Supervised by:

Dr. Maha Hafez

Introduced by :

Abeer F. Agami Amira M. Ali Hanan Seif

It is any type of financial reward that is provided only when certain specified performance results occur. AKA : Variable Pay or Contingent Pay.

Motivation. Increase the commitment. Reinforce cultures and values. Alignment with company performance. Discriminate equitably between employees based on performance.

Payment method
Frequency of payout Ways of measuring performance

Choice of which employees are covered

Pay based on individual performance differences. Ability to finance performance reward. Use SMART performance standards. Communicate the payout formula. Keep administrative costs reasonable.

Individual

Group

Organizational

Merit pay Incentive pay Profit sharing Ownership Gain sharing

Annual pay increases are usually linked to performance appraisal ratings.

Merit increase grid combines an employees performance rating with his/her position in a pay range, to determine the size and frequency of his/her pay increases.

Develop employee confidence and trust in performance appraisal.

Establish job-related performance criteria.

Separate merit pay from regular pay. Distinguish merit raises from cost-of-living raises. Withhold merit payments when performance declines.

Depends on reliable and accepted performance measures. Cause poor relationships between supervisors and their subordinates, and among subordinates. Not suitable for work depending on collaboration and cooperation. Setting the total available bonus pool is an arbitrary decision by top management and can cause dissatisfaction. How to define behavior that will be rewarded? is a tough question.

Straight piece-work Payment of a uniform price / unit of production. Forms: Money piecework Time piecework Sales Commissions Basic commission on sales volume One-third of salary Satisfy all the criteria listed for bonus schemes

Gainsharing
A form of group compensation based on group or plant performance (rather than organisation-wide profits) that does not become part of the employees base salary.

Group incentives
Tend to measure performance in terms of physical output.

Profit Sharing Any procedure by which an employer pays, or makes available to all regular employees, in addition to their base pay, current or deferred sums based upon the profits of the enterprise.
Challenges:

Agreement over division of profits between company and employees.

Possibility of no payout due to financial condition of company.

Ownership Stock option An employee ownership plan that gives employees the opportunity to buy the companys stock at a previously fixed price.
Employee stock ownership plan (ESOP). An employee ownership plan that provides employers certain tax and financial advantages when stock is granted to employees.

Thank

Questions???