Incentives And Benefits At Commerce Essay

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In today's competing environment people need to be pushed to do a specific amount of work and to deliver any desired kind of performance. Motivation is that which energises, directs and sustains human behaviour. Motivation is a subject that all of the organizations management cannot ignore at any cost.

Motivation has many aspects; however we shall concentrate more on, incentives which is a type of compensation that is linked to performance by rewarding employees for actual results achieved instead of the traditional seniority or hours of work contributed. While, benefits are that kind of compensation that includes financial and non-financial rewards that are not paid in cash e.g.: health care, insurance, a key to the executive toilet etc. (R.J.Stone, 2005)

According to R.J.Stone (2005) organizations would introduce such incentives and benefit plans for the following major reasons:

To promote employee identification with the organizational strategic objectives.

To encourage individual, team or business unit performance.

To control fixed compensation cost.

To increase remuneration competitiveness.

Googleplex is the home for the worlds for famous search engine. Today Google has over 19,000 employees. Out of this 19,000 only 8,000 actually work at the campus. Though Google, does not have actual rivers of chocolate flowing to attract potential applicants they do offer a lot of incentives and benefits (Howstuffworks, 1998).

Incentive plans

Why exactly have incentive plans? Core Issues for Successful Employee Incentive Plans according to (2009),

Who are you going to incent?

How much are you going to pay, and for what result?

How are you going to deliver the employee incentive - monthly, first-dollar, quota attainment, etc.?

And, a key question that can help you answer: Is your total pay package competitive when you include your incentive compensation plan?

The types of incentive plans involve as stated in R.J. Stone (2005):

Individual Incentive Plans:

Individual incentive plans are directly linked to individual as opposed to group or team performance. They can be categorized as to which employee performance objective is set. Generally there are 3 criteria for setting employee performance objectives:

-Internal Benchmark: where performance must meet or exceed past performance levels in the organization.

-External Benchmark: where performance levels must meet or exceed past performance levels outside the organization.

-Strategic Objectives: the performance levels are measured against the strategic objectives for the organization.

The key principles need to be considered in the design and implementation of an individual incentive plan:

-Simple design and clear goals

-Identified source of funding

-Performance tracking and management systems.

- Frequent Reward.

-Pay for Performance.

-Periodic Review.

-No Shifting of Goal Posts.

Small Group Incentive Plans:

This type of incentive is designed for rewarding work teams, project groups or departments. The types of small group incentive plans involve:

-Gainsharing: It is an incentive system that shares the gains from productivity improvements with the employees who made the improvements. Examples of gainsharing:

1. Scanlon Plan: Named after Joe Scanlon. A plan designed to link employee rewards to the firm's performance.

2. Rucker Plans: Calculating employee gains using a value added formula.

-Pay for quality and customer service: It is a means of rewarding work teams for achievements in quality and customer service. Mainly used in the manufacturing (Quality) and hotels, banks etc. (Customer Service).

-Incentive pay for project teams: In today's business world, emphasis has been shifted from individual to team work and project teams. So even organizations use teams and hence it is fit for small group incentive plans.

Large Group Incentive Plans:

Are designed to cover large groups of employees. Typically use broad achievement measures such as profit or sales. They usually take the form of a bonus plan. Bonus plans allow employees to share in the success of the organization and further enhance the organizational image. The objective is to encourage employees to achieve or better the performance targets. If the objectives are exceeded then, employees receive more than their target pay.

Recognition Programs:

Recognition programs make use of various rewards such as cash, merchandise, travel, certificates and the like. The performance varies depending on the purpose of the program. The awards are related to the achievement of specific organization targets. This program is suited for situations where:

-a reward process that is required for a short term goal or activity such as to increase customer satisfaction ratings by 15 percent by the end of the first quarter.

-organizations that decide to introduce a process for recognizing any outstanding contribution by an individual employee or work group.

-the organization has a strong team orientation and wishes to keep the focus on working group performance and team incentives.

In the next section we shall look at Google and its type of incentive compensation for its employee's and it's incentive plan.

Designing incentive plans

A wide range of issues need to be considered when designing and implementing an incentive system. As stated by R.J. Stone (2005), the steps needed to be taken for a successful incentive system are as follows:

Focus on strategic business objectives:

The first step to design an effective incentive plan is to define the required performance criteria. The plan must depict the organizations strategic business objectives. For eg: a manufacturing department will affect profit, therefore share a price, by increasing the productivity of operations. So the key performance indicators here are cost and efficiency.

Develop a comprehensive reward framework:

The incentive plan has to be integrated within an entire reward program. It is necessary at this level to define the base pay and how it fits in the incentive system, like what should be the target pay i.e. the base pay and the incentive, for the employees?

Ensure reinforcement of desired behaviours:

The aim of the incentive system is actually to reinforce the business objectives and priorities of the employees. Three things are needed to make the system clear: 1. Performance objectives, 2. Nature of the contribution and 3. Frequency of payment.


There are two ways to fund incentive payments. First, payments through the increase of profits or decrease of costs. In another way, it could also be an expense to the organization. They are generally paid through the first medium.

Fit with organizational culture:

The incentive system would also be a success if it depicts and reinforces the organizational culture and management style.

Googleplex and Incentive Planning

In today's competitive and business oriented world every organization looks to motivate its employee's. Googleplex is no different from the other organizations.

Blogspot (2006), states that Google drives its employees through incentives. Google provides its members with an incentive package which includes the base salary, yearly bonuses through its Employee Referral Program. The Google incentives range from :

-Gift Certificates.

-Message Coupons.

-Giant Bonuses.

-Stock Grants etc.

According to Blogspot (2006), Google has been using partly a large group incentive plan and partly a recognition plan. The combination of this does not only help foster the image of the company but allows employees not to only share in the success of the organization but also receive the right amount of salary or sometimes even extensively large incentives for exceeding the target performance. The following is the way to go about the entire designing and planning of the incentives system with the organization:

Reviewing the strategic objective of the company i.e. to boost research.

Then defining the different criteria's to be measured and making a rough framework of the system.

To make sure the desired behaviour is received through the implementation i.e. setting the performance objectives, benchmarks etc.

The funding of the incentives and the amount of bonuses, salaries and option grants.

Finally then making it fit to depict the organizational culture.

Types of Employee Benefits

Benefits are any perks offered to employees other than their salary. The most common benefits are medical, disability and life insurance; retirement benefits; paid time off and fringe benefits.

The I seek organization has put down the most common benefits for employees:

Medical Insurance:

What is covered? Medical insurance covers the costs of the physician and surgeon fees, hospital rooms and prescription drugs. Dental and optical care might be provided as a part of the overall benefits, sometimes covered as part and sometimes not at all. Coverage can cover the employee's family (dependants).

Who pays? Employer's pay all or sometimes only part of the premium of the employee's medical insurance. Often the employer does just pay a part of the monthly premium. Even if the employer does not pay the part of the premium, the cost occurs to be lower than that available to an individual.

Disability Insurance:

Disability insurance covers all or just part of the employee's salary when he is unable to perform the job because of illness or injury. There are two main disability insurance are:

-Short term disability insurance begins right away or within a few weeks of an accident, illness or some other ability. For example, someone in an accident might be given a few paid weeks to recover.

-Long time disability insurance provides benefits when a long term or permanent illness, injury or disability renders a person completely unable to perform his task and duties.

For example, an employee who suffered spinal injuries could be entitled to long term disability benefits until retirement age.

Life Insurance:

A life insurance takes care of the dependant members of an employee in case the employee dies. Insurance benefits are paid to the beneficiaries all at once- usually spouses or children.

An employee can get life insurance if the employer sponsors a group plan. Company sponsored life insurance plans are standard for all full time employee's in medium and large organization.

Retirement Benefits:

Retirement benefits are basically the funds set aside to provide former employees of a company a pension or income when they end their careers. They have 2 categories:

-In Defined benefit plans, also called pension plans, the benefit amount is predetermined on the basis of salary and years of service. Here the employer bears the risk of investment.

- In Defined contribution plans, employer or employee contributions are specified. But the benefit amount is usually tied to the investment returns, which are not guaranteed

Domestic Partner Benefits:

Some employers offer benefits to unmarried domestic partners, while others do not. Requirements to qualify very from simply signing a form to showing proof of domestic partnership or financial interdependence. A common domestic partner benefit is access to family health insurance, but that benefit is considered taxable income by the federal government.

Paid Time Off:

Paid time off (PTO) is earned by employees while they work. The 3 types of common PTO's are Holidays, Sick Leaves and Vacation Leaves. In majority work places, workers earn vacation leave, sick leave and holidays as separate benefits.

Fringe Benefits:

A variety of non cash payments are increasingly being used to attract and to retain talented employees. These are referred to as fringe benefits and can include tuition benefits, flexible medical or child care spending accounts.

Moreover an employee can evaluate benefit plans by asking the following questions:

What benefit programs does the employer offer?

Are the programs offered important to you?

What do you need to do to be eligible?

What benefit costs does the employer pay for?

What benefit costs are you responsible for paying?

Does the company offer family coverage and other family-friendly provisions?

Is there flexibility in working hours and in the use of paid time off?

Google and provided benefits for employees

Google does not only provide its hardworking employees with the right incentive to work but pays off the hard work by providing them with a variety of benefits. Moreover it would be appropriate to say that Google can make employee's feel very much at home. It would not seem like you are at office and need to complete your jobs at all. However, it is very important for them to complete tasks at hand but on the other hand they could also relax while at work.

Google believes that the following are the reason's to provide the organizations employee's with benefits:

-Decreased Health Insurance Costs

-Improved Work Performance

-Reduced Sick Leave

-Increased Company Loyalty

-Increased Responsibility

-Increased Productivity

-Reduced Overall Costs

-Reduced Absenteeism

-Work Place Morale

-Decreased Health Care Costs

They also found the following benefits that Google received as an employer by providing benefits to employees:

-Reduce employee health insurance costs

-Reduce absenteeism

-Increase job satisfaction

-Increase employee morale

-Produce happier citizens that will get more

involved in their local communities.

-Return on investments is huge.

Some of the many perks stated by How Stuff Works (2008), found in Googleplex involve:

Recreation Facilities:

Work out rooms with weights and rowing machines, locker rooms, washers and dryers, massage rooms, assorted video games, foosball, baby grad piano, pool table, ping pong, roller hockey twice a week in a parking lot.

Google Café:

Healthy lunch and dinner for all staff. Outdoor seating for sunshine and day dreaming.

Snack Rooms:

Bins packed with various cereals, gummi bears, cashew nuts, yogurt, carrots, fresh fruit and other delicious finger licking snacks.

Hair Problems:

If an employee's hair seems to get in the way of his busy schedule, he could book an appointment for a hair cut on campus.

Health Care:

If a Googleplex employee feels ill at work and is that bad that he cannot wait till home, there is medical help available.

20 Percent Time Program:

Another famous benefit of working at Google is the 20 percent time program. Google allows its employees to use up to 20 percent of their work week at Google to pursue special projects. That means for every standard work week, employees can take a full day to work on a project unrelated to their normal workload. Google claims that many of their products in Google Labs started out as pet projects in the 20 percent time program.

Googleplex also states the top four reasons why they would never give up the benefits provided for their employee's:

-27.3% consider healthy employees to be assets.

- 25.6% consider promoting a healthy life style.

-14.3% want to reduce absenteeism.

- 10.1% companies want to contain the cost of benefit programs.

So basically we see that how Google has provided a wide range of facilities for its employees. And how important it is to how they retain the required skilled and technical staff at the Googleplex campus.


The entire report we spoke about the benefits and incentives employers would provide their employee's with during the time they work. We emphasized on Googleplex and how they have designed their incentive and benefit plans, to help make Googlers live a better life.

Google Australia Jobs(2009), state that as different a company Google is they still strive to do the best at what they do and that also includes their approach in taking care of their employees. Google strives to improve every Googlers life by providing award winning array of services, schemes and programmes that enable them to get along with things that they love to do. Google was built on the idea that work should be challenging, and they have built their environment so that the challenge is also fun. They believe that their people are their greatest assets and they will always look after them so they are able to keep creating, inventing, finding solutions, breaking boundaries and realizing new technologies they never possible imagined.

Google realizes that they need to realize and celebrate the needs of their Googlers but their main priority is to offer perks, benefit and policies that reflect not only the local market but that make their life much easier and fun.