efinition of Incentive Pay
“Pay for performance” is given for specific performance results rather than simply for time worked. While incentives are not the answer to all personnel challenges, they can do much to increase worker performance.
Definition of Person Focused Pay
Pay based on knowledge or skill.Employee carries the wage, regardless of the tasks performed
Pay increases are linked to knowledge/skills, not promotions.Assess and values skills, not jobs
In following conditions incentive pay is more appropriate than person-focused pay programs
- Incentive pay shows appreciation and creates a sense of participation in the company’s well-being that straight salary dollars, no matter how large, don’t convey.
- the second condition, desiring more pay, i If employees do want more pay and nothing about the plan serves to reduce its importance to them.
- desired rewards result from good performance is more likely to appear where the competitive nature of the plan is minimized.5 In some plans, good performance is likely to result in social acceptance, esteem, respect, and feelings of achievement. If a person feels that he or she benefits from another’s good performance and it becomes the norm of the group to perform well, then the possibilities of good performance are increased.
- The belief that negative consequences will result from good performance is quite possible under incentive pay plans. It has been shown that employees can believe that rates will be cut if they produce too much and that social rejection by peers, working themselves out of a job, or even getting fired if they fail to meet the standard can be anticipated.
- employees must believe that good performance will lead to more pay.Incentive pay plans do foster the belief that good performance leads to more pay. This belief is based in part on the employee’s confidence that the measurements do reflect his or her performance
- A well-designed incentive-pay plan can also help pull people together, help point them in the direction you want them to go, and give that extra push that every company needs in today’s competitive environmen
