Strategic Compensation: A Human Resource Management Approach, 9/e

Company-wide Incentives

1. 5 Discuss two types of company-wide incentive plans.

The use of company-wide incentive plans can be traced to the nineteenth century. Companies instituted profit sharing programs to ease workers’ dissatisfaction with low pay and to change their beliefs that company management paid workers substandard wages while earning substantial profits. Quite simply, management believed that workers would be less likely to challenge managerial practices if they received a share of company profits.

Defining Company-wide Incentives

Company-wide incentive plans reward employees when the company exceeds minimum acceptable performance standards (e.g., profits or the overall value of the company based on its stock price). As competitive ...