Q Case Incentive

Incentives Scheme

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Staff incentives are designed to motivate workers so that they can achieve higher level of performance and change attitudes or behaviors. Incentives are generally target based rewards which are given in the form of incentive-based cash rewards.

The company under consideration provides services which are extremely labor intensive in nature. Almost 70% of expenses incurred by companies comprise of salaries and wages. Management should pay full attention to any proposed changes in salary and wages’ structure because these changes may have long-term consequences for all stakeholders. There are considerable resources spent on developing employees until they are converted to valuable resources. Management should take initiatives that increase morale and satisfaction of employees including an effective incentive program.

Well-designed incentives programs may have important implications for performance and productivity of employees. Organizations should look closely into factors that can motivate their employees to perform better.

Well-designed staff incentive schemes may have positive and long-lasting effects on the various aspects of a work force. On the other hand, a poorly designed incentives program can have opposite effects. Incentive schemes must be such that employees have a very clear idea about what is happening. System should not be very complex and should have more objective factors than subjective factors. Organization should not change the terms of incentive plans without taking employees into confidence. An incentive scheme must be considered fair by all employees and goals set by it should be attainable and staff members should feel that better performance has been actually rewarded by the company. For the company under consideration, quality will be the primary part of any incentive program. This will mean that only those employees will be rewarded who are able to deliver higher level of service to the customers. There are certain reasons as to why quality should be an integral part of any incentive program. Better or higher quality service will keep customers intact with the company which is very important for the company under consideration because it is providing services to its customers which is intangible in nature. Quality of service provided will decide the satisfaction level of customers. When company will choose to expand in any new market, this aspect will help the company to make long term customers. Word-of-mouth business is a source of inexpensive marketing which is easily achieved by providing good customer service. This will again help the company to settle in any new market faster than traditional marketing ways. Not knowing a market can become a competitive disadvantage for a company but it can be overcome by providing good quality service to customers. Many other similar factors can be overcome by providing quality service. Providing good service will mean that there are no reworks done by the company which will save time and resources CITATION Mar05 \l 1033 (Holtmann & Grammling, 2005).

Metrics of Incentive schemes

Employee incentives are important to a number of stakeholders including employees, managers and customers. In the organization considered, incentives’ program can take several forms discussed as under:

If quality is considered as a primary aspect of basing incentives, there should be a clear base for measuring quality aspects. One aspect of quality may be to receive feedback from customers on regular basis. The employees who receive the maximum positive feedbacks will be eligible for incentives. Working fast and well may have different meanings in terms of quality because sometimes workers may have to sacrifice the level of quality and company cannot afford it to drop down. More customers handled should not be considered metrics for making employee incentives because an inefficient fast employee may handle more customers as compared to an efficient but slower employee CITATION Rom01 \l 1033 (Inderst, 2001).

The structure of incentives may vary from area to area depending upon the base pay in that area. Company will base incentives on base pay if pays are lower in a certain area and some other bases will be used to calculate incentives otherwise.

Another aspect can be attendance of employees because the nature of services provided by this company is such that it is very important for employees to reach and leave on time. There can be percentage bonus based on wage rate that can be offered to employees.

Business referral is another aspect that can be used to calculate incentives especially when a company has started working recently in a city. This will help the company to have a stronger footing in that city and will also benefit the employees in terms of incentives offered. A percentage of revenue can be offered to employees as an incentive.

Determining which staff members are to be included

In order to determine the staff members to be included in incentive program, It is absolutely critical that an organization sets the objectives of an incentive program because this will keep the organization on a certain track all throughout this process.

The next step is to identify the staff members who will be included in this incentive’s program. There can be several criteria used for this identification depending on the objectives of incentive’s program. If the major objective of an incentive’s program is to enhance quality of service, only those employees should be included who have been awarded at least five positive feedbacks from customers. Sometimes organizations want to reward their senior employees in some way, in that case, employees with a minimum of two years ‘service will be eligible for incentives

Incentive mechanisms will include percentage of wage, profit sharing or a combination any of these methods. The current organization will provide percentage of wage in those areas where wages are low and profit sharing in those areas where wages are higher. This will help both the employee and the organization to achieve their relevant targets.

Costs and benefits of any incentive plan should be checked before implementing it as well as the recheck with calculations. The scheme should be pretested in some controlled environment so that any flaws can be found and rectified CITATION Mic95 \l 1033 (Gibbs, 1995).

Scheme should be properly communicated to staff members especially the parts showing the eligible staff and actual incentives to be offered. This will motivate the staff members who receive the incentives and provide working initiatives to others as well.

Organizations should avoid such practices as to identify those employees who are not considered eligible for incentive plan because it will create demotivation in these employees. The incentives should come into the periodic pay of all employees without letting other employees know. There is another danger that employees may go too hard in pursuit of these incentives and in turn hurting the initial level of quality provided to customers. This is very much true in case of organization under consideration because it is a service organization and employees may get directly in contact with customers. These employees may ask for a positive review from customers which can leak the secrets of company incentive program.

It is important for the organization to have an incentive program for employees based on quality and attendance. Specific employees having peculiar characteristics will be offered these incentives in the form of percentage of wages and profit sharing.

References

BIBLIOGRAPHY Gibbs, M. (1995). Incentive compensation in a corporate hierarchy. Journal of Accounting and Economics, 247-277.

Holtmann, M., & Grammling, M. (2005, August). https://sptf.info/images/staff_incentive_schemes_participants_manual.pdf. Retrieved from https://sptf.info: https://sptf.info/images/staff_incentive_schemes_participants_manual.pdf

Inderst, R. (2001). Incentive Svhemes as a signaling device. Journal of Economic Behavior and Organization, 455-465.