Short Term Incentive Pay System - 1800 Words

Short Term Incentive Pay A survey report for publicly traded companies administered by WorldatWork found that 99 percent of the 350 companies had some form of short term incentive pay system in place (Miller, 2014). Short term incentive pay compensates employees for achieving short term business goals that are typically a year or less. These goals can depend on factors such as the type of business, its specific strategy, and market conditions to name a few. Metrics for short term incentive plans can include financial metrics like revenue growth and profit maximization as well as non-financial metrics specific to the company, such as safety or quality assurance, customer satisfaction, and more (Fotsch Case, 2015). Short term incentives normally reflect a percentage of the employee’s salary or wage; there are threshold, target, and maximum levels that can be achieved providing different levels of compensation based on outcome. Short term incentive pay can involve individual employee performance, or g roup company wide performance. Some examples of short term incentive pay include merit pay, bonus pay, and profit/gain sharing. Understanding the specific processes and benefits of these types of short term incentives allows employers to choose which plan saves the company the most money in terms of productivity and reduction of turnover. Individual Short Term Incentive Pay Over half (55%) of publicly traded companies offer an annual incentive plan or bonus plan toShow MoreRelatedChoka Enterprise Rewards System974 Words   |  4 PagesEdmonson Student Number: 308004287   Coursework Assignment CHOKA Enterprise Rewards System PROPOSAL: OBJECTIVE An effective reward system is organized to stimulate, inspire and motivate individuals to enhance their overall job performance. Our system is design to appeal and retain staff of the right quality with an understanding of the financial status of the organization. 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Incentives hinder creativity andRead MorePay for Performance1091 Words   |  5 PagesTraditionally, all incentive plans are â€Å"pay-for-performance† plans. They pay all employees based on the employee’s performance (Dessler). Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them both in terms of salary and other benefits accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of rewarding employees for performance.