MHR 749 Lecture 9: Chapter 11 - pay for performance
20 Oct 2016
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Document Summary
Pay that varies with some measure of individual,, team or organizational performance. Increasingly popular due to: competition from foreign competitors, fast paced business environment, signal a movement away from entitlements. These plans have a positive impact on performance if they are designed well. Performance is related to some sort of outcome: personal, organizational or departmental. Employers like variable pay plans bc: potentially saves more money ( cost containment ) Instead of earning a 10% increase in pay based on present performance, you would earn. 10% increase throughout the past few years or every year in order to get that increase. Potential talent shortage employers need tools to attract, motivate, and retain their valued employees. Advantages for employers: motivate better employee performance, manage total comp costs, align business and individual goals. Advantage for employees: performance are rewarded accordingly. A merit pay system links increases in base pay to how highly employees are rated on a subjective performance evaluation.
