Eligibility and Coverage for Incentive


Who is eligible of incentives, and other forms of nontraditional compensation? The extent of coverage is crucial because it affects teamwork, motivation and perceptions of equity. Eligibility may differ for different programs even within the same firm. As is the case at many Japans and U.S. enterprises, workers paid by the hour get individual incentives (Piece rates) while managers and workers share in the profits. Individual incentives such as sales commissions work best when cooperation and teamwork are less important to success. When success requires cooperation and coordination among those doing the work, group incentives work best. Coverage must be defined broadly enough to facilitate equity and teamwork but narrowly enough to include only those who affect the results.

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