Hi! Thanks for the interesting question.
I will try to provide you with links that answers some of your
questions and also gives a background of this field. Whenever
appropriate, I have provided direct quotations from the sources I
cited so as to save you time but I highly recommend that you read the
whole article to get a better coverage of the ideas. Some documents
are in PDF file so you will need the Adobe Acrobat Reader to read
them. In case you haven’t installed it yet here is a link so you could
download The Adobe Acrobat Reader
(http://www.adobe.com/products/acrobat/readstep2.html). One article
is also in MS Word format so you would also need Microsoft Word to
read it.
Initially and to get us starting on the right foot, let us first take
into account the different cash incentives programs you could use in
your company. The article mentioned here is based in the UK setting
and also discusses the incentive stock options you are familiar about
but it also discusses different programs that could guide you on what
to implement in your company.
The following topics are discussed in this article:
Long Term Incentive Plans (LTIPs)
Phantom Share Schemes
SAYE Sharesave (SAYE)
Approved Company Share Option Plans
Unapproved Company Share Option Plans
New Employee Share Schemes
The New All Employee Share Scheme
Enterprise Management Incentive
Employee Share Ownership Trusts (ESOPs)
PAYE healthcheck
“A guide to Employee Incentives”
http://www.littlejohnfrazer.com/PDF/EMP-INC.PDF
Before going to the more recent methods of cash incentives programs,
it will also be helpful to look at more traditional ones so as to get
a good perspective of different types of programs.
Merit Pay:
“…Merit pay rewards individual performance only, while the changing
nature of work is leading to more job interdependence and shared
responsibilities. The second limitation of a merit-pay approach is
its questionable motivational value. Criticism is often voiced that
merit-pay increases are based on a subjective appraisal of employee
performance, and several national surveys concluded that most
employees see little relationship between their pay and their job
performance. The effectiveness of merit pay as a motivator is,
therefore, suspect. Further, as pointed out by the SRM workshop
participants, the motivational aspect of merit pay is further
diminished because the size of the percentage point spread between pay
increases for average and outstanding employees is usually too small
to truly differentiate between individual performance levels.”
Variable Compensation Approach:
“Most of the firms contributing to this research believe that the
effective use of reward systems means following a variable
compensation strategy. Variable compensation includes the use of
stock-based programs and cash-based vehicles, such as profit sharing,
productivity gainsharing and cash incentives or bonuses. The key
features of variable compensation—flexibility and built-in cost
control—overcome the major drawbacks of traditional reward systems
that rely heavily on giving employees most of their compensation in
the form of base salary.”
“Like merit pay, a variable compensation approach is
performance-linked. Unlike merit pay, however, this approach can
incorporate the performance of individuals, groups, business units,
and both corporate financial and stock price performance. As a
result, rewards can be driven not only by an employee’s own
performance but by the performance successes of the work unit, plant,
business unit and company. By custom designing plans to suit specific
organizational and employee needs, many firms find that salary
structures can be maintained while employees can be focused on
corporate goals.”
“STRATEGIC REWARDS MANAGEMENT: The variable approach to Compensation”
http://www.esopcanada.org/download//Strategic%20Rewards%20Management.doc
Another type of incentive program is throught ESOPs.
http://www.esopcanada.org/index.cfm?itemID=408&subNavID=132
A program to develop corporate performance is made by Quick Solutions
which is designed for corporate executives.
"Quick Solutions of Columbus, Ohio has come up with the following
clever ideas: (1) send house cleaners to the homes of longer term
employees once a month, (2) pay $1,200 toward employee vacations, and
(3) one week annually in company condo, at Sanibel Island, for high
achievers. These are just a few of several excellent ideas that are
summarized in the Sept. 1999 edition of Inc. magazine."
"Incentive Strategies"
http://www.xpay.net/incentHome.htm
GMSI (Global Home Management Systems, Inc., an integrator of computer
systems for home automation and control) also has in its website a
cash incentive plan that your company could probably adopt so as to
improve unit and company performance.
"GMSI Incentive and Recognition Program"
http://www.gmsi.com/corporate/careers/bonuses.shtml
On an individual employee performance level (which actually also
provides great contribution to the company), there are different and
creative ways of cash rewards programs that could be initiated by your
company.
One program for cash incentives is by coming up with ideas and
activities which could save the company money and give that portion of
the savings as a bonus to employees.
“The Brainstorm program encourages state employees to submit ideas for
streamlining operations and improving services by rewarding them with
a portion of the savings. If an idea results in a documented cost
reduction for the state, the employee earns a cash award equaling 10
percent of one year's savings, to a maximum of $10,000. If the
benefits cannot be translated into a dollar value, the employee is
eligible for an "intangible" award ranging from $25 to $400.”
”Supervisors and managers do not share in the awards, nor do employees
earn awards for ideas they could implement under their normal job
responsibilities.”
“State Employee Suggestions Reduce Costs By $65,000”
http://www.secstate.wa.gov/office/news.aspx?news_id=95
The next article expounds on this type of cash rewards program by
implementing it in different areas such as safety for example, which
could save the company valuable medical expenses on employees. This
could also be applied to different company units.
“Engineering strategies aim to eliminate unsafe acts, workplace
hazards, and job-related stresses by focusing on the
mechanical/physical work environment. Some safety professionals now
suggest that engineering should be replaced by ergonomics as the first
"E" of safety strategies. Ergonomics, as you probably have learned, is
the science of designing the workplace to fit the capabilities of
workers. Each workstation is structured to be consistent with the
unique mental, physical, and emotional limitations of the operator
assigned to that station. Whether the "E" here represents engineering
or ergonomics, working to make the environment safe is typically the
first strategy used in safety.”
“Employees readily will take the money and run because cash gives them
the freedom to decide how to reward themselves, in effect. They can
buy what they want. A problem crops up, though, when you try to decide
how to disburse cash incentives in a way that all employees will view
as fair, objective, and acceptable. Feelings run high when there's
money to be had.”
“One solution is to return to employees part, if not all, of the
monetary savings resulting from achieving the safety goal. One of the
more successful methods is to return savings realized from reduced
insurance premiums, especially workers' compensation savings. This
method is easily administered by management and easily understood by
employees. Its objectivity can be demonstrated through typical company
records. Other methods of rewarding meritorious employee performance
can be based on increased profits resulting from fewer manufacturing
defects, improved productivity reflecting value-added processes, and
reduced overhead costs.”
“Integrating safety incentives into your mix of strategies”
by L. Dayle Yeager
http://www.ishn.com/CDA/ArticleInformation/features/BNP__Features__Item/0,2162,3068,00.html
Another scheme that can be implemented is through commuter financial
incentives by using parking cash outs, travel allowances, transit and
rideshare benefits.
“Commuter financial incentives can be prorated according to how much
employees use alternative modes. For example, employees who drive
twice a week would receive 60% of the full Parking Cash Out
allowance.”
“These strategies create more neutral travel incentives. Most
employees who commute by car receive a free parking space with a
typical value of $50-100 per month (Shoup, 1999; Litman, 1999).
Employers offer employees subsidized parking because these benefits
are usually untaxed. A typical employee must earn $1,500 or more in
pre-tax income to pay for a parking space that costs their employer
only $1,000 to provide. In the U.S., transit benefits are tax-exempt
up to $65 per month, which increases to $100 in 2002 (see the Commuter
Choice website at www.fta.dot.gov/library/policy/cc/cc.html for
information on U.S. federal implementation resources and incentives).
This policy has motivated an increasing number of employers to offer
transit benefits as an alternative to parking benefits (Commuter
Check). In Canada, transit benefits are currently taxable, so few
employers offer them (employees would just as well receive cash), but
there are efforts to change this policy (IBI, 1999).”
“Parking Cash Out and transit benefits represent the savings that
result from reduced parking costs. Businesses that own adequate
parking may perceive little short-term savings from reduced parking
demand. However, over the medium and long term most firms have
opportunities to benefit financially from reduced parking demand: to
provide additional parking to accommodate growth, to lease or sell
excess parking, or to use the land for a new building, equipment
storage, or greenspace. Parking Management allows businesses to take
advantage of reduced parking demand. To make it easier for businesses
to save from reduced employee parking demand, commercial leases can
unbundle parking (parking spaces are leased separately rather than
automatically included with building space), and list parking as a
separate line item (parking rents are listed separately from building
rents).”
“Commuter Financial Incentives
Parking Cash Out, Travel Allowance, Transit and Rideshare Benefits”
http://www.vtpi.org/tdm/tdm8.htm
An elaboration and varieties of these methods could be found in the
following links:
“Complementary Plans and Impact Fees Protect Open Space”
http://www.abag.ca.gov/planning/theoryia/cmprsantamonica.htm
“Financial Mechanisms: Commuter Choice Tax Incentives”
http://www.commuterchoice.com/employerresources.php?elink=support
I also found this idea when you want a creative way to give cash
incentives to your sales staff. Some of the ideas in this article is
not purely for cash incentives but you could also find some value in
the other programs.
“Still intent on using cash as an incentive? In that case, instead of
handing over the money for your top seller's next car insurance
payment, try depositing that check into your big closer's retirement
account. This gesture serves a dual purpose. For one, it qualifies as
a tax write-off but more important, by investing in your employee's
future you are sending the message that the company cares about its
employees and their families' well-being. That's one sure-fire cash
incentive with trophy value that produces bottom line results?”
“An Incentive For Anyone”
http://www.usegiftcertificates.org/anincentive.htm
Adaptec Inc., a computer motherboard producer also has a different
type of cash incentive activity for its employees. This enables the
company to get quality people for the business.
“Adaptec's also promotes its generous companywide program of
referrals.”
“If an employee's referral is hired, they can earn up to $2,000. If
the position the new hire moves into is gauged as a "critical"
position, a general manager or someone with background specific to an
important project, the employee can earn as much as $5,000.”
“Cash incentives lure top talent; employees offered finders' fee”
By Michelle LeJeune
http://www.bcbr.com/aug97/adapt2.htm
The “Corporate Wellness Program” of the Quaker Oats Company meanwhile
provides cash incentives to its employees who take care of their
health.
“Employees who pledge to pursue health improvement activities receive
up to $140 annually of flexible benefit credits. The activities
eligible for credits include ‘aerobic exercise 3 times weekly, use of
seat belts while in automobiles, no tobacco, no alcohol abuse, and no
drug abuse.’ All flexible benefit credits are granted under the honor
system. There are no "life-style credit police."
“Employees who take the company Health Risk Appraisal and whose scores
fall at or above accepted levels receive an additional $110 in
flexible benefit credits. Employees whose scores fall short of
accepted levels can still receive full credit. They do so by positive
demonstration they are following measures designed to improve their
Health Risk Assessment scores up to acceptable levels.”
“Medical Savings Accounts Study: Case Studies
Quaker Oats Company”
http://www.effwa.org/studies/msas25.php
You could also set-up cash rewards wherein your employees could use
the money to pay for expenses which could contribute to the over-all
quality of their lives.
“Public relations firm Alexander Ogilvy offers employees $2,000 per
year in a " Q-Fund. " The money can be used for any product or service
that contributes to overall quality of life, such as child day care,
housecleaning service, gym membership, or a spa vacation.”
“A peek at perks”
http://www.nwfusion.com/newsletters/careers/2001/00885539.html
Before formulating and offering your rewards program, please read the
following articles to serve as your guide:
“Dr. Alyce Dickinson of Western Michigan University has probably done
more research on the issue of incentive effectiveness than anyone. In
a recent review of her work and that of others in this field
("Individual Monetary Incentives: A Review of Different Types of
Arrangements Between Performance and Pay," Journal of Organizational
Behavior Management, Vol. 21, #3, 2001), Bucklin and Dickinson
indicated that most of the common variations in incentive plans make
no difference in performance. These variations include percent of base
pay available as an incentive, whether the percent increases,
decreases or stays the same for increasing performance, total amount
that can be earned, or the per piece incentive amount. One of her
studies showed that performance did not differ significantly whether
the amount to be earned as an incentive was 3 percent or 100 percent
of total pay. As her work seems to indicate, any incentive plan,
regardless of its structure, is better than none at all. They also
found that plotting results on a graph each day facilitated
performance under incentive plans.”
“Choosing an Employee Incentive Program”
http://www.entrepreneur.com/Your_Business/YB_SegArticle/0,4621,302766,00.html
“Though the need to utilize cash incentives to retain employees is key
in tight labor markets, it's not the only time they're a key weapon in
a manager's arsenal. Indeed, according to a survey from WorldatWork,
even when economic conditions ease up, retaining key employees can
mean the difference between success and failure, particularly if
companies face reorganization. Interestingly, data from the
association's 2002 survey data indicates a slightly higher prevalence
toward offering retention bonuses in more difficult market conditions,
despite the fact that more people are looking for work in such cases:
In 2000, about 24% of respondents reported having a retention bonus
program in place, while in 2002, 34% of respondents indicated their
organization has a retention bonus program.”
“Reward and Recognition”
http://www.recognizeserviceexcellence.com/rewardrecog.htm
"Incentive plans provide a visible link between business strategy,
results and individual rewards. A well-designed plan gives each
employee a personal stake in the successful implementation of business
strategy. And the plans pay off for all other stakeholders. A recent
study of 663 incentive plans conducted by the Consortium for
Alternative Reward Strategies reported a median net return of 134% on
incentive payouts. That is, for every one dollar of incentive paid,
there was a gain of $2.34."
"Employee Incentives"
http://www.cga-canada.org/eng/magazine/julaug96/empl_1_e.htm
Search terms used:
Employee Cash Incentives strategies –non
I hope these links would help you in your research. Before rating this
answer, please ask for a clarification if you have a question or if
you would need further information.
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Easterangel-ga |
