A personnel assessment is a process of determining the effectiveness of the employees’ performance of their duties and the implementation of organizational goals. The main condition for the effective work of the personnel assessment system is its integrated nature. Evaluation of the work of staff helps to solve tasks related to other areas of work with staff. Encouragement is a motivation method based on moral and psychological influence. The method presupposes rewarding a person for conscientiously performed work. Taylor differential piece-rate method will be the best choice for human resources professionals.
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The stimulation of the work of employees is carried out on two levels. The first level is the stimulation of every employee, and the second is the stimulation of the entire collective of workers. At both levels, the manager must determine the amount of incentive for the staff for the successful carrying out of tasks assigned. The incentive methods should be chosen for every specific situation. At the same time, it is necessary to think through the incentive program and link it with other activities within the framework of the leadership. None of the events affect the desire of sales personnel to succeed as a fact of encouraging individual actions. The structure and application of an effective system of encouraging success in trading activities are directly related to the system.
Incentive Pay Determination Basic Methods
The primary labor remuneration methods are based on the time rate system and piece rate system. According to the time rate system, workers receive payment for the exact working time. It can be hourly, daily or monthly payment. The quality and quantity of the work are not taken into consideration. The piece rate system presupposes a payment system based on the quantity of the work performed.
The incentive plans are oriented on both rate systems the time and piece. These systems have and positive and negative aspects, that is why it is necessary to combine only good aspects of the systems in the incentive plan. The main goal of the plan is to stimulate employees to perform better for earning a higher wage. It is natural that fulfilling a larger amount of work results in employee’s extra payment as it causes lower labor costs (Kato, Kauhanen, & Salmi, 2013).
At present companies follow a number of different incentive plans as: straight piece rate method, flat time rate method, co-partnership, guaranteed day work, Taylor differential piece rate method, different time rates, Rowan premium bonus plan, Halsey premium bonus plan, group incentive schemes, standard hour plan, Merrick multiple piece rate, Gantt task bonus wage system, Bedaux point system, Emerson plan, Barth premium system, accelerating premium bonus.
Human resource professionals for determining the incentive pay may choose among the basic methods. Halsey premium bonus method was brought in 1891 by F. A. Halsey. The method combines the piece and time rate systems. An employee has a fixed base rate and gets a reward for performing extra norm. A time for each job or unit is also fixed.
The base for the bonus payment is 50% of the time saved (Dix, 2016). As a result, increased productivity cases per unit cost falls. Overhead expenses are divided by a larger volume of output. It makes it possible to pay employees proportionally to production. In this case, companies use 30 percentages instead of 50. Rowan premium bonus method presupposes a fixed time for each job or process fulfillment. The base payment rate is set. A bonus payment is determined on a time saved basis, calculated as a proportion of the time taken to the time saved regarding the set one.
Taylor differential piece rate method is introduced by the founder of scientific management F. W. Taylor. According to the method, there is no set daily payment, i.e. there is no fixed minimum of employees’ wages. However, there is a set time determined by careful studies for each job fulfillment. The job piece rates are set on the lower and the higher rate. A worker receives the lower piece rate in case of work completion in longer than the set time. The higher rate is received by a worker in case of the work completion within the set time.
To summaries, unproductive workers are paid the lower piece rate, while productive workers are paid the higher piece rate. That is why the salaries of a productive worker differ a lot from an unproductive worker (Aitken, 2014). Among these methods, the most acceptable from the point of view of individual, group and company performance is Taylor differential piece rate method. This method ensures that productive employees receive a high reward, and the company, in turn, has the opportunity to attract only the best workers in the labor market.
Legal Requirements Affecting Employee Benefits
Employee’s benefits occupy a prominent part in the employee’s life and life of their family as a whole. That is why the benefits offered by the employer are decision-making factors for an employee to apply for work or not. There are benefits that the employer is obliged to provide by law and offered by the employer as an option for employees’ compensation. Worker’s compensation, as well as social security, are the examples of required benefits, while retirement benefits and health care insurance coverage are optional benefits. Required benefits like optional ones have tax and legal implication for employers. For instance, each employer is obliged to pay social security taxes at the rate paid by company’s employees.
Some businesses must pay unemployment insurance taxes wherefore they are to be registered with workforce state agency. At the same time, companies are obliged to carry compensation insurance coverage of the employees through the state program of workers’ compensation insurance or on the basis of self-insured with the help of a commercial carrier. In a number of states California, New Jersey, New York, Rhode Island, Hawaii, Puerto Rico insurance coverage provision is claimed for partial wage replacement to employees temporarily not working because of illness or injury.
Employers in majority offer leave benefits not obligatory according to federal law. These benefits are offered as a constituent of benefits plan and overall compensation of the employers. Among leave benefits defined by law are vacation, personal leave, sick leave, bereavement leave and others. Leave should be provided following the Family and Medical Leave Act. Guerin and England (2015) define that “the Family and Medical Leave Act guarantees up to twelve weeks with preservation of the workplace.
Unpaid leave during a period not exceeding twelve months is given in case of birth and care of the employee’s child, or foster care of a child or placement for adoption; in case of immediate family care, for example a spouse, a child or a parent with serious health condition; care of the employee’s own health due to serious problems.” The Family and Medical Leave Act implements to every public employer and private employers with a staff of more than 50 people. During the period of leave, the health benefits are left for employees as for those continuing to work, but not at a leave.
Additional Benefits and Concepts That Should be Considered in Designing Benefit Plan
The incentive system should not be limited to directly economic incentives in the form of allowances for salaries, bonuses, commissions, awards for winning competitions, pension benefits, insurances and other incentives. A promotion should also be applied, for example, an order to conduct business with larger clients and in larger sales territories, promotion to a higher position within the organization, provision of the opportunity to improve personal qualifications through full-time and evening courses.
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Expression of gratitude is an oral praise, compliments to employees. Many companies have honor boards, their badges and other differences and promotions. Practices include such forms of promotion as a publication of an article in the company’s bulletin with photographs of the achievements of an employee or a group of employees. Non-economic forms of encouragement are: holding ceremonial receptions in honor of distinguished, presenting small gifts, issuing certificates of achievement, indicating names of distinguished on souvenirs, enrolling in members of elite clubs. Today’s interest in high quality and in strengthening the dedication of employees is the logical continuation of Taylor’s method.
At the stage of the benefit plan designing a company should consider a number of important concepts. It is worthy to reward the employees of the company with the every fact of active work performance with a positive result. Stimulation should not be included in salary, unexpectedness, and unpredictability of award giving causes much greater effect. Different forms of incentives should be practiced. All of them should have a certain value, raising the status of an excellently performed work. The faster is the reward for labor, the more its productivity is. If an employee knows that encouragement awaits to be after five years, it is unlikely to make the employee accomplish his/her labor exploits.
The award should be public. Encouragement of a specialist in a private environment is not desirable. Some people much more value not material benefits, but their own image among colleagues and respectful attitude to their person. The opportunity to be awarded should be available to employees of any level of professionalism, both to beginners and experienced masters. Incentive pay is used to improve work performance, but it can result in unethical staff behavior, such as dishonesty by overstating work performance results and inequality payment raises envy and disappointment. To reduce these risks companies should implement incentives only for uninteresting to employees work units. The incentive pay should be done in small amounts not to destroy internal motivation.
The system of incentives plays is a fundamentally important in functioning and development of the organization. Stimulation is the main function associated with the process of activating the collectives through the use of incentives, levers, and ways of forming interests and motives of activity. Stimulation is a powerful lever of management. It actively influences the consciousness of people, the state of public relations of the collective. Unfortunately, financial incentives, called to motivate employees positively, make a more complex result that can cause opposite the negative impact on the company’s work.
Aitken, H. G. (2014). Scientific management in action: Taylorism at Watertown Arsenal, 1908-1915. Princeton, NJ: Princeton University Press.
Dix, G. (2016). A genealogy of the incentive. Economic Sociology: The European Electronic Newsletter, 17(2), 24-31.
Guerin, L., & England, D. C. (2015). The essential guide to family & medical leave. Berkeley, CA: Nolo.
Kato, T., Kauhanen, A., & Salmi, J. (2013). Empirical evidence on the dynamics of incentive plans. The Research Institute of the Finnish Economy, 20, 1-26.