Preview

Performance Related Pay

Powerful Essays
Open Document
Open Document
993 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Performance Related Pay
Performance Related Pay

Author of Report:
Shevon Oxford (Personnel manager)

The purpose of this report is to gather views from staff regarding the introduction of a performance related pay system.

Requested by: Tony Milward (Personnel Director) of Transmitacom. Transmitacom is a company, which produces software for the telecommunication industry.

Date request was made: 01/11/04

Date completed: 16/11/2004

The data was collected from a variety of books dedicated to the subject of Performance Related Pay and from an article entitled: Performance Related Pay is it a motivator? Also from internet sources.

What is Performance Related Pay?
Performance related pay is the idea of Frederick Taylor who comprised his theory of scientific management. ‘It is a bonus salary increase awarded in line with an employee 's achievement over a range of criteria. ' These criteria depend on each job. (David Lines and Ian Marcouse pp)
A company that adopts this method has to set clearly defined objectiveso that staff know what they rae doing. Awards are decided based on appraisal results. They must link achievements to pay (and decide how much to pay and where the money comes from).
This table looks at the advantages and disadvantages of Performance Relate Pay from the article:
Advantages Disadvantages

• Only those who perform well get paid
• Rewards employees with highest productivity
• It is argued this system motivates staff
• It enables firms to recruit highly qualified staff who like the idea of being able to earn a bonus
• Encourages employees whose performance is not up to scratch to leave company on a voluntary basis
• Easy to identify companies aims and objectives
• High flyers find it attractive • Possible to give employees no pay rise at all
• Inflations means pay will be cut and this coupled with the indignity of being judged and found wanting would, would make it that employees seek a job elsewhere

• Union influence within the company


Bibliography: David Lines and Ian Marcouse (2000) A-Z of Business Studies 3rd Edition. Hodder and Sloghton publishing Edward Lawler (1983) Pay and Organisational Development. Addison and Wesley publishing company Ian Brooks (2003) organisational behaviour: individuals, groups and organisations. 2nd edition. Financial Times prentice hall www.tutor2u.net (2004) tutor 2 U limited. Accessed 16/11/04.
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Satisfactory Essays

    FinalExamHRM324classstartDecember162014 1 1 1

    • 438 Words
    • 2 Pages

    FinalExamHRM324classstartDecember162014 1 1 1

    One performance based pay strategy is bonuses. This links an employees pay to performance results and…

    • 438 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Best Essays

    RWT1 Business Research Report
    • 1775 Words
    • 8 Pages

    RWT1 Business Research Report

    Commission/productivity based pay also known as performance based pay is a relatively common and popular approach to compensation where the employee is paid by the employer based on their job performance; this inspires them to do their best work on a daily basis and gives the employees control of how much they make to maximize their own income. With quality performance and high productivity, employers are able to increase profit and become more competitive.…

    • 1775 Words
    • 8 Pages
    Best Essays
    Read More
  • Powerful Essays

    Riverpoint Writer Reimbursement and Pay for Performance Paper
    • 1525 Words
    • 5 Pages

    Riverpoint Writer Reimbursement and Pay for Performance Paper

    Pay-for-Performance healthcare definition fluctuates. Pay-for-Performance is explained as an equivalent based procuring strategy with the initiative to link reimbursement to quality and efficiency as an incentive to improve health care, as well as reduce costs (Shi & Singh, 2012). Also considered a pay-for-performance financial plan that includes several forms of performance-based contributors compensation provisions, comprised of individuals that are directed at carrying out cost or efficiency procedures.…

    • 1525 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Good Essays

    Case Study: Evaluate the Work/ Life Climate in Your Company
    • 516 Words
    • 3 Pages

    Case Study: Evaluate the Work/ Life Climate in Your Company

    Introducing pay for performance system in the firm would be one of the trickiest decisions for Perkins since this system brings with its self a lot of advantages and disadvantages. Pay for performance system motivates and retains key talent hence increasing the overall productivity of the organization and creates a healthy competition amongst employees. But on the other hand it can create rifts amongst the…

    • 516 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    Maslow's Hierarchy Of Needs Theory
    • 699 Words
    • 3 Pages

    Maslow's Hierarchy Of Needs Theory

    The salary paid relating how well the employee works. Many employers use this program for evaluating the employees and for setting their salaries. Pay-for-performance is probably most compatible with expectancy theory. Individuals will perceive a strong relationship between their performance and the rewards they receive for motivation to be maximized. This is a popular programs and can motivate the employees to finished their jobs on time and perform…

    • 699 Words
    • 3 Pages
    Good Essays
    Read More
  • Satisfactory Essays

    Human Resources Chapter 9 Case Study
    • 302 Words
    • 1 Page

    Human Resources Chapter 9 Case Study

    The advantages of a pay for performance policy is typically that productivity is increased while overall employee compensation costs are decreased because it doesn’t pay poor performers well. The disadvantages are measuring employee performance isn’t always easy. There will always occur some discrepancies in the performance level measured by the employer and actual performance level obtained by the employee which leads to dissatisfaction and decrease in motivation of the employee.…

    • 302 Words
    • 1 Page
    Satisfactory Essays
    Read More
  • Good Essays

    Top Pay for Top Performance
    • 361 Words
    • 2 Pages

    Top Pay for Top Performance

    3. What are the advantages and disadvantages of implementing a variable pay system that is linked to performance? (2 points)…

    • 361 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    Employee Satisfaction
    • 433 Words
    • 2 Pages

    Employee Satisfaction

    Long-established rewards systems usually have had a large proportion of the total package as base pay and just a small portion tied to performance. In today’s world new and more strategic rewards systems, have come to be implemented which are more aligned with overall organizational strategies. These new rewards include a performance based variable pay, skill base pay and recognition pay. In researching this new trend it has been shown to have a very positive effect on employee productivity and firm performance.…

    • 433 Words
    • 2 Pages
    Good Essays
    Read More
  • Powerful Essays

    Supporting Good Practice in Managing Employment Relations
    • 1444 Words
    • 6 Pages

    Supporting Good Practice in Managing Employment Relations

    * Performance related pay – when an employee hits a target or they have performed well over the year they can be rewarded by receiving a payment.…

    • 1444 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Good Essays

    Pay for Performance
    • 1107 Words
    • 5 Pages

    Pay for Performance

    Traditionally, all incentive plans are “pay-for-performance” plans. They pay all employees based on the employee’s performance (Dessler). Compensation is a primary motivator for employees. People look for jobs that not only suit their creativity and talents, but compensate them both in terms of salary and other benefits accordingly. Compensation is also one of the fastest changing fields in Human Resources, as companies continue to investigate various ways of rewarding employees for performance. It is very important for organizations to make sure that the incentive plans are well structured to need the needs of the employee and in return make the organization profitable. Giving incentive pay to employees that has not earned them destroys the motivation and moral of employees which leads to less productivity. Thanks to public outcry, shareholder outrage, and increased government scrutiny, companies are making some adjustments to their executive incentive programs. At the very least, it gives the appearance of linking pay to performance.…

    • 1107 Words
    • 5 Pages
    Good Essays
    Read More
  • Powerful Essays

    Performance-Related Pay
    • 10510 Words
    • 43 Pages

    Performance-Related Pay

    Abstract Despite the growing amount of literature on performance related pay (PRP) schemes there is still very little, which examines the organisation of the schemes on a comparative basis. This paper does so by examining the nature and characteristics of those establishments with PRP schemes from the WIRS90/WERS98 data followed by an examination of the schemes of 16 different companies from various sectors of the economy. The examination of the WIRS data highlighted certain distinctive features portrayed by establishments with PRP. A closer examination of the schemes, however, highlights that similarities on paper disguise many of the practical differences, while the similarities in practice are masked by the different rhetoric and terminology utilised by the companies.(112 words)…

    • 10510 Words
    • 43 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    MGT REPORT
    • 359 Words
    • 4 Pages

    MGT REPORT

    Relatively easy to administer and allows labor cost to be predicted DISADVANTAGE • Does not productive motivate employees to become more Pay to the quantity of the individual’s output Example: The commission paid to a salesman for selling the company’s products. ADVANTAGE • Employee is motivated to put extra effort • There is fairness because the level of reward is related to the level of output • There are likely to be cost advantages since wages are directly linked to production and less supervision is required DISADVANTAGE • Outputs in certain jobs cannot be easily measured • Safety standards may be compromised • Workers may view payment by results as a device to obtain greater effort from them without commensurate rewards PERFORMANCE RELATED PAY…

    • 359 Words
    • 4 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Compensation and Benefits project
    • 1478 Words
    • 6 Pages

    Compensation and Benefits project

    It’s a financial reward system for employees where some or all of their monetary compensation is related to how their performance is assessed relative to certain criteria.…

    • 1478 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Powerful Essays

    Sample Assignment
    • 28494 Words
    • 114 Pages

    Sample Assignment

    Introduction and context Discussion of context is clear and provides an effective starting point for further discussion within the report. The employment relationship is not considered in a great deal of detail and more could be done to set out the broader parameters of the relationship – particularly in terms of the implied balance of power and the scope that this provides for the parties in the design of the reward system. Discussion of parties’ respective interests Again, this could have been discussed in further detail – establishing the parameters of the parties’ objectives are an important precursor for the discussion that follows. It is difficult to evaluate the compromises and tactical victories/defeats of each side without a clear statement of what was desired and why. Technical competence of reward proposals The discussion of reward proposals naturally improved throughout the report. Phase 1 was often a little unclear in the way that the compensable factors were explained and justified. Perhaps a better presentation could have been achieved – although there is the odd confusion between person and job based factors (e.g. p20). Similarly the discussion of the development of multiple structures on the basis of a single set of comp factors is not clearly explained. Phase 2 is probably the strongest section. Phase 3 would have benefitted from more detail… Awareness of the link between proposals/practices and parties’ respective interests …particularly in relation to what we know about the respective objectives of parties with regard to performance pay…

    • 28494 Words
    • 114 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Hr Management
    • 389 Words
    • 2 Pages

    Hr Management

    Pays for individual performance based on performance appraisal results. If appraisals are designed correctly, workers performing at a high level will get more pay.…

    • 389 Words
    • 2 Pages
    Satisfactory Essays
    Read More

Related Topics