Shrm Essay

3461 WordsSep 12, 201214 Pages
PERFORMANCE RELATED PAY SYSTEMS by aneta Outline • Introduction. • Performance pay systems. • Conclusion. • References. Introduction Once the job evaluation is complete in an organization, the data generated become the nucleus of the organizations pay structure. This means establishing pay rates or ranges compatible with the ranks, classifications, or points arrived at through job evaluation. As organizations rapidly change in this dynamic world, so, do compensation programs, most notably, organizations are finding that they can no longer increase wage rates by a certain percentage each year without some comparable increase in performance. Subsequently, more organizations are moving from varied themes of pay for performance (Hegel, 2002, p.89). . In a performance-based compensation system, the business rewards employee performance, connecting employee pay with their professional achievements. Several companies employ the performance-based compensation system in combination with a long-established salary, incorporating the performance-based fraction of compensation to establish pay raises or bonuses. The business evaluates the performance of the employee, the department or a precise team when calculating the performance-based fraction of the compensation (Charles, 2008, p 92). Any merit pay program requires the business to have the best performance evaluation system. Where likely, performance should be calculated, but this requires that there is some clear result from the job that is the result only of the efforts of someone on that job; this is not very expected in an organizational surroundings. These include incentive compensation plans, competency based compensation, team based compensation, pay for performance, Scalon plan and lastly, group or plant wide incentives. Each of the

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