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MGT 431 Incentive Plans paper week 4 individual .assignment

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Incentive Plans for Farm Bureau Insurance
Incentive Plans for Farm Bureau Insurance
NAME
MGT 431 Human Resources Management
DATE
1

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Incentive Plans for Farm Bureau Insurance
Incentive Plans for WHATEVER COMPANY YOU CHOOSE
Farm Bureau Insurance offers two incentives to employees. The incentives
include a yearly bonus and a company vehicle included with 6,000 personal miles a year.
The incentive plans of Farm Bureau Insurance relate to the organization’s needs and
objectives by keeping premiums as low as possible while maintaining a profit margin to
gain revenue. At the end of each fiscal year the loss to gain ratio is evaluated. The
outcome of this ratio determines rather or not employees receive a bonus. The incentive
plans rely solely on how much premiums are brought in compared to loss ratios. For
example, if Farm Bureau were to bring in $100,000 in premiums and had only $30,000 in
losses, bonuses would be a definite for all employees that year.
With Farm Bureau being an insurance organization, incentives rely on the number
of customers, amount of premiums, and amount of losses in a year. If Farm Bureau were
to be faced with many tragic storms in many areas losses would be sky high. Although
premiums are being paid, the amount of losses could be too high to pay out bonuses to
employees. Farm Bureau thrives to project the best case scenario with premiums and
losses. Farm Bureau advertises to increase customer level and makes sure to provide the
right amount of coverage for each individual with all of their valuable property. Farm
equipment is a big factor with a lot of Farm Bureau customers. Farm equipment is some
of the most expensive business tools in the world. For example, a combine tractor can run
in the hundreds of thousands of dollars and is much needed to harvest crops. An auger is
used to move the grain out of a bin into a truck and usually costs around $50, 000.
Farmers must make sure to protect this equipment because it brings in their income and
feeds their family. Farmers paying a small premium offer peace of mind protecting them
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Incentive Plans for Farm Bureau Insurance
from an accident or natural disaster. Fore example, a customer can pay only one month of
premiums, total their equipment and we will pay to replace the entire amount of damage
or price to replace equipment.
The company truck enables employees to drive wherever they need to in order to
be there for the customers of Farm Bureau. This keeps the customers paying their
premiums and recommending us to friends and family. This company vehicle allows
employees to travel many miles within their assigned counties without having to pay for
their own gas. A company credit card is provided with the vehicle to fill up the tank
whenever needed. Traveling is a big component of Farm Bureau employees because
customers are all over the state. Employees do not have to worry about putting wear and
tear on their personal vehicle while driving numerous miles. The 6,000 personal miles
offer the employees a bit of reward that they can use to their own desire. For example, if
an employee and their family wanted to take a vacation Farm Bureau would pay for their
gas if the company vehicle was used.
Farm Bureau’s incentive plans do not help the organization achieve goals and
objectives. The goals of Farm Bureau Insurance are too obtain and keep as many
customers as possible while bringing in an adequate amount of premiums to cover the
reported losses each year. Insurance companies pay out in losses each year which make it
difficult to provide incentives. “Companies that don't carefully devise and execute their
incentive plans run the risk of including disincentives that can jeopardize high-quality
performance and adversely affect the company, its employees and its customers (CBS
Interactive Inc., 2010).” Yearly bonuses are the only incentives because insurance
companies are structured to collect premiums and pay out claims leaving little to no funds
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