Pay plans
Pay plans are crucial to hiring and retaining the best employees. It remains a fact that the number one reason people are employed is to earn a living. Merit pay, incentive pay and profit sharing are three methods to provide employees pay based on their contribution to the companies bottom line. All three methods have their strengths and weaknesses. It is important to know which method to use for given situations to ensure a fair and equitable pay structure.In merit pay programs annual pay raises are linked to performance appraisal ratings. Most organizations use some type of merit pay system. Typically an annual raise is determined by the annual performance of the employee in comb
Like individual incentive plans these payments are not part of an employee's base salary. Also, since the payments are not part of the base pay the labor costs of an organization are automatically reduce with lower profits. These systems are administratively intensive and difficult to measure for employees for managers and professionals. Employees think of the term of profits, higher revenues and lower costs. One the plan causes employees to think like owners of the company. I work in a company that uses this type of compensation and it is well like by the employees and the company has been very successful. The main reason for this type of ratio is to maintain integrity in the pay structure; otherwise the compensation plan would have uncontrollable growth. With these types of programs the pay is not part of the employees' base salary and they must be earned and re-earned. It has been shown that a pay strategy that utilizes characteristics of all three of these plans is highly successful. Individual incentive pay programs reward for individual performance. Merit increases, individual incentives, and profit sharing plans all can be effective in hiring and keeping valuable employees. These types of plans are very common in the sales and services industries especially in the high tech sector. Profit sharing plans pay employees based on organizational performance. Opponents of merit pay structures argue that the system is too subjective with very little actual reward for performance.
Common topics in this essay:
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merit pay,
profit sharing,
merit increases,
profit sharing plans,
individual incentive,
pay programs,
pay structure,
organizational performance,
employee output,
types plans,
sharing plans,
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Acceptance Essays
