Leadership and PFP: Analysis of SAS Institute and Lincoln Electric

This report provides a comprehensive analysis of Pay-for-Performance (PFP) strategies, examining how they are implemented and impact organizational culture using case studies of SAS Institute and Lincoln Electric. The report delves into the effectiveness of PFP systems, particularly highlighting Li...Read More

Running head: UNDERSTANDING OF PAY-FOR-PERFORMANCE
Understanding of Pay-for-Performance
(SAS Institute, Lincoln Electric)
Name of the student:
Name of the university:
Author Note

1UNDERSTANDING OF PAY-FOR-PERFORMANCE
Executive summary
In this study, PFP or Pay for Performance is discussed under the case study of SAS Institute and
Lincoln Electric. Here, discussion on moving towards or moving away from Pay-for-Performance is
analysed. Hence different facts and results are investigated and highlighted in this report.

2UNDERSTANDING OF PAY-FOR-PERFORMANCE
Introduction:
SAS Institute is a software-based organisation. The product is related to analyze data from
agricultural experiments. Lincoln Electric, on the other hand, is an electrical product manufacturing
company involved in welding tools and suppliers around the world.
In the following report Pay for Performance or PFP is analyzed under the scenario of the
above mentioned companies. Various facts and findings are reviewed and presented in this study.
1. Answer to question 1: Analyzing PFP:
PFP gets effective during evaluating how well an individual, teams and organization has any
performance towards any specific purpose or goal. This helps in assuring that every employee
performing gets higher salaries that must be more than those people who have not been playing well
enough. This has also been transferring different loads from the firms to employees. This must be in
the sense that as employees never performs any salary that has never been high (Conrad et al., 2018).
Furthermore, these companies never users that benefits to save extra money. However, it must be
reminded that one controversial and enduring issue is the importation of different private sector tools
of compensation. This has been linking performance of employees for some aspect of employee
compensation for government personnel.
Besides, merit plans are the instance of pay for performance that is determined in an initial
cell. Here, they are ties to various individual performance level measurements, like ratings of
performance appraisals (Gerhart, 2017). Moreover, there have been different payouts allocated
within merit plans that are added commonly to a distinct base salary of employees (Han, Bartol &
Kim, 2015). Since, there have been drastic economic reversals in this business world, current

3UNDERSTANDING OF PAY-FOR-PERFORMANCE
organisations have become cautious. They must think they have been not the organisations who have
been sufficient to reap different rewards of a pension plan and various options for long-term savings.
The efficiency has also been coming to reality while motivating their employees in any
organisation for reaching targeted goals and getting rewarded afterwards. Here, from the study of
Lincoln Electric, incentive system has been centred on four things that are based n wages on any
piecework output. This has also been including bonus paid every year. This also involves assurance
in employment and limited benefits. Here, the four components acted as extrinsic motivation for
employees through some people have never been of much interest in a job (Urech et al., 2015). This
is due to additional money. This would be helpful to gain from those incentive systems that have
been propelled. This is needed to be performed and get into the target goals of the organisation.
Further, Pay-for-Performance has been working effectively under Lincoln Electric as per the
philosophy of James Lincoln over human motivation. Here, management processes and incentive
compensation systems get emanated. It is also believed here that there must be an enquiry from
higher management towards their subordinates to any organisation with an adequate incentive in
place. This helps in motivating individuals while they feel any sense of growth in them as they meet
up with targeted goals and then being getting rewarded afterwards (Kuvaas et al., 2018). The
management style of Lincoln has been equal for every position. Here there has been particular
regards to any location, and this has also been in a method where every individual are approachable.
This is done while developing any sense of cooperation among various employees. Here an open-
door policy for every people has also been present (Belogolovsky & Bamberger, 2014).
Here, the case study of D&B Hoovers, Canada is analysed using PFP. Then it is contrasted
with that of Lincoln Electric. It is an American Business research institute, providing data over
industries and companies around their preliminary platform for a product under the name “Hoovers”.

4UNDERSTANDING OF PAY-FOR-PERFORMANCE
Here, the initial step has been to create viable economic planning. This is from different
organisational and operational developments. This is deployed while the project life-cycle goes on.
As they possess any targeted economic aim, they have reviewed the contribution of the overall goal
(Harrison et al., 2014). This has created KPIs to calculate them. This is also useful in tracking tools
regarding grading processes. Then they have set up a “share” system while every employee owns
one share of the pool of PFP. Next, they have sat with each employee. This is done individually and
analysed how they have earned value with those kinds of shares.
However, as compared to Lincoln Electric, D&B Hoovers has let their employees know the
methods to create large money. Lincoln, on the other hand, has set clear and various concise
expectations. Then, Lincoln has assured that those expectations have been measurable and used to
drive those PFP plans. Next, as that business gets success, every people are intended to get success.
However, for D&B Hoovers, a company has been coming first (Doran et al., 2014). Here, a well
found PFP is the key towards assuring the fact that business reaches their minimal profits, ownership
and potentials. This also includes employees who are rewarded regarding exceeding that level.
Further, Lincoln Electric has always been involved in asking for help from their advisors while
developing any PFP plans.
2. Answer to question number 2: How SAS has designed culture and system
staying away from PFP:
SAS has never expected to provide bonuses and incentives for entire organizations making
every people with every people working harder. This is also a traditional academic belief having
doubtful applications that are practical. Here the spurs have been mattering for them where those
tasks have been allowed to clear different definition of results. These tasks have been more prevalent
as they move towards hierarchy (Maltarich et al., 2017). Using incentive budgets on the proper set of

5UNDERSTANDING OF PAY-FOR-PERFORMANCE
a job as opposed to spreading that has been around the total workforce. Here the most vital thing has
been to assure that various award targets get tied to different realistic aims of performance. Here,
very often performance goals have been reflecting on being ambitious (Stanowski, Simpson &
White, 2015). Further, some quantity of incentives that are paid out in spite of those aims being
achieved. This is because all the people know that those ambitions are on the top. This has taken the
entire trust in SAS. Here simple mathematical models have been aligning to PFP opportunities
towards proper levels of stretch within targets. Lastly, long-term incentives have been driving
performances and not retentions.
Here, a significant reward has been accrued to different top performers in SAS over various
years in traditional. This has been including better retention that where many people have been
paying money of conservation (Li et al., 2014). Lastly, the incentives and teamwork have been
possessing disconnected ideas. This has been vital for SAS to create a culture where people have
been able to work together for a common goal. This has been vital to assure that incentives have
been providing for recognising different achievements.
For example, SAS has been ranked as one of the largest software developers in the world.
According to a founder of SAS, he has been treating their staffs as they make a difference to a
company. This has made differences to those companies. SAS has reviewed their salaries every year,
to remain competitive. Here their staffs have been eligible for a different rise in performance-based-
pays and different bonuses (Ljungholm, 2015). Having a host of various onsite daycares, all the
coverage of health insurance premiums, and spacious fitness centre and free centre of healthcare,
there is no wonder that their annual employee turnover has been less than about 4%.

6UNDERSTANDING OF PAY-FOR-PERFORMANCE
To understand the scenario better, the example of Environics Research is taken. It is a
Canadian market research and polling company. It is a generation Y company and pays for
performance has never worked for generation Y (Petersen, 2014).
The reason that why pay for performance has not worked is merit has increased matrix game.
First of all, it is to be considered, on what basis their salary has risen or not risen in due time. The
ways in which decisions are made regarding the payments are to be determined along with the way
they have rewarded for results. For this performance addressed is to be found out. Environics
Research has consisted of rating systems for determining whether they have been meeting
expectations (Gooderham et al., 2018). These must be great, good, fantastic, wonderful and
outstanding. They have needed improvements wishing that they are gone. One cannot actually
believe that this nominal differentiation has been motivational and driving results of performances.
Now, why the alternative of PFP, pay for potential has been working on them, as discussed
hereafter. This has been trying a level of playing the field on the basis where an employee has been
bringing jobs and the manner in which those competencies are leveraged. This is an idea to get rid of
more and more years to work. Here, more money is to be made. Thus the individual potential and
talent are to be determined (Pohler & Schmidt, 2016). Since this has been challenging for Boomers
in accepting new ways of thinking regarding compensation here, pay for potential has been far way
regarding the best plan for connecting and engaging with those millennial.
The ways it has been working has been writing computer programs. This is because they
have been paid less than people who have been some years or real-world experiences. The reason is
that the potential and talent has never been counting in a current workplace of the 20th century, till
one demonstrates through performances (Holmström, 2017). As, Environics Research moves to the
21st century and believing in the pay-for-potential, rewarding that skills and competencies have been

7UNDERSTANDING OF PAY-FOR-PERFORMANCE
bringing in along with distinct resources of age and years of workplace experiences. Thus, their
salary has been reflecting the actual prizes.
Conclusion:
The above report has helped in understanding whether the philosophy of the above
organisations has been towards PFP or away from it, various considerations are applied. The above
discussions on SAS Institute and Lincoln Electric, have highlighted that there are plenty of scopes to
research compensation and hone the skills. They should maximise their baseline salaries and know
that non-monetary compensations have been as valuable as salaries. This must be mainly as it
includes the time off. Mostly, the settlement has been actually negotiable and stating various cases.
They should understand how their organisations have been making money. Moreover, they must be
aware of their company policies about compensation. Here, some of the companies might have
limited budget constraints, and provide raises at particular times of any year.

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