Study BIOL 101
DISCUSSION BOARD REPLIES
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Whatever the firm’s size, employee remuneration has a substantial influence on the company’s ability to keep them motivated. Providing a competitive salary and benefits package is the best way to say thank you to a candidate who has expressed an interest in working for your company in the first place. A raise in wages has a positive effect on the mood of the majority of workers. A growing number of employees throughout the world are realizing the importance of competitive compensation and are working to improve their salaries in order to achieve this goal (Jones, 2018). As a result of new compensation arrangements, employees are receiving more perks such as health insurance, 401(k) plans, and other advantages.
In terms of performance-based payment, the cash bonus pay scheme recently introduced by Apple is one of the best examples to date (Kaufman, 2012). Executive incentives based on sales and operating profit goals have been added to the company’s compensation structure as part of a new compensation plan. Since using this strategy, staff engagement and productivity have increased significantly. When Apple Inc. decided to implement the cash incentive compensation plan, there were a number of variables that played a role. To be sure, the company’s decision to adopt a competitive incentive plan for performance evaluations is a driving force (Apple, 2021). By offering cash incentives, the method aims to motivate people to be more innovative and productive. It was also heavily influenced by the company’s long-term strategic goals, such as development and expansion.
Payoffs for employees under the incentive compensation plan can range from 100% to 400%, depending on the employee’s performance. Increasing productivity and product quality have helped the organization become a worldwide technological leader. It was decided to reward employees for their efforts in order to accomplish Apple’s goals, thus a cash bonus incentive program was established (Kaufman, 2012). “We have a threshold, target, and maximum level for each employee’s needs”(Apple, 2021). According to the firm’s official website, these results show that the company is dedicated to surviving and prospering in a highly competitive industry (Apple, 2021). A cash bonus scheme on top of the employee’s base salary must be appropriately executed if employee contributions are documented. Based on performance, an incentive scheme was designed for both the employee and the business. The plan’s implementation was overseen and monitored by a committee formed (Jones, 2018). Representatives from the company’s employees and management who serve on the committee that chooses whether or not employees get month-end bonuses. Everyone knows when an evaluation is successful because of the cash award. Customers’ satisfaction, performance, and profitability have all benefited from the company’s increased reliance on modern technology. Improvements to employee benefits will continue in the coming years.
Throughout the world, Apple is and will continue to be an industry leader and by using an incentive compensation plan they have solidified their position as a premier employer of choice.
Apple. (2021). Apple. Retrieved November 21, 2021, from Apple website: https://www.apple.com/
Jones, C. (2018, January 8). Apple’s Executive Cash Bonus Plan. Retrieved November 21, 2021, from Forbes website: https://www.forbes.com/sites/chuckjones/2018/01/01/apples-executive-cash-bonus-plan/?sh=be3efeb72dd4
Kaufman, B. E. (2012). Strategic Human Resource Management Research in the United States: A Failing Grade After 30 Years? Academy of Management Perspectives, 26(2), 12–36. https://doi.org/10.5465/amp.2012.0037
IKEA – Pay for performance Organizational
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Pay for performance cultures have been a positive force for several companies over the past few decades. They create an environment where individuals and groups are rewarded based on success. This is a key driver in overall performance and creates a sense of teamwork within the organization. A great example of organizational pay for performance is IKEA. IKEA focuses in on the pay for performance model and believes that it is a key contributor to employee communication. They have used several outside the box techniques and ideas to motivate through pay. Some examples of this are dedicating an entire day’s revenue to the employees to be paid out evenly as well as increasing pay for specific job skills that are attained as part of their in company training. This type of system not only increased employee retention but also sharpens their skills to do the job at a higher level. IKEA runs this program through different cycles where employees can sign up for paid time to attend vocational skills. One might think that this would create flight risk in which someone could use these skills to aquire a better position outside of IKEA however they have industry leading retention rates. IKEA also places a high emphasis on brainstorming and innovation of process and products. This can be seen in their innovative designs and retail locations. This has also created an environment where employees want to achieve a higher level of success based on pay. Pay for performance has continued to be a strong model and more large companies are picking this model up to drive performance and revenue.
Jackson, J. H. (2019). Human Resource Management . Cengage.
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Companies utilizing pay for performance
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In 2018, one of the largest corporations in America made the switch to individual pay-for-performance model. The textbook defines this sort of system as one where, “Incentives are given to reward the effort and performance of each model” (Valentine, Meglich, Mathis, Jackson, Section 11-8b). There is one major downfall of this method, and it could be detrimental to the health of the entire organization. The downfall is that this type of pay system may foster a competitive environment, rather than a cooperative one. For over 125 years GE had been providing their top executives with cash bonuses. In 2018, however, they decided to tie those bonuses to performance in an employee’s unit.
Multiple people on LinkedIn had something to say about the switch. It was said that it was a great decision for GE to make the switch because bonuses tied to overall company prosperity can cause people to feel as though their individual efforts do not make a connection with what they earn. One person raised the question, “Have we become so conditioned that we expect or feel entitled to bonuses, despite the business’ performance?” (Samuel, LinkedIn).
Troubles for GE began in 2017, and the Chief Executive Officer changed halfway throughout the year. The main aim of the change was to improve accountability and better align pay with investor priorities (Melin, Clough, 2018). The new CEO put in a lot of effort in order to get the company out of their financial stress. The company must have dug pretty deep in order to decide this new payment system would be the best for their needs since they changed things around at a pretty crucial point. Other steps they took to complement their new system include: shrinking its board of directors from 18 to 12, breaking the bonus money up into pools for each business, and developing an app that managers and employees use to enable constant improvement for everyone at GE.
As for the results of this strategy taken by the new CEO, they have been positive regarding company culture. This is a big deal considering the major downfall of the individual pay-for-performance model discussed earlier. The company strives to improve in each aspect of their cultural environment, and the training and development going to their employees reveals that.
Clough, R., & Melin, A. (2018, March 13). Ge details compensation program, cuts bonuses. The Daily Gazette.
GE: Building a World That Works. General Electric. (2021).
How does GE DO Performance Management Today? PerformYard. (2021, June 14).
Valentine, S. R., Meglich, P. A., Mathis, R. L., & Jackson, J. H. (2020). Human Resource Management (16th ed.). Cengage Learning.
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Pay For Performance – Ikea
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Pay for performance or variable pay, is a form of compensation in which work performance is directly connected to compensation (Valentine, Meglich, Mathis, & Jackson, 2020). This type of pay structure can be practiced on an individual level, group level or organizational level. Individual pay for performance consists of an employee being compensated based on their own performance, while group and organizational pay for performance consists of an employee being compensated based on their work group or organization’s overall performance.
According to the Ikea webpage, Ikea is a company that utilizes a pay for performance structure for its employees by providing bonuses based on the performance of each work unit or group (
). I believe that Ikea was driven to engage in this pay for performance structure because it is a company that recognizes the value of its human capital and also wants to encourage its employees to provide a high-quality work product. It is clear that Ikea cares about its employees and wishes to attract and retain talented individuals because not only did the company implement the pay for performance bonuses, but it also provides the employees with numerous other benefits. For example, Ikea contributes additional money to employee pension funds as a way of thanking all employees for their hard work. The company also recently made the news for their employee centered focus, specifically employee training and large appreciation bonuses, during the Covid-19 pandemic (Kelly, 2021). Ikea’s group pay for performance structure has had a very positive influence on the company. It has encouraged employee performance enhancement and long-term company growth, created a reward system that is viewed as fair, and discouraged competition and discord among employees (Cirillo, Poensgen, Sheerbahadursing, Vo, 2018).
In Ruth 2:12, Boaz expresses his gratitude to Ruth when he states, “May the Lord repay you for what you have done. May you be richly rewarded by the Lord, the God of Israel under whose wings you have come to take refuge” (NIV, Ruth 2:12). In the next verse, Ruth responds to Boaz’s gratitude by letting him know that his kindness has put her at ease despite the fact that she is not of the same standing as other servants (NIV, Ruth 2:13). It is so important to express gratitude and appreciation to others for their efforts and care. Knowing you are appreciated as an employee, no matter your position in the company, can change the way you see your employer, your work situation and yourself. Ikea does a great job of letting its employees know they are appreciated and I admire the company for its dedication to its employees.
Cirillo, M., Poensgen, C., Sheerbahadursing, A., & Vo, T. (2018). Ikea Case Report, The Performance Measurement and Management System of IKEA AB. [Case Report, Lund University, School of Economics and Management]
Ikea. (2021). Work With Us: Benefits.
Kelly, J. (2021, October 31). IKEA’s Ingka Group Is Giving A $128 Million Bonus To Employees For Their Efforts During the Pandemic. Forbes.
New International Version, 1973/1995, Ruth 2:12-13
Valentine, S., Meglich, P., Mathis, R. & Jackson, J. (2020). Human Resource Management, Sixteenth Edition. Cenage Learning, Inc.
Performance Method: Group
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A performance appraisal by our textbook definition is said to be a “process of determining how well employees do their jobs relative to a standard and communicating that information to them” (Jackson, Mathis, 2019). These standards could fall into different categories of evaluation: individual, group, or organizational appraisal. The one I am choosing to focus on is group appraisal. The company I would set my sights on for this task is actually Microsoft. For over 20 years the appraisal system for Microsoft was ranked. Kurt Eichenwald a staff member describes it as follows “If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, two people were going to get a great review, seven were going to get mediocre reviews, and one was going to get a terrible review.” It turned everything into a competition for who could win over the manager who was doing the review versus actually putting in the good effort that would help boost the company. It was a game of pariahs, and no one was ultimately winning. This included the upper management who had a large say in the numbers. The more favors they got, the better the lower tier of working were assured a good positive review in place of those deserving. Around 2012 they did away with this whole ranking system and shifted it to a more peer-to-peer grouping system. The lead HR Representative was determined to change the cannibalistic culture and make it more positive and welcoming. They changed the system to where it focuses on more long-term goals versus short-term goals and one of the criteria would be how you engaged with your peers. If you were getting along with them and if not what could be solved. You would no longer wait until a designated time of year, but your manager would check in every few months and get real-time feedback on your progress. It was a beautiful thing and now people enjoy coming to work at Microsoft more than ever. (WORD COUNT: 346)
Microsoft throws stack ranking out the window. Impraise. (n.d.). Retrieved November 30, 2021, from https://www.impraise.com/blog/microsoft-throws-stack-ranking-out-the-window.
Valentine, S. R. (2020). Human Resource Management. Cengage Learning.
Reflektive-Admin. (2020, November 18). These five companies are trailblazing performance management. Reflektive. Retrieved November 30, 2021, from https://www.reflektive.com/blog/companies-trailblazing-pm/.
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