INCENTIVES

INCENTIVE
An incentive program is a formal scheme
used to promote or encourage specific actions
or behaviour by a specific group of people
during a defined period of time. Incentive
programs are particularly used in business
management to motivate employees and in
sales to attract and retain customers.
Scientific literature also refers to this concept
as pay for performance.
CATEGORY
1. Remunerative incentives

2. financial incentives

3. Moral incentives

4. Coercive incentives

5. Natural Incentives
1. Remunerative incentives : are said to exist where an
agent can expect some form of material reward -
especially money - in exchange for acting in a
particular way.

2. Financial incentives: are said to exist where an agent

can expect some form of material reward - especially
money - in exchange for acting in a particular way.

3. Moral incentives: are said to exist where a particular

choice is widely regarded as the right thing to do or as
particularly admirable or where the failure to act in a
certain way is condemned as indecent. A person acting
on a moral incentive can expect a sense of self-esteem
and approval or even admiration from his community; a
person acting against a moral incentive can expect a
sense of guilt from the community.
4. Coercive incentives: are said to exist
where a person can expect that the failure
to act in a particular way will result in
physical force being used against them (or
their loved ones) by others in the
community - for example, by inflicting pain
in punishment or destroying their
possessions.

5. Natural Incentives: such as curiosity,

mental or physical exercise, admiration,
fear, anger, pain, joy, or the pursuit of
truth, the control over things in the world
or people or oneself.
INDIVIDUAL INCENTIVE PLAN

Bonus, merit pay, pay for knowledge, and other such goal
based compensation programs aimed at linking pay with
performance.

Reward individual performance

Payments are NOT rolled into base pay

Performance is usually measured as a physical output

rather than subjective ratings
TYPES OF INDIVIDUAL INCENTIVES
Piecework plans
Standard hour plans

Management incentive plans

Referral plans

Bonus Pay

Profit sharing

Stock incentives

Retirement incentives

Vacation incentives

Prizes
PIECE WORK PLAN

Piecework is a type of incentive program where by the

employee is paid based on each unit of output.
Employees are paid a certain rate per unit times the
number of units produced. This is a system that works
for only a limited number of jobs such as assembly line
or agricultural. Piecework incentive programs are
declining in popularity due to the fact that it does not
always lead to higher productivity. It is also difficult to
measure a persons benefit based solely on the units
they can produce in a given period of time.
STANDARD HOUR PLAN
A plan by which worker is paid a basic
hourly rate but is paid an extra percentage
of his or her rate for production exceeding
the standard per hour or per day Similar to
piecework payment but based on a percent
premium.
Management incentive plans can also be difficult to create. While
it is the duty of managers to work to maximize shareholder
MANAGEMENT
wealth INCENTIVE
by working for what PLAN
is in the best interest of the company,
not all managers act on behalf of the company at all times.
Including stock options in management or executive incentive
plans are often used because they appear to reduce excessive
aversions to risk by giving managers incentives to increase firm
risk instead of avoiding it
BONUS PAY
In order for a bonus pay plan to work, you need to set goals
that employees believe can be reached. Before creating a
bonus pay incentive program, run metrics on the department
to which you are looking to give the incentive.

PROFIT SHARING
A profit sharing incentive plan can encompass many
aspects of the company for the entire year. Make
employees aware of the factors that affect profit,
such as sales revenue, employee productivity and
conservation of resources to lower overhead costs.
When the year is over, determine a percentage of
the profit that can be paid to the employees as a
reward for helping the company achieve a profit.
STOCK INCENTIVE
You can offer shares in the company as incentives, as opposed to paying out an
immediate cash reward. Make sure you discuss your stock incentive plan with the
stock regulatory bodies to keep your plan in line with the law.

REFFERAL PLAN
To provide an incentive to encourage current members to reach out to their personal and
professional networks and provide qualified referrals to the Branford Chamber.
To encourage the members to remain connected to these referrals, mentor those they referred
and, providing a framework to retain the new members .
RETIERMENT INCENTIVE
Rather than paying an incentive directly to the employee, you can offer to add
it to the employee's 401(k) retirement account instead. According to the
Internal Revenue Service, a company that sponsors a 401(k) program can claim the
cost of doing that as a deduction on its federal taxes. The employee gets the added
benefit of tax-free dollars in her retirement account, beyond what the employee
contributes and what the company matches.
VACATION
Unscheduled employee time off can sometimes be a problem for
employers. To help reduce the use of sick days and personal days, offer
an additional vacation day for each quarter in which the employee does
not call in to work.

PRICES

Vacations and prizes are often good incentives, because you can
work with your vendors to help pay for those incentives.
 GROUP INCENTIVES PLAN

Group incentives attempt to empower people and

tend to have a levelling effect on labour's
performance. Rather than restrict production, the
group pressures the superior producer to handle
more job assignments. Group pressures may
likewise have an upward levelling effect upon the
operator who would be satisfied with relatively low
individual earnings. Therefore, average group
output often is higher than average individual
output.
TEAM BASED OR SMALL GROUP PLAN

Focus = smaller work groups

While gain sharing typically measures physical
output, group incentives tend to measure
performance in terms of a broader array such as
cost savings
successful completion of product design
meeting deadlines
Drawback: competition among teams
GAIN SHARING PLAN

sharing productivity gains with employees

differs from profit sharing in that instead of using an

organization-level performance measure (profits) plans
measure group or plant performance

better for motivation

goes beyond money -- participation in problem solving = key

THANK YOU..

PRESENTED BY:
ANKITA ROY
HIMA
BINDHU
A.R.KEERTHI