Published once a week at Palmer, Alaska* for the Motanuskn Valley Partners' Cooper
ating Association for the purpose of giving news of the Associations' work, prob
lems, anl accomplishments.
SUBSCRIPTION Ri>T5_ _$1.75_$1.00 for six months_1?J:JL_CCPI
• INCENTIVE PAYMENTS, BONUSES, AND SHARE SAVINGS
By Kelsey B. Gardner Taken from the*Cooperative Digest
The battle over the value and the methods of tasking employee incentive payments is
of long standing. It is by no means settled. Strang contenders are to be found
on beth sides. Not only is the division of opinion strongly marker between those
who do and those who do net favor incentive payments in any form, but there is also
sharp dissension even among those who favor the principle of incentive payments
regarding the particular form the Incentive should take.
Just what is meont by an incentive payment? How taoy it be defined briefly fcr the
purpose of this presentation? Basically, any form of incentive payment in its
flrril analysis rests upon some fern of profit-sharing in the noncooperative field,
since in effect it reduces the amount available for distribution as profits. In
cooperative terminology, employee incentive payments over an'' above adequate pay
schedules constitute sharing in savings. whether the incentive payment takes the
form of a bonus, a commission or a. formal plan for sharing in savings, one and all
affect the savings of the cooperative available for distribution to patrons. It is
of course true that if the plan is effective, total savings will be increased.
mQAo 3a sis
In a broad and proper sense, incentive payments reach over into the field of wel
fare and benefit programs including retirement plans, health insurance, vacations,
sick leave, and the numerous other forms that welfare and benefit plans may. take.
Those are all Incentive programs since they are essential factors affecting condi
tions of employment and Influencing the employee’s attitude toward his job.
As commissions seem, in a degree, separate from bonuses or sharing in savings, the
discussion will be divide'5 into two principal parts--(l) commissions, and (2) shar
ing in savings in which bonuses will be included.
Although no specific project dealing with incentive payment plans has been under
taken by the Cooperative Research and Service Division, for the purpose of this
discussion some Information relating to the use of bonus, commission and savlngs
sharing plans by cooperatives was assembled.
In the absence of a study by our Division in this field, it became necessary to re
quest assistance through letters to cooperative officials, banks for cooperatives
an state college workers.
CQtvh/i/SSI ON$
Ordinarily In cooperative practice the use of commissions is restricted to a com
bination salary plus some agreed upon additional payment in the form of commissions
at specified rates per unit cr as a percentage of sales. Seme use by cooperatives
of the straight commission form of payment is made, however.
It is cur belief that this form of employee payment us used by cooperatives is
largely limited to employees directly engaged in distribution and. selling. Tank
i»fgon salesmen In cooperatives appear to be the primary areas where commission
forms of payment are in use. Cooperative insurance companies also make use of the
commission form of payment.
One cooperative having an insurance affiliate and also engage in handling petrol
eum employs the commission form of payment in these areas of operation. An offi
clal of the organization says that "incentive payments in the form of commission
or bonus are very good in our organization, and especially sc when they can be used
as a direct basis, where results can be measurer."
core JUDGMENT NEEDED
Thjs payment plan should not be entered into lightly. Maximum earnings in relation
to other employees, division of territory, credit policies and other contingencies
which affect the successful use of the commission plan must be considered fully in
order to prove adequate.