Incentive Plans Paper

654 WordsMar 11, 20123 Pages
Incentive Plans Paper MGT 431 October 2, 2011 Dr. Laura-Ann Migliore This paper will examine how Farmers Insurance incentive plans relate to its organizational objectives, and how the incentive plans help the organization to achieve their goals. Farmers offer to all of their employees a short term incentive plan. This plan is designed to award and compensate employees who contribute to help the overall financial success of the company and to focus the efforts of such employees on the continued success of Farmers. The short term incentive plan reinforces the performance management philosophy which links the performance of the business to with the overall individual performance. Having an effective plan in place helps the organization achieve high motivation and morale with the employees as well as keeping then engaged throughout the year (Noe, R. A., Hollenbeck, J. R., Gerhart, B., & Wright, P. M. (2007). Fundamentals of human resource management (2nd ed.). New York: McGraw-Hill Companies Chapter 12). The short term incentive plan helps the organization ensure employees within the company remain enthusiastic about what they are contributing each day in helping them and the organization achieve its objectives and goals giving them the feeling of a partnership. The performance management process utilizes a rating scale that ranks its employees on a scale of one to five. The scale is a one for below expectations to five for far exceeding expectations. Utilizing this approach the majority of employees typically receive a rating of three, with fewer employees receiving ratings of one and two, and four and five. The short term incentive plan is designed to motivate, focus, and reward employees for successfully achieving specific organizational and individual performance objectives. With that being said if an employee has an individual rating of one

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