Compensation_Plan

Running head: COMPENSATION PLAN Compensation Plan/ Originally submitted August 8, 2010 Sylvia Daniels Colorado Technical University Augustine Kange/ Jennifer Young HRM415-1004B December 3, 2010   Abstract The VP of Sales and Marketing is concerned about the sales team at Lansing-Smith Corporation, the VP feel that the pay structure is affect the sales teams, because there is a lack of motivation and sales are decreasing in order for the company to continue to grow the VP would like some recommendations on a compensation plan that would motivate the sale teams.   There are other strategies for compensation and pay plans, such as bonuses that may be offered annually and this not part of the base pay, another is spot bonuses which is pay to employees based on outstanding performance that could range from $100 to $1,000 keeping the team competitive by setting goals and rewarding them when they have reached their goals will increase productivity. Another way would be to offer stock options, better health care and educational assistance, so that they feel they are a part of the company. In order for Lansing-Smith to be competitive the company has to offer a compensation package that will motivate the sale teams in order to meet the goals of the company. “The overall purposes of providing compensation are to attract, retain and motivate employees” (Mondy, 2010). “Failure to maintain a culture of employee motivation will not lead a company toward achieving its goals, but will instead foster mediocrity and apathy among the team. Companies that are most successful at keeping their employees motivated to exceed expectations have gone beyond implementing performance standards and rewards” (Lisboa). Employees need feedback they want to know how they are performing on the job, by providing a positive environment for the employees and to ensure them that their opinions are important to the company. The are several ways that managers can learn effective motivational techniques, after researching the topics I will provide the managers with some effective tools to help them to motivate the employees in order to improve work performance. The three theories I decided to research were Endowed Progress Effect, Expectancy Theory and Intrinsic Motivation. The Endowed Progress Effect is people feel that they have made progress towards a goal, they will also become committed towards achieving the goals set, because perception is critical and the appearance of progress will have a strong effect over the actual progress, and without recognitions it will not be motivating the closer they get to the goal the more likely they are committed to strive harder to achieve success. There are some pros and cons about this theory to improve performance there different questions that employees may ask to establish commitment through stages of goals, the progress and situation will have a distinctive impact on motivation depending on the signals of higher difficultly of goal attainment usually lower the commitment and also decreases motivation. The motivational tools that can be used to motivate employees improve productivity and work performance is to satisfy employees’ needs, by rewarding them for their job performance. The Expectancy Theory is a mental process regarding choice it predicts that employees in an organization can be motivated by what they believe, for example better job performance will lead to rewards, such as increased compensation or benefits. By having the support to get the job done, however the down side of this theory is an organization that uses compensation as a motivational tool may think this is applicable to increase productivity in the workplace, although it might seem feasible at first, but in the long run employees will begin to become bored and productivity will began to decrease. “Vroom’s theory assumes that behavior results from conscious choices among alternatives whose purpose it is to maximize pleasure and minimize pain. Together with Edward Lawler and Lyman Porter, Vroom suggested that the relationship between people’s behavior at work and their goals was not as simple as was first imagined by other scientists. Vroom realized that an employees’ performance is based on individual factors, Such as personality, skills, knowledge, experience and abilities” (Vroom, 1964). The motivational tools that can be used in this theory to increase productivity, improve work performance and motivate employees are valence, expectancy and instrumentality, in order to accomplish these tasks the organization may offer the employees different kinds of benefits to satisfy the employee, such as extra time off work or a day care center of the employees. Intrinsic Motivation is an internal factor that people use, because they believe it is the right thing to do, although an individual is motivated by the satisfaction of completing a task the individual may also find the task challenging. “There is no reason that money can't be an effective motivator, or that grades can't motivate students in school. It's all a matter of individual differences. Different people are motivated in different ways” (Reiss, 2005). Comparing current pay scales with other companies will help to design the incentive plan, the plan must be fair to the employees in order for the incentive plan to be successful, by communicating the goals as well as the company’s vision and delivering what the plan has promised to the employees at a timely manner will be the biggest motivator of all. There are several ways to increase intrinsic motivation managers can give employees the tools needed to succeed, such as giving rewards based on performance level, verbal and non-verbal praise and setting realistic performance goals will help achieve the motivation needed in the organization to improve work performance, motivation and increase productivity. “In this way, companies can make sure that their incentive plans motivate employees to perform at a higher level without unintentionally encouraging them to engage in unacceptable behavior” (Sammer, 2007).   References Lisboa, K. (n.d.). Why is employee motivation important' Retrieved July 25, 2010, from www.life123.com/career-money/career-development/motivating-employees/motivation.shtml Mondy, R. W. (2010). Human Resource Management. Upper Saddle River, New Jersey: Prentice Hall. Reiss, S. (2005, May 5). Intrinsic Motivation doesn't exist, researchers says. Retrieved August 8, 2010, from Ohio State University: www.reserchnews.osu.edu/archive/inmotiv.htm Sammer, J. (2007, June). Weighing pay incentives: Incentives plans should motivate employees to perform at a higher level, not encourge them to engage in questionable behavioral. Retrieved December 1, 2010, from BNET: www.findarticles.com/p/mi_m3495/is_6_52/ai_n19311779/pg_4/'tag=content;col1 Vroom, V. (1964). Expectancy Theory. Retrieved August 22, 2010, from www.valuebasedmanagement.net/method_vroom_expectancy_theory.html