Overview of Key Incentive Program Types PPT

This PPT slide, part of the 36-slide Enterprise Cost Reduction Approach PowerPoint presentation, outlines 6 primary types of incentive programs, emphasizing their distinct purposes, participation criteria, funding mechanisms, and payout structures. It begins with a general statement that these programs vary significantly in their design and implementation, indicating that a key performance indicator (KPI) related to controllable expenses is essential for assessing their effectiveness. The slide suggests that discussions with management are crucial to identify who should be held accountable for managing these expenses and, consequently, who should be rewarded.

The first type, Cash Profit Sharing, is based on the organization's profitability and is characterized by a single measure. It is described as the oldest approach, where a percentage of profits is shared among employees, with annual payouts and equal distribution among them.

Business Incentives combine various financial and operational measures, allowing for multiple performance metrics across different organizational levels. This flexibility can enhance motivation by recognizing both non-financial and financial contributions.

Gainsharing focuses on improved productivity, utilizing a single measure to assess performance, typically at the plant level. It encourages employees to work towards common productivity goals.

Team or Group Incentives reward collective performance, employing multiple measures to assess achievements through teamwork and problem-solving. Payouts can be annual or more frequent, depending on the program's structure.

Individual Incentives are tailored to recognize personal performance, often involving multiple measures and annual payouts. They are frequently used for managers and executives, although their effectiveness may vary based on how performance ratings are determined.

Lastly, Special Incentives acknowledge contributions that may not fit traditional criteria, offering a more flexible approach to rewarding employees for unanticipated efforts. This comprehensive overview provides valuable insights for organizations looking to optimize their incentive structures.

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Cost Reduction Assessment Cost Reduction KPI Purpose