Long Term Incentives: 2.3.1 Varieties of Long Term Incentives

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Do curso por University of Minnesota

Human Resources Management Capstone: HR for People Managers

110 classificações

University of Minnesota

Human Resources Management Capstone: HR for People Managers

110 classificações

Curso 5 de 5 em Specialization Human Resource Management: HR for People Managers

This specialization provides a robust introduction to the key principles, policies, and practices of human resource management, with a focus on understanding managerial choices and constraints, acquiring and onboarding talent, managing employee performance, and rewarding employees. The capstone project provides learners with the opportunity to apply these key principles and practices to a real-world workplace (including a learner's own workplace if desired). Specifically, the capstone project will involve identifying the key human resources challenges for a workplace--including the most pressing motivational, selection, performance evaluation, and reward issues. And for each of these areas, learners will devise a multi-step action plan for addressing the challenges identified.

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Milestone 4: Managing Employee Compensation and Rewards

To reach the final milestone of the capstone project, you will identify and analyze the organization's rewards practices. This includes an analysis of compensation strategy, benchmarking practices, and an analysis of the pay mix. You will receive feedback from others and also review others' work to provide guidance and to help reflect upon their own context.

Base Pay: 1.3.1 Connecting Structure to Strategy3:32

Base Pay: 1.3.2 Job Families and Levels6:06

Base Pay: 1.3.3 Assigning Grades and Ranges8:04

Short Term Incentives: 2.2.1 To Incent or Not to Incent8:39

Short Term Incentives: 2.2.2 Designing Incentives11:01

Long Term Incentives: 2.3.1 Varieties of Long Term Incentives4:45

Benefits: 3.3.1 Shopping for Health Insurance Providers8:00

Benefits: 3.3.3 Shopping for Pension Providers9:19

Non-Monetary Rewards: 4.1.2 Value to Employees7:32

Non-Monetary Rewards: 4.1.3 Value to Employers6:58

Conheça os instrutores

John W. Budd
Professor and Director
Center for Human Resources and Labor Studies
Larry Bourgerie
Senior Lecturer
Carlson School of Management, Department of Work and Organizations
Amy Simon
Senior Lecturer
Department of Work and Organizations
Alan Benson
Assistant Professor
Carlson School of Management, Department of Work and Organizations

Welcome back.

In this lesson, we're talking about long-term incentives,

starting out with defining, what are long-term incentives?

So long-term incentives are incentives that tie long-term rewards

to a company's long-term performance.

And so how would they do this?

Well, typically these are going to work because we're going to measure performance

in terms of the share price, that's going to be the key performance indicator,

and the main way that we're going to reward them are using rewards

who's value is also tied to the share price.

So again, long-term incentives are just one element of the pay mix.

The pay mix includes base cash, short-term incentives, long-term incentives and

benefits and perquisites.

And so, why use long-term incentives?

While long-term incentives, unlike the other elements, the pay mix,

can be very valuable when it comes to communicating with employees.

Long-term incentives, as an element of the pay mix,

communicates to employees, that they are, that they own a little piece of the firm.

That they have a sense of shared prosperity of things go well and

they also are an important retention tool because if the share price goes up,

then the value of their stock options and other rewards will be very high and

then will encourage employees to stay with the organization.

So before we go into how those work, we have to define some terms.

First of all, we have equity.

Equity is a piece of a company, and equity is measured in terms of shares.

Shares are a piece of the company, essentially a piece of the company and

it's a unit of equity.

So shares, as they're traded,

of publicly traded companies can be traded like anything else.

And the share price is the price that is associated with purchasing

that share of the company.

So let's take an example.

Suppose you buy one share of the Coca-Cola company.

Well, that price on the open market is worth 42 dollars.

And that one share means that you on about one four-billionth of

the Coca-Cola Company.

And as an owner of that one share, you're entitled to get

some of the dividends of the Coca-Cola Company when it is profitable.

And that's why those shares are valuable because the more shares you have,

and the more those shares are worth, you have that expectation that when it

pays dividends, that those dividends will be very valuable.

So let's look at some of the forms that long-term incentives take.

So one method that's very common is stock options.

Sp stock options you might get at any time.

For example, if you join an organization and you do well, the organization

might reward you with long term incentives such as a stock option grant.

And so this is going to be very valuable to you when the price of the stock

goes up, assuming that you're still with the organization.

That's because for

stock options you're only going to be allowed to exercise the option to

purchase the stock at that price assuming that you're still with the organization.

And that's going to be particularly valuable if the stock price goes up.

If you're confused then don't worry because it's going to be the topic of

our next video.

There's also performance shares.

Performance shares are restricted stocks

that you are granted when the price hits a certain target.

So for example, if you get a stock grant

of however many shares, if the Coca-Cola stock goes up to $50 dollars per share and

that would be valuable that grant, the grant of those stock would be valuable

assuming that the price does go up to $50 per share.

There's also stock grants, so stock grants you can get any time

as well and they are also valuable immediately when you get it.

Then also there's phantom shares and

phantom shares are a lot like stock grants except unlike normal shares

they don't have the same voting rights that ordinary equity ownership would have.

So next up we'll go into some details about what are stock options and

how their value is calculated.

Thanks and I'll see you next time.

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