PAY-FOR-PERFORMANCE

Pay-For-Performance Schemes for Top Management

Pay-For-Performance Schemes for Top Management

Introduction

Human resource is the most important asset for any organisation. Therefore, in order to make sure that the human resource is motivated, working with efficiency and at its fullest potential, it is important for employers to make them feel that they are important. For this mere purpose, every organisation builds its own compensation and benefits plan. It is true that highly motivated employees are more productive and creative. Employees are the real asset for an organisation. There are myriad of factors that influence an employee's motivation level. The success of any business directly depends on employee motivation. There are scenarios when an employee has a high level of motivation and at other times he has a lower level of motivation.

There are some employees, who get motivation through recognition and others get motivation through cash bonus and incentives. So it is a fact that organisations can not motivate all employees at the same time. Employees having high level of motivation do excel in productivity and thus are entitled to get rewards for their efforts and time they have put in to achieve a certain goal. The rewards can be different. They can be compensatory rewards or non-cash incentives. Both types of rewards have a positive impact on employee's productivity and behaviour (Wright, 2004).

To measure performance, organisations need to assess through performance indicators. These indicators should help management to determine how effective and efficient are the employees in achieving the objectives, and thus fulfilling the mission of the organisation. They should be incorporated into a comprehensive system of measuring performance that enables simultaneous monitoring and consistent at all levels of operation of the company from achieving the strategic objectives of the company at the highest level to the individual performance of each officer and employee. There are many methods of measuring an employee performance. Some companies go for merit-based pay; some opt for pay-for-performance models. Both of the models have their advantages and disadvantages. The fact remains that companies are now eager to help their employees maintain top level performance and thus they are correctly evaluated and rewarded adequately.

Pay-For-Performance Reward System and Top Management Motivation

All incentive schemes for employees have similar aims or goals. First, try to encourage behaviours that lead to achievement of individual or organisational goals that are significantly above and beyond normal job responsibilities. It is a fact that money attracts humans. Same is the case with employees, who get motivation when they see an increase in their pay, promotion to a higher category and other such benefits that involve cash. Organisations use various incentive programmes to motivate employees by hiring them on higher pay scales and giving other advantages such as free fuel, good bonus amount, free healthcare, travel services, and paid vacations etc. Compensatory rewards harness top management employee productivity leading companies to post good profits. Companies having effective compensation structure and incentive programmes tend to retain their top managements for longer periods of ...