Employee Incentive Plan Evaluation at XYZ Industries Essay

Employee Incentive Plan Evaluation at XYZ Industries - Essay Example The Company will implement a new incentive plan, the details of which are given in the following sections. The plan will be reviewed after a period of twelve months. Objective: To become the leading provider of blood bags in North America. Types of incentives proposed: Incentive plans are broadly classified into three groups, namely those for individuals, groups, and the enterprise (Bohlander & Snell, 2010, 455). Individual incentives: a. Hourly pay of $5 per hour with a maximum of $10 a day (five working days). Every employee is eligible. b. Sales incentive – 25 cents per bag, for exceeding targets for sales and marketing staff. There is no limit on the amount that can be earned. c. Bonuses – Thirty percent of basic pay for all employees twice a year (employees are at liberty to choose the time, but needs to provide one month’s advance notice. d. ... cturing and packing (Note – the company has excess production capacity and aims to achieve a 30 percent increase in sales this year) Enterprise incentives: a. The Company is planning to go public and is planning to introduce 100,000 shares in February 2011. It is expected the value of each share will be approximately $7. Of these, thirty percent will be held by the owners, fifteen percent will be given as employee ownership, and the rest be made public. Employees are not allowed to sell the shares to the public for a minimum period of five years. It is hoped that full cooperation from all employees and departments will be there for the successful implementation of the incentive plan. Review of the bonus plan: A review of the effectiveness of the plan was made after a period of fifteen months in June, 2011. The gap of an additional three months (plan introduced in January 2010). This was to assess the impact of the stock ownership plan which was planned in February 2011, as men tioned in the incentive plan. The review was conducted by the human resources manager, Mr A. as he had a good rapport with all employees. This was the first time that a relatively comprehensive incentive plan was introduced. Previously, only the group bonus plan was in operation. Hence the employees were willing to cooperate until the period of review was over. Moreover they were happy that they could obtain additional compensation when compared to previous years. But the following drawbacks were noted after discussions, which need to be looked into by the management and implemented as far as possible. The company did achieve it target of thirty percent increase in sales. With regard to the sales and marketing personnel had the following complaints especially from the top performers who