التحكم التنظيمي

Document Sample
التحكم التنظيمي Powered By Docstoc
					Designed and Lectured by: Dr. Amr A. Osman



                                                 ORGANIZATIONAL CONTROL AND
                                                 REWARD SYSTEMS




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 1
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 2
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 3
Designed and Lectured by: Dr. Amr A. Osman




                                                       (1
                                                  PART (1)

                      4.1. Why Organizations Need To Assess Employees’
                                       Performance?




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 4
Designed and Lectured by: Dr. Amr A. Osman




                4.1.0. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                PERFORMANCE
                4.1.1. PERFORMANCE APPRAISAL ISSUES AND PRACTICES
                4.1.2. OVERCOMING RELIABILITY ERRORS IN
                PERFORMANCE APPRAISAL
                 4.1.3. Developing Performance Measures With Job
                Analysis

                                             PART OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 5
Designed and Lectured by: Dr. Amr A. Osman


                4.1.0. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                                  PERFORMANCE
                      AN ORGANIZATION PERFORMANCE APPRAISAL SYSTEM:
                  “a process which generates information about employee work effectiveness
                         for the purpose of making informed human resource decision”

                      WHY DESIGNING A PERFORMANCE APPRAISAL SYSTEM:
                 1.    Employee need to understand the behavioral requirements of the job.
                 2.    Employees’ work is evaluated for its contributions to organizational goals.
                 3.    Employees need to know where they stand with the organization in terms
                       of their performance.
                 4.    Employees’ motivation to do a good job is increased by the performance
                       appraisal system.
                 5.    Valid information about performance levels of employees should be used to
                       make decisions about salary increase, promotions, bonuses and training
                       needs.
                 6.    Employees need a clear understanding of what the organization expects
                       from them in terms of performance.


All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 6
Designed and Lectured by: Dr. Amr A. Osman


                4.1.0. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                                  PERFORMANCE
                     EFFECTS OF PERFORMANCE APPRAISAL:

                           For the Organization                  For the Employee

                      Performance improvement                     Need fulfillment
                      Validation of the selection system          Job satisfaction
                      Employee counseling                         Organizational commitment
                      Training and development                    Job involvement
                      Clarification of job expectations           Satisfaction with supervision
                      Help in goal-setting                        Satisfaction with pay
                      Development of employee potential           Achievement of promotions
                      Human resources planning                    Greater responsibility
                      Documentation of existing performance       Personal career goals
                      Improved customer service                   Improved self-efficacy
                      Product and process improvement




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 7
Designed and Lectured by: Dr. Amr A. Osman


                 4.1.1. PERFORMANCE APPRAISAL ISSUES AND PRACTICES



                                                                          RELIABILITY PROBLEMS

                                                                          1. Situational factors
                                                                             effecting evaluator
                                         TRUE         UNRELIABILITY
                      DEFICIENCY                                          2. Disagreement among
                                      ASSESSMENT        INVALIDITY
                                                                             evaluators

                                                                          3. Inconsistent methods

                                                                          4. Temporary personal
                                                                             factors


                                Actual           Measured
                             Performance        Performance

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 8
Designed and Lectured by: Dr. Amr A. Osman



                 4.1.1. PERFORMANCE APPRAISAL ISSUES AND PRACTICES

                                   ERRORS IN PERFORMANCE APPRAISAL
                                        A stereotype or bias which influences a superior’s rating upward
                Personal Bias
                                        or downward
                                        Rating an employee on one trait based on their evaluation on the
                Halo Effect
                                        trait

                Recency Error           The emphasis on recent performance
                Central Tendency        Assigning average rating to all employees resulting in little
                Error                   variation among ratings

                Similarity Error        Superior has a performance quality in himself which he looks for in
                                        subordinates
                Forcing the rating to   Deciding on an overall rating first and then going back to adjust
                match other criteria    ratings on individual dimensions to justify the overall rating




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 9
Designed and Lectured by: Dr. Amr A. Osman



                 4.1.1. PERFORMANCE APPRAISAL ISSUES AND PRACTICES



                    QUALITIES OF ERROR CREATING MANAGERS:
                    Improperly trained in performance appraisal work

                    Not spending enough time on their performance appraisal
                    work

                    Not trying to remain objective and fair-minded in their
                    evaluation work



All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 10
Designed and Lectured by: Dr. Amr A. Osman



                 4.1.1. PERFORMANCE APPRAISAL ISSUES AND PRACTICES

                                              FORMS OF VALIDITY
                                        The performance appraisal measure and its administration are
                Content Validity
                                        logically related to the aspects of performance being measured
                                        Performance measures are statistically related to other important
                Empirical Validity
                                        work outcomes
                                        The performance appraisal system logically derives from a model
                Construct Validity
                                        or theory of performance behavior and motivation
                                        Multiple measures of the same performance dimension yield
                Convergent Validity     equivalent score
                                        Measures of performance using the same method produce
                Discriminant Validity
                                        different scores for different aspects of performance




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 11
Designed and Lectured by: Dr. Amr A. Osman


              4.1.2. OVERCOMING RELIABILITY ERRORS IN PERFORMANCE
                                   APPRAISAL
                 Use Of Multiple Criteria.

                 Emphasizing Behaviors Rather Than Traits.

                 Use Of Several Raters.

                 Continues Raters Training And Appraisal System Development

                 360 Degree Performance Appraisal
                   1.   Employee conducting self appraisal
                   2.   Peers evaluating each other
                   3.   Team leaders appraising team members
                   4.   Team members appraising team leaders




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 12
Designed and Lectured by: Dr. Amr A. Osman


              4.1.2. OVERCOMING RELIABILITY ERRORS IN PERFORMANCE
                                   APPRAISAL

                  HOW MANAGERS CAN IMPROVE THE DESIGN OF PERFORMANCE
                  APPRAISAL SYSTEMS?


                                  PERFORMANCE APPRAISAL SYSTEM


                           CONDUCTING JOB                    IMPROVING THE VALIDITY
                              ANALYSIS                      OF PERFORMANCE MEASURES




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 13
Designed and Lectured by: Dr. Amr A. Osman


                 4.1.3. DEVELOPING PERFORMANCE MEASURES WITH JOB
                                      ANALYSIS


                    PROCEDURES OF JOB ANALYSIS:
                    Defining the job.

                    Setting primary duties which are documented as job
                    description.

                    A clear specification of the employee characteristics and
                    experiential qualifications.


All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 14
Designed and Lectured by: Dr. Amr A. Osman


                 4.1.3. DEVELOPING PERFORMANCE MEASURES WITH JOB
                                      ANALYSIS
                   CHALLENGE TO JOB ANALYSIS:
                  Isolating the tasks in a give job (territorial questions)
                  Where does the job of a computer programmer stop and computer operator
                                               begin (both engineers)?

                   Suggested Strategies:
                   Determine the common skills and qualifications required for each job

                   Isolate separatable work tasks

                   Clearly identify conflict area and future common overlapping tasks

                   Use externally accepted qualities based on professional identification

                   Use organizational tradition and past experiences of how the work was done

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 15
Designed and Lectured by: Dr. Amr A. Osman


                          4.1.4. PERFORMANCE APPRAISAL METHODS
                    ABSOLUTE STANDARDS: judging each employee against a fixed and
                    inflexible set of performance criteria. (risky system)



                    GRAPHIC SCALES RATING SYSTEM: scale rating of criteria (mostly on
                    numerical basis) to clearly highlight differences in performance
                    among employees



                    BEHAVIOR ANCHORED RATING SCALE: providing complete examples of
                    behavior for different levels of performance (more work oriented
                    than employee oriented)

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 16
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 17
Designed and Lectured by: Dr. Amr A. Osman




                                                       (2
                                                  PART (2)

                       4.2. Goal-setting And Management By Objectives




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 18
Designed and Lectured by: Dr. Amr A. Osman




                4.2.1. ASPECTS OF THE GOAL SETTING PROCESS

                4.2.1. MANAGEMENT BY OBJECTIVES (MBO)



                                               PART OUTLINE


All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 19
Designed and Lectured by: Dr. Amr A. Osman


                       4.2.1. ASPECTS OF THE GOAL SETTING PROCESS
                    GOALS are defined as those end states which reduce the intensity of needs
                    and motives.
                    BENEFITS OF GOAL SETTING SYSTEM:
                    Increase work motivation and employee job performance
                    Reduce the stress of conflicting or confusing work expectations for
                    employees
                    Improve the accuracy and validity of performance evaluation work in
                    the organization
                    FACTORS INFLUENCING THE PROCESS OF GOAL SETTING
                    The importance of employee acceptance of the goals
                    The amount of available time for goal setting
                    The importance of employee development through goal-setting
All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 20
Designed and Lectured by: Dr. Amr A. Osman


                         4.2.1. ASPECTS OF THE GOAL SETTING PROCESS



              ENVIRONMENTAL       GOAL SETTING         GOAL            EMPLOYEE
                                                                                        OUTCOMES
                  ISSUES            PROCESS         ATTRIBUTES        INTENTIONS
               Specify results   Mutually           SMARTERS       Accept the       Work
               expected          established     Specific          goals            Performance
                                                 Measurable
               Explain           Employer                          Commit to the    Job satisfaction
                                                 Achievable
               rewards which     centered                          goals
               are available
                                                 Resource-Based                     Job motivation
                                 Frame as ‘do    Time Specific
                                 your best’      Ethical
                                                 Risky
                                                 Sustainable




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 21
Designed and Lectured by: Dr. Amr A. Osman


                           4.2.2. MANAGEMENT BY OBJECTIVES (MBO)

                     BASIC ASSUMPTIONS OF THE MBO MODEL:
                     Employees perform better when they know what is expected of them and how
                     they contribute to the effectiveness of the organization

                     Most employees prefer self-determination at work

                     Employees can be motivated further by well-timed formal and informal feedback
                     about their work methods and results.

                     Employees prefer intrinsic and extrinsic rewards that are consistent with their
                     performance levels.

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 22
Designed and Lectured by: Dr. Amr A. Osman


                            4.2.2. MANAGEMENT BY OBJECTIVES (MBO)


                        1                            2                          3
                ANALYSE the mix of         PLAN goals, strategy,       DEAFINE the employees’
                people, jobs, work         communication and           jobs in terms of content,
                methods and                training                    authority and
                external demands                                       responsibility

                                           7
                                make FORMAL review of
                                goal achievement and
                                rewards to be obtained


                            6
                                                          5                         4
               make INFORMAL review of
               goal achievement, methods       reach MUTUAL                ARTICULATE goal
               and probable rewards, and       AGREEMENT about             difficulty, clarity,
               REVISION of goals and           goals, work methods,        number, feedback
               methods id necessary            goal measurement, and
                                               time frame

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 23
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 24
Designed and Lectured by: Dr. Amr A. Osman




                                                       (3
                                                  PART (3)

                                 4.3. Rewards and Reward Systems




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 25
Designed and Lectured by: Dr. Amr A. Osman




                4.3.1. CLASSIFICATION OF ORGANIZATIONAL
                       REWARDS

                4.3.2. DISTRIBUTING REWARDS IN ORGANIZATIONS

                4.3.3. EMPLOYEES’ PERCEPTIONS OF PAY RISES


                                               PART OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 26
Designed and Lectured by: Dr. Amr A. Osman


                   4.3.1. CLASSIFICATION OF ORGANIZATIONAL REWARDS

                  INTRINSIC REWARDS                          EXTRINSIC REWARDS

                                       Direct Compensation        Indirect          Non-Financial
                                                                Compensation          Rewards


                 Participation in      Basic salary           Job protection      Preferred office
                 decision making                              programs            location
                                       Performance bonus
                 More responsibility                          Time off with pay   Impressive titles
                                       Stock options
                 Opportunities for                                                Preferred break
                 personal growth       Overtime                                   hours

                 More interesting                                                 Own assistant
                 work
                                                                                  Cellular phone
                 Variety of job
                 activities


All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 27
Designed and Lectured by: Dr. Amr A. Osman


                     4.3.2. DISTRIBUTING REWARDS IN ORGANIZATIONS

                              MAIN DISTRIBUTION DETERMINANTS:
                                      Performance
                                      Effort
                                      Seniority
                                      Job Components:
                                           Skill Requirements
                                           Mental Requirements
                                           Physical Requirements
                                           Responsibility
                                           Working Conditions
                                      Equality
All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 28
Designed and Lectured by: Dr. Amr A. Osman


                       4.3.3. EMPLOYEES’ PERCEPTIONS OF PAY RISES




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 29
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 30
Designed and Lectured by: Dr. Amr A. Osman




                                                       (4
                                                  PART (4)

                          4.4. Components of Executive Compensation




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 31
Designed and Lectured by: Dr. Amr A. Osman


                          COMPONENTS OF EXECUTIVE COMPENSATION

                     Executives represent average 3% of any task force and
                     take over 52% of work responsibility.

                                     FOUR MAIN COMPONENTS
                                             Base Salary

                                             Benefits

                                             Long-Term Incentives

                                             Annual Bonus

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 32
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 33
Designed and Lectured by: Dr. Amr A. Osman




                                                       (5
                                                  PART (5)

                          4.5. A Comparison of Company Pay Practices




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 34
Designed and Lectured by: Dr. Amr A. Osman




                4.5.1. COMPARING COMPANY PAY POLICIES

                4.5.2. VALIDITY OF PAY SYSTEMS

                 4.5.3. GUIDELINES TO CONSTRUCTING PAY
                        SYSTEMS


                                               PART OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 35
Designed and Lectured by: Dr. Amr A. Osman


                          4.5.1. COMPARING COMPANY PAY POLICIES


                              MAIN ORGANIZATIONAL PAY POLICIES

                                        Cafeteria-Style Fringe Benefits

                                        Lump-Sum Pay Systems

                                        Skill-Based Compensation

                                        Accumulating Time Off

                                        The All-Salaried Team

                                        Open-Salary Information

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 36
Designed and Lectured by: Dr. Amr A. Osman


                                 4.5.2. VALIDITY OF PAY SYSTEMS


                    Does the plan capture the attention of the employees?

                    Do employees understand the elements of the plan?

                    Does the plan improve communication?

                    Does the plan make payments to employees when it should?

                    Is the company performing better as a result of the plan?



All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 37
Designed and Lectured by: Dr. Amr A. Osman


                     4.5.3. GUIDELINES TO CONSTRUCTING PAY SYSTEMS
                 Tie incentives in the reward system as closely as possible
                 to actual performance on the job.

                 To the extent possible, the incentive system and benefits
                 programs should be adjusted for individual differences
                 among employees in the work force.

                 Incentive programs should match the type of work
                 performed by the employees and the structure of their
                 firm.

                 The pay system should be consistent with the culture of
                 the firm.

                 Any incentive system should be monitored over time.
All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 38
Designed and Lectured by: Dr. Amr A. Osman




                  4.1. WHY ORGANIZATIONS NEED TO ASSESS EMPLOYEES’
                  PERFORMANCE?
                  4.2. GOAL-SETTING AND MANAGEMENT BY OBJECTIVES (MBO)
                  4.3. REWARD AND REWARD SYSTEMS
                  4.4. COMPONENTS OF EXECUTIVE COMPENSATION
                  4.5. A COMPARISON OF COMPANY PAY PRACTICES
                  4.6. INDIVIDUAL AND GROUP-BASED REWARD SYSTEMS


                                           MODULE OUTLINE

All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 39
Designed and Lectured by: Dr. Amr A. Osman




                                                       (6
                                                  PART (6)

                       4.6 Individual And Group-based Reward Systems




All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 40
Designed and Lectured by: Dr. Amr A. Osman


              THE RUCKER PLAN: An Incentive System That Works In The
                          Self-Directed Team Environment
                1. Identify a base period that provides data that will be valid and
                   useful for establishing standards.
                2. Generate the following data using the base period standards.
                            Sales value of production (SVP)
                            Cost of materials, supplies, service, etc. (COM)
                            Cost of labor (COL)
                3. Using these data, establish the following standards.
                            Value added (VA) = SVP − COM
                            Labor contribution to VA (LCVA) = COL / VA
                            Economic productivity index (EPI) = 1.00 / LCVA
                            Expected value of production (EVP) = EPI × COL
All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 41
Designed and Lectured by: Dr. Amr A. Osman


              THE RUCKER PLAN: An Incentive System That Works In The
                          Self-Directed Team Environment
                   A corporation determined that the following values (in millions of pounds)
                            SVP = £25m
                            COM = £11m
                            VA = £14m
                            COL = £6m
                            LCVA = 6 / 14 = .4286
                            EPI = 1.00 / .4286 = 2.333
                   For the bonus period in question, the following business data were generated
                            SVP = 2.8 VA = 1.5
                            COM = 1.3 COL = .6
                            AVP (actual value of production) = SVP − (COM + COL) = 2.8 − (1.3 + .6) = .9
                            EVP = .6 × 2.333 = 1.398
                            Savings or loss = EVP − AVP = 1.398 − .9 = .498 or £498 000



All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 42
Designed and Lectured by: Dr. Amr A. Osman


              THE RUCKER PLAN: An Incentive System That Works In The
                          Self-Directed Team Environment

                      Labor contribution to value added is .4286. The money placed in

                      a bonus pool for self-directed teams is

                                 £498 000 × .4286 = £213 443.
                      In a RUCKER PLAN, 75 percent of the bonus is paid monthly to

                      employees and the remaining 25 percent is held in an escrow

                      account until year’s end.


All copyrights reserved to author. No part of this document may be reproduced or used unless prior written permission
the author is maintained. Violators shall be held responsible.                                                 43

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:21
posted:12/5/2011
language:
pages:43