Concepts of performance related pay
Added on 2021-04-17
16 Pages3449 Words39 Views
Running head: Performance Related Pay 1Managing human resource Performance Related Pay and theories of motivation
Performance Related Pay 2ContentsIntroduction.................................................................................................................................................3Concepts of performance related pay..........................................................................................................4Theories of motivation................................................................................................................................6Effectiveness of using Performance Related Pay systems...........................................................................9Conclusion.................................................................................................................................................13References.................................................................................................................................................14
Performance Related Pay 3Introduction Performance related pay is considered as the financial reward to employees whose work is accomplished within time frame. It is usually utilized where the performance of employee cannotbe adequately measured in terms of sales achieved. It has been analyzed that money is powerful motivator which can attract number of employees. Therefore, it is able to connect pay to performance. Variety of compensation system is being offered by performance related pay from merit plans to inconsistent pay plans which are broken out into group incentives plan (Lucifora, 2015). There are various concepts of performance related which will be described in this assignment. Motivation has two kind monetary and non-monetary motivation techniques and the connection between motivation theory and performance related pay will be mentioned to show the involvement of motivation theory in PRP. The two different employment industries will be taken to evaluate the effectiveness of the performance related pay because every industry has its own way to evaluate the performance of the employees and the incentives plan. PRP encourages employee of the organization to earn more money
Performance Related Pay 4Concepts of performance related pay There are various concepts of performance related pay such as performance planning, reward concept and evaluation concept. The most common type of performance related pay is payment by results, merit pay, profit related pay, commission and organization wide incentives. It has various advantages such as the culture of performance can be developed within the company. It is the effective way of dealing with poorer performing employees. The concept of performance planning shows that the every employee has some capabilities to attain the decided target (Shields, et. al. 2015). The concept of performance planning describes that PRP should be made as per the performance of the employee and for this target of each employee should be settled. The level of performance can be divided into two forms such as group level and individual level. Monetary and non- monetary incentives are encouraged employee to accomplish the task within time frame. The employees of the organization can evaluate their target if they have knowledge about the distributed work and can attain the incentives by doing more work (Lucifora and Origo, 2015). Reward concept is most attractive concept of PRP where employees of the organization get benefited in monetary or non-monetary terms as per their performance. The concept of PRP is integral within the organization for improving the productivity of the employee (DeVaro and Heywood, 2017). For instance, the reward concepts are considered as the element which may affect the employment experience of individual. The goal setting of the organization can be improved with the help of performance related pay because it increases the performance culture. The plan of incentives provides the opportunity to the employee to amplify the annual pay whichshould be based on the performance of the company or individual performance (Bozeman and
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