Performance-Based Compensation (HR Involvement in Implementing (Check in…
Definition of Compensation
Compensation is the total of all rewards provided to employees in return for their services. The overall purposes of providing compensation are to help attract, retain and motivate employees.
Definition of Performance-Based Compensation
Performance-Based Compensation is also known as direct financial compensation. It consists of the pay that a person receives in the form of wages, salaries, commissions and bonuses.
To improve employee productivity in order to gain a competitive advantage. Linking pay to performance improves the composition of the company’s workforce.
Company Stock Options
Employee Stock Ownership Plans
Stock Compensation Plans
How to Implement
An organisation must make sure that output standards are established. These standards are a measure of work that an average, well-trained employee, working at a normal place, should be able to accomplish in a given period of time.
HR Involvement in Implementing
Check in with employees regularly to gauge their satisfaction with the plan
Interview employees who are leaving the organisation voluntarily to find out if the incentive pay program had anything to do with their decision to leave
Explain to employees how the incentives work, including what level of performance is necessary for them to benefit
Keep upper-level management apprised of how the plan is working
Survey employees regarding the incentives they would value
Flexible Wage System
has a sizeable variable component that allows companies to adjust wage costs quickly in severe business downturns
enable companies to:
reward employees with bigger bonuses in good times and
adjust and better manage its wage costs in bad times
Monthly Variable Component
“standby” component to be used by employers to bring down wage costs in sudden and severe business downturns to survive and save jobs