Choosing Incentive Plans
There are questions regarding the advantage or the disadvantage of incentive plans. Are incentive plans good for an organization or bad for self-esteem? The answer is very much dependent on whether the prize incentive plan assists to sustain the company’s objective, such as raise revenues and customer allegiance, or if it simply produces detrimental competitiveness and duplicity among your staffs. If one chooses to launch a reward incentive plan, a meticulous balancing act is essential to ascertain good benefits. Incentive plans play an important role in today’s corporate world.
Before, the only employees presented with incentive plan were those on sales and top officials which are no longer the case in this present world since every employee were now given a chance to attain incentive plans. Incentive pay is significant on an organization in that it demonstrates approval and generates a sense of involvement in the organization’s welfare “that straight salary dollars, no matter how large, don’t convey” (BusinessTown. com 2003). A well-made incentive plan could help an organization to make the employees work together.
It helps in pointing them in the course of action you want them to do, also, it allows an organization an extra push which could give it an edge in today’s corporate world. Profit-sharing plan is one of the most well-known incentive-pay plan there is at large organizations. Usually this plan is accessible to every regular employee. Usually, this kind of plan is done by taking some percentage from the organization’s income and giving it to eligible employees for them to share among themselves. Splitting of the award is normally based on the wages of the employees.
This kind of incentive is typically done annually. Among the advantages of this kind of plan are that it unites people since they are all in the same boat, it makes individuals concentrate on productivity, and its expenditure to the organization varies dependent on the pre-tax earning. However, profit-sharing plan also has its shares of disadvantages in that its main determinant is the base earning of the individual and not his or her accomplishment all throughout, and that it is generally concentrated on a lone goal.
For some organizations this kind of plan could only lead to annoy employees by producing anticipations which may not be accomplished on that year thus leading to a low morale. Basically there are really many pros and cons which surround this issue. Though there are many kinds of incentive plans there usual advantages are mainly that it produces better rights and loyalty by the employee, it stimulates the production of new proposals or thoughts, it advances closer teamwork between owner and employees, it produces the likelihood of better administration awareness on the employees, and the like.
Among the common disadvantages are additional expenses for the company, further concessions, modification in priorities necessitates another negotiation, growth in arguments, complexity in founding unbiased and reasonable objectives for implementation evaluations. “It is wildly unrealistic to assume that all incentive programs work, or that by taking away individual rewards, productivity per person will triple” (Hays 1998). As could be seen in a thorough analysis of this statement any kind of incentive plans both has advantages and disadvantages.
It is up to the company or to the organization if they want to take the risk. Basically, if you want to better improve your organization you would have to take extra measures and incentive plans are one of those. If you want the advantages to outweigh the advantages the incentive plan would have on your company, a well-thought out plan is necessary. One must first ask his or herself what he or she wants to achieve and then he or she should move on to list the advantages and the disadvantages of the plan.
The plan which succeeds to produce more advantages could then on be used on your company. Basically, incentive plans works or else the rest of the corporate world would not even bother to think of incentive plans in the first place. The important factor is to determine which plan would work best on your organization. A careful planning is all it takes to make incentive programs succeed.
References: BusinessTown. com (2003) Choosing Incentive Plans. Hays, S. (1998) Pros & Cons of Pay for Perfomance.Sample Essay of PaperHelp