Human Resources Management: Compensation Plans and Employee Recognition
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Identify two ways an organization's compensation plan may be linked to key objectives, and explain how they could benefit the organization.
When considering a reward and recognition plan that effectively retains employees, what are some key components that must be included? Why?
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Solution Summary
This solution discusses ways that an organization can link compensation plans with key objectives. Employee retention through reward and recognition plans is also discussed.
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Identify two ways an organization's compensation plan may be linked to key objectives, and explain how they could benefit the organization.
There is a distinct problem with linking compensation plans to objectives. When the two are linked, it increases the risk of fraud. Management wants (i.e. needs) to obtain the objectives and if management does not do so, the form of compensation is not achieved. If compensation is set as bonuses to management for achieving a key objective of fifteen percent and management does not achieve fifteen percent growth, there may be an inclination to falsify numbers that make it appear like the objective has been achieved.
One of the main ways that the compensation plan can be linked to key objectives is setting a restricted option. This reduces the risk of fraud and ...
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