Pay for Performance and Employee Incentive Systems are becoming more and more part of the current compensation landscape. Discuss their applicability in the context of individual and team performance .Identify critical success factors in the Caribbean Region.
According to the course material pay for performance or merit pay provide an opportunity for companies to demonstrate the link between pay and performance. Pay for performance is by far one of the most popular forms of compensation that employees can offer their workforce. Essentially pay-for-performance compensation means that a form of measurement is established and goals are set, when employees meet a goal, they are compensated accordingly. This could be a number based on the amount of sales during a period of time, annual revenue, performance reviews or any number of other measurements.
Inc.com defines “Employee Reward Systems” as programs set up by a company to reward performance and motivate employees on individual and/or group levels. They are normally considered separate from salary but may be monetary in nature or otherwise have a cost to the company.
A Reward System is of utmost importance in aiding a firm to meet its strategic objectives. Reward systems serve several purposes in organizations. Effective reward systems help an organization be more competitive, retain key employees, and reduce turnover. Reward systems can also enhance employee motivation and reinforce the image of an organization among key stakeholders or future employees.
The Incentive Pay should not replace traditional pay but should accompany traditional pay. The traditional base pay should remain with the incentive pay acting as a motivator for employees to produce more at a higher quality and shorter time.
The criteria by which performance will be judged is as follows:-
* Productivity (Quality and Quantity Produced)
* Cost Effectiveness
* Timeliness
* Punctuality and Attendance
* Initiative
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