Pay For Performance 130224021210 Phpapp01
Pay For Performance 130224021210 Phpapp01
Pay For Performance 130224021210 Phpapp01
-performance
Why Incentives?
(i) Strategy:
. Does the pay-for-performance plan support corporate
objectives?
. The plan should link well with HR strategy and objectives.
. The reward should not be on the basis of status quo.
. Finally, management has to address the most difficult
question like- How much of an increase makes a difference?
(ii) Structure:
Structure of the organization should be sufficiently decentralized
to allow different operating units to create flexible variations on a
general pay for performance plan.
Different operating units may have different competences and
different competitive advantages, so the organization should not
have a rigid pay-for-performance system that detracts from these
advantages.
(iii) Standards:
The key to designing a pay-for-performance system rests on
standards:
Objectives
Measures
Eligibility
2. Equity/Fairness :
The second design objective is to ensure that the system is
fair to employees. Two types of fairness are concerns of
employees:
Distributive justice: Fairness in the amount that is
distributed to the employees. Managers have little influence
over the size of employees pay check. It is influenced more
by external market conditions, pay policy decisions of
organization and occupational choices.
Procedural justice: Fairness of the procedure used to
determine the amount of reward employee receives.
Managers have control over this type and the organizations
that use fair procedures and supervisors are perceived as
more trustworthy and command higher levels of
3. Compliance:
The pay for performance system should comply with existing
laws as a good reward system enhances the reputation of the
firm.
Types of Pay-for-
performance
1) Shop-floor incentive: Shop-floor incentive
schemes are based on the principle of payment-by-
performance(PBR).
The view that employees will only work harder if they get more
money still dominates thinking about shop-floor incentive
schemes, although the advent of high technology in the shape of
computer-integrated manufacture has meant that what were
2) Sales force incentive:
Gain-sharing