Recognizing

Employee

Contributi

ons

by FEYZA ALTOO HALLHRM Foundations

FAYE ALTOO HALLHuman Resources Specialist

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Profile• • Faye Altoo Hall MBA• Human Resources Professional

• I adequately applied employee placement strategies to acquire talented candidates in order to fill key roles within a company. Additionally, I have worked to build programs that support HR initiatives while implementing internal processes that facilitate corporate objectives.

• My employee incentive program proved to be very successful with employee job satisfaction increasing by 50% after implementation and also helped me to reduce the turnover around %80-90s. Recruitment, hiring, training and development, benefits/incentives management, performance management, workers compensation and safety programs are some of the job functions which I had been directly responsible.

• All the achievements and successful human Resources operations that I was involved had awaken a strong passion towards the Human Resources field and had driven me to earn a degree in the field. After successfully completing my HR concentrated MBA education, recently completed post-graduation Executive Human Resources Management Certificate program at Strayer University

Originally from TurkeyMoved to the US in 1999Worked as an Independent Business management development consultant and also successfully handled executive level business administrative works for some nationwide distinguished companies for 15 +years overseas. During this general business management period,gained strong experience and earned a sublime reputation in human resources field.

1.IncentiveMotivating employee can be a difficult task. There are no “ one fits all” formulas to motivate individuals. Motivating fact changes from person to person. While one employee may appreciate time off, the next may enjoy new challenges. Determining the optimal incentive plan design will not only help improve performance, it will promote ethical behavior that is in the best interest of the company and shareholders. While determining the incentive programs, it is essential to remember that “ goal setting” is an important factor that could be used as a measure

Top Employee Motivating FactsChallenging workRecognitionEmployee involvementJob securityCompensation

While designating the incentive plan, considering the followings will serve the purpose perfectly• Pay is tied to performance,• Extrinsic rewards are taken

account,• The amount of pay is large

enough; • Performance measures reflect

effort and evaluation processes are fair;

• There is a high level trust between the administrators and employees.

1. Why Incentive Plans

Bonus Plans vs. Incentive Plans• Bonus plans are “after the fact” features and

reward employees for their overall performance and contributions without setting individual objectives or committing to specific payment levels. Bonus plans are excellent performance rewarding systems and have a comprehensive motivational value when they are regularly given after high performance, but they are not as effective for incenting specific actions/behaviors, or supporting a “Pay-for-Performance” culture.

• Incentive plans are “before the fact” features and stimulate employees to meet expected goals. These plan objectives are connected prior to the given period along with details of how results will be rendered into individual award payments. If the incentive plan is explained clearly, a participant will identify what needs to be done in order to get an award and what the conferment will be for different levels of performance. The employee’s pay is directly associated to performance.

1. Pay for Performance Performance Bonuses: • Performance bonuses are not rolled into base pay.

• The employee must re-earn them during each performance

• period.• Sometimes the bonus is a one-time reward.

• Bonuses may also be linked to objective performance

• measures, rather than subjective ratings

• 72% of firms use bonuses in their sales incentive contracts, whereas only 58% use commission rates, the next most common form of incentive pay” (Steenburgh, 2008, p. 235).

“Pay for performance” incentive plans :• Should be tied to the high levels of productivity.

• Employee should see that their performance level directly related to their rewards.

• It is important to analyze the advantages and disadvantages of potential incentive plans prior to implementation.

1. Incentive PlansIncentive Formula: exibility +choice + customization=Fair fl

incentive=pay-for-performance Setting goals is the most essential activity to guide employees how far they can go. Besides recognizing and rewarding top performers more often, it is extra important to make it publicly ceremonial and let the entire team see what actions and behaviors lead to recognition and rewards. Thence, it will stimulate others and help organization to achieve its goals more rapidly.Old school incentives are not attractive anymore. X gens are leaving their chairs to Y gens. Meanwhile, Z gens are on the way. New generation is interested in different trends. It is necessary for HR managers to get more creative with incentives.

Recognition and Conferment Recognition: Recognizing employees for their efforts and

achievements is an effective motivating reward package. It also can be inexpensive but very functional. A very common "employee of the month" a printed certificate and one month's use of a designated parking spot close to the office entrance costs the company nothing, still works as strong motivating factor for employees. Other forms of recognition that can be used include listing employee accomplishments in the company newsletter and handwritten notes from a manager or executive identifying excellent performance.The most ubiquitous pay systems: 1.Commission with percentage:A commission pay structure for sales professionals works by rewarding a sales professional who closes more business with more money. The company benefits from the additional revenue as well. Financial rewards packages for non-commission employees can include a profit-sharing program, quarterly performance bonuses and lower health insurance premiums for employees who take part in the company wellness program. Guaranteed annual raises for employees that meet standard performance criteria can also act as motivation. For example, a 3 percent pay raise each year for employees who have a 99 percent attendance rating is a motivating financial reward.2.Lump-sum bonuses : These type of pay systems are earned at the end of a specified time period, such as monthly, quarterly, or annually, when a salesperson achieves a specific level of sales or sales quota.

1.Monetary Incentives

INDIVIDUALPERFORMANCEINCENTIVES

Piecework ratesStandard Hour PlansMerit Pay

Individual BonusesSales Commissions

Incentive pay specifically designed to energize, direct, or control employees’ behavior. Incentive pay is influential because the amount paid is linked to certain predefined behaviors or outcomes.

GROUP PERFORMANCE INCENTIVESGain SharingGroup BonusesAnd Team Awards

ORGANIZATIONAL PERFORMANCEINCENTIVES Profit Sharing

Stock Ownership

Stock Option

Employee Stock Ownership

INDIVIDUAL GROUPORGANIZATIONAL

Recognizing Employee Contribution with Awards

1.Non-Monetary Incentives

Many studies set forth that, non-financial rewards can have an even more substantial impact on employee satisfaction and motivation than traditional financial rewards. Here are some commonly used examples for non-monetary incentives:Flexible hours.A handwritten note from superiors added on a piece of cakeDiscount cards or free memberships ( gym, stores, beauty shops etc.)Giving a free passTravel, amusement park, sauna ,tickets etc.Buying lunch to the department or teamPublicizing employees’ successes.Bringing fun to the workplaceProviding company promotional materials ( shirt, pen, note book etc.) As the HR department , our suggested formula will be : Monetary Awards Non Monetary Japery High performance

2.The Balanced-score Card Approach

Why Balance Score Card?The balanced scorecard is a combination of performance measures directed toward the company's long- and short-term goals and used as the basis for awarding incentive payIts purpose is to allow the organization to have a mix of measures that can be customized according to its markets, products, and objectivesThe balanced scorecard (BSC) is the most widely applied performance management system today. The tool is built to focus on past and future of the business with its lagging and leading measures. Many organizations say they have a Balanced Scorecard because they use a mixture of financial and nonfinancial measures. Such measurement systems are more balanced then ones that use only financial measures.The Organization builds its measurements around three dominant constituents: customers, shareholders and employees. The stakeholders’ scorecard identifies the major constituents of the organization ( stakeholders, customers, and employees ) The scorecard defines their goals and develops possible targets and measures for them.

2.Balance Score Card

Organizations’ four perspectives within their balanced scorecard:

1.Financial Resources; Cost ➞

reduction 2.Customer Community and Customers ➞

3. Internal Business Operational ➞

Excellence and Internal Efficiency4. Innovation and Learning People, ➞

Motivation and Learning

*The balanced scorecard combines the advantages of different incentive-pay plans and it helps employees understand the organization's goals. *Rewarding achievement of a variety of goals in a balanced scorecard reduces the temptation to win bonuses by manipulating financial data.*By communicating the balanced scorecard to employees, the organization shows employees information about what its goals are and what it expects employees to accomplish.It helps employees understand the organization's goals

Advantages of BSC

2.Assessing Stakeholders’ Value

•Assessing the Share Holders’ Value :It is a common sense that the employees who have better skills, are well paid, and feel their jobs are secure have higher individual performance, which take the company into desirable organizational improvements like growth in sales. Effective practices motivate employees by carefully measuring performance, making fair promotion decisions, and linking pay to performance. As a matter of fact the company wants the shareholders to see that: “It is a compelling place to invest”•Assessing the Employees’ Value : A good cooperation of HR Management and Employees influence the organization’s ability to achieve its objectives. Employees’ lives are directly influenced by the organization. Satisfied and happy employee is a critical component of organizational success. The human resource department plays a major role in ensuring that the organization complies with employees’ wellbeing and safety. Low turnover is a strong sign for understanding work conditions are meeting the expectations. In short, organizations want the employee to think that “this workplace must be a compelling place to work”.

2.Assessing Stakeholders’ Value

• Assessing the Customers’ Value:Customers have enormous influence on the organization’s subsistence. If customers don’t buy its goods or services, the business will be in trouble. Researches concretized that good human resource management improves customer satisfaction through customers-employees’ interactions.Customer satisfaction measures for the success of a training system include quality of introduction/orientation programs.It also measures for the success of a compensation system include competitiveness in the local labor market. The anticipation of personnel needs is a customer satisfaction measure that indicates the success of staffing activities. Employees tend to treat customers the same way they believe Managers treat them. If employees sense their company values them and treats them with respect, they reflect these good attitudes and behaviors in their interactions with customers. Hiring and keeping skilled employees can also improve customer satisfaction. A Satisfied Customer will think “this is a compelling place to shop”

3.Difficulties in Creating a Benefits Package

•In comparison with pay structures, benefits packages are more complex; accordingly benefits are hard to understand and appreciate for some employees. Setting a pay rate for each job would be extremely complex at the large organizations because they have hundreds, sometimes even thousands of different jobs.

•Benefit decisions can also destruct price stability. Distance Learning Center asserts that “When total compensation gains exceed productivity in the economy, inflation is the consequence. Benefit costs are often not given their full weight in calculating total compensation and so amount to a hidden inflationary tendency.”

•Benefit decisions encourage organizations to work employees' overtime, since this does not significantly change the other benefit costs. The effect of this, of course, is to lower the employment level.

•Another effect is to encourage organizations to hire part-time and temporary employees to whom the organization does not have to pay these expensive benefits.

•Beginning in the mid-1990s, "outsourcing" gained strength in America as companies employed the employees of other firms (staffing companies) to complete assignments.• 

4.Incentives for Motivation

Our approach is “Innovative and creative”Old school incentives are not attractive anymore. X

gens are leaving their chairs to Y gens. Meanwhile, Z gens are on the way. New generation is interested in different trends. It is necessary for HR managers to get more creative with incentives. Old school incentives are not attractive anymore.

Setting goals are the most essential activity to guide employees how far they can go. Besides recognizing and rewarding top performers more often, it is extra important to make it publicly ceremonial and let the entire team see what actions and behaviors lead to recognition and rewards. Thence, it will stimulate others and help organization to achieve the goal more rapidly.

Awarding fewer points per activity will create excitement and have them still be meaningful to employees because they can be combined and accumulated

Tailoring the rewards by age group, employees’ needs and recent trends will serve the purpose ( conducting surveys will be helpful to determine employees’ needs)

Recommended Strategy: Points vs. Cash (for individual or team)Adding $50, even $100 reward or bonus to the paycheck will be inured and go unheard. Instead of rewarding performance with $50, it would be more exciting for employee to be incentivized with points. The reward points given to top performers are then redeemable for a variety of personal and customizable incentives such as custom experiences/classes, cash money, or pre-loaded or reloadable credit cards (at or below retail) and so on.

During the reward ceremony, while declaring the high performers, honoring Employees with Bonus Pochette (A special package including the university’s promotional products for instance, t-shirts, pens, note-books gift cards, etc.) would make the ceremony more liturgical Catalog ProgramsCatalog reward packages are programs that allow employees to build up points that can be redeemed through a prize catalog. This kind of a reward package has two distinct advantages. First, it gives chance to create any kind of performance measurement schedule. Second useful aspect is it offers flexibility. Rather than you choosing gifts for your staffers, they can choose their own rewards.

4. Recommended Incentives

4. Recommended Incentives

• Incentives program for teams Steps for Motivating the Team1. Setting goals.2. Implementing team participation.3. Acting as an example.4. Coaching, rewarding and encouraging the team

How it worksFirst, teams will be generated (minimum two individual for each group),Plus, one person will be assigned as the team leader for each group to give recognition to the team members for meeting a certain goal. Then they will use special chart to schematize the performance to tie the recognition back to the goal . Thus the management will be able to easily track and see who is the most prospering and the entire team will see where they are standing. This method is highly self-motivating and stimulating.

5.Executive Compensation

*The gap between paychecks for average employees and the compensation of executives has long been an issue of ethical concern, and the gap is growing*Executives often receive other special benefits and perquisites in addition to regular company benefits. *One of the most frequent is severance protection or pay for executives who lose their jobs.Special benefits for executives

A golden Parachute A Silver Parachute Perquisites Hiring Bonus Deferred Bonuses Stock Options

A Golden Parachute Severance benefit that protects the executives if they lose their jobs or if the companies are acquired by another companyA Silver Parachute A severance and benefit plan to protect lover level managers if their companies are acquired by another onePerquisites are attractive benefits over and above a regular salary that are usually noncash itemsHiring Bonus is provided to executives in order to sweeten the incentives to leave the current employer and forfeit their deferred bonuses and pension rights

5.Executive Compensation

Criticism of Executive Compensation

*It does not offer long-term rewards, instead performance within a given year leads to large rewards even though corporate performance overtime may be mediocre,*Executives can manipulate earnings per share by selling assets, liquidating inventories or reducing research and development expenditures, all these actions make the organizational performance look better but they may impair the long term growth, they may keep their wealth intact when company performance falters. Sometimes there is a significant disparity between total compensation and corporate performance *Supplements (bonuses, stock options etc.), are supposed to be tied to the performance of the organization, conflicting research results exists as to whether or not this linkage occurs

5.Executive Compensation

• As the stock market went into decline, another ethical issue regarding stock options arose – reprising. Reprising consists of either lowering the strike price of existing “under water” options and/or issuing new options with a lower strike price.

• Recent data indicates over 90 percent of option holders have at least one grant of stock options that are underwater.

• Cash flows are relatively easy to manipulate in comparison to other financial metrics. Basing business decisions on stock price alone has fueled a large number of the corporate ethics scandals in recent years due to the myopic focus on increasing or even inflating the firm’s share price.

*Conflicts of interests arise in the uncontrolled relationships between CEOs (over 70% of whom also serve as Chairman of the Board) and their selected boards.

*Ethical questions abound regarding managing the interests of the shareholders, employees, and the remaining stakeholders when the compensation arrangements between these two controlling groups are self-managed. *The correlation between executive pay and financial performance of underperforming organizations has been most tightly linked with cash flows and stock prices of their respective firms.

Maintaining good ethics at every level is clearly a key responsibility for the human resources department. Of course, nothing can protect companies in every instance from occasional renegade acts.

5.Executive CompensationSome of the reactive

solutions to underwater stock options that

companies have utilized include:

To help avoid the situation of underwater options,

proactive companies should consider several strategic

initiatives:• Cancel outstanding options

and delay new awards for six months and one day.

• Option cancellation in exchange for restricted stock.

• Acceleration of new stock option grants.

• Acceleration of new restricted stock awards.

• Cash out existing underwater option (typically 50 cents to $1 per share).

• Acceleration of vesting schedules.

• Diversify the long-term incentive portfolio with the use of stock options, restricted stock and performance units.

• Award stock options and restricted stock on a more frequent basis (not more stock) to dollar cost average.

• Shorten vesting schedules.

• Shorten terms of awards.

5.Executive Compensation

Final words for executive Compensations

• Executives are outside of the ordinary levels that controlled by HR

• There is no question, executive compensation is an issue that will continue to receive massive attention from employees, shareholders, legislators and the media.

• No matter what side of the equation a stakeholder falls on, the refiner's fire felt by corporate America today is sure to forever impact the ethics of executive compensation.

ReferencesDeCenzo,D. & Robbins,S. (2005). Fundamentals of Human Resources Management 8th Edition, Chapter11. Establishing Rewards and Pay Plans Hoboken, NJ: John Wiley & Sons.

Forbes.com. (n.d.) Creating Incentive Plans That Actually Incent Employees. Retrieved 06 12, 2014from Forbes.com http://www.forbes.com/sites/lisaquast/2011/09/19/creating-incentive-plans-that-actually-incent-employees

/

Hbr.org.(n.d.) Putting the Balanced Scorecard to Work. Retrieved 05 14, 2014, from Hbr.org http://

hbr.org/1993/09/putting-the-balanced-scorecard-to-workhttpHrworld.com, (n.d.) 25 Ways to Reward Employees (Without Spending a Dime) .Retrieved 06 13, 2014fromHrworld.com ://www.hrworld.com/features/25-employee-rewards/

ReferencesMathis & Jackson, 1994 P. 391. (n.d.). Human Resources Management 7th. edition. In R. &. Mathis, Text Book, (p. 387). St. Paul, MN: West Publishing Corporation.

Rose University, Fundamentals of HR Managementhttp://my.rose.edu/faculty/gmurray/fundamentals%20of%20mgmt/Chapter%2010.pdf

Scott Thompson,(n.d.) Demand Media: Importance of nonfinancial rewards in Organizations. Retrieved 06 11, 2014http://smallbusiness.chron.com/importance-nonfinancial-rewards-organization-45146.html

Smallbusiness.chron.com. (n.d.) Examples Reward Packages to motivate Employees. Retrieved 06 13, 2014fromhttp://smallbusiness.chron.com/examples-reward-packages-motivate-employees-11615.html Compensation

Steward & Brown. (2011). Strayer University text book. Human Resources Management, Motivating Employees Through Compensation In G. &. Steward, 2.Edition, Chapter11 (p. 444). Hoboken, NJ: John Wiley & Sons, Inc.