Merit pay, profit-sharing plans, employee share purchase/

stock ownership plans, and gainsharing plans are examples of organization-wide incentive plans, usually made available to all employees. Merit pay is an increase in base pay (fixed) which is tied directly to individual performance. Profit-sharing plans provide a share of company profits to all employees in the organization. The problem with such plans is that sometimes the link between a person’s efforts and rewards is unclear. Stock purchase plans provide a vehicle for employees to purchase company stock with their own and sometimes employer contributions.

Gainsharing plans engage employees in a common effort to achieve a company’s productivity objectives in which incremental cost savings are shared among employees and the company. All these plans are intended to increase employee commitment toward the organization and are ultimately designed to motivate workers. LO.1