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Hrm 531 Week 4 Individual Incentive Pay

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Individual incentive pay plans reward employees for meeting one or a combination of performance standards (e.g. productivity, safety, or attendance) set by the employer (Martocchio. 2013). Piece- rate pay is one of four individual incentive plans offered in the employment industry. Employers have two options to select from when choosing this incentive plan. The first option is compensating the employee hourly for each piece over the given production number. The second option is compensating employees based on established subjective (quality) and objective (quantity) performance standards. In both options the employee is, essentially, being compensated for the work he or she does and not what could have been completed (Gibbons. 1987). Motivation,…show more content…
Additionally, if the employee produces more, the overall productivity of the firm will increase as well. The system is also cost effective, as the firm is only paying for what is produced. Therefore, the firm saves if an employee’s production numbers are low, as the employee only get paid for what is produced. If an employee knows that his or her pay is based on how much is produced, then he or she would be less likely to waste time conversing with co-worker or lollygagging. When you look at the big picture, all of these advantages are intertwined. For example, I work for the Department of Safety as a Driver’s License Examiner for five years. During that time and currently, customers complain about the slothfulness of the examiners and the long wait times. However, examiners (including myself) also complained about the work ethics of their co-workers. It was also stated by one examiner, during a meeting, that he was compensated by the hour not per customer, when I complained about the slowness of some examiners. If this system was implemented, it would motivate, otherwise less motivated employees, to be more productive, as they would be compensated base on how many customers they assist per day. This would increase productivity, thereby, decreasing complaints and customer wait times, save the state funds, and employees would be less apt to waste time
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