Pay has an important role both on an employee and an employer. This could be an employees’ expectation to fulfill their needs and a concern for the employers to achieve labor costs efficiently, and together it will be a continuous exchange process in compensation system. Mathis and Jackson (2010) state that most compensation systems divided into two main principles which organisations tend to follow one of them. These principles are entitlement and performance. In the public sector, a pay-for-performance system which is also called merit pay or performance based pay has been introduced to compensate the public servants.
All organizations need competent personnel to enhance their productivity. Yousef (2000) observes that in organizations, the wrong things are appraised while correct techniques are utilized. Performance appraisal has direct influence on job satisfaction and worker motivation (Ahmad & Ali, 2004). As such, it is important for the organizational leadership to provide proper motivation to the workers. Research has shown that performance appraisal gives rise to a connection between additional pay and the worker’s competency, thus inspiring
incentive pay is compensation beyond base wages. Employees earn these dollars by meeting or exceeding set goals. In any type of business, reward systems offer employees the incentive to more effectively and efficiently perform. Whether the rewards are financial, material, recognition based, or just beneficial they are important in helping to motivate employees in performing better and going above and beyond the minimum requirements. Incentive pay rewards employees for achieving defined goals.
Employee compensation is a sensitive subject and a motivational factor in an individual’s decision to apply for or accept a specific job. Compensation represents the extrinsic and intrinsic rewards employees receive in exchange for work performed as required. These monetary and non-monetary rewards define a company’s total compensation system. Effective compensation system design influences organizational growth by revealing external competitiveness to attract talent, internal equity to retain talent, and individual equity to allow employees to feel that their potential is rewarded; thus, they are encouraged (Lai, 2011). Deliberate and meaningful relationships between employers and human resource managers are necessary to understand and
Team-Based Reward Team compensation is typically used when teamwork is mission critical. In technical fields such as software development, there may be several interdependent teams creating a final deliverable. These teams are judged corporately as to speed and accuracy, assuming each member of the team is required to complete the task on time and at budget. The compensation of the group is typically scaled in percentages of the maximum pay scale depending on when or how well the team completes the task. If the organisation succeeds with setting a goal that all the employees in the group feel that they want to contribute to and that they together with the group are able to achieve, the organisation can with help of group rewards decrease unhealthy competition.
In the recent past, firms have shown interest in applying performance measurement purposely to increase accountability and performance among executives. Many corporations are providing competitive incentive and compensation packages that align with the interests of company executives (CEOs). It is beneficial for a company to pay employees a compensation plan, which aligns with its performance package, productivity and financial position. Businesses have been profiling their highly compensated executives, and most of them lack a clear compensation plan. This paper examines different methods of compensation and their alignment with the productivity of executives in a company.
The term “compensation” simply refers to the pay paid specifically for work done and other benefits apart from pay that employees collect as part of their job or based on contractual agreement with an organization (Otobo, 2007). Employers want human resource to increase their performance, they want to retain efficient, effective and skilled employees, bring new talents to the company and still minimize cost. Compensation cannot be managed in isolation, it has to be part of the organization’s overall strategy meaning that a competitive compensation strategy as all organizations have different forms of compensation strategy that attract employees. Aligning organization’s overall strategy with compensation, makes compensation an effective means
If he/she performs according to the organization’s expectations, he/she is motivated by his/her carry on. The organization could as well reward him or her Another advantage is that , performance assessment can be used to determine compensation for the employee . Merit rating is possible through performance reviews. Appraisal attempts to give worth to employee performance. Compensation packages that include bonus , salary increments , extra benefits, allowances and pre - requirements depend on the performance assessment.
Alternatively, it could be payments made with the aim of pushing employees’ performance towards higher targets. Incentives could also be defined as compensation other than basic wages or salaries that fluctuates according to employees’ attainment of some standard, such as pre-established formula, individual or group goals, or organizational earnings (Martocchio,
All human resources can give their best contribution for achieving the organizational goals if they are recognized by in the organization. In all the organizations there should be a performance appraisal system that all the employees can understand easily and also can accept (Alam et al, 2013). If there is more attention is paid to recognition of the employees then the level of job performance increases significantly. Recognition programs must be according to the needs of the diverse group of people in the organization(Ali & Ahmad, 2009). Discrimination must be avoided in recognition programs in the