Ethical Business Decision Making Long Term Performances

Question: Discuss about the Ethical Business Decision Making for Long Term Performances. Answer: Incentives based on long term performance: Sabbatical these incentives are offered to keep employees trustworthy and loyal. Stock options the employees can purchase companys shares at a reduced price after fulfilling the required conditions. Vacation increases increase a week per year after completing 5 years of employment as an incentive. Cash awards it is given after completing certain performance goals, after completing 3 5 years employment. Stock and stock appreciation rights (SARs) it is similar to stock options, in SARs company pays cash to its employees for purchasing companys shares after fulfilling the required conditions. Incentives based on short term performance: Employee gift it is the simplest form of short term employee incentives. It includes gift cards, prepaid cards for online shopping, restaurant vouchers and entertainment vouchers. Employee bonus bonus is a financial gain given to the employee after completing a given period or project. It can be paid as a percentage of sales generated or given for each completed assignment/project. Paid time-off it is generally given to temporary or part time employees in order to motivate them to work for allotted working hours and earn more paid time off. Team awards for employees it is given when the performance of a team directly contributes to the success of a company. It helps in developing better coordination among team members. Incentives based on team (group) performance: Profit sharing company will pay a percentage of its actual profits to employees. It helps in achieving better team performances and creating a sense of ownership between employees. Performance is directly proportionate with the percentage of profits they get. Better the performance more will be the profit for the company. Gain sharing it is similar to a profit sharing incentive. It is given against the computable non financial attainments. For example, customer satisfaction level increases as compared to the last year and for this company will give bonuses to its employees. Goal based incentives it is given after completing specific goals. It provides a target to the employees, which have to be fulfilled in order to get incentives. It focuses on collective work and team efforts. Merit based incentives it is a more of subjective approach of incentive. In these employees are rewarded for their efforts despite of any particular outcome. For example, incentives given to the employees stay late night to finish their work. Incentives which are similar in each reward structure: Cash award it can be given for long term as well short term performance of an individual or a team. Bonuses bonus can be given for short term as well as long term performances. Following are the two key benefits and two key potential control costs associated with each reward structure: Structure Key Control Benefits Potential Control Costs Long term performance It can be customized as per the needs of company, employee and shareholders. Cost of LTIP is more than benefit received from employee. Helps in holding executive talent with the company. Complex in nature as compared to short term incentive plan. Short term performance Helps in holding managerial talent with the company. Cost of supervision of each employee is high. Helps in increasing operational performance. Establishing performance standards is costly and time consuming. Group performance Helps in increasing effectiveness and efficiency of the team. Cost of analysis of individuals contributions. Better coordination among team. Increase in overall cost of team. 4: In the given scenario Sam has made the following logical and decision errors in her recommendation to the board: Sam has not made the full disclosure about the facts related with overseas factory, employees of which lives in poverty and are paid by a charity institution. Sam has not provided any quantitative analysis for proposed proposals and not shown working for average cost of production. Her recommendation is not clear but creating more confusion in decision making. She has not considered all the factors in her recommendation to the board. In the given case Sam has to apply ethical principles while giving her recommendation to the board. Ethical principles provide standards of behavior to the human beings. In order to make ethical decision one has to eliminate unethical options and select from alternatives as per the ethical principles. Following are the ethical principles which may affect the Sams decision: The fairness and justice approach as per this approach all equals should be treated equally. All human beings are treated equally in ethical actions and if treated unequally then that actions must be taken on the basis of some defensible standard. The common good approach the Greek philosophers have given a notion that life in community is a good in itself and our actions should contribute to that life. In this approach attention is given to the common conditions which are essential for the welfare of everyone. It includes public educational system, health care, recreational areas, effective law, police and fire departments. Creating the good for society every company must work in a manner which is good for the society in which they conduct their business operations. Business policies, standards and procedures are developed by taking into account social and economic factors applicable to the company. Right stuff Right stands for justified claim on others. Ethical standards suggest moral rights for human beings. Since these rights are not governed under the law, therefore their interpretations are taken differently by different persons. As per the above mentioned principles Sam should recommend for the outsourcing to the overseas factory as it is in favor of ethical principles. This decision will help in improving rural areas in the overseas country by providing employment to people as it is mentioned in the question that people living in that area lives in poverty. This decision is also in the favor of the company as the average cost of production is less in long run if the company decides to outsource its production to the overseas factory. Reference: SCU, 2015, Ethical decision making, viewed on 10th July, 2016 _ https://www.scu.edu/ethics/ethics-resources/ethical-decision-making/ Webb C., 2015, Long term incentive plans, viewed on 10th July, 2016 _ https://smallbusiness.chron.com/examples-longterm-incentive-plans-11244.html Taylor T., 2011, Short term incentive plans, viewed on 10th July, 2016 _ https://www.brighthub.com/office/human-resources/articles/101867.aspx McQuerrey L., 2015, Team based incentive plans, viewed on 10th July, 2016 _ https://smallbusiness.chron.com/types-team-based-incentive-plans-59545.html