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Group, Enterprise and Non-Financial Incentives

Group Incentive Schemes:

Group incentive schemes are designed to encourage teamwork and collective goal achievement. Here are some examples:

1. Priestman's Production Bonus Plan (Standard):

  • Employees are awarded bonuses when the group's production exceeds a predefined standard.

2. Cost Efficiency Bonus Plan (Cost Saved by Group):

  • Bonuses are given to the group for reducing costs or achieving cost-saving targets.

3. Gainsharing Plan (Sharing of Benefits to Group):

  • A portion of the financial gains from improved productivity or cost savings is shared with the group.
  • i. Scanlon Plan (Saving the Labour Cost): Employees share in the cost savings through improved operational efficiency.
  • ii. Rucker Plan (Production Workers): Similar to Scanlon but with a different formula for sharing the gains.
  • iii. Improshare Plan (Suggestions, Shares of Profit): Employees share in the gains from their suggestions and improvements.

4. Towne Plan (Timelines):

  • Bonuses are awarded to groups for achieving or exceeding project timelines.

Enterprise Incentive Schemes:

Enterprise incentive schemes aim to align employees' interests with the overall organizational performance.

1. Profit Sharing Plan:

  • A portion of company profits is shared with employees.
  • i. Cash Payment Plan: Employees receive a share of profits on a regular basis.
  • ii. Deferred Payment Plan: Profits shared are kept in a trust for future distribution.
  • iii. Combination Payment Plan: A mix of immediate cash benefits and deferred benefits.
  • iv. Stock Ownership Plan: Profits are offered in the form of company stocks.

2. Stock Options:

  • Employees are given the option to buy company shares at a predetermined price.
  • i. Incentive Stock Options: Offer tax benefits but come with more restrictions.
  • ii. Non-Qualified Stock Options: Fewer restrictions but without the tax benefits.

3. Employee Stock Ownership Plan (ESOP):

  • Employees become partial owners by holding shares, aligning their interests with the company's success.

Non-Financial Incentive Scheme:

Non-financial incentives aim to satisfy employees' psychological needs, enhancing job satisfaction and motivation.

  1. Achievement: Recognizing and rewarding employees for their accomplishments.

  2. Recognition: Acknowledging employees' efforts and contributions.

  3. Responsibility: Entrusting employees with responsibilities, showing trust in their capabilities.

  4. Influence: Allowing employees to have a say in decisions that affect their jobs.

  5. Personal Growth: Providing opportunities for learning, development, and career advancement.

These various incentive schemes are instrumental in creating a motivating environment, fostering teamwork, aligning individual and organizational goals, and ultimately contributing to the overall success and growth of the organization. Each scheme has its own set of advantages, and the choice between them would depend on the organizational culture, the nature of work, and the long-term strategic goals of the organization.

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