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Pay For Performance

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❶Incentives play an important part in motivating employees to do a good job.

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They are given large stock options, cash bonuses, and other high price incentives and often times they take advantage of the situation. Enron executives are a great example of taking advantage of a good thing. This is just one down fall of the incentive program, another issue would be employee moral decrease because they often times feels like management should not receive such large rewards when they the employee feels like they are going all the work.

Enron officials manipulated information to protect their interests and to deceive the public, although the extent of their deception is still to be determined. They also abused the trust of those who worked for them. Employees felt betrayed, in addition to losing their jobs and retirement savings. America has an ethical issue because knowledge and techniques has been used to manipulate people unethically as well as to help them develop their potential.

People who lack respect for the basic dignity of the human being could learn organizational behavior ideas and use them for selfish ends. Merit pay is a plan that most state agencies use. As times have changed and budgets are tight state government has cut back on merit play. The state merit programs were used to compensate employees for exceeding their work expectations.

It has been over eight years since the state has given out merit pay. Another misuse of the merit system is when an employee has performed above the call of duty and is over looked and an increase is given to a person that has been less productive but is good friends with the boss. How do you keep an employee motivated when there is nothing extra to give them for doing a job well done?

Often times just a simple recognition of a job well done will keep an employee motivated. Being that funding was tight and there were no pay raises being given out due to budget cuts our Deputy Director came up with this program. Employee resistance to changes in standards or work processes affecting output Quality problems caused by an overriding output focus. Employee dissatisfaction when incentives either cannot be earned due to external factors or are withdrawn due to a lack of need for output.

Merit pay A permanent cumulative salary increase the firm awards to an individual employee based on his or her individual performance. Merit awards tied to both individual and organizational performance. Lawyers, doctors, economists, and engineers.

Decisions can be challenging These individuals are already well paid and are driven to succeed Possible incentives Bonuses, stock options and grants, profit sharing Better vacations, more flexible work hours Improved pension plans Equipment for home offices. Recognition-based awards Recognition has a positive impact on performance, either alone or in conjunction with financial rewards.

Combining financial rewards with nonfinancial ones produced performance improvement in service firms almost twice the effect of using each reward alone. Day-to-day recognition from supervisors, peers, and team members is important. Online award programs Programs offered by online incentives firms that improve and expedite the awards process.

Broader range of awards More immediate rewards Information technology and incentives Enterprise incentive management EIM Software that automates the planning, calculation, modeling and management of incentive compensation plans, enabling companies to align their employees with corporate strategy and goals.

Salary plan Straight salaries Best for: Commission plan Pay is only a percentage of sales. Commission-plus-drawing-account plan Commissions are paid but a draw on future earnings helps the salesperson to get through low sales periods.

Commission-plus-bonus plan Pay is mostly based on commissions. Small bonuses are paid for directed activities like selling slow-moving items. The Lincoln incentive system Profits are distributed to employees based on their individual merit rating. The trust holds the stock in individual employee accounts and distributes it to employees upon separation from the firm if the employee has worked long enough to earn ownership of the stock.

Employees ESOPs help employees develop a sense of ownership in and commitment to the firm, and help to build teamwork. No taxes on ESOPs are due until employees receive a distribution from the trust, usually at retirement when their tax rate is lower.

If employees meet or exceed their goals, they earn incentives. If they fail to meet their goals, they forgo some of the pay they would normally have earned. Annual bonus Plans that are designed to motivate short-term performance of managers and are tied to company profitability.

The firm PRP system is effective as the workforce is aware of their contribution. Besides, employees can participate in organizational control and show greater commitment to the organization. Drawbacks come along with organization PRP benefits. The motivation value of implementing such a scheme is relatively weak. On one side, the added-value systems like profit-sharing involves complicated information and rules and thus employees will feel confused with them.

On the other side, the bonus payments are usually available with a delay of several months or years and sometimes combined with other indicators of firm-level performance such as sales, productivity, amount of cost saved and etc. Impact of performance related pay, employee and financial participation on individual earnings PRP acts as a motivational tool that attracts workers to perform higher competency and induce employees to pay greater effort.

Table one supports this point, showing that workplaces that exert any type of PRP schemes pay higher than those that do not. Among them, individual PRP only makes the most contribution to earnings by comparison with the team and organizational PRP only. Nevertheless, the only single scheme impact is far behind that of combined application of two or more types. Earnings are highest in workplaces where firms adopt a combination of individual and workgroup-based or organizational PRP schemes, as can be seen from the column three.

Interaction effects Along with, the impact of PRP on pay is strongly controlled by the joint of financial participation. As can be seen from table two, earning is relatively high where PRP co-operate with employee share-ownership. PRP is not only backed up by employers, but also by governments to promote employee financial participation through a range of fiscal incentives.

Conclusion In conclude, PRP is one of the main financial incentives to motivate employees on the basis of expectancy theory. Earnings are paid higher when organization applies PRP and highest when uses a combination of individual and team or organisational PRP.


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Pay for Performance Pay for Performance plans were developed in the early ’s as a way to control costs. “Pay-for-Performance is a reimbursement plan that links payment to quality and efficiency as an incentive to improve the quality of health care and to reduce costs” (Shi & Singh, , p. ).

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Pay-for-performance plans Variable pay (organizational focus) A team or group incentive plan that ties pay to some measure of the firm’s overall profitability.

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Reimbursement and Pay-for-Performance Essay Words | 6 Pages. been a pervasive issue in health care because of the Pay-for-Performance (P4P) Programs. Performance measures such as productivity or profit related to the performance of a group have been of less importance in determining pay increases. Though skills have been reflected in pay differentials, pay systems have been seldom geared to the encouragement of skills acquisition and application.

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Besides, this pay-for-performance plans enable the employer to share the rewards to those employees which most responsible for attaining the aim of results. It also helps employers to setting clear standards of performance and giving the authorities to the management to handle the details. Base on the research of Rogan.  Chap 12 Pay for Performance and Financial Incentives Motivation, Performance, and Pay Incentives Financial rewards paid to workers whose production exceeds a predetermined standard. Individual Differences Law of individual differences The fact that people differ in personality, abilities, values, and needs.