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In this research paper we are going to talk about important of motivation of employees. Motivation is a significant factor in any industry and organization. This is why we are going to describe the most effective motivational instruments in IT-industry. First of all, we are going to talk about compensation plan, since we believe that financial motivation is a driving force in the modern economic conditions.

Effective compensation plan is really important for the successful development of any organization, business or non-profit organization because compensation is among the main factors people work for. Of course, other factors are also important, including realization of own potential, professional development and public recognition. But, all in all, people work for money and the compensation system should be effective enough to stimulate them to work better.

Without effective compensation system the employees will not work in a proper way, unless there are some special exceptions – personal loyalty, desire to study etc. They will not work effectively – they will slapdash and will be looking for another job. In any way employees’ work will not be effective.

“Employers that want to succeed in this increasingly competitive environment must have a well-designed compensation plan that motivates employees, controls compensation costs, and ensures equity. The best compensation plans mirror the culture of the employer. Therefore, employers should establish a compensation philosophy. Benefits programs should also be part of an employer’s compensation strategy” (Compensation plan).

First of all, we have to decide what type of compensation plan to implement

We have to choose between traditional compensation plans based on the appliance of straight salary and performance-based compensation plans. Both have some advantages and disadvantages and we have to decide what is better.

Many promising companies have been implementing performance-based compensation plans as they increase employee’s’ productivity and their return on investment in compensation and this makes the employees work better.

“Some experts argue that traditional salary increases aren’t as connected to performance as they should be. By contrast, a well thought out performance-based bonus plan can be tied directly to the results the company sees as valuable. However, developing a performance-based compensation plan isn’t easy.” The most widespread mistake of the employers is setting performance targets too low. Another mistake employers often make is usage of the wrong metrics in determining an employee’s performance.” (Compensation plan).

We tend to use some mixed type of those mistakes

Thus, there will be some stable wage rate (straight salary) and the system of bonuses which will be determined by the immediate results of the work of the employees. So, on the one hand, our employees will have a stable income and will feel secure. On the other hand, they will be motivated to work more and better, because there will be a clear correlation between their salary and the results of their work.

What is more, some penalties will be implemented as we should also take into account that our employees may make mistakes and the company will suffer. Thus the main indicator of the level of payments to our team will be the result. If the result is appropriate – payments are high, if the result is low – payments are also low.

To our mind, such compensation system will be really flexible. It will let the company increase payments in good years and reduce costs in crisis times. For example, such practice is traditionally used by the Japanese companies. Thus we will take into account all the warnings mentioned above and will use mixed type of compensation plan.

Mainly compensation plan should consist of stable rate and bonuses according to the results of the performance. It will also include the following elements: quarterly and annual bonuses, special bonuses (based on the results of some projects), welfare, social package, bonuses for education and professional development etc.

Work of web-designers and, for example, marketing professionals has a specific character. That is why traditional straight motivational system is not the most effective in the considered case. According to experts

“Compensation includes many things beyond straight salary. It also includes benefits, perks, stock options, etc. You have to balance what these cost against what your employees perceives as their value, and that varies by employee” (Reh).

We would also like to create some correlation between the experience of worker (his period with the company) and his compensation. It means that experienced and loyal workers will receive higher compensation thanks to special bonuses. These bonuses will exist in the form of percentage of the wage rate (for example, 5-10 % for every year of job). As for us, it would be really effective way to boost company’s loyalty (loyalty of the workers to the company). And in such way we can keep valuable workers.

We will adjust salary ranges periodically to compensate for different factors: economic factors – inflation, cost of living changes; competitive factors – profit margins, industry demand for employees etc.

Thus, the main advantages of proposed compensation plan are the following: correlation between work performance and the level of salary; encouraging increasing loyalty of the workers to the company; wide range of different bonuses; social package. This compensation plan will provide some stability for our employees and, on the other hand, will stimulate them to develop their skills and professional abilities to work better and to earn more money.

The main benefit of this compensation plan for an employee is its “democracy”. We mean that it is mainly performance-based. Every employee is able to choose between loafing and work.

The main advantage of the plan for the company is its flexibility

It provides opportunity for the company to manage its costs more effectively – to reduce them in crisis and increase in good years.

So we will recommend this compensation plan to the Human Resource department and we believe that it will be approved. Also we would like to say a few words about expectancy theory that may be effective for motivation of employees under consideration.

Applying this theory to the reward systems of employees means that their salary depends on the result of their performance. Successful performance provides different financial bonuses and other incentives and, vice versa, unsuccessful performance provides different fines and other sanctions.

This approach can be applied to individual workers and groups of employees. In this essay we have to answer the question what form (group or individual) is better.

One of the performance-related reward systems is profit-sharing and share ownership of an organization scheme. In such way employees are really interested in the successful development of an organization. Because they realize that their success depends on an organization’s success. That is why they will do their best and work harder.

Nowadays more and more companies are using this scheme of motivating their workers. We believe that individual reward system is better than the group one, because, as for us, it creates a clear link between the performance of a worker and his reward. It is also easier to monitor a performance of an employee and it excludes the possibility when some employee does not execute his or her functions, using the total group’s success. However, we believe that group and individual schemes should be combined and used according to the particular situation.

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