What is Incentives ?
Incentives are the monetary benefits which are paid to workers as a reward of their excellent performance. Incentives are also known as payments by results. Incentives are different from wage and in the sense that they differ for every individual based on his performance; while wage and salary is fixed, irrespective of an individual's performance.
Incentive systems are tools to support the individual or group behavior at work. A good quality incentive system also motivates the employees to be creative and innovative. It promotes a sense of loyalty among those employees who are competent and productive. Incentives can be monetary and non-monetary in nature.
Definition of Incentives
According to Burrack and Smith :
"An incentive scheme is a plan or programmes to motivate individual for good performance. An incentive is most frequently built on monetary rewards, but may also include a variety of non-monetary rewards or prizes".
According to Kemmerer and Thiagarajan :
"An incentive is something that influences people to act in certain ways. An incentive system is a collection of incentives and a set of procedures for using them. Organisations use incentive systems to motivate their employees".
Prerequisites for an Effective Incentive System
In order to achieve the desired organisational objectives an incentive plan or scheme must be constructed on the following fundamentals :
1) Motivation :
It is a natural phenomenon that nobody does anything without purpose. Therefore, an incentive plan should motivate the employees to perform better.
2) Definite and Quantifiable Objectives :
Incentive schemes should have specific and quantifiable objectives to facilitate a good control and to maintain energy.
3) Reduction in Production Cost :
The incentive scheme should lower down the production cost.
4) Easy to Understand :
The scheme should be easy for the workers to understand. They should be able to compute their wages at their own.
5) Payment for Increased Production :
The incentive scheme should minimize the wastage of raw material and defective work. On the contrary, good and increased production should be rewarded.
6) Simple to Administer :
For the management, the incentive scheme must be easy to administer, with low cost and effort.
7) Efficacy :
The scheme should be such that it can create a link between effort and efficiency to attain the desired objectives.
8) Guarantee of Minimum Wages :
At the time of choosing an incentive scheme, it should ensure the minimum wages in case of unavoidable circumstances which are beyond the control of workers.
9) Technical Standards to Attain the Levels of Performance :
One of the basic prerequisites of a good incentive scheme is that its standards should be developed on a scientific ground. This makes the rules to be objective. On the other hand, these standards should be realistic and attainable, so that they can inspire workers to enhance productivity.
10) Compliance with Policy and Labour Law :
An incentive plan should be in accordance with the labour laws and should not be against any policy or regulation of the country.
11) Unrestricted Wages :
An incentive system should ensure that the workers would put a considerable effort to increase the production and in turn their wages will be increased.
12) Reducing the Labour Turnover and Absenteeism :
The incentive scheme should be lucrative so that workers are regular to their job on a long-term basis.
13) Well Timed Disbursement of Incentives :
Incentives should be disbursed as soon as the assigned task gets accomplished. This motivates the employees to further ask and eagerly wait for such challenging tasks.
Scope of Incentives Scheme
The scope for the incentive plan is universal; however, its application may be restricted to certain specific industries. They are :
- Industrial units where the productivity of the individual or group is difficult to measure or is not possible due to technical and psychological situations.
- Industrial units where quality control is essential or in specific group of workers where high quality is extremely important.
- Industrial units where the working conditions are hazardous for the life of an employee and it is hard to keep an eye on the use of safety measures.
Incentive plans can be easily applied in all industrial units, excluding the above three categories. For example, textile industries, mining industries, cloth industries, leather and rubber industries, etc. In certain industries like construction industries, chemical industries, etc., incentive schemes have been applied successfully. It is evident from the fact that the result-based payment systems are efficiently applied in those organisations where there are managerial experts and technical staffs for guaranteeing efficient production, quality control and work measurement. However, this system gives positive outcomes in small businesses which use remedial support from expert services for designing the incentive plans.
Incentive schemes are often considered as important and to be widely used in those manufacturing processes which are labour-intensive. However, their implementation in fully automated planes is doubtful. Incentives schemes also have a vital role in machine-based organisations. However, this fact is not justified because an operator can easily destruct a CNC machine and a software programmer can easily place virus in the computer system, if incentives are not given to him. This is the only reason why machine-based organisations are advised to use incentive plans.
It should be a rule in new organisations to avoid introduction of incentive plans at least for the initial five years for employees. They should be given payment on the basis of time because this initial time is crucial for any organisation to establish itself in the market. When such measures are taken by the organisation, then additional units of products are easily sold out. Incentives also affect the output and its quality and in initial stage, any pour quality of output will hamper the prospects of newly established business.
Types of Incentive Schemes
The two different categories under which the incentive scheme/plan can be classified are as under :
1) Monetary Incentives :
Monetary incentives are those incentives which are paid in the form of money or kind.
2) Non-Monetary Incentives :
Non-monetary incentives are those incentives which are not paid in the form of money or kind.
These types of incentives do not provide any direct benefit to the employee. Although non-monetary in nature, these incentives play a role of motivation by stimulating the employees to work hard. Following are 4 main types of incentives scheme explaining below :
Individual Incentive Schemes
Most popular and universally accepted plans are individual incentive plans. These plans, aim to achieve the organisational objectives. The distinguishing feature of this plan is that it actually awards the employee on the basis of his individual performance.
According to L.G. Magginson :
"Individual incentives are the extra compensation paid to an individual for all production over a specified magnitude which stems from exercise of more than normal skill, effort, or concentration when accomplished in a predetermined way involving standard tools, facilities and materials. In those assignments where there is no interrelation or we can separate the work, then individual incentives are preferred".
Types of Individual Incentive Schemes
There are different types of individual incentive plans. They are categorized into four types according to International Labour Organisation (ILO) :
1) Earnings Varying in the Same Proportion as Output :
In such schemes, every profit or loss generated from employee's output is to be accumulated by him. On the other hand, when the employee is remunerated on hour, day or month basis, all the benefits of increased employee's productivity or decreased productivity is borne by the employer only. Two incentive schemes lies in this category:
i) Straight Piece-Work :
Under this plan, the payment for per unit of production is fixed. The total income of the employee is determined by multiplying the total units produced by the employee with the rate of single unit.
ii) Standard Hour Plan :
In this plan, a fixed amount of time is scheduled for the completion of a specific task.
2) Earnings Varying Proportionately Less than Output :
There are four different types of plans which come in this group i.e., Halsey, Rowan, Barth and Bedaux. These plans motivate the employee to save time and energy by completing the assigned task within or before the time limit specified for the completion of a task. It provides the bonus on the time being saved, by comparing the time actually taken for, the completion of task and time allotted for that task. These plans are described below :
i) Halsey Plan :
This plan was developed by F.A. Halsey. Under this plan, the specific amount of time is allotted for the accomplishment of a particular task. Afterwards, the rate per hour is decided. Now, if the employee is completing the allotted task within the stipulated time period or even after it, the employee will get remunerated at the time-rate.
If the employee is completing his job well before time, he will be paid at the time-rate plus a bonus for the time saved. Variation in percentage is thirty to seventy per cent. Standard share is 50 per cent and the left over part goes to the employer.
ii) Rowan Premium Plan :
D. Rowan developed this plan in 1901. It is an upgraded version of the Halsey's Plan, In this plan, premium is determined on the basis of time spent by the worker and the time saved by him. This type of scheme provides additional bonuses to the employees. It is computed by the following formula :
Time Taken
Bonus = Time Saved x --------------------------------------- x Hourly Rate
Standard Time or Time Allowed
iii) Barth Variable Sharing Plan:
This plan does not give any assurance about the payment as per time. Pay of worker is calculated by multiplying the standard hour with the number of hours actually taken to perform the job', taking the square root of the product and multiplying it by the worker's hourly rate.
iv) Bedaux Plan:
Under this arrangement, each work or activity is articulated in respect of different standard minutes, which are called 'Bedeaux Points' or "B's", each indicating one minute, through time and motion study. Therefore, one hour includes 60 B's. Each job has a specific number of B's. The rate per hour is also calculated. The worker gains hourly rate as well as a bonus which under the original plan is equal to 75 per cent of the number of points earned, in excess of 60 per hour, multiplied by one-sixtieth of the worker's hourly rate. If the worker is not able to achieve his specific target, the time rate method of payment will be used.
3) Earnings Varying Proportionately More than Output:
This category includes two methods :
i) High Piece-Rate System :
In this scheme, the income of the worker varies in percentage to his or her output, as in straight piece-work, but the increase in income for each unit of output above the standard is more. For example, for every one per cent rise in output above the standard, there may be a 4/3 times rise in income, as compared to one per cent rise in income under the straight piece-rate system. Once the standards have been reached, higher rates start applying. Same logic is applicable to the high standard hour system.
ii) High Standard Hour System :
Under this scheme, the rate per unit of time is higher. For example, there may be a 10 per cent escalation in the time rate earnings of an employee for every one per cent increase in output above the standard.
4) Earnings Differing at Different Levels of Output:
In this system, the earning of the employee varies between the lowest rates to highest rates at the different stages of the output. Income for one part of the range may vary proportionately less than output and for another part proportionately more. More often earnings may vary in the same proportion as the output. Schemes which lie under the group where remunerations vary at diverse levels of production are as follows :
i) Taylor's Differential Piece-Rate System:
In 1880, F.W. Taylor introduced differential piece-rate system. Under this system, two piece rates are fixed. Low piece rate system is used for those who are unable to achieve the required standard. High piece rate system is applied on those who have achieved either required standard or more than required standard. Usually, the efficiency of an employee is decided a percentage of :
- Time allowed for the job and time taken to complete the job.
- Actual output to the standard output, within a particular time.
Differential applied in this case is 80% of the piece rate below the standard and 120% above the standard.
ii) Merrick's Multiple Piece-Rate System :
Merrick's multiple piece-rate system is a system, which was developed to overcome the shortcomings of the Taylor's Differential Piece Rate System. In Merrick's plan, three piece rates are fixed for the job. All the rates are fixed at above the normal level. Three rates can be represented as follows :
|
Rates |
Bonus Incentives |
|
1) Up to 83% |
Normal Rate |
|
2) Above 83% to 100% |
110% of Normal Rate |
|
3) Above 100% |
120% of Normal Rate |
iii) Gantt Task and Bonus Plan:
It was given by H.L. Gantt. It is the only plan in which percentage of the bonus is multiplied by the value of standard time. Fixed time rates are guaranteed in this plan. Job performance is associated with output and time standards. If worker completes a job within a standard fixed time or before that then he gets the wage for standard time with an additional bones (which is 20 to 50% of the time allowed and not the time saved). A worker who fails to complete his job within required time is paid on normal time rate which does not include any bonus.
iv) Emerson's Efficiency Plan :
In this plan, a standard time is fixed for each and every job, and the efficiency of each and every worker is determined by dividing the time taken' by 'standard time. The worker is paid by time rate, up to 67% of efficiency. After that, the worker is paid a graduated bonus, which amounts to a 20% bonus at 100% efficiency. An extra bonus of 1% is also given for extra efficiency of 1%.
v) Accelerating Premium System :
Accelerating premium system of incentive guarantees a minimum wage for output which is lower than standard output. Small increment in the salary is given for low or near to average increase in the output as compared to standard output. Large increments are given for the above average output. Increment differs for every 1% increase in the salary for the 1% increase in the output. In this way, production s increased by rewarding the high output and discouraging the low output.
Group Incentive Schemes
Group incentive plans refer to those plans which are designed to inspire the group to generate more output. Usually, under individual incentive plans, each worker is paid bonus depending on his individual efficiency. It is not influenced by the efficiency of the other worker. Group incentive plans are used when it is difficult to analyse the performance of an individual or when an individual's performance is influenced by others. In such plans, bonus is paid collectively and is announced by the management before the beginning of work. It helps the team to work collectively and increase their output. On the whole, a definite performance standard is recognized and bonus is provided as per the performance standard.
Types of Group Incentive Schemes
Different types of group incentive schemes are as follows :
1) Priestman's Production Bonus Plan :
In Under this plan, experts set a definite standard for a given task. This standard is fixed in context of number of units for the entire work to be executed by a group within a definite time frame. Later on, this standard is compared with actual work. If the level of work more than the expected standard, bonus is given to workers and if group fails to reach required standard, workers are paid on time-rate basis and no bonus is offered to them.
2) Cost Efficiency Bonus Plan :
In this plan, organisation firstly calculates the standard cost for various components of cost like material cost, labour cost, overheads related to production, etc. Organisation also determines the standard cost to calculate total cost of all these components. Then, organisation calculates the actual cost incurred by the group for completing the task. Lastly, actual cost and standard cost are compared to calculate the savings. Hence, according to cost efficiency plan, a previously defined -percentage of saving is dispersed among employees in the form of bonus.
3) Gainsharing Plan :
This plan compares an enhancement (gain) in organisational performance with certain allocation (sharing) of benefits to employees. Generally, it is applicable to a particular group or all the employees, instead of a single person. It is not a traditional method of compensation because maximum people earn wages or salaries, not shares.
Types of Gainsharing Plan
Gain-sharing plans can be of following types :
i) Scanlon Plan :
One of the most popular gain sharing plans is Scanlon Plan. It aims to provide monetary benefit to the employees for their contribution-in-saving the labour cost, which is a result of their valuable suggestions. Employee-management committees are responsible for assessing the suggestions given by the employees. Participants in these plans compute savings as a ratio of 'payroll costs' to the 'sales value of what that payroll produces'. If the organisation is able to minimize the payroll costs by enhancing the operating efficiency, then it distributes the savings among the employees of the organisation.
ii) Rucker Plan :
It is also known as Share-of-Production (SOP) plan. Rucker plan covers only the production workers; however, it may be applied to all the workers the organisation. It is based on the significant relationship between the total earnings of hourly employees' and the production value created by the workers'. The amount of bonus that a worker can get is based on improvement in this relationship. Therefore, if workers have increased the production value by 1% then they are eligible for a bonus of 1% of their total payroll costs.
iii) Improshare :
This type of system is originated from the consultative style of management. The employees are not given option to participate or involve but managers may consult the employees to give suggestions in order to improve the productivity of the organisation. In case the organisation is benefited from the suggestions given by the employees then the organisation shares its profits with the employees.
4) Towne Plan :
Under this plan, only the savings of labour cost considered for determining the rewards, which are to be paid to the group. Initially, the 'standard labour cost' required to perform a whole task is ascertained. Then the actual cost of labour is computed and after that it is compared with the standard cost of labour. The cost saved by the labourer by completing the work before the specified time period is measured and distributed among the labourers. A part of the savings is also given to supervisors to appreciate their work. Organisation also gets its share from the savings of labour cost.
Enterprise Incentive Schemes
The distinguishing feature of enterprise incentive plan is that in such plans all the members of the organisation participate actively. Under such plans, employees are compensated based on organisational success over a period of time. Generally duration is one year, however it can be extended. It aims to infuse the sense of belongingness among the employees and builds a culture of ownership.
Types of Enterprise Incentive Schemes
Various types of enterprise incentive schemes are as follows :
1) Profit-Sharing Plans :
Profit-sharing plans offer direct or indirect payment employees depending upon the profitability of organisation along with the usual bonus and salary. However, these plans involve allotment of shares to employees in case of publicly traded organisations. Principal objective of profit sharing is to exchange the monetary achievement of the organisation with employees and give them an identity.
Methods of Profit-Sharing
Different methods of profit-sharing are as follows :
i) Cash Payment Plan :
Share of the profit is regularly distributed among the employees. But one thing has to be kept in mind that longer the duration between two distributions, more are the chances that employees may neglect the association between their efforts and corresponding remuneration. Distribution of profit depends upon the philosophy of management and financial condition of the organisation.
ii) Deferred Payment Plan :
In this plan, employee's part in the profit is either given to a 'trust' which maintains it until retirement, or it is given to the employee in small installments. If the employee dies, the amount is given to the desired beneficiaries and if he is terminated in the middle of his tenure, ensured amount is deposited in the trust is returned to him. This plan counterbalances the inflationary trends.
iii) Combination Payment Plan :
This plan combines the features of cash and deferred payment plans. It allows the employee to get some immediate cash benefits while saving some amount for long-term purpose. It saves the worker from paying high rate of taxes.
iv) Stock Ownership Plan :
Under the stock, ownership plan, an employee is offered the stocks of the organisation at discounted rates. Discount given is dependent on the wage or salary of the employee and sometimes it is restricted above a specific wage level. The amount of stock which an employee can purchase is limited. There are certain conditions regarding the resale of stock; like stocks should be sold to the issuing organisation first if employee wants to resale it or if he wants to leave the organisation.
2) Stock Options :
It provides the holder the right to buy shares of stocks at a fixed rate in future. Whatever be the price of the stock in the market, if a person uses his option of stock, he will get the share predetermined rates. If the person redeems his stock when the market price is high then the person w make profits. If the value is lower, then the stock option would not be beneficial. This option is almost always beneficial for those organisations in which the possibility of growth is high. It also helps to motivate and maintain good quality of human resources. Long-term and short-term business goals are also achieved with the help of these plans.
Types of Stock Options
There are two broad categories of stock options, which are as follows :
i) Incentive Stock Options (ISOs) :
These are also called qualified stock options or statutory stock options. They should fulfill the requirements as per the Internal Revenue Code (IRC), Section 422 for preferential tax treatment.
ii) Non-Qualified Stack Options (NQSOs) :
These are also known as non-statutory stock options. It does not fulfill the requirements of the Internal Revenue Code for preferential tax treatment.
3) Employee Stock Ownership Plan (ESOP) :
ESOP is a benefit plan which makes it possible for the employees to become the owners of stock of their organisation. It is a method of selling the organisation to its employees, instead of selling it to the outside investors or to any other organisation.
Non-Financial Incentive Schemes
The non-financial incentive schemes include the following :
1) Achievement :
Achievement can be defined as competitive success which can be measured against a standard set up by the person himself or by others. Encouragement can be given to the employees by providing them the chances show their skills and capabilities in their work.
2) Recognition :
An employee should be recognized for his contribution towards the organisation. Be it some significant achievement or some important task. Usually, financial benefits are offered instantly after the task. But it is not necessary that some tangible assets should only be awarded for recognizing good work. Sometimes, good gesture from the employer is also good enough for motivating an employee. It should be planned at right time and should be related to the work.
It is called praise. Praise refers to positive appreciation of the work. On the other hand, negative recognition is called criticism. Criticism should not be done publicly It should be done in private. Criticism should always follow to motivate the person.
3) Responsibility :
If people are given full responsibility of the task they have to perform, they will definitely feel motivated. This concept is based on the fact that person is motivated when he has full freedom to do the things which are required to fulfill his goal.
4) Influence :
Human beings have the tendency to be influential. They like to be in a position where their views are listened. Employer can do this by making policies of participation and involvement. In this way, he can make them more motivated. It is a type of empowerment.
5) Personal Growth :
A person always seeks the opportunities to grow. He can perform well, if he sees the potential for growth. A person would always like to utilize his skills in a proper and positive way so that he can work towards the development of his own self and can contribute towards the growth of the organisation as well.
Advantages of Incentives
Main advantages / importance of incentives are as follows :
1) Enhances the Productivity :
The foremost benefit with the incentive system is the increased efficiency of the employee, which in turn increases the productivity of the organisation. For example, salespersons are given incentives based on their sales volume in many organisations. The incentives are a source of motivation for them to maximize their sales. Many organisations also give their productive employees a good amount of money in the form of bonus, in order to keep them motivated.
2) Boosts Employee Morale :
Incentives also infuses zeal and energetic attitude among the workers contribute cheerfully for the achievement of organisational objectives. For example, if an employee does overtime for six months, then he should be given bonus for his efforts. Employees, if given rewards feel that organisation is appreciating their hard work, which in turn motivates them to work more hard than before and ensure their loyalty towards their organisation.
3) Increases Employee Commitment :
The incentive for high-quality work makes employees committed towards their organisation. Incentive system in any organisation shows that the employees as an asset, which in turn makes the employees, feel appreciated and valued.
4) Accomplishment of the Set Targets :
Employers can set rational goals and give rewards to their employees using an incentive system. Incentive system also helps the employee to achieve the set objectives of the organization.
5) Decreases the Total Expenses of Organisation :
The incentive system aims to reduce the total cost of an organisation, by motivating the employees to increase the efficiency and to reduce labour cost.
6) Decreases the Labour Turnover Ratio :
It is quite evident that people would like to come to work and remain in the job for longer time-span, if their hard work is valued and appreciated. Ultimately, this kind of approach also reduces the labour turnover ratio.
7) Creates Team Spirit :
Incentive system promotes better efficiency and production, reduces stressful work environment and facilitates in building team spirit among employees.
Disadvantages of Incentives
Incentives are disadvantageous because of the following reasons :
1) Leads to Increased Expenses :
The quality of the product or service cannot be assured in the absence of strict and vigilant supervision. The process of strict monitoring and supervision increases the expenses of the organisation.
2) Increases Danger of Accidents :
Sometimes, in order to earn the incentives, employees go beyond their capacity to perform and therefore avoid following safety rules. This increases the chances of accidents in the organisation.
3) Leads to Higher Labour Costs :
Incentive systems usually incur are expenses on the labour, especially when they are being paid by the result, e.g., paper-making and coal mining industries.
4) Creates Feeling of Jealousy among Workers :
The workers who perform well are being rewarded exceptionally well, in comparison to those who are not able to perform well. This creates a feeling of jealousy among those workers whose performance is low.
5) Induces Fear in Workers :
Incentives create a feeling of fear in the workers, in case any technological up-gradation is implemented in the organisation. For example, introduction of new machine develops a feeling of fear among the workers the whether or now they will be able to produce high output as required for getting incentive while working with the new machines.
6) Standards are Based on Past Performance :
Generally, the past performance is set as a benchmark to measure the actual performance of the worker which is not an easy task. Many organisations play safe by timing a standard of performance, which is the average of performance in the past years, but it cannot be considered as a perfect basis of setting a performance standard.
Practices in Indian Organisations
Incentive payments, which were earlier introduced in 1946, have gained much popularity among Indian organisations. Today, these payments are commonly used fike salaries and wages. However, any kind of generalization is always discouraged so as to avoid usage of the same scheme by different industries. Such schemes vary from one company to another and from one plant to another within an organisation. Practices of incentives that are followed in some major Indian organisations are as under :
1) Incentives Plans by Infosys :
A certain bonus is given to employees when certain objectives are completed. This helps in encouraging the employees for better performance levels and motivates them for accomplishing the pre-set goals. Infosys also provides stock options to their employees along with their bonuses. Nowadays, three option plans covering all the Infosys employees are offered which are described below :
i) Employees Stock Offer Plan, 1994 :
This plan was initiated in September 1994. It offers the issuance of 60 lac warrants for eligible employees.
ii) Stock Option Plan, 1998 :
Established in 1998, Infosys stock option plan did not provide any incentive or statutory stock options to its employees. As per the provisions of 1998 plan, near about 16 lac equity shares are currently reserved for issuance.
iii) Stock Option Plan, 1999 :
Infosys 1999 stock option plan offers the issuance of 66 lac equity shares to its employees. Under this plan, there can be a maximum of seven members in the compensation committee for its administration. Employees are provided options at an exercise price, which is more than the value of fair market. But sometimes, the options are provided at comparatively lesser exercise prices after being discussed and approved under Infosys general meetings. Apart from the statutory benefits including pensions, medical claims, leaves, etc., Infosys also provides attractive loan programmes to its employees. These loans fulfill several financial needs of their employees.
2) Incentives Plans by TCS :
TCS wanted to design a mechanism under which incentives are provided for retaining as well as rewarding talents of their employees. EVA framework by TCS, clubs the performances of the constituent business units and individuals with corporate value. Under this framework, an employee owns a profit share of the organisation. Hence, this framework serves as a compensation model. The employee should know the factors that develop EVA and other business units. There are three basic factors that inspire an individual as well as organisational growth. These factors are revenue, cost and capital charge. Revenue depends upon the license price or rate involved in the product, sales, response time, billable hours and domain skills. Productivity manages the cost. Various costs including sales and marketing costs, recruitment's, etc. affect the overall cost. The bulk of capital charge comprises of receivables and training's.
Generally, an individual works for enhancing its benefit package. It has three important components viz corporate EVA, business unit EVA and the individual performance factor. A certain percentage out of the total EVA payment goes to each employee on the basis of the corporate EVA improvement. Apart from this, if the performance of a particular business unit is better than the other, then one gets at least a special/skilled employee in another unit as a reward of team spirit.
The concept of "Bonus Bank' has also been introduced by TCS. Under this concept, the company declares a potential bonus for the employee whenever a pre-decided corporate target is exceeded. Such a bonus gets accumulated for several years. This concept helps in enhancing the performance of the individuals and retains a growing relationship between performance and payment.
3) Incentives Plans by NTPC :
NTPC rely on valuing and appreciating every employee that works. The common incentives offered at NTPC include :
i) Performance-Based Bonus :
Through certain schemes like Generation Performance Scheme', high performance employees are paid performance bonuses. This acts as a reward to the employees for their good performance. Such bonuses help in increasing the morale of the employees and also in identifying their efforts made in day-to-day work.
ii) Employee Stock Purchase Plan :
Established in 1938, NTPC's employee stock purchase plan offers plans for stock purchase to their employees, as NTPC believes in appreciating the employee ownership. All regular or part-time employees of NTPC are free to choose this plan.
4) Incentives Plans by Aditya Birla Group :
Assertive growth plans with acquisition of companies has been developed by Aditya Birla Group. This group has set new projects and is exploring overseas business opportunities simultaneously at a determined pace. The human resource is also being prepared for facing the competitions. Lately, the company has launched Employee Stock Option Plan (ESOPs) in the following four companies, viz., Hindalco, Grasim, Aditya Birla Nuvo and Ultra tech.
According to this plan, the managers receive long-term incentive plans and the best talent is retained. This establishes a sense of responsibility and possession among the employees. This plan is also useful in managing the recruitment process. Moreover, the variable pay plans are also being complemented, which are frequently offered by the companies.
RELATED TOPICS :