Individual Employee Incentive Plans

Learning Objective 1

  • Discuss the main incentives for individual employees.

Frederick Taylor popularized financial incentives—financial rewards paid to workers whose production exceeds some predetermined standard—in the late 1800s. As a supervisor at the Midvale Steel Company, Taylor was concerned with what he called “systematic soldiering”—the tendency of employees to produce at the minimum acceptable level. Some workers then had the energy to run home and work on their houses after a 12-hour day. Taylor knew that if he could harness this energy at work, Midvale would be much more productive. Productivity “is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital).” ...

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