Incentive Plans

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Title: Incentive Plans

Name: Jordan Miller

Course: HRM 240

Instructor: Sandra McKnight

Due Date: Thursday, January 20th, 2011

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Incentive plans are specific types of compensation, monetary or other, designed to encourage and motivate groups or individuals to complete designated tasks or increase work performance. Incentive plans can be implemented within family life, but is much more common in a business environment. Human Resource researchers have identified the three main types of incentive plans. These three plans are the individual, group, and enterprise incentive plans.

One of the first types of individual incentive plans is called “piecework”. Piecework is recognized as the oldest of the individual plans. Bohlander and Snell defined piecework as "an incentive plan under which employees receive a certain rate for each unit produced" (Bohlander & Snell, 2007, p. 442). What makes this old method such a great incentive plan is that employees are paid based strictly on work output. This incentive plan encourages employees to increase performance and production to earn more money. While this is a great incentive plan for employers who demand high levels of production for profitability, there are a few disadvantages as well. Piecework may not motivate some since they may fear that the higher performance rate and production output may produce disapproval among co-workers.

The next incentive plan is group incentives. One of the common types of group incentives is team compensation Two advantages of team compensation includes the avoidance of jealousy amongst co-workers, as well as the possibility that one may learn new skills or techniques from his or her co-workers. Tam compensation can come with its possible disadvantages as well. Pushing one another in an extreme manner in order to obtain the incentive, which could lead to altercations, as well as what is known as free riding of an employee that is working much...