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Show Advertising Supplementto the Salt jLake Tribune /Deseret News |Sunday, January 24, 1999 CAREERS 15 Incentives can motivate employees to work more productively Five years ago, Elizabeth Hargreaves realized she couldn't afford automatic annualraises for In an incentive pay plan, employ- salaried, exempt employees. Among manufacturers, the survey ees get a base salary and can earn found, 73 percent use them for public relations firm, Esprit Measures. office and technical employees: 55 percentfor salaried employees: and Whatare incentive plans? the employees of her marketing and more depending on meetingspecific Ceeaincatioas in Corona del Mar, Cali So she te a deal with her work- ers: If the company does well, they do well Like a growing numberof compa- niesof all sizes, Hargreavesinstituted-an incentive payplan in which a portion of wages depends on com- and lower prices and employees demand for more money,” said Karen Jorgensen, author of Pay for fone $ (Merritt Publishing, “By shifting labor costs to ecie.-based variable pay, they can continue toprice products and services competitively and retain and reward the workers who contribute to the organization's suc- cess.” “The incentive must be large duction workers. The most common 1930s, Jorgensen said, and they ° Ml include such formats as management by objective. profit sharing, incentives, Employers commissions and bonuses. reports, are profit est compensation fad ... and haven't bonuses and com- Group “Companies want to follow the lat- sharing, Whouses them? The majority of Orange County, Calif, companies have formal incentive plans for certain segments of their staffs, according to a 1996 sur- tlesey said, “but every jobcanbemea- sured. If you can’t tell how job ties in to company perfor- vey by The Employers Group in mance,fire that perNewport Beach. son immediately.” Financial service firms are most “It's easier to annual defined the problem they're trying to missions. measure the P etek plans: 73percent for office, clerical enue, number of days to collect pay- hours, client reviews and some subjectivi- ments and employee productivity sharing information.” ty, based on how clients rate company tive pay awards are twice a year, applicants don’t want to work for Employees can earn up to 16 per- uncertain, Employee evaluation and incen- You have toset aside moneyforit And you have to be committed to Whittlesey adds that some job based on company performance. companies where part of their pay is centof their base pay Whatpurposedo they serve? Hargreaves’s plan “When employees benefit finan- Manysmall companies struggle to implementincentive plans, he said. “because they are very poorat set- is based completely cially from company profitability. ting goals. They don’t have formal on company perfor- they are more motivated to pull business plans. Theydon't do regu- I i mance * “This is a very col- “Dut every jobcan be measured.” TI jatorative industry. no one worksalone.” togetheras a team to each company lar performancereviews.” Hargreaves said her company has doubled since she instituted the Incentive pay plans fail “with uncomfortablefrequency,” according incentive pay plans improve com- quate communication of goals; and insufficient employee involvement in goals,”Hargreaves said. Why dotheyfail? she said, explaining incentive plan. Employeesare hap- to William Leavitt and Robert sty she doesn't set pier and stay longer, she adds. Greene, writing in the American any individual per- Jorgensen said studies have shown Compensation Association Journal. formancegoals. that in addition to help with recruitAmongthe causes, they say, are lack AU first, Hargreaves just told ing and retaining skilled workers. of management commitment: inade- employees to trust her that they would earn incentive pay when the companydid well. his companysevenyears ago. Whittlesey’s employees earn a “NowI provide a company perfor- andtechnical employees; 69 percent for production, service and mainte- youcould be in a cash flow problem Goals are set on suchitems asbillable uarterly Whittlesey said, How do they work? Whittlesey established an incentive pay plan whenhefirst opened likely to have formal incentive it,” she said. “There's a lag factor. By the time (the incentive) is paid out, sales as a percent of revenue, cost of administration as a percent of rev- performance Incentives are paid performance of a salesperson than a nl pany are: gross profit margin, net enough tomotivate people to change profit margin,costs of marketing and their behavior.” he maintains. Companies have beenusing such 42 percent for pro- plans in various forms since the panyand/orindividual performance solve,”said Fred Whittlesey, owner “It's easier to mea-__—_ Howcan small companies effec. of & and sure the tively implement suchplans to ben- Management, a Newport Beach, ofa salesperson than efit both owner and employees? Calif., consulting firm. a eee Whit“Companies are caught between customers’ demandfor moreservice incentives based on company and Hargreaves has determined that the their disadvantages, Hargreaves adds “[ spenda lot of time administering individual performance. key success indicators for her com- nance workers; and 68 percent for third of their compensation through mancereport to everybody,” shesaid. munication, company financial program design. By Jan Normanof The Orange However, incentive plans do have CountyRegister. results, morale and teamwork, Do they have a downside? We've Got The Blueprint For Your Future! Monday, January 25, 1999 Technical, Sales & Business Professional Career Fair! World of Opportunity The Hilton Hotel - Downtown 150 West 500 South * Salt Lake City, UT 84101 2 Big Sessions: 11AM-2PM & 4PM-6:30PM FREE! FREE! FREE! FREE! FREE. NoCostsor OTe ara Plenty Resumes! Business Attire Required! 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