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Compensation Package

Problem:
You are a member of a national human resource management society which provides web materials for members, as well as on-line chat learning events with field experts. You have just finished reading a live chat presentation with the Martocchio, leading author on strategic compensation. Martocchio says that when designing incentive pay programs, there are 5 factors that should be considered.

Whether the plan should be based on group or individual employee performance.
The level of risk employees will be willing to accept in their overall compensation package.
Whether incentive pay should replace or compliment traditional pay.
The criteria by which performance should be judged
The time horizons for goals, long term, short term, or a combination of both.

You are asked by the chat moderator to contribute to the learning event by choosing 2 of the 5 factors, and posting chat on them. Discuss why those factors are important to consider, and the role each plays in developing effective incentive programs.

Solution Preview

Whether the plan should be based on group or individual employee performance.
Whether incentive pay should replace or compliment traditional pay.

The plan should be based on individual employee performance and that the incentive pay should replace or compliment the traditional pay because it is the most effective reward and compensation systems, which aligns with objective, outcome-based evaluations of employee performance. Each employee's performance measurement should reflect the organization's business strategies and financial goals, and that compensation should also reflect the employee's performance level and his or her contributions to the ...

Solution Summary

This solution is comprised of a detailed explanation to discuss why those factors are important to consider, and the role each plays in developing effective incentive programs.

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