Another group continuum represents incentive plans that by cooperation of all organizational members create a culture of ownership. These common incentives are profit sharing, and stock option and employee stock ownership plans (ESOPs).
According to Coates (1991) “profit sharing plans are defined as an arrangement in which companies make contribution, based on profits, to individual employee account” (p. 19). It can be distributed in form of cash (added to paycheck) or in a deferred form, where employer contributes to a retirement trust (Kruse, 1993, p. 5).
One of the advantages is that employees, by increasing their productivity and quality of work, assist with business growth and ultimately help themselves by gaining higher premiums (Coates, 1991). Kruse (1993) wrote, “profit sharing can motivate employees to work harder for increased profits, primarily through increase productivity,” and also “can aid economic stability and decrease unemployment” (p.2).
Despite the distinctions, profit sharing is prone to weaknesses and ¬criticism. Coates (1991) notes that one of the disadvantages is problem finding a correlation between increased or decreased productivity and profit sharing gains (p. 20). Not only the top management may have a hard time measuring it but also an average worker may have a difficulty relating his work to his profit share earnings (Noe, Hollenback, Gerhart, Wright, p.558). Additionally, during the economic downturn, employees may react negatively to the lack of share in profits (Coates, 1991).
Another disadvantage mentioned by Coates (1991) is the “free rider” problem, where “employee who ignores his or her responsibility, believe that other workers will pick up the slack,” and despite minimal work effort, ...
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...st). The Employee Ownership 100: America's Largest Majority Employee-Owned Companies. Retrieved April 26, 2014 from http://www.nceo.org/articles/employee-ownership-100
Noe, R.A., Hollenback, J.R., Gerhart, B., (2010). Human Resource Management: Gaining A Competitive Advantage. New York, NY. The McGraw-Hill. (p. 555-561).
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Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2014). Fundamentals of human resource management (5th ed.). New York, NY: McGraw-Hill Education.
employee stock ownership can create a burden of long-term planning for the sustainability and repurchase program; not all employees can be able to purchase stock. According to the case, Atul believes in a total compensation between 0-10 percent based on employee’s salaries could play as a “trade-off” for a “supportive and respective work environment” (Calo et al., n.d.).
Cummins Inc. is a manufacturing, distribution, service, and sales organization. Until recently, every region had their own compensation reward system that was designed specific to that region and specific to the market it served. In 2015 we moved away from individual performance based bonus structure to a companywide profit sharing plan. This benefit to this program is the unified goal of reducing costs while driving company PBIT. The goal is good and motives for the company are understandable, but local motivation is hampered when you are looking at GLOBAL PBIT goal. The challenge we face now is the lack of motivation for individual and team results that go beyond the expected AOP and work-plan. When there was pay for performance plans for
Mathis, R. L., & Jackson, J. H. (2010). Human resource management (13th ed.). Mason, OH: Thomas/South-western
CEO compensation has been a heated debate for many years recently, and it can be argued that they are either overpaid or that there payment is justified by the amount of work they do and their performance. To answer the question about whether CEO compensation is justified it must be looked at by the utilitarian viewpoint where the good of many outweighs the good of one. It is true that many CEO’s are paid an exorbitant amount of money; however, their payment is justified by the amount of money that they bring back to the company and the shareholders. There are many factors that impact the pay that the CEO receives according to Shah et.al CEO compensation relies on more than just the performance of the CEO, there are a number of factors that play a rule in the compensation of the CEO including the fellow people who help govern the corporation (Board of Directors, Audit Committee), the size of the company, and the performance that the CEO accomplishes (2009). In this paper the focus will be on the performace aspect of the CEO.
The plan then echoes management's traditional rewards by handing groups of workers (now designated “teams”) “bonuses” in the form of a share of the financial gains from improved efficiency of operations. However, the division between “workers” and “management” remains. Scanlon Plans operate on two assumptions, one explicit and the other implicit. Explicitly such plans assume workers have ideas for improving productivity (defined as units of revenue per dollar of labor costs). Implicitly, they assume that workers will reveal and implement these ideas only in exchange for a bonus, without which things would be left to continue as before with improvements resisted through union work rules. This is the language – or the attitude -- of “class warfare.” Experience suggests that after an initial period of improvement, rewarded by “bonus” pay, operations will settle into a new, more efficient, routine, which will become the new “base” from which management will continue to seek improvements – and be disappointed if they are not
Noe, Raymond A., et al. Human Resource Management: Gaining a Competitive Advantage. 7th ed. New York: McGraw-Hill/Irwin, 2010. Print.
To conclude, the author feels intrapreneurship is beneficial to progressive business organisations as it uses their employees’ knowledge and ideas for new developments or solutions to a problem. However, there may be drawbacks to the employees. For example, they receive compensation for their creation, but the profits from their ideas goes to the business and not the individual. This can mean they are missing out on a lot of capital. Focusing on the benefits to the business organisation, this is a very important concept for them to gain their maximum potential profits and the success of the business as a
...mployees turnover (increase in cost of recruitment, training and retraining), increase sick pay, higher grievance and litigation/compensation costs, etc. These will influence numerous budgetary issues among employees (Vokic 2007). Managers can apply Equity Theory. Equity Theory suggests that an individual's inspiration relies on what he or she considers being fair when contrasted with others (Redmond 2010). Managers should give benefits by award the employees with enough pay, security and protection so employees feel safe to work, and give advance promotion based on how motivated or experience they are. For example; Coca-Cola Company is functioning towards a world-class wellbeing status in its assembling and deals operations by developing a safety program and give fairness in wage to encourage its employees to live positively and diminish their stress (Kini 2012).
Whether an organization consists of five or 25,000 employees, human resources management is vital to the success of the organization. HR is important to all managers because it provides managers with the resources – the employees – necessary to produce the work for the managers and the organization. Beyond this role, HR is capable of becoming a strong strategic partner when it comes to “establishing the overall direction and objectives of key areas of human resource management in order to ensure that they not only are consistent with but also support the achievement of business goals.” (Massey, 1994, p. 27)
Noe, Raymond A., John R. Hollenbeck, Barry Gerhart, and Patrick M. Wright. Human Resource Management: Gaining a Competitive Advantage. 7th ed. Boston: McGraw-Hill Irwin, 2010. Print.
Lengnick-Hall M.L.; Lengnick-Hall, C.A.; Andrade, L.S.; Drake, B. 2009. “Strategic human resource management: The evolution of the field.” Human Resource Management Review, 19, pp. 64-85.
Johnson, Sam T. "Plan your organization’s reward strategy through pay for performance dynamics: Compensation & Benefits Review 30, Number 3: (May/June 1998): 67-72
Byars, L. L. (1997). Human Resource Management. Chicago, IL: The McGraw-Hill Companies, Inc. Mills, D. Q. (1994).
Remuneration management is defined as the sum received for an employment or service delivered, this includes the money received on a monthly basis as well as benefits given as rewards (investopedia,para.1 ). Individualism need to be taken into account when implementing these remuneration structures or reward schemes, equal pay plays a role in balancing earnings among the diverse workforce (Shen, Chanda, D’Neetto and Monga,2009,p.241). The Woolworth’s Holdings uphold remuneration policies which have the purpose of making sure to attract and hold on to the best talent, that they are congruent with the strategies of the company and are the determinants of performance during the short and long phases. The policy considers the board members and the employees. This policy manages employees of the company by giving...