Chapter 12 Discussion Post

Employee Contributions and Pay

1. This chapter focused on the different ways to compensate employees for their contributions to the companies performance. When we think of getting paid, we typically think of getting a wage or salary, however, there are so many other methods of paying employees. In addition to wages and salaries, probably the next most common form of pay is commission. There are also performance bonuses that are awarded when specific objectives are reached. There are even team bonuses that are paid out to all members of a work team who accomplish a specific goal. Additionally, there are stock options that can be given to employees. This has long term retention benefits. Employees will want the company to do well so their stock will improve. It teaches them to think like owners.

2. Have you ever been on a payment plan other than wages or salaries? Have you ever received special bonuses?

3. To me, tying an employee's pay to the growth of the company is the most effective way to make sure employees are involved and concerned about the company's growth. After this, the next best thing is tying their pay to specific performance. I think the worst form of pay is to just pay someone a straight wage for their time. I recognize that this is the only method for a lot of jobs. From personal work experience however, wage jobs typically create a situation where you don't have much concern for company growth or performance. You often are just watching the clock till you can get out!

4. Could your current job be modified to include some sort of other compensation for your contributions to the company? Can anything that you do be quantified so you could receive a bonus for exceptional performance? Do you feel that a pay structure where you could earn more for performing better would incentivize you to work harder or be more involved in your work?

Reflections

As a group we seemed to have a common theme. We all discussed different methods of compensating employees. The three main categories that surfaced were: wages/salary, commission, or equity. One person in our group actually had her compensation tied to all three! She got paid a wage for her time working, she also would be given bonuses if her or her team met certain quotas or objectives, AND if her company performed well that year she would get a bonus. I think this is pretty effective. Its unfortunate this type of compensation can not be used in all types of jobs.