PAY FOR PERFORMANCE

Pay for Performance

Pay for Performance

Meaning of pay for performance

Pay for performance is a compensation system in which the remuneration given to an employee is directly proportional to the performance level that the employee displays. The essence of this performance system is to encourage the employee to sustain high performance in the workplace. As a direct outcome, the employee manages to take home more compensation. The Pay for performance is somewhat similar to a commission-driven system in which the employee takes home a small percentage of the business that the employee manages to bring. In comparison, the Pay for performance system is a general and broadly applicable form of the commission system (Bol, 2011). Instead of relating compensation to sales figures or revenue figures, the Pay for performance allows employees to tie their compensation with their non-quantitative performance. This allows the employees to exercise a direct control on their rewards and remuneration. The pay for performance system is also productive in the characteristic that it allows the organization to clearly establish performance perimeters. This helps the employees to adequately realize the performance levels that they are expected to exercise.

This is perhaps one of the most critically important characteristic of the Pay for performance system. It allows the organization to function in an employee-employer cohesion in which the employee is fully aware of the organizations expectations and the organization is fully aware of the employee's ability to perform. The Pay for performance system does not come without its disadvantages (Harkness & Schier, 2011). The Pay for performance system creates a hyper-competitive environment in the organization. At first, the employees compete with their own performance benchmarks in order to increase their rewards. This is followed by an organization-wide increase in competition where employees begin to compete amongst each other in terms of their remuneration. In such cases, it is important to keep a close eye on internal stability. Such a scenario also greatly increases the relevance of internal equity.

Other approaches available to paying employees

The pay for performance compensation system is not the only adequate system for law offices or other office environments providing service to customers. The development of pay for performance compensation systems in law offices and in other customer service providing offices is complex. This complexity originates from the fact that traditional compensation systems in such facilities are in full swing in such facilities (Brencic & Norris, 2010). A change in the compensation system can result in the generation of chaotic circumstances. This is because of the fact that the growth of employees in most public services offices is directly reliant on tenure length. As a result, many high ranking officials in such offices will undoubtedly oppose such a change.

There are Other compensation systems that fit the bill in the case of law offices or other office environments providing service to customers. These compensation systems are reliant on customer feedback, performance appraisals, and other similar factors. For instance, a compensation system reliant on feedback can function through the conduction of ...