Pay For Performance and Incentives
Contents
Abstract
Introduction
Benefits of Using Performance Management Process
Challenges in Adopting a Pay for Performance Plan
Factors Impacting the Success of Performance Liked Compensation
Components of a Sound Performance Management Process
Conclusion
References
Abstract
Pay for performance and incentives involve monitoring of an individual's performance to determine their pay in an organization. Introducing a performance pay program in an organization involves various factors and challenges. This paper will examine what pay for performance and incentives involves as well as what it entails.
Introduction
Various organizations opt to introduce pay for performance programs in their system. This program monitors the performance output of an individual regarding work to determine their pay. Various factors come into play in this system such as providing motivation among others.
Benefits of Using Performance Management Process
Pay for performance allows for recognition. Pay and recognition programs allow an individual performance to be recognized and to be rewarded accordingly. The amount of money an individual gets paid for in the work they do is directly linked to their performance. It also serves as motivation. Employees that are not motivated may be able to pretend their motivation; the organization, however, does not improve or get benefits from this. Motivation plays a very important role in encouraging innovation and providing challenges in an organization. The majority of organization recognize and reward their top performing employees including those with high potentials. Motivation is affected if employees see no action on low performance in the team. An employee who does not meet the set performance standard does not expect to be recognized in the organization (Pay for results aligning executive compensation with business performance, 2009).
It affects retention. Low performing employees may have to leave an organization. Managers may put them under observation. If they find work environment too challenging and cannot cope even with getting assistance from the organization, they have to leave. High performing employees, on the other hand, are retained by the organization because they benefit the organization. It attracts top talent. Pay for performance programs may serve in attracting top talent into an organization. Pay is linked directly to performance. People who believe they are skilled and talented enough to offer their services to an organization may want to join. Their sole aim would be to give high-quality service to the organization in exchange for good compensation.
Establish a system of truly differentiated rewards. Each pay is linked directly to their work output in an organization. Every person is rewarded depending on the goodness of his or her work. Such performance may be notified to the rest of the employees in the organization. No one feels that they are prejudiced or unfairly treated because the system is open and transparent. This, therefore, establishes a system of truly differentiated results (Pay for results aligning executive compensation with business performance, 2009).
Challenges in Adopting a Pay for Performance Plan
Performance pay programs …
