Incentive Plan Essay

1. Workings individually or in groups, identify the factors for a successful incentive plan.

When planning and developing an incentive plan, the first step is to establish the goal the company is trying to reach and work backwards from there. Establish the goal, and then utilize SMART goals to ensure the plan is specific, measureable, actionable, realistic and timely. When creating these steps, there should be representatives from each group that these changes will affect. By involving everyone at the different levels, management will get better buy in. The incentive plan has to be easy for everyone to comprehend and of course, the higher incentives of the plan will require more effort and higher performance. Establish if it will be individual incentives, group incentive, or both. The biggest thing of all is to communicate to everyone and while designing the incentive program, management must be sure to utilize

Straight piecework, the employee receives a certain rate for each unit produced. This ends up being the number of pieces accomplished during a pay period. An example of this would be a Welder working on a building site may be paid by the number of welds required to complete the job versus an hourly wage. Differential piece rate would be an incentive plan that motivates the employee to be more productive by setting a goal for them to achieve. An example of this would be to create 100 widgets per day and for every one above 100, the employee would receive a higher rate of pay for performing at a higher level of productivity. The standard hour plan is an incentive plan that sets an employee’s rate of pay based on the completion of a job in a predetermined time. As an example, a Mechanic will charge for a job, state it will take 3 hours to fix and if they get done sooner, they still receive 3 x their hour