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Pay-for-Performance (Purpose (Recruit & retain highest quality…
Pay-for-Performance
Purpose
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Communicate and reinforce company's values, goals and objectives
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Individual level
Merit pay
Advantage: Retain valued employees, motivate employees
Disadvantage: Increase pressure, taking it for granted, lose motivation
Piecework plan
Advantage: simple and easy, increase motivation
Disadvantage: complicated process, one-dimensional
Commission
Advantages: increase sales, cost-savings
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Company level
Profit sharing
Advantages: loyalty, increase productivity
Disadvantages: negative focus on profit, inequality
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Team level
Gainsharing
Advantages: increase feeling of ownership, enhance level of teamwork and involvement, promotes morale and pride
Disadvantages: management have to openly share information, increase stress