Introduced by : Abeer F. Agami

Amira M. Ali Hanan Seif

Supervised by: Dr. Maha Hafez

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 employee’s 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 employee’s base salary.

Group incentivesTend 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.

OwnershipStock option

An employee ownership plan that gives employees the opportunity to buy the company’s 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 U

Questions???