What Is an Incentive Policy?

Incentive mechanism refers to the process of maximizing employees' commitment to organization and work through specific methods and management systems. The "incentive mechanism" is the sum of the structure, methods, relationships, and evolution laws of the incentive system in the organization system, which uses a variety of incentive methods and is standardized and relatively fixed.

Incentive mechanism refers to the process of maximizing employees' commitment to organization and work through specific methods and management systems. The "incentive mechanism" is the sum of the structure, methods, relationships, and evolution laws of the incentive system in the organization system, which uses a variety of incentive methods and is standardized and relatively fixed.

Incentives are the means by which companies can turn big ideas into concrete facts.

Chinese name

Incentives

Foreign name

Incentive Mechanism

Content

Spiritual motivation, salary incentive

Function

With promoting effect and weakening effect.

Mode

Incentive operation mode of the whole process

Content of incentive mechanism

Including spiritual incentives, salary incentives, honor incentives, and job incentives. According to the definition of incentive, the incentive mechanism includes the following aspects:

Collection of incentives

Incentives

Inductive factors are the various reward resources used to motivate employees. The extraction of inducement factors must be based on the individual needs of the team members to investigate, analyze and predict, and then design various reward forms, including various external rewards and internal rewards, according to the period of the reward resources owned by the organization. Sexual rewards (reached through job design). Need theory can be used to guide the extraction of inducing factors.

Incentive mechanism behavior-oriented system

Incentives

It is a rule of what the organization expects its members to do, the way they behave and the values they should follow. In tissues, individual behaviors induced by inducing factors may be oriented in all directions, that is, they do not necessarily point to the target of the organization. At the same time, individual values are not necessarily consistent with the values of the organization, which requires the organization to cultivate a dominant value among employees. Behavior orientation generally emphasizes global, long-term, and collective ideas, all of which serve the goals of the organization. Dr. M. Leboeuf pointed out in the book "How to Motivate Employees" that the greatest principle in the world is reward; what is rewarded will do better, and in a profitable situation everyone will Do a better job. He also listed 10 ways in which businesses should reward:

(1) Reward those who solve the problem thoroughly instead of just taking emergency measures.

(2) Reward adventure, not risk avoidance.

(3) Reward for using workable innovations, not blindly following them.

(4) Reward decisive action, not useless analysis.

(5) Reward excellent work without being busy.

(6) Simplify rewards and oppose unnecessary complication.

(7) Reward silent and effective actions, and oppose publicity.

(8) Reward high-quality work, not rash action.

(9) Reward loyalty and oppose betrayal.

(10) Reward cooperation and oppose internal strife.

Incentive mechanism behavior amplitude system

It refers to the rules of control over the intensity of behaviors induced by inducing factors. According to Froom's expectation theory formula (M = V * E), the control of the amplitude of individual behavior is achieved by changing the correlation between a certain reward and a certain performance and the value of the reward itself. According to Skinner's reinforcement theory, determining the correlation between rewards and performance at a fixed rate and a varying rate will have different effects on employee behavior. The former will bring rapid, very high and stable performance, and show a tendency of moderate behavior decline; the latter will bring very high performance, and show a very slow behavior decline trend. Through the behavior range system, the level of individual effort can be adjusted within a certain range to prevent a rapid decline in the incentive efficiency of employees with certain rewards.

Incentive mechanism behavior space-time system

It refers to the time and space provisions of the reward system. Provisions in this regard include time limits associated with specific external rewards and specific performance, time limits for employees to combine certain jobs, and the spatial scope of effective behavior. Such regulations can prevent employees' short-term behaviors and geographical infinity, so that the desired behaviors have a certain degree of continuity and occur within a certain period and space.

Incentive mechanism behavioral domestication system

Domestication refers to the assimilation of members and the punishment and education for violations of the code of conduct or failure to meet the requirements. Organizational Socialization refers to a systematic process of bringing new members into the organization. It includes the education of new members in their outlook on life, values, work attitudes, normative behaviors, working relationships, specific work functions, etc., so that they become members consistent with organizational style and habits, and thus have a qualified membership . Regarding various punishment systems, it is necessary to explain clearly to employees in advance, that is, to strengthen them negatively. If violations of the code of conduct and unsatisfactory behaviors actually occur, education should be strengthened while appropriate punishment is given. The purpose of education is to increase the parties' awareness of the code of conduct and their ability to act, that is, to assimilate the organization again. Therefore, organizational assimilation is essentially a process of continuous learning by the members of the organization and is of great significance to the organization.

The above five aspects of the system and regulations are the constituent elements of the incentive mechanism, which is the sum of the five elements. The inducing factors play the role of initiating behavior, and the latter four play the role of guiding, regulating, and restricting behavior. A sound incentive mechanism should be a complete system that includes the above five aspects and two properties. Only in this way can we enter a benign operating state.

Incentive mechanism

Once the incentive mechanism is formed, it will inherently affect the organizational system itself, keep the organizational function in a certain state, and further affect the survival and development of the organization. The effects of incentive mechanism on the organization have two properties, namely, promoting and weakening, that is, the incentive mechanism has promoting and weakening effect on the organization.

Incentives fuel role

One of the motivating effects of the incentive mechanism is that the fixed incentive mechanism has repeatedly strengthened and continuously strengthened certain behaviors of employees in line with the expectations of the organization. Under this incentive mechanism, the organization continues to grow and grow. We call such an incentive mechanism a good one. Of course, in a good incentive mechanism, there must be negative reinforcement and punishment measures to restrict employees' behaviors that do not meet the expectations of the organization. The enlightenment of the incentive mechanism on employee behavior is that managers should be able to pinpoint the true needs of employees, and effectively combine measures to meet employees' needs with the achievement of organizational goals.

Weakening incentives

The weakening effect of the incentive mechanism is manifested in the following: due to the existence of demotivating factors in the incentive mechanism, the behavior that the organization expects of employees has not been shown. Although the original intention of the designer of the incentive mechanism is to hope that through the operation of the incentive mechanism, the enthusiasm of employees can be effectively mobilized to achieve the goals of the organization. However, whether the incentive mechanism itself is not perfect or the incentive mechanism is not feasible, it will inhibit and weaken the work enthusiasm of some employees. This is the weakening effect of the incentive mechanism. In an organization, when factors that weaken employees' enthusiasm for work dominate for a long time, the development of the organization will be restricted until it declines. Therefore, for the incentive mechanism with weak effects, the de-motivation factors must be eliminated and replaced with effective incentive factors.

Operating mode of incentive mechanism

The operation mode of the incentive mechanism The process of the incentive mechanism operation is the process of interaction between the incentive subject and the incentive object, that is, the process of incentive work. The following figure is an incentive operation mode based on the entire process of two-way information exchange: see this entry chart

This mode of operation of the incentive mechanism starts before employees enter the working state and runs through the entire process of achieving the organization's goals, so it is also called the whole process incentive mode.

The application of this incentive model in management practice can be divided into 5 steps, and its work content is as follows:

First, two-way communication. The tasks in this step enable managers to understand the individual needs, career plans, abilities and qualities of employees, and at the same time clarify to employees the goals of the organization, the values advocated by the organization, the content of the organization's rewards, performance evaluation standards and behavioral norms, etc .; and Individual employees should properly express their own capabilities and strengths, their individual requirements and plans, and at the same time, employees must understand the organization's requirements in all aspects.

Second, choose their own behavior. Through the two-way communication in the previous step, managers will arrange appropriate positions for employees according to their individual strengths, abilities, qualities, and work intentions, propose appropriate goals and assessment methods, take appropriate management methods and take action; and employees Start with a proper attitude, behavior and effort.

Third, periodic evaluation. Periodic evaluation is the timely evaluation of the phased results and work progress that employees have made so that both managers and employees can make adaptive adjustments. This staged evaluation should select an appropriate evaluation cycle, which can be determined as one week, one month, one quarter, or half year according to the specific work tasks of employees.

Fourth, year-end evaluation and reward distribution. This step of work is carried out at the end of the year. Employees must cooperate with the management to evaluate their work performance and obtain the reward resources of the organization accordingly. At the same time, managers must be good at hearing employees' own evaluations of work.

Fifth, comparison and re-communication. At this step, employees will compare the rewards they receive from work processes and tasks with other comparable people and their past, to see if they are satisfied with the rewards they receive from work. Is it fair. By comparison, if employees feel satisfied, they will continue to work in the original organization; if they are not satisfied, they can conduct constructive consultations with management to reach an agreement. If the two parties cannot reach an agreement, the contractual relationship between the two parties will be interrupted.

The whole process incentive mode highlights the role of information exchange, divides the logical steps of incentive work, and is highly operable.

Information exchange of incentive mechanism

Information exchange is the process by which members of an organization communicate the premise of decision-making to another member. As a decision maker, any member of the organization, on the one hand, obtains the information needed for his decision from others, and on the other hand transmits information about himself to others. In the operation of the incentive mechanism, information exchange runs through the whole process and is two-way, that is, there is both the information transmitted from the incentive subject to the incentive object and the information transmitted from the incentive subject to the incentive subject. The sender and receiver even change the position of the incentive subject and the incentive object. The achievement of organizational goals or sub-goals often takes weeks, months, or even years. During this period, leaders, managers and employees need to continue to promote high morale. In the process of promoting the achievement of goals, managers 'evaluation of employees' work is the most important, but they often do not get the attention of managers in motivation work. Evaluation of employees' work, including evaluation of work progress, evaluation of work quality, and evaluation of the relationship between work progress and ultimate goals, etc. The reward and punishment information throughout the job evaluation often directly affects the morale and motivation of employees.

Five Principles of Incentive Mechanism

1.Employees' assigned work should suit their working ability and workload

Matching people and positions is the goal that employees are configured to pursue. In order to achieve the right people, analysis of employees and positions is required. Everyone has different abilities and personalities, and each post has different requirements and environments. Only by analyzing and reasonably matching in advance can the role of talents be fully utilized and the work can be successfully completed.

There are four ways to promote job matching:

First, a number of senior managers met with a new employee at the same time to understand his interests, work ability, and work potential in many ways;

Second, in addition to the regular evaluation of work performance, the company also has corresponding job descriptions and requirements;

Third, use electronic databases to store information about job requirements and employee capabilities and update them in a timely manner;

Fourth, through the appointment letter, senior managers recommend candidates for important positions to the board of directors.

2, on reward

The contribution of employees to the company is affected by many factors, such as work attitude, work experience, education level, external environment, etc. Although some factors are not controllable, the most important factor is the personal performance of employees, which is a factor that can be controlled and evaluated . One principle is that an employee's income must be determined based on his performance. Whether employees' past performance is recognized will directly affect future job results. On the merit reward not only can let employees know which behaviors should be promoted and which behaviors should be avoided, but also encourage employees to repeat and strengthen those behaviors that are conducive to the company's development. Therefore, embodying wage differences based on job performance is an important part of establishing a high incentive mechanism. In addition, BASF offers different benefits such as meal subsidies, housing, and company stock based on employee performance.

3. Through basic and advanced training programs, improve the working ability of employees, and select qualified personnel for leadership work from within the company.

Extensive training programs for employees, with specialized departments responsible for planning and organization. The training plan includes some basic skills training, and also involves high-level management training, as well as training courses developed according to the actual situation of the company, to help employees grow as the ultimate goal. The organizational structure is clear, each employee knows the position and role of his post in the company, and can easily understand what promotion paths are available and obtain relevant information. BASF has a clear internal orientation in promotion, and it is more inclined to promote managers from the inside, which provides promotion opportunities for those who are interested in development.

4. Continuously improve the working environment and safety conditions

A suitable working environment can not only improve work efficiency, but also regulate employee psychology. Designing a working environment based on physiological needs can speed up speed, save energy, and relieve fatigue; designing a working environment based on psychological needs can create a pleasant, relaxed, positive, and energetic working atmosphere. Humanized transformation of the working environment, setting up various special car facilities near the factory, opening many canteens and restaurants in the company, adding toilets for manual workers, and keeping the work place clean and tidy.

Safety is the most basic requirement for working conditions, but it is a hidden pain that is difficult for many enterprises to achieve. A large number of standard facilities to ensure safety have been established. Specialized departments are responsible, such as the medical department, fire brigade, and senior factory guards. They are responsible for safety issues in their respective areas of work. Provide regular safety instructions and protective facilities to all workers. Various security systems can also be established, such as a staff member on each floor of the building who must be on duty to take turns on special security training. In addition to the guarantee of facilities and systems, it also encourages safe production by means of rewards. Those workshops with the lowest accident rate can receive safety awards.

5. Implement a cooperative leadership approach

In the relationship between leadership and being led, emphasis is placed on a cooperative attitude.

In the process of leadership, just as they are being led, leaders candidly cooperate in an atmosphere of mutual respect. BASF's leaders are tasked with agreeing on work indicators, delegating work, collecting intelligence, inspecting work, resolving conflicts, assessing subordinate employees and improving their performance. Among them, the most important task is to evaluate subordinates, and give a fair evaluation based on work tasks, work abilities and performance, so that subordinates can feel their contribution to the company and recognize the gains and losses in the work. The principle of evaluation is "more praise, less blame", respect for employees, and help them complete tasks in a cooperative manner. After the task is delegated, the leader must check it in person, and the employees also check the mid-term work and the final work result by themselves, and jointly promote the smooth completion of the work.

Promotion mechanism

Promotion incentive mechanism is to rely on promotion to motivate employees and increase work motivation. Promotion is the process by which employees are promoted from lower-level positions to higher-level positions. As we all know, the division of labor is one of the means to improve efficiency. Therefore, according to the profession, it is divided into many grades. These grades are divided into many positions. These positions form a series of levels, so there are conditions for promotion. Companies need to evaluate employees to see if they can be promoted to high-level positions.

Incentive mechanism

The promotion mechanism has two functions: one is resource allocation and the other is to provide incentives. Both aspects are conducive to reducing staff turnover. First of all, the so-called role of resource allocation is, generally speaking, the right person to do the right thing, to achieve the matching of ability and position, which is an important task of human resource management.

Second, providing incentives means that the income and status of higher-level positions provides incentives for employees in lower-level positions. Traditional concepts still affect employees in modern society. There is a deep-rooted concept in their values that holding important positions in the company is a symbol of competence and status, and even promotion is the main measure of personal success. Therefore, a good promotion mechanism creates an atmosphere for employees to pursue promotion and can provide support and guarantee for their promotion. Therefore, in order to obtain the satisfaction of honor, employees will work hard to improve at a faster rate, their sense of mission is enhanced, the behavior of work flow is delayed, and the probability of work flow is reduced.

Incentive mechanism principle

1. Both virtue and talent are available.

Enterprises cannot use the banner of "employee" to reuse and promote some talented employees. Doing so will inevitably have an adverse impact on employees, thus discouraging their enthusiasm.

2. Equal opportunities.

Human resources managers must promote their employees in the way of promotion, that is, to implement open recruitment and fair competition for managers, but only for education, not only for academic qualifications, but not for seniority. Only in this way can they truly stimulate employees' motivation.

3. The combination of "step promotion" and "extraordinary promotion".

"Step promotion" is for most employees. This promotion method can avoid blindness, high accuracy, and it is easy to motivate most employees. However, extraordinary talents and special talents should be promoted so that rare outstanding talents will not be lost.

Incentive mechanism process

The employee submits a written application, which includes the vision of the future manager's work, his own abilities and qualities, and his own work experience, etc., and submits the materials submitted by the human resources department to the corresponding candidates, the "employer career development plan", The "Capability Development Requirement Form" was first reviewed and passed to the assessment management committee for review. According to the main factors to be reviewed for review of posts at all levels in Article 25 of the "Measures for the Management of Employees' Career Planning", the assessment management committee passed Later, the general manager can be issued a notice of appointment, which completes the promotion of an employee.

Incentive mechanism

The salary incentive mechanism is an incentive for companies to use salary, which makes individual employees take certain positive actions and strive to achieve certain goals, thereby increasing labor productivity. It has a huge impact on the competitiveness of enterprises. In the modern market economy, it has become one of the main contents of human resource management of enterprises in various countries. This mechanism is particularly significant for a developing country like China.

The 21st century is an era full of opportunities and challenges, an era of survival of the fittest, survival of the fittest, and an era of fierce competition in human resources. Human resources are increasingly being regarded by companies as the key to core competitiveness and the source of competitive advantage. How to obtain talents, make good use of talents, and retain talents has become a major issue in the corporate world. The most complicated and difficult problem is how to make good people's incentives, how to use the double-edged sword of "salary", that is, how to effectively implement the salary incentive mechanism.

Steps for developing an incentive compensation system

(1) Salary survey

The salary survey focuses on solving the external competitiveness of salary. When designing the compensation system, it is necessary for enterprises to understand, study, and refer to the basic conditions of the labor market's compensation system and salary level, especially for companies that compete with themselves or similar companies in the same industry, and focus on the loss of employees And recruitment sources.

(2) Formulating employee performance standards

Under the traditional remuneration system based on position-based compensation, employees only know what they should do and they do not know what performance standards should be achieved. Therefore, employees do not know how to improve their work efficiency and how to do their work better. There is no incentive to do so. The performance-based compensation system can reverse this situation.

(3) Design of salary structure

Pay structure design is a systematic project. The salary structure is generally divided into basic salary, performance salary, overtime salary and salary benefits. In addition, internal salary design is required. The distribution of the proportion of each part of the salary structure is also a more complicated issue. Enterprises need to design different compensation structures for employees at different levels, and with changes in employee positions, skills upgrades, and changes in demand levels, the company should also make appropriate adjustments to employees' compensation structures in response to these changes.

Incentive mechanism

For some enterprises with mature conditions, it is necessary to try an annual salary system to form an effective incentive for management personnel, prevent them from going idle, increase their "lazy" cost, improve their management efficiency and sense of responsibility and mission to the enterprise .

The significance of the annual salary system of incentives

(1) It is a breakthrough to the traditional distribution system, and it is the embodiment and recognition of the special labor of the operator.

(2) It is beneficial to straighten out and clarify the relationship of responsibility and rights between the owner and the operator.

(3) It helps to ensure the preservation and proliferation of corporate assets.

(4) Conducive to promoting enterprise restructuring and establishing a modern enterprise system.

(5) Conducive to creating a team of professional managers.

Principles of the annual salary system of the incentive mechanism

First, proceed steadily in a planned and step-by-step manner, because the directors and managers of most enterprises are mostly appointment systems and have not been fully professionalized. If they are generally promoted, once mistakes are made, the losses will be huge and the impact will be serious.

Second, the scientific determination of a reasonable annual salary, mainly depends on the extent to which the manager achieves the business goals of the enterprise.

Third, it is necessary to establish an effective supervision and restraint mechanism to prevent corruption.

Design Principles of Incentive Mechanism

1.The principle of combining goals

In the incentive mechanism, goal setting must reflect both organizational goals and the needs of employees.

2.The principle of combining tangible and intangible incentives

Tangible incentives refer to economic incentives such as material, which are the basis. Intangible incentives refer to non-economic incentives such as status, rights, sense of achievement, and social identity. Intangible incentives are fundamental. Based on the combination of the two, we must gradually transition to intangible incentives.

3. Punish evil and promote good

Incentives should guide the motivated person to consciously promote good behaviors and give up bad behaviors. Therefore, the incentive mechanism must be a combination of positive and negative incentives. Reward employees for expected behavior that meets organizational goals, and punish employees for undesired behavior that violates organizational goals.

4, the principle of fairness and reasonableness

The principle of fairness and reasonableness of incentives means that incentives must be moderate and fair.

5.Intuitive and open principles

Intuitive and open principles of motivation means that the purpose and method of motivation must be clear, intuitive and open. Intuitiveness and openness are directly proportional to the psychological effects of motivational effects.

6. Timeliness principle

It is necessary to grasp the timing of the incentives. The more timely the incentives, the more it will help to push people's passion to a climax and let their creativity be continuously and effectively exerted. For example, Shanghai Jingbang Group launched a Chinese-style partnership equity incentive plan.

7.Incentive on demand

The starting point of incentives is to meet the needs of employees, but the needs of employees vary from person to person and from time to time, and only the measures that meet the most urgent needs (dominant needs) have high effectiveness and strong incentive strength. Therefore, leaders must conduct in-depth investigations and research, constantly understand the changing trend of employee needs levels and needs structure, and take targeted incentive measures in order to receive actual results.

Incentive mechanism

Incentive mechanism equity incentive principle

Managers and shareholders are in fact a principal-agent relationship, and shareholders entrust managers to manage assets. But in fact, in the principal-agent relationship, due to asymmetric information, the contract between the shareholder and the manager is not complete, and it is necessary to rely on the "moral self-discipline" of the manager. The goals pursued by shareholders and managers are inconsistent. Shareholders want the value of their equity to be maximized, and managers want to maximize their own utility. Therefore, there is a moral hazard between shareholders and managers, which requires incentives and constraints. To guide and limit manager behavior.

Among the different incentive methods, the salary is mainly determined in advance based on the qualifications of the manager and the company's situation and target performance. It is relatively stable for a certain period of time and has a close relationship with the company's target performance. The bonus is generally determined by the performance evaluation of the target to determine the manager's income in this part. Therefore, it is closely related to the company's short-term performance, but it is not obvious to the company's long-term value. Long-term benefits. But from the perspective of shareholder investment, he is more concerned about the increase of the company's long-term value.

In order for managers to care about the interests of shareholders, the interests of managers and shareholders need to be made as consistent as possible. In this regard, equity incentives are a better solution. By enabling managers to hold equity for a certain period of time, to enjoy the value-added benefits of equity, and to bear risks in a certain way to a certain extent, managers can be more concerned about the company's long-term value in the course of operation. Equity incentives have a good incentive and restraint effect on preventing short-term behaviors and guiding long-term behaviors of managers.

Incentive mechanism equity incentive value

Generally speaking, the implementation of equity incentives for the company's core employees is conducive to improving the company's salary structure, thereby attracting, retaining and motivating outstanding talents to achieve a win-win situation for all parties. At the same time, for non-listed companies, especially innovative companies, equity incentives often have a more important role.

First, for non-listed companies, equity incentives help ease the pressure on pay that companies face. Since the vast majority of non-listed companies are small and medium-sized enterprises, they generally face a shortage of funds. Therefore, through equity incentives, the company can appropriately reduce operating costs and reduce cash outflows. At the same time, it can also improve the company's operating performance and retain core talents with high performance and ability.

Secondly, for the original shareholders, the implementation of equity incentives will help reduce the "moral hazard" of professional managers, thereby achieving separation of ownership and management rights. Unlisted companies often have an overwhelming phenomenon. The ownership and operating rights of a company are highly unified, which has led to the company's "three associations" system in many cases. With the development and growth of the company, the company's operating rights will gradually be transferred to professional managers. Because the goals pursued by shareholders and managers are inconsistent, there is a "moral hazard" between shareholders and managers, and the behavior of managers needs to be guided and restricted through incentives and constraints.

Furthermore, for company employees, the implementation of equity incentives is conducive to motivating employees to realize their own value. One of the biggest problems faced by SMEs is the problem of talent mobility. Due to the disparity in treatment, it is difficult for many small and medium-sized enterprises to attract and retain high-quality management and scientific research personnel. Practice has proved that after the implementation of the equity incentive plan, since the long-term value of employees can be reflected through equity incentives, employees 'work enthusiasm will be greatly improved. At the same time, due to the constraint of equity incentives, employees' loyalty to the company will also increase.

Incentive mechanism equity incentive model

1. Stock option mode

The stock option model is one of the most classic and widely used equity incentive models in the world. With the consent of the shareholders' meeting, the company will use the reserved unlisted common stock stock options as part of the "package" reward, and grant or reward the senior management of the company conditionally and free of charge at a certain option price. And technical backbones, the holders of stock options can make options such as exercise and redemption within a specified period.

2.Share option mode

The stock option model is actually a stock option transformation model. This model stipulates that, with the consent of the company's investor or the board of directors, senior management personnel of the company can obtain 5% -20% of the company's equity in the form of a group, and the shareholding ratio of the chairman and manager should account for more than 10% of the group's shareholding. Operators must first contribute capital if they want to hold shares. Generally, they must not be less than 100,000 yuan, and the amount of shares held by the operator is determined by 1-4 times the amount of their capital contributions. When the three-year term expires, the agreed targets are completed, and after two years, the net assets per share at the end of the term can be realized.

A major feature of the share option model is the introduction of the "3 + 2" income method, the so-called "3 + 2", which means that after the three-year term expires, if the business operator does not renew his employment, he must The impact will be investigated for another two years, and the income can only be realized if the assessment is qualified.

3. Futures stock reward model

The futures award model is a popular equity incentive method among domestic listed companies. Its characteristics are that bonuses are drawn from the current year's net profit or undistributed profits, and share discounts are awarded to senior management.

For example, Hunan Broadcasting Media, the company withdraws 2% from the annual net profit as an incentive fund for members of the company's board of directors, senior management and key business leaders. The fund can only be used to purchase the company's circulating stock for the incentive object and freeze it accordingly. It can be thrown out after half a year of employment.

4.Virtual stock option mode

Virtual stock options are not stock subscription rights in the true sense. It is to extend the payment of bonuses and convert bonuses into ordinary stocks. This part of the stock enjoys rights such as dividends and conversion of shares, but cannot be circulated for a certain period of time. Can be cashed in installments according to regulations. This model is an innovative design for barriers to stock sources. It is temporarily operated by internal settlement. The source of funds for virtual stock options is different from the futures stock reward model, which comes from the reward funds accumulated by the enterprise.

5. Annual salary rewards conversion to equity model

The annual salary reward transfer to equity model was designed and launched by Wuhan State-owned Assets Holding Company, so it is also called "Wuhan Option Model".

6. Stock appreciation rights model

The main content is to obtain the value-added difference between the net assets of the company's shares paid by the company at the end of the current year and the beginning of the year through simulated stock options. It is worth noting that stock appreciation rights are not stocks in the true sense. They do not have ownership, voting rights, and options. This model directly uses the added value of net assets per share to motivate its executives, technical backbones and directors, as long as it is approved by the shareholders' meeting, it can be implemented conveniently and quickly.

Characteristics of Incentive Mechanism for Equity Incentives

1. Equity incentive is a long-term incentive plan that mainly affects employees' future behavior

2. Link employees to corporate performance, improve employee loyalty, and limit employee turnover

3. It can be paid in cash or in stock.

4. Enable employees and enterprises to form a community of interests with property rights as the bond, and sharing the profits and losses makes the return of human capital from "management rights" to "residual value claims" to achieve a high degree of consistency between the interests of operators and shareholders.

Incentive mechanism operation process

Carry out the purpose and feasibility study of the shareholding plan;

Carry out a comprehensive evaluation; hire a professional consulting agency to participate in the development of the plan; determine the shares

Quotas and distribution ratios; clarify the management organization holding the shares;

Fund raising issues; develop detailed plan implementation procedures;

Prepare approval documents and perform approval procedures

Incentive mechanism

The so-called integral incentive, that is, in order to improve employee retention and employee loyalty, a set of planning systems including incentive principles, incentive rules, incentive processes, and effect evaluation are designed and implemented by enterprises and institutions, based on employee performance , Reward points, employees receive and accumulate points, redeem them, the company uses this to motivate employees to complete the company's performance goals, thereby enhancing the work enthusiasm of employees, and in the process to achieve the common value of the company and employees.

The design of integral incentives usually includes the following steps:

Determine points

That is to identify which actions or results can earn employee points. Optional credit package

Including: monthly, annual or quarterly assessment result points, behavior attitude points, ability improvement points, age points, attendance points, special contribution points, honorary award points, certificate patent points, etc.

The choice of point item form has strong flexibility and can be designed according to the characteristics of the company's staged needs.

Determine points assignment

The allocation of points must be determined according to the difficulty of each item and the relative value to the enterprise. For example, the monthly (annual) performance evaluation points can be awarded according to different rewards of the monthly (annual) performance evaluation results of employees; the Secretary's retrospective points can be awarded according to the number of years of uninterrupted work in the company.

Determine the form of integral incentives

When employees' points accumulate to a certain level each year, the reward can be redeemed. The main reward items can include honorary titles, job transfer opportunities, promotion opportunities, salary increase opportunities, flexible benefits, etc. For example, star employee allowances are based on the total points for employees to be rated as different stars, and enjoy the corresponding star allowances and other honors . The star employee title is a glorious title granted to employees by the company, which means that the company recognizes and rewards employees' performance; and the points in the employee's small discount points account can be used to redeem corresponding small discounts. According to some surveys conducted by Bert Consulting in 2001, the main small-scale preferential items can include paid leave, working meals, academic education, child education subsidies, travel assistance, shopping vouchers, car subsidies, etc., and employees can choose from them. For the required items, each item needs to consume a certain amount of points, which will be deducted from the employee's small discount points account after consumption.

Determine supporting management mechanisms

Including how to accumulate points, how to consume points, management of employee points account and promotion of employee positions, career development rules, etc.

Perform precalculation of integration rules

Based on the company's existing budget management mechanism, the pre-calculation of the credit incentive quota was carried out simultaneously, and the project score allocation of the credit project allocation stage was adjusted and revised. Like all management systems in an enterprise, the operation of the system needs to consider cost support. ^[1]