Human Resource Professionals : Design And Install Incentive Pay Systems

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Human Resource Professionals also design and install incentive pay systems. Incentives are pay systems that reward employees for their efforts beyond normal performance expectations. In order to pay incentives, organizations measure employee performance at three levels; Individual level, Group level, and Organizational level. Individual level incentives are merit pay, skill-based pay, competency-based pay, piece rate pay, standard hour systems, employee suggestion systems and commissions (Heneman & Gresham, 1998). Merit pay is provided to employees for their individual behavioural contributions to organization. In skill based pay, pay increases are based on skill mastery. It is used by organizations in order to improve organizational …show more content…

The team-based merit pay depends on team performance evaluated by team members and supervisor. On the other hand, group incentives rewarded the group performance where it is hard to assess individual contributions of group members. In team recognition, monetary or mostly non-monetary recognition awards are offered for the team developing a more efficient way to produce products or services (Heneman & Gresham, 1998). Lastly, the organizational level incentives can be listed as follows; Gain sharing, Profit sharing, Stock sharing, and Executive pay. Gain sharing emphasizes cost savings, time savings, and revenue enhancement. Profit sharing is a group incentive pay plan that uses profitability as the standard for organizational level incentives. Additionally, stock sharing is another group incentive-based pay that provides employees with the ability to buy company stock at reduced rate per share. Finally, executive pay is a form of profit and stock sharing that is applied to top level management (Heneman & Gresham, 1998). 2-12-4 Performance Appraisal The performance of the employees is evaluated by their supervisors, peers or outside sources like customers and employees themselves. Muchinsky (1999) stated that there are different methods for performance appraisal. These methods are classified in three groups. The first group is Graphic Rating Scales (GRS), which are the most commonly used techniques of performance appraisal. In GRS, employees are rated

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