8.5: List the types of incentive plans. Flashcards
What is another term for incentive plans?
Variable pay programs.
What are the five main types of incentive plans?
Individual bonus – Supplements base pay to reward extra effort.
Team- or group-based incentive – Rewards team performance based on standards.
Merit raises – Increases pay based on performance, often annually.
Profit sharing – Pays bonuses from company profits.
Employee stock ownership plans (ESOPs) – Gives employees stock at a set price.
What are some best practices for designing incentive plans?
Reward employees who matter most to business performance.
Balance short- and long-term incentives.
Reward better results with better pay.
Align incentives with both individual and organizational goals.
Review plans periodically.
Link incentives to company goals (e.g., sales growth).
Design plans to support both short- and long-term success.
What are employee benefits?
Indirect forms of compensation such as health insurance, vacation, sick leave, and government-mandated coverage.
How much can benefits cost employers as a percentage of payroll?
Up to 40%
What influences the motivational value of benefits?
How benefits are designed and communicated.
What are the goals of a benefits program?
Improve job satisfaction
Meet employee needs (health, security, environment)
Attract and retain talent
Motivate employees
Create a competitive employer brand
What is a good practice when designing benefit plans?
Consult employees through surveys or committees.
What is value-based healthcare?
A holistic approach to health benefits that promotes healthy lifestyles to reduce long-term costs and increase productivity.
