How To Recognize Employee Contributions

Methods of Determining Incentive Pay 

Performance-based incentives 

The primary focus of any business organization is to achieve the highest performance which relies so much on the motivation of the employees. Before making any step, the human resource must be able to understand the employees’ needs and assess them. For this company, the nature of its business has its better way of motivating the employees, and performance-based incentives will lead to an improvement in the performance (Bennett & Levinthal, 2017) . It is about identifying the top performers and after that, the human resource takes the step of addressing them with the aim of informing them of the incentive plan regarding performance bonus probably linking it with the sales quarter. This incentive can work better with the individual performance as well as a group performance, that is, the internet sales can as well receive a group bonus determined by their internet sales. This incentive plan is vital in individual perspective because it motivates the employees to work more due to the self-satisfying goals that the company has put up. The groups, as a result, will then start developing teamwork so that they can achieve success together and benefit from their performance. 

Profit-Based Allocation 

In this form, the company has to decide on the percentage it will allocate its employees annually. The division of the award among the employees should follow a specific formula that the organization will settle on. This plan works on an annual basis, and thus its value is undetermined, that is, open-ended. A good performance management system should accompany this plan so that the yearly profits relates directly to the employee performance to avoid impacting on the organization negatively (Garbers & Konradt, 2013) . In other words, the rewards will entirely depend on the performance of the company. For more performance, another different management system has to be in place to manage the behaviors that will guide the company in attaining superior targets. The human resource should define profits, select a growth approach, identify their thresholds, make a selection of the percentage share, select a formula for allocation and determine the personal performance component to ensure this works for the best. With this form of incentive, it will benefit both the group and individuals because every individual will aim at achieving high performance also translating to the group because the profit that the organization will attain will be a group effort that requires teamwork. 

Core legal requirements are affecting employee benefits in today’s competitive environment and the legally mandated benefits that the company must currently offer to its employees. 

The primary legal requirements that the current competitive environment offers involves the treatment of tax, the freedom from discrimination laws and the accounts requirements. The accounts requirements involve the specifications that arise from regulations that have been put forth by the Financial Accounting Board to ensure the financial position of the company depicts its actual status and enable external entities or individuals to compare the statements with other institutions (Han & Kim, 2018) . The tax requirements concerning the benefits will allow the company to make possible other benefits such as retirement or pension tits employees. Freedom from discrimination is an issue that is also affecting the institutions. That is, it aims at ensuring that there are equality and justice to everyone regardless of age, race, gender, disability and other platforms that may cause bias to ensure that everyone has equal benefits. For instance, some laws protect women from discrimination such as the Pregnancy Discrimination which prohibits discrimination against women due to pregnancy, childbirth or other related conditions. 

The legally mandated benefits that the company must award the employees include the social security. It involves the award of benefits on monthly basis employees are above sixty-two years, those with disabilities and legally recognized dependents and spouses. These advantages are made possible because of the monthly contributions of these employees and computed in some percentage of their earning. Unemployment insurance is another benefit that comes as a result of an employee losing the job without making any fault (Volkova, 2015) . These benefits are payable as stipends for a specified period. Also, the worker's compensation insurance is a legally mandated benefit that results from one being because of job-related causes or injuries during the operations. The institutions are under the mandate to protect such employees financially that will cover medical charges and the lost wages during the period of illness. These benefits are a percentage of their income. 

Additional benefits that an organization should consider providing to its Employees and essential concepts in designing benefit plans. 

The benefits that the company ought to take into consideration include paid leave, medical insurance, life insurance, and pensions. The paid leave will give room for employees to be off when they require it most to attend to other pressing issues such as attending to a family member who is sick, vacations or to cater for personal needs. With this, the employee will be confident and at any time free to break the monotony and get refreshment away from the daily activities and coming back happier and with motivation to be productive (Bennett & Levinthal, 2017) . Also, having medical insurance is crucial for the employees to provide cover for hospitalization, surgeon and medical care. This benefit is because the traditional way of paying for health services when in need is costly thus this will provide lesser costs through the employees agreeing upon a fee schedule. Pensions, on the other hand, will assist in keeping the employees secure concerning their retirement. After satisfying the eligibility requirement, the employees need to be prepared for their old age starting as early as twenty-one years. This benefit will make the employees productive knowing that their future has no economic challenges. Finally, the life insurance is another substantial benefit that the company need ought to implement to give the employees the confidence and settlement of expenses in the case of untimely death which the beneficiaries will receive. 

There are various concepts to put into consideration when developing a benefit plan. Foremost, you have to take into consideration the costs of the benefit plan before the company starts offering it. As much as it may be good and beneficial to the employees, there is need to analyze the impact of the plan to the organization. That is, the incentive may prove to be costly to the organization. Analysis should be done to determine the current direct costs as well as the long-term expenses. The introduction or elimination of a benefit can affect the staff morale so there is no need for an organization to start a benefit that will not be able to last. Sensibly, the plan should be able to finance itself (Garbers & Konradt, 2013) . Secondly, the incentive should have clear guidelines to reduce ambiguity or confusion. Employees should not see it as payment that is guaranteed instead, they should view it as a measure of performance regarding individual efforts or a group. They should act as a motivating factor rather than a fulfillment of an organization’s responsibility. The end result should focus at the profitability benefits. Finally, it is important to consider the communication channel. It is by ensuring that the employees are psychologically ready. The channel or the manner in which the employees receive the information will impact their morale of taking part in the incentive which will ultimately have an impact on the organization. 

Assessment of the Efficiency of Common techniques for Effectively Communicating Compensation and Benefit plans. 

To be able to reach the employees, they should be able to understand what is behind the benefit. One way of efficiently getting the employees take full advantage of the incentive is through online platforms or making circulation of a paper with details of the package. As in the case of retail and internet sales, working with e-mails. Will assist a lot in letting the employees aware of the plan. Another way of doing this is through meetings held by the organization with its employees and giving the employees a platform in which they can raise their concerns or feedback on what they feel about the incentive and the organization in general. Immediately there is a change in the benefit plan; the employees should have full information so that they are always aware of their working surroundings and what goes on in the organization concerning their welfare. 

Ethical Risks of Making Incentive a Large Portion of Employee Total Compensation and the Ways to Mitigate it. 

There are some ethical issues usually come as a result of incentives. An example of one that the company has to address before making a significant portion of employee total compensation includes the bonuses and stocks options. Bonuses and stocks usually lead to improvement in employee performance and also the organization, but it can, as well, cause unethical behavior. The outcome of developing a strong financial incentive like this one will lead to challenges, for example, the employees will always try to go beyond the ethical boundaries with the idea that probably the end will justify the means (Volkova, 2015) . Some employees will seek and find other means of getting the bonuses even if it is not in the manner that the company outlines, for instance buying and selling stocks with full knowledge on the future of the company. Another issue is that such an incentive will lead to inequality in payments which may directly translate to turnover rate in the organization. When such an event occurs, employees at different levels will receive an unusual amount of compensations. This inequality will lead to employees comparing their pay with other peers leading to frustration, jealousy, resentment and lack of motivation because it will not only affect the economic status of an employee but also their status at the organization. 

For the management of these ethical issues to be a success, the organization needs to focus on transparency by creating a system of checks and balances that will ensure that the company does fall under fraud, thus, making every employee responsible of the actions he or she takes. It involves incorporating internal and external auditors who will immediately detect fraud whenever it happens (Han & Kim, 2018) . In this manner, there will be a sense of responsibility and caution from all departments. Another way of managing this concerns the development of a code of ethics and conducts which employee signs and promises to abide by and also to stipulate legal actions that will result due to the failure of the same. This technique will create a sense of responsibility, and every employee will abide by the incentives that the company provides without trying to fraud it. 

References 

Bennett, V., & Levinthal, D. (2017). Firm Lifecycles: Linking Employee Incentives and Firm Growth Dynamics.  Strategic Management Journal ,  38 (10), 2005-2018. doi: 10.1002/smj.2644 

Garbers, Y., & Konradt, U. (2013). The effect of financial incentives on performance: A quantitative review of individual and team-based financial incentives.  Journal of Occupational and Organizational Psychology ,  87 (1), 102-137. doi: 10.1111/joop.12039 

Han, K., & Kim, A. (2018). Differential impact of short-term and long-term group incentives.  Employee Relations ,  40 (3), 549-564. doi: 10.1108/er-10-2016-0202 

Volkova, V. (2015). On Some Characteristics of Legal Incentives to Improve Employee Engagement and Performance.  V Mire Nauchnykh Otkrytiy ,  0 (1), 159. doi: 10.12731/wsd-2015-1-12