Management Accounting Assignment

Executive Summary

The objective of this paper is to propose a bonus plan for Healthy Start. Bonus is a part of 'pay-for-performance' incentive and merit pay system. More and more and more companies are changing their salary structures to replace the upper portion of their scales by a formula of performance bonuses. We will make two things at once: while encouraging cooperation to better organizational performance, such a way to recognize individual differences by distributing the amounts to be paid on the basis of individual performance. As we all knows that products always follows a life cycle therefore, I would proposed a bonus plan which does not heavily dependent upon the short term effect of change in net cash flows. In my point of view, I would propose Insured bonus plan, the insured bonus plan is increasingly popular as employers seek ways to build retirement funds for favoured employees. Some employers seek a degree of control over an insured's use of the policy while employed. Other employers wish to use a vesting schedule with or without restrictions on policy use

Management Accounting Assignment

Introduction

Bonus is a part of 'pay-for-performance' incentive and merit pay system. More and more and more companies are changing their salary structures to replace the upper portion of their scales by a formula of performance bonuses. Thus, the wages of employees on their performance rose to the level of earnings that the company wants to pay with the market. Subsequently, those whose performance is at least satisfactory benefit from the change in the structure. Those for which performance is beyond the satisfactory level are recognized by their performance bonuses.

Such a formula is more advantageous than the traditional wage increases for employees whose performance is above average and less advantageous for those whose performance is satisfactory or average(Dunnette,1976).

This formula is consistent with the alleged failure of merit pay to focus on individual performance versus group performance. To overcome this drawback, some theorist suggests that the amount of premiums to be distributed to employees whose wages are at their maximum level is based on the performance of the company. Thus, we will make two things at once: while encouraging cooperation to better organizational performance, such a way to recognize individual differences by distributing the amounts to be paid on the basis of individual performance(Crown ,Rosse,1995).

Discussion

Proposed Bonus Plan

As we all knows that products always follows a life cycle therefore, I would proposed a bonus plan which does not heavily dependent upon the short term effect of change in net cashflows. In my point of view, I would propose Insured bonus plan, the insured bonus plan is increasingly popular as employers seek ways to build retirement funds for favored employees. Some employers seek a degree of control over an insured's use of the policy while employed. Other employers wish to use a vesting schedule with or without restrictions on policy use. Some proponents claim insured plans with these restrictions are deductible under IRC Section ...