A Group Incentive Plan is a type of team-based Alternative Reward Program, but differs from the others in its features, advantages, and disadvantages.
Team Based Programs:
? Gainsharing
? Group Incentives
? Group Sharing
? Long-Term Capital Accumulation
In Group Incentive Plans, all employees in the company share in rewards based on performance gains tied to corporate profitability.
Design Features:
* Performance targets are established; requiring that standards be established and the planning process is well documented.
* Funding requires a systematic mechanism for setting aside sufficient monies to fund rewards.
* Includes a consistent and acceptable method for allocating rewards among eligible participants.
Advantages:
* Focuses the group on specific performance targets.
* Since rewards are controllable by individuals, the programs can be very motivational.
* The program can be integrated with other corporate initiatives (i.e., quality, product/service introduction, cost savings, etc.).
* Leads to improved communication and employee relations.
Disadvantages:
* Group Incentive Plans can be costly to install and administer.
* De-emphasizes individual performance which can result in excessive peer pressure.
* Requires open communication with employees on costs, profitability, etc. (although this can be a sensitive issue, there are alternatives available).
* If the performance targets are not carefully selected, adverse results may occur.
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