Reward Systems and Incentives | Massachusetts Institute of Technology - Edubirdie

University:
Massachusetts Institute of Technology
Course:
15.501/516 | Accounting
Academic year:

2023
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479

Pages:

4
Author:

Spokane118

Today Lincoln Electric z z Video- Inside Lincoln Discussion: • Is this a “healthy” company? • What is the link between the strategy of the firm and the compensation system? • Why does it work? • What should they do in China? z Wrap-up: The Empirical Evidence Lincoln Electric Is this a healthy organization to work for? 1 2 “A poor model for a modern firm.” 3 4 5 6 7 8 9 10 “A model company to work for.” In Europe z z z Study of 460 companies in 13 industries 58% tied pay increases of executives to merit 25% of senior executive pay is variable – – z Up from 20% in 1996; Expected to be 31% by 2002 For non-management: 5% expected to go to 10% Only 4% reported that workers had a good understanding of the plans Some Cautions z Rewards produce temporary compliance – – z Rewards focus people on more rewards – – z Good for precise behaviours but not lasting commitment Do not generate extra-role behaviour They can undermine intrinsic motivation Emphasize work as a means, not an end Reduction in rewards seen as punishment – Seeing large bonuses reduced in lean years may breed resentment. • Saturn, 1998 • Ikea, 1999

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