Pay for Performance Essay

Good performance is rewarded through timely job promotions, special recognition and in some cases monetary rewards and incentives.

Although the "pay" in "pay for performance" can refer to any of the more traditional components of reward programs, the organization should look beyond its current forms of compensation and consider whether additional approaches might work best in the long term.

A well-articulated compensation philosophy drives organizational success by aligning pay and other rewards with business strategy. It provides the foundation for plan design and administration and anchors current and future plans to the company's culture and values (Kaplan, 2006, p.32). Recognizing and rewarding achievement is the cornerstone of the company A’s compensation philosophy. The mission of the company is to attract, select, place and promote all individuals based on their qualifications. The company believes that performance-based compensation helps attract, develop and retain talented professionals. In addition to base pay which based upon local market conditions and targeted to be above market, the company provides the following types of potential compensation to reward performance:

Traditionally, most employers compensated their employees based on a set hourly wage or annual salary (Martocchio, 2013). Today, there are many companies that utilize incentive pay programs to replace part or all of the base pay to manage payroll expenses and to connect pay to performance. Incentive pay, also referred to as pay-for-performance or variable pay, rewards individuals for partly or completely achieving a predetermined goal (Martocchio, 2013). Basically, incentive pay is compensation, outside of the employee’s regular wages, which can vary depending on whether or not the employee achieves predetermined goals (Martocchio, 2013).

I am a firm believer in pay for performance methods. How many times have you seen your co-workers not meet their performance goals and still get an annual raise? In the Military everyone is getting paid regardless of performance. You can put your heart and soul into your craft or do the bare minimum and the results the same. “A Pay for performance philosophy assumes that compensation decisions reflect performance differences”(Valentine, p. 377). For this assignment I chose organizational pay for performance example. When you think about the hourly workers on the vehicle assembly line what do you think of? You probably don’t think of them as employees with any buy in or stake in the company. They are just the hands and feet of the company not the brains. General motors (GM) are changing all of that within their organization. In 2011 “General Motors announced that it would start to share its profits with its hourly workers as part of a larger agreement the company signed with the United Auto Workers (UAW) union”("Why automakers are adopting pay for performance")

Incentive pay is an important concept that allows an employee to be rewarded based on exceptional job performance. This is used to motivate employees into working both quickly and efficiently. In order to effectively utilize incentive pay, one must balance out payments between individual performances, group performances, and organizational performances.

What better way to drive people to work harder and more efficiently, you may ask, than to offer them a special carrot: more money for hitting specific company targets? The idea seems perfect. Studies have shown time and again that pay represents one of the most important factors involved in retaining qualified employees, it is little wonder that there has been a great deal of attention focused on how best to compensate employees for their performance in recent years. Moreover, because employee performance and productivity is inextricably related to organizational profitability, these issues have assumed new relevance and importance in the current economic

In this essay, I shall make my evaluation on whether Performance Related Pay (PRP) should be introduced to The Harding Trust (THT). The theoretical ideology of PRP will be looked at, as well as the practical implications of the scheme. Factors of great importance, that may well determine the impact of PRP on THT, will also be examined. Through my evaluation, I shall place a significant focus on advantages and disadvantages of PRP as well as how they could affect THT. I will pay special attention to the impact that PRP could make on employee performance and the overall organization. All arguments and facts will be presented from organizational point of view as well as from

Pay-for-performance pay is an increasingly popular compensation strategy in today’s business world. According to research conducted by consulting firm Aon Hewitt, 90% of the 1,100 employers polled use some form of variable, performance-based pay in their compensation strategy (Kelleher, 2013). There is also considerable evidence that employees, themselves, believe that their compensation should be tied in some way to their performance (Milkovich, Newman, & Gerhart, 2016, p. 332). With such a significant number of organizations utilizing this type of pay, as well as the overwhelming support of employees, it would seem that pay-for-performance is an effective strategy. However, there is argument over whether pay-for-performance is truly an effective compensation strategy. Despite its prevalence and support, both managerial and employee alike, failures such as Hewlett-Packard’s in the 1990’s (Beer & Cannon, 2004) demonstrate that the extent of pay-for-performance’s effectiveness is questionable. This report sets out to examine the evidence in support of and in opposition against the efficacy of pay-for-performance to determine if this compensation strategy can truly motivate employee behavior and benefit an organization’s business strategy.

As Thorpe and Homan (2000), the role of incentive pay in employee motivation nearly sets up on psychological theories. Locke and Latham (2004) define motivation as internal factors that impel action and to external factors that can act as inducements to

Sometimes managers need to decide what kind of remuneration they have to use in order to motivate their subordinates to work harder, smarter or faster. As in my case I'm willing to work faster or harder if I know there is something I can gain with my behaviour and these thoughts almost everyone has. As their decision should be wise and fact based they need to know how the incentives they will use influence the motivation of the employees and when to use them. Mangers can decide whether to use individual or group incentives. If the individual incentive plans can't be implemented the group incentive plans take their place and vice versa. In this paper I would like to focus on group incentives and try to explain how the group

In this day and age, performance in the workplace is paramount and all businesses strive to improve it. Whether strong or weak, employee performance is determined by a variety of factors. Of these factors, workers ability, the environment they work in and the workers motivation play the most significant roles. But while ability can be trained and environment can be altered, motivation to do and to perform well is often difficult to capture. To address this, many businesses focus on remuneration in the hopes of improving employee satisfaction and motivation and often apply ‘variable performance-related pay’ (better known as

The retail chain of RightNow! has recently come into a bit of trouble concerning their issues of pay secrecy and the discrepancies that came with it. In order for the company to move forward with the same productivity and employee motivation as before, with potential to further improve, Hank, the CEO of RightNow! must decide whether changes should be made concerning their pay model and performance review system. The implications of these changes and how they will effect the employee motivation, retention, attraction and development will be looked at. The recommendation of a new and improved reward management system can provide the answers to their pay discrepancy issues, as well as offer a logical and methodical approach to battle employee

It can take many forms, including bonus programs, stock options, and one-time awards for significant accomplishments. Some companies choose to pay their employees less than competitors but attempt to motivate and reward employees using a variable pay program instead. According to Shawn Tully in Fortune, "The test of a good pay-for-performance plan is simple: It must motivate managers to produce earnings growth that far exceeds the extra cost of [the program]. Though employees should be made to stretch, the goals must be within reach."

This is a report finding detailing the significance of the pay for performance program in improving business performance. The report was requested by the Fair Work Commission (FWC), an Australian tribunal firm that solves employees work-related matters. This report begins by providing a history of the FWC, its objectives and functions. This will be followed by a review of theories that expound on worker’ motivation and pay incentives. Some of the concepts and theories that will be analysed include efficiency wage theory, labour supply and demand, Pay structure among others. Later, the theories will be applied businesses that have used the pay for performance structure to their benefit and benefited as a result. The idea is to illustrate the linkage between compensation and other work-related factors such as allowance and motivation.