Pay for Performance for individual performance becomes applicable when the strategy of a given organization is one that emphasizes and focuses on entrepreneurial activity and independent effort. In this case, all or portion of the individual’s pay is tied to their performance is effective. The advantages of pay for performance based on individual performance are that it results in a significant increase in productivity.
Other advantages are that it results in an increase in earnings of the workers and it lowers production cost. Since employees know that their remuneration is tied to their performance, less direct supervision is required to maintain the levels of output desired by the employer.
In contrast, the disadvantage of pay for performance based on individual performance is that it creates an environment for conflict between employees seeking to maximize output and managers who are concerned with improving quality levels. In other words, by rewarding individual performance, employees will cooperate less, and high performers may be resented by others in the company, and low performers may try to undermine top performers.
According to Osmond Vitez key success factors in the Caribbean region include
• Communication - The corporate culture must be one which promotes open communication between employees and management;
• Goals - Managers must set easily understood and attainable goals for employees as a motivating factor when working in the business. They should also provide employees with a desire to help the company reach its larger goal;
• Performance Measures - Performance measures allow management to determine how well the company is achieving the stated goals. Measuring employee productivity and production time are a few critical measurements used by management to gauge performance;
• Responsibility - Management must instill the value of personal responsibility in each employee. This creates a sense of importance for employees. When employees...