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Compensation experts point out that amount and timing of a merit increase have an effect on its motivational value, but little is known about how to structure merit pay plans in order to produce gains in worker output (Milkovich & Milkovich, 1992) or employee acceptance of the philosophy of merit pay. Research is needed to clarify these questions. Expectancy theory and goal-setting theory (Chapter 6) propose two possible explanations for merit pay’s potential effectiveness as a motivator. Goal-setting theory suggests that merit pay and incentive plai motivate employees by making goals and expectations clear. Expectancy theory implies that employees are motivated to obtain the incentive (in this case, increased salary) Incentive Pay Incentive pay is a salary supplement or bon paid to teachers who hilfill specified conditions established by the district to help it attain certain goals or solve particular problems (American Association of School Administrators l933a). Examples include payments to teachers who are willing to teach in schools with high concentrations of educationally disadvantaged children or who are in fields with teacher scarcity, such as special education mathematics and science. Incentive pay is also given by some districts to teachers who attain certain educational or profcssional growth objectives. The amount of these awards varies. For teaching in a difficult school, a teacher may receive a bonus of $1oo to $2000 per year, and for achieving professional growth objectives, the payment is often equivalent to the cost of tuition for a graduate college course.Houston independent school district successfully used an incentive plan to recruit teachers with scarce subject specialties The Houston plan paid salary supplements ranging from $600 to $1,000 per year for teachers of mathematics science, bilingual classes, and special education.
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