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Pay for performance (Incentive) - Coggle Diagram
Pay for performance (Incentive)
Definition
compensation technique that specifically rewards employee performance by using wages, bonuses, or other benefits.
Objectives
consists of bonuses for successful work, rewards, or appreciation
encourage organizations to reward employees for ongoing efforts and align the priorities and performance of the employee with the organisation
Using incentive plans or pay for success is a significant aspect in strategic compensation management.
used within organizations to exercise justice and equality
Importance
Many employees support the pay for performance concept
Pay for performance plans attract and retain top performers
Pay is a powerful motivator for employees
Pay for performance plans provide a clear signal
Types of incentive schemes
Team incentive scheme
Organisation wide incentive scheme
Individual incentive scheme
Pros and Cons organisation wide
Increase cooperation throughout the organisation (+)
Objective (+)
Encourage identification with the organisation (+)
Encourage social loafing (-)
May not be motivating (-)
Equity concerns when targets not met(-)
Pros and Cons of Individual
May lead to the neglect of other desirable aspects of work(-)
Require much preplanning (-)
Reduce subjectivity (+)
Encourage intragroup conflict(-)
May lead to burnout (-)
Control costs(+)
Highly motivating(+)
Pros and Cons of Team
Useful when the supervisor cannot identify individual performance levels (+)
Reasonably motivating (+)
Encourage team cooperation (+)
Encourage social loafing(-)
Encourage intragroup conflict (-)
Designing an effective incentive plan
Select the rewards
Communication and training
Program structure and budget
Tracking and administration
Fulfillment
Fact finding and involvement
Evaluate and measure
Identify the audience
Celebrate success
Set goals and objectives