Compensation & Benefits Review

This study documents the human resources, compensation and benefit practices and policies adopted in a typical family-owned tire manufacturing company in India. This article is a case study of a company where the lack of proper policies resulted in several costly lockouts. Thus, this study highlights the importance of well-structured human resources policies. The study presents detailed data on the compensation and benefits policies from 1990 to early 2011. It attempts to trace the progression of the firm’s policies, which are still not mature with respect to industry standards among multinational tire manufacturers. Much of the information in this article is based on detailed interviews with top managers at the firm. The interview material offers a rare look at the inner workings of the family-owned business that was eventually acquired by a large German corporation.

With government spending on Medicare and Medicaid programs skyrocketing, their futures are questionable. Many politicians and political pundits are calling for intense oversight of these agencies to reduce fraud and abuse in the system and, consequently, rein in costs. Many medical providers’ fraudulent behaviors, which cost the medical community billions of dollars, stem from prescribing of pharmaceutical drugs to treat an illness or injury. Although this is part of the job of providers, some allow kickbacks from pharmaceutical companies or patient requests to cloud their clinical judgment. This article identifies several options for increased enforcement of laws concerning Medicaid and Medicare fraud and abuse of drug benefits, with great emphasis placed on the Integrated Data Repository currently under development by the federal government.

Organizations design and implement incentive plans to attract, retain and motivate their sales force. With the objective of achieving goal congruence between the sales organization and its sales force, many sales organizations implement variable pay plans. However, in the case of the sales carryover, such incentive plans do not always align sales force motivations with organization objectives. This article identifies various factors affecting sales carryover and examines its impact on the sales organization as well as the sales force. This article also recommends various strategies for mitigating the impact of sales carryover and suggests appropriate modifications in sales force compensation plans. By reallocating fixed and variable pay in compensation plans, sales organizations can inhibit the adverse impact of sales carryover and align the objectives of the sales organization and the sales force.

Effective extrinsic rewards foster a positive culture within organizations. The current study reviewed algorithmic/experiential reward patterns and perceptions of justice in four businesses to gain insight into the perceptions of employees with regard to justice. Results indicate that perceptions of justice vary according to patterns in extrinsic rewards. This study also discovered that employees perceive fairness according to characteristics specific to the organization and industry. Managers must understand how employees perceive justice to determine the most effective means with which to implement extrinsic rewards, according to two distinct patterns. Suggestions for practical implementation and future research are also provided.

Stock incentives for bank management in the 1990s increased and may have allowed management too much freedom in making risk choices and ignited the credit crisis of 2008. Contracting theory suggests stock incentives will induce better stock performance; moral hazard theory suggests stock incentives will motivate managers to undertake risky projects. This study finds, in the period of 2005-2007, CEO options are associated with negative performance supporting moral hazard theory. However, stock ownership is associated positively with performance as measured by earnings, supporting contracting theory. Director options are associated positively with performance but are not significant in for stock ownership.