Contingent reward methods
We have reviewed eight of the common mechanisms in contingency bonuses and we will continue the rest today.
Skill-based method
The bonus is paid based on the new skills that the person learns and for the benefit of the organization. It is common in software development companies.
Share sharing
The bonus is based on the overall profit of the company, in the form of stock transfer, which is used to pay the senior managers of the companies, or it is allocated to all employees at a lower price. In stock ownership plan, shares are usually given to all employees.
Billing method
Based on the progress of the work, it is paid according to the project process and taken from the employer, and it is common to pay a percentage of it to the project manager.
Merit-based pay
Almost most organizations use this method in some way, which is a form of payment based on performance evaluation.
Organizational efficiency or profit sharing
In some organizations, pay is determined based on the performance of the entire organization. In this method, a percentage of the profit from the work of all employees is divided between them. Organizations that seek to increase efficiency try to make employees share in the profits. For example, if the profit of the X organization is Rial, 70% will be distributed among the shareholders and the rest among the employees.
One of the most common profit sharing plans is the Scannell plan. In this plan, monthly cash bonuses are provided and there is a lot of emphasis on encouraging employees to reduce labor costs. That is, it encourages employees to increase their productivity and increase their profit share. In this method, if the ratio of labor cost for production to its sales value is lower than the standard, the person will be rewarded.
For example, if the sales value is 1200 Rials:
Standard ratio = labor cost divided by sales value = 20 to 100
Target = 20% x 1200 = 240
Actual = 210
210-240=30
A percentage of these 30 rials per production is given to the individual.
Balanced scorecard
It is given based on the individual’s performance in line with the organization’s short-term and long-term goals.
Productivity share
Based on the productivity of the whole team. That is, profit is divided based on the products or services provided by the team at a certain time.
Reward based payment
It is granted based on the acquisition of new knowledge in the current job or job family or a new job in the organization.
Payment based on documents
Bonuses are allocated based on valid certificates and documents from universities and educational institutions (as most employees are forced to continue their studies, etc.)
Merit-based pay
A combination of methods based on skills, knowledge and degrees.
summary; The strategies of the organization are very important in choosing the payment method.
– Pay based on skill with individual development strategy
– Merit based payment with customer oriented strategy
– District and commission with individual productivity strategy
– Group incentives or group profit sharing with teamwork strategy
– Allocation of shares with the strategy of increasing the company’s profit.
Sincere
@startul_30T
This post is written by Rimaazz1