Designing Performance Pay Plans

1
Designing Performance
Pay Plans

• Chapter 10

2
Suggestion System

• An incentive plan through which employees receive
  cash bonuses for submitting money-saving
  suggestions

3
Gain-Sharing Plan

• A group performance pay plan that shares cost
  savings or productivity gains generated by a work
  group or team with all members of that group

4
Scanlon Plan

• A gain-sharing plan that creates mechanisms for
  employee participation in developing productivity
  improvements and shares the financial benefits of
  those improvements with the employee group that
  generated them

5
Rucker Plan

• A gain-sharing plan that is similar to the
  Scanlon plan but that expresses labour costs as a
  percentage of value added

6
IMPROSHARE

• A gain-sharing plan that focuses on labour hours
  per unit of output, and that does not usually
  include worker participation

7
Family of Measures Plan

• A gain-sharing plan that utilizes a variety of
  measures to determine the extent to which a bonus
  payout is justified

8
Goal-Sharing Plan

• A group performance pay plan in which a work
  group or team receives a bonus when pre-specified
  performance goals are met

9
Employee Profit-Sharing Plan

• A formal pay program under which a firm provides
  bonus payments to employees based on the
  profitability of the firm

10
Deferred Profit-Sharing Plan (DPSP)

• A profit sharing-plan in which the profit-sharing
  bonuses are allocated to employee accounts but
  not actually paid out until a later date, usually
  on termination or retirement

11
Employee Stock Plan

• Any type of plan through which employees acquire
  shares in the firm that employs them

12
Employee Stock Bonus Plan

• A plan through which employees receive shares in
  their employer at no cost to the employee

13
Share Appreciation Rights

• A plan through which employees are awarded
  company shares at no cost if the price of company
  shares rises during a specified period

14
Phantom Stock Plan

• A plan through which employees participate in the
  appreciation of company shares and any associated
  dividends, without ever owning any company stock

15
Phantom Equity Plan

• A plan that helps retain key employees by
  providing rewards based on the stock performance
  of a portfolio of promising new high-tech firms