Employee motivation,incentives and fringe benefits
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Transcript of Employee motivation,incentives and fringe benefits
Employee motivation, Incentives and Fringe Benefits
FICCI CE
Individual Performance=f(ability*motivation)
Motivation is defined as an innate need or desire with a physiological or psychological basis that propels an individual to undertake an activity to satisfy the need or desire.
Employee motivation
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Motivational Process:
1. Awareness on the part of the individual that a need is operating.
2. Identifying mechanisms to satisfy the need.
3. Drive mechanism implementation.
4. Attainment of goals.
Employee motivation
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Freud’s Defense Mechanisms• Repression• Reaction Formation• Projection• Rationalization• Intellectualization• Displacement• Regression
Employee motivation
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Employee motivation
Functions of Work:Work is instrumental for survival.Contributes to personal identityProvides opportunities for interaction with others.Status and self-respect.Growth and Development.Generates self-confidence.Relate to and contribute towards society.
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Chris Argyris’ Immaturity-Maturity Theory:
Immaturity Characteristics
• Passivity• Dependence• Capable of behaving in
few ways• Shallow interest• Short-term perspective• Subordinate position• Lack of Self-Awareness
Maturity Characteristics• Active• Independence• Capable of behaving in
many ways• Deep interest• Long-term perspective• Super ordinate position• Self-Awareness and
Control
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These theories attempt to determine what motivates people at work and are concerned with identifying and prioritizing needs.
• Maslow’s need-hierarchy theory• Herzberg’s Two-Factor theory• Alderfer’s ERG theory• McClelland’s Achievement motivation theory
Content Theories of Work Motivation
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Growth needs(G needs): Self-Actualization Esteem Belongingness
Basic needs(B needs): Safety Physiological
Maslow’s Need-Hierarchy Theory
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Maslow’s Model in a work situation
Self-Actualization
Esteem
Social
Security
Pay
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Herzberg’s Two-Factor Theory
Hygiene Factors Company policy and
administration Supervision, Technical Salary Interpersonal Relations Short-term perspective Working Conditions Advancement
Motivators Achievement Recognition Work itself Responsibility
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Alderfer’s ERG Theory
ERG stands for Existence, Relatedness and Growth.It is a more practical theory compared to Maslow’s Theory as it explains individual differences in pursuit of development regardless of whether or not other needs are satisfied. But the main drawback is we are not sure as to what motivates an individual.
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McClelland’s Achievement Motive Theory
A brief description is as follows:Need for AchievementNeed for PowerNeed for Affiliation
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Process theories of Work Motivation
•Vroom’s Expectancy Model•Adam’s Equity Theory•Porter-Lawler’s performance-satisfaction Model
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Incentives And Fringe benefits
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Meaning
Incentives are the rewards to an employee, over and above his base wage or salary, in recognition of his performance and contribution.
“ An incentive scheme is a plan or programmes to motivate individual or group performance. An incentive programme is most frequently built on monetary rewards but may also include a variety of non-monetary rewards or prizes.”
By- Burack and Smith
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Pre-requirements For Effective Incentive System
Incentive plan should be simple so that it may be easily understood by the workers.
The plans should be acceptable to the workers, trade unions and management.
The incentives rates should be made attractive so as to encourage the worker to give his best results.
All incentives should guarantee a minimum day’s wages.
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The scheme should be explained and
discussed with all employees and
supervisors before it is implemented.
Standards once fixed should not be
changed unless it is necessary.
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Two Types Of Incentives
1.Financial Incentives
2.Non-Financial Incentives
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Group Incentive/ Bonus Plan
It is a plan in which a production
standard is set for a specific work
group and its members are paid
incentives if the group exceeds
the production standard.
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Profit Sharing Scheme
It is an incentive plan that engages many or all employees in a common effort to achieve a company’s productivity and any resulting incremental cost-savings gains are shared among employees and the company.
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At-Risky Pay plan
These are some times called variable
pay plans but are essentially plans
that put some portion of the
employee’s pay at risk, subject to
the firm’s meeting its financial goals.
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Salary plan Salary plan varies from organization
to organization. Some firms pay sales people fixed salaries and no specific commission or bonus schemes are paid on achieving the sales targets. The emphasis being on customer service rather on high pressure selling.
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Commission Plan Commission plans provide sales representatives with payment based on a percentage of sales turnovers they generate.
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Combination Plan
Most companies pay their salespeople a combination of salary and commission. A portion of total earnings is paid in form of fixed salary.
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Bonus Scheme And Awards
Bonus scheme provide pay in addition to basic salary which is related to the achievement of defined and preferably agreed targets. These may refer simply to sales volume or profit.
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Base Salary
Decisions on the base salary of directors and senior executives are usually formed on the basis of market worth of the individuals. Remuneration on joining the company is usually settled by negotiation, often subject to the approval of a remuneration committee
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The Annual BonusAnnual bonus plans are those which are aimed at motivating the short term performance of their managers and executives and are given on the basis of the profitability of the company.
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Stock Option A stock option is the right to
purchase a specific number of shares of company stock at a specific price during a period of time.
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Book Value Plan Managers are permitted to
purchase stock at current book value. Executives can earn dividend on the stock they own, as the company grows the book value of their shares may grow too.
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Stock Appreciation Rights
The employee is given the appreciation in the value of shares from the date the option was granted till the date it was relinquished. He earns without investing any money in buying the options.
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Restricted Stock Plans Shares are usually awarded without cost to the executive but with certain restrictions. One of the major restrictions is that the shares may be forfeited if they are not earned out over a specified period of time.
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Phantom Stock Plan Executives receive not shares but
“units” that are similar to shares of company stock. Then at some future time they receive value equal to the appreciation of the “phantom” stock they own.
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Employee Stock Option Plan:
A company contributes shares of its own stock or cash to be used to purchase such stock to a trust. The trust holds the stock in individual employee accounts and distributes it to employees upon their retirement or at the time of separation from service.
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Employee Stock Purchase Plan
The employees are given the right to acquire shares of the company, normally at a price lower than the prevailing market price.
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Non-Financial Incentives
Materialistic Incentives
CanteensHousing FacilitiesEducation
FacilitiesPensionProvident Fund
Schemes
Non-Materialistic Incentives
Recognition and praise
Good working environment
Cordial human relations
Job satisfaction
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Fringe Benefits For Employees
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“Imagine life as a game in which you are juggling some five balls in the air. You name them - work, family, health, friends and spirit - and you're keeping all of these in the air. You will soon understand that work is a rubber ball. If you drop it, it will bounce back. But the other four balls - family, health, friends and spirit - are made of glass. If you drop one of these, they will be irrevocably scuffed, marked, nicked, damaged or even shattered. They will never be the same. You must understand that and strive for balance in your life.”
-Brian G. DysonPresident and CEO
Coca-Cola Enterprises
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Definition
Fringe benefits are those monetary and non monetary benefits given to the employee during and post-employment period which are connected with employment but not to the employees contribution to the organization.
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For ExampleYou Could receive a benefit when you
• Use a work car for private purposes.• Are provided with a cheap loan.• Are provided with free private health insurance.• Are provided with cleaning services for your
private residence or enter in to a salary sacrifice arrangement.
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Need & Importance of Fringe Benefits:
•To retain the employees.•To motivate performance.•As a social security.•Trade Union demand.•Skill shortage.•Employee Demand.
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Principles of Fringe Benefits
• Satisfaction of Real Needs.• Flexibility.• Proper Communication.• Educate the workers.• Corporate Tools.• Participation
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Fringe Benefits Categories :
• Car Fringe benefits.• Loan Fringe Benefits.• Expenses Payment Fringe Benefits.• Housing Fringe Benefits.• Airline Transport Fringe benefits.• Living-Away-from-Home allowance fringe
benefits.• Car Parking Fringe Benefits.• Property Fringe Benefits.
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Fringe Benefits In India :
• Payment for Time not Worked.• Voluntary Benefits.• Payment For Special Duties.• Payment For Health and Security
Benefits.
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Conclusion:
• Basically, a fringe benefit is a benefit provided to an employee or an associate (For Example: Family, Spouse and children) because of his employment.
• Fringe Benefits provide output in terms of employee loyalty and co-operation, employee welfare and create Organizational image.
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References
1.Ajai Kumar Singhal,“Human Resource Management.”
2.Gary Dessler & Biju Varkkey, “Human Resource Management.”
3. Google
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