To be effective, rewards must be linked to employee
performance. Any incentive plans must also be customized to meet the unique
needs of each individual. Management must know what is important to its
employees and then provide incentives that are meaningful to them.
The work force today is not homogeneous. Each worker has
unique needs. A fair and equitable incentive system will customize rewards to
meet the variety of needs of a diverse work force.
Effective incentive plans must also be creative. Since different
needs motivate different people, the incentives must fulfill a variety of
needs. The trend is toward incentives that are not financial in nature. For
example, gift certificates, additional time off, dinners, and sports equipment
are being used more widely today. Plaques, certificates of appreciation, and
public recognition have also been used effectively to improve motivation. A
handwritten note from a superior in the organization doesn’t cost the firm a
thing, but it is extremely effective in reinforcing good work behaviors.
Two ways that an HR professional can determine incentive pay
is through individual or pay for group performance. An individual incentive
such as merit pay is an increase in base pay to how successful an employee
performs his or her job. The merit increase is normally given on th e basis of
an employees having achieved some objective performance standard, although a
superior’s subjective evaluation of subordinate performance may play a large
role in the increase given. Merit raises can serve to motivate if employees
perceive the raise given to be related to the performance required to earn
Merit pay plans establish an effort performance and
performance reward link, if an employee’s effort leads to successful
performance, the employee is rewarded by the organization. In consideration to
group and company performance if the individual performs well, the reward is
granted regardless of how well others have performed their jobs or how well the
company, as a whole has done.
Pay for performance incentives such as gain sharing which is
a program which measures increases in productivity and effectiveness and
distributes a portion of each gain to employees. (Noel, p.379). With
gainsharing the organizations have determined that total quality may be best
achieved through effective teamwork. Gainsharing plans offer employees a cash
reward for meeting or exceeding goals based on the collaborative performance of
a team of employees. Unlike individual incentive plans gainsharing plan allows the
employees to know what needs to be done to achieve a payoff. The formula is
stated in objective terms and protected from management bias. Gainsharing also
encourages the employees to improve the company’s overall productivity.
are often referred to as indirect compensation. Benefits are also included in
the total compensation package for an employee. Benefits are used to attract
employees and improve the satisfaction level of the workforce. There are both
required benefits and voluntary benefits that employers may offer. Some
voluntary benefits have become so popular that many employees feel they are
entitled to them. However, benefits that are not required by law are only
provided at the discretion of the employer. The required benefits an employer
must offer are as follows:
Social SecurityUnemployment compensationWorker’s compensationFMLAHealth care benefitsIt is common for employers to
provide certain benefits to their employees, many of which are subject to
strict rules under the Employee Retirement Income Security Act(ERISA), the
Internal Revenue Code, Antidiscrimination laws, and Accounting requirements.
With the world we live in today, job seekers are looking for
more than just salary when looking for a job or even thinking of leaving their
current position. Most people think of compensation in terms of salary alone.
But it is more than that it is all forms of financial returns and tangible
services and benefits employees receive as part of an employment relationship.
Its’s essential that the organization offer benefits that would be beneficial
to the employees of the company. Within
a retail organization they can offer discounts such as 50 percent off twice a
month for friends and family in addition to the normal 15 percent off daily
discount. They can offer educational assistance for employees who would like to
further their career in business or fashion. Today wellness programs are
becoming bigger and they are good to have because it allows the employees to
have access to helpful educational information.
It is critical that organizations effectively and frequently
communicate the benefits package to employees. Employer’s use an array of methods
to communicate benefits to employees, such as the following:
In- house publications (employee handbooks and
organizational newsletters)Group meeting and training classesVideotapesBulletin boardsPayroll inserts/pay stub messagesSpecialty brochures
New employee intranet self-services have made
it easier and more accessible for employees to gain information about their benefits
plans, enroll in their plans of choice, change benefits coverage without contacting
an HR representative. When communicating employee benefits, the best advice is to
use multiple media techniques. Different employee groups have different ways of
learning and distinct preferences in how they prefer to receive information.