BUS 409 Week 4 Discussion – Incentive Pay Programs

Part 1

Respond to the following:

Put yourself in the position of an HR manager of a large research and development facility. The CEO is concerned about rising labor costs. The most recent employee opinion survey showed employee satisfaction with their compensation as low.

The CEO is considering revamping the incentive pay program. He’s not sure whether a person-focused incentive plan or a team-based incentive plan would best address the challenge of rising labor costs and employee satisfaction:

• What are the pros and cons of each of these incentive play plans?
• Which program would you recommend to your CEO that would best meet his goals?
  • Provide the rationale for your explanation.

Part 2

Post at least one substantive comment to student’s post (Princess S.)

Hello Professor and classmates:

A person-focus incentive plan focuses on a single employee’s knowledge, skills, and competency. Like everything else, a person-focus incentive plan has its pros and cons. A pro of a person focus incentive pay plan is that it will inspire employees to strengthen their knowledge and skills in the work place. Employees will be provided with job security, flexibility, ability to set goals, leaner staffing, improve productivity, and have the opportunity to excel into leadership. Cons of a person-focus incentive plan are that employees may not want to learn new skills, hourly labor costs, training costs, and overhead costs can all increase. Another con is that the company may have issues determining pay for an employee based on a person’s knowledge and skills set. Sometimes this may cause a company to have to negotiate the pay with an employee and may cause the employer to pay the employee more than they were expecting.

A team-based incentive plan rewards employees as a group instead of rewarding them as an individual. One pro of having a team-based incentive plan is that companies can develop performance measures more easily because they use less resources (Martocchio, pg. 97). Another pro is greater group cohesion because these groups usually work better towards achieving common goals (Martocchio, pg. 97).

I would recommend that the CEO uses the team-based incentive plan. I think that this would be the best approach to rising labor costs and employee satisfaction. It will encourage team work, collaboration, and happier employees. A team-based incentive plan can help members get the most out of their incentives, reduce employee turnover, and give more flexible work arrangements.

1. Martocchio, Joseph J. Strategic Compensation. Available from: Strayer University Bookshelf, (10th Edition). Pearson Education (US), 2019. https://strayer.vitalsource.com/reader/books/9780135175910/epubcfi/6/216%5B%3Bvnd.vst.idref%3DP700101532100000000000000000157F%5D!/4/2%5BP700101532100000000000000000157F%5D/14%5BP70010153210000000000000000015C9%5D/2/2%5BP70010153210000000000000000015CA%5D/3:13%5B%20Pl%2Can%5Links to an external site.

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