11 - pay for performance

11 - pay for performance - The Principle 00:58 Our...

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The Principle 00:58 Our principle is pay for performance Involves providing monetary rewards through carefully designed  compensation systems that base pay on measured performance within the  control of participants  Includes incorporating appropriate concerns for procedural and distributive  justice  Pay for performance systems make major contributions to performance They positively influence the motivation to perform  They impact the attraction and retention patterns of organizations  Pay for performance systems can deliver monetary rewards at the individual,  small group, and/or divisional or organizational level  Individual Level Traditional incentive plans: Piece-rate plans and sales commissions o Piece-rate plans: An employee is paid a specified rate for each unit  produced or each service provided o Commission: Sales incentive that is typically expressed as a percentage of  sales dollars, a percentage of gross profit margins, or some dollar amount  for each unit sold  Variable pay: Performance-related compensation o Does not permanently increase base pay and must be re-earned to be  received again  o Merit pay: Rewards individuals for past work behaviors and outcomes by  adding dollar amounts to their base pay  Most widely used pay system in US organizations  Team level Small group pay plans provide monetary rewards based on the measured  performance of the group or team  o Performance gains can be associated with the use of monetary rewards  for groups, but that results are likely to be heavily influenced by situational  factors  Organizational level Gainsharing: Compensation plan in which an organization shares with 
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11 - pay for performance - The Principle 00:58 Our...

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