins

Houston Fearless 76 Essay

337 words - 2 pages where company profit potential was greatest. The new incentive plan will factor in three perspective /key drivers of the business and these are the products gross margin, sales forecast and management by objective. 1. Commission based on product gross margin, but with no commissions paid until gross exceeded 70% of forecast; 2. A bonus paid on forecast accurancy; 3. A bonus paid on achievement of individual management by objetives MBO

Incentive Pay Essay

1147 words - 5 pages incentive. Evidence from the Lincoln electric case suggest that “an individual’s share of the bonus pool was determined by a semiannual merit rating which measured individual performance compared to that of other members of the department or work group”. This would ensure that the employees would compete with each other and produce similarly so that they receive a good merit rating when their performance was compared to that of the other employees