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Paramjit Sharma
 Research Findings on Compensation

•MCS be Reward Oriented

•Both Monetary and Non Monetary are important
•Importance to systems by management
•Importance of Feedback on performance
•Motivation depends upon tasks to be achieved
•Period of Reporting different for levels
•Goals, Standards provide strong incentives

Paramjit Sharma
 Types of Compensation

Short Term Long Term

Incentive Plans Incentive Plans

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 Types of Compensation

Total Bonus Plans

Carryovers
Short Term
Incentive Plans
Deferred Compensation

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 Types of Compensation

Stock Options

Phantom Shares
Long Term Stock Appreciation Rights
Incentive Plans
Performance Shares

Performance Units

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 Incentives for Executives

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 CEO
Compensation

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 1 Financial Rewards 2 Psychological and
Social Rewards
Types of
Incentives for •
Business Unit
• Salary increase Promotion Possibilities
• Inc Responsibilities
Managers • Bonuses • Increased Autonomy
• Benefits • Better Posting
• Perquisites • Recognition

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 •1 Upper Cutoffs

Size of Bonus
Relative to
Salary

•2 Lower Cutoffs

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 •Business Unit Profits

Bonus
Based on •Company Profits

•Combination of two

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 •Financial Criteria

•Contribution Margin
Performance •Direct business unit profit
Criteria •Controllable business unit profit
•Income before taxes
•Net Income
•ROI
•EVA

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 •Time Period
Performance •Annual Financial Performance
Criteria

•Multiyear Financial Performence

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 •Nonfinancial Criteria
•Sales Growth
•Market Share
Performance •Customer Satisfaction
Criteria
•Quality
•New Product Development
•Personnel Development
•Public Responsibility

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 •Benchmark for Compensation

Performance •Profit Budgets

Criteria
•Past Performance

•Competitor’s Performance

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•1 Formula Based
Bonus
•2 Subjective Determination
Plan
•3 Combination of Two

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 •1 Cash

•2 Stock
Forms of
•3 Stock Option Bonus
Payment
•4 Phantom Shares

•5 Performance Shares

Paramjit Sharma