individual-based versus group-based Incentive

• Individual Incentive Plans – designed to make high levels of individual performance financially worthwhile and the research is clear monetary incentive increase performance over the use of a guaranteed hourly salary
• Pay For Performance: also called as earnings-at-risk (EAR) plans, pay employees according to how much they individually produced
• Merit Pay: base their incentives on performance appraisal scores rather than on such objective
• Group Incentive Plans – get employees participate in the success or failure of the organization
• Profit Sharing: provide employee with percentage of profits above a certain amount
• Gainsharing: ties groupwide financial incentives to improvements in organizational performance
• Stock Options: employees are given the opportunity to purchase stock in the future