Pay for Performance
Increasing organizational productivity is one of the hottest topics in executive suites. Managers realize that paying employees more will not result in increased output and improved quality. The strong economy of the 1950's and 1960's and the high inflation of the 1970's and early 1980's helped establish the expectation among workers that their pay and benefits would be increased, as needed, to keep pace with the changes in the cost of living. These adjustments were often granted without consideration to individual productivity. What emerged was a mindset of job and pay entitlement. However, things are changing due to the current move of restructuring and downsizing activities that are so prevalent on the economic landscape. Pay represents by far the most important and contentious element in the employment relationship, and is of equal interest to the employer and employee. To the employer it represents a significant part of the costs, and it affects ability to recruit and retain a labor force of quality, and to the employee, because it is fundamental to the standard of living and is a measure of the value of service and or performance. Traditionally wages and pay have been determined through government regulation, mi
Because staff members ultimately make the call on how much effort to put into their work, it is obvious that a good incentive plan can improve performance by linking staff efficiency to systematically applied rewards. However, times have changed, in the United States, adjustments in individual pay levels are based to a great extent on how well people do their jobs, as reflected in a performance appraisal. Performance measures such as productivity or profit related to the performance of a group have been of less importance in determining pay increases. Management goals and objectives are defined by group, and increasingly, with the interest in quality management techniques, such as process improvement, performance is measured by groups. Give someone a $5,000 raise and she keeps $250 a month after taxes. This is reasonable since it is more often the group rather than individuals that provide services to external or internal customers. Employers that do not pay for performance are at a decided disadvantage. Workplace Performance is as varying from financial measurement, to group performance, to the performance of the physical workplace. Its workability and effectiveness depend on the existence of a suitable performance appraisal system. Companies with well-formulated policies perform better than those that do not. „« Updating and thoroughly utilizing integrated information technology and taking advantage of state-of-the-art systems furniture. The "stakes," after taxes, are nominal. „« Work strategies: taking initiative, networking, self management, teamwork effectiveness, leadership, fellowship, perspective, show and tell, and organizational savvy. For example, an organization can evaluate an employee on the significance of his or her work, in addition to its objective quality, with rewards contingent on both the employee's contributions and the organization's success (Abowd, 1995).
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