Incentives Pay With Traditional Pay Essay - 2108 Words

Contrasting Incentive Pay with Traditional Pay Compensation is a tool used by management for a variety of purposes to further the existence of the company. Compensation may be adjusted according the business needs, goals, and available resources. Compensation may be used to: †¢ recruit and retain qualified employees. †¢ increase or maintain morale/satisfaction. †¢ reward and encourage peak performance. †¢ achieve internal and external equity. †¢ reduce turnover and encourage company loyalty. †¢ modify (through negotiations) practices of unions. Recruitment and retention of qualified employees is a common goal shared by many employers. To some extent, the availability and cost of qualified applicants for open positions is determined by market factors beyond the control of the employer. While an employer may set compensation levels for new hires and advertise those salary ranges, it does so in the context of other employers seeking to hire from the same applicant pool. Morale and job satisfaction are affected by compensation. Often there is a balance (equity) that must be reached between the monetary value the employer is willing to pay and the sentiments of worth felt be the employee. In an attempt to save money, employers may opt to freeze salaries or salary levels at the expense of satisfaction and morale. Conversely, an employer wishing to reduce employee turnover may seek to increase salaries and salary levels. Compensation may also be used as a reward for exceptional jobShow MoreRelatedTraditional Bases For Pay, Incentive, And Person-Focused1002 Words   |  5 Pages Traditional Bases for Pay, Incentive, and Person-Focused Pay Traditional bases for pay is about longevity, seniority pay practices, performance appraisal methods, merit pay, and performance appraisal methods. Organizations award their employees raises based on their job performance and or their seniority. Many companies only award their employees raises based on their job performance and not their seniority. IBM was one of those organizations that awarded its employees raises solely based on jobRead MoreThe Employee Total Compensation Program1163 Words   |  5 Pagesemployee (p. 5). The area of compensation derives from three basic segments that differ in organizations (Gomez-Mejia, Balkin, Cardy, 2016, p. 287). First, this includes base compensation, pay incentives, and indirect compensation (p. 287). In addition, the base compensation is the salary, pay incentives are rewards for employee performance, and indirect compensation is insurance for the employees in an organization (p. 287). Next, the topic of compensation is a vital factor to recruit and maintainRead MoreThe Employee Total Compensation Program1162 Words   |  5 Pagesemployee (p. 5). The area of compensation derives from three basic segments that differ in organizations (Gomez-Mejia, Balkin, Cardy, 2016, p. 287). First, this includes base compensation, pay incentives, and indirect compensation (p. 287). In addition, the base compensation is the salary, pay incentives are rewards for employee performance, and indirect compensation is insurance for the employees in an organization (p. 287). Next, the topic of compensation is a vital factor to recruit and maintainRead MoreTraditional Bases For Pay Practices991 Words   |  4 PagesTraditional bases for pay refers to longevity, seniority pay practices, performance appraisal methods, merit pay, and performance appraisal methods. Organizations award their employees raises based on their job performance or their seniority. Many companies only award their employees raises based on their job performance and not their seniority. IBM was one of those organizations that awarded its employees raises solely based on job performance. 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Indirect compensation encompasses the benefits provided by the organization to the employee. â€Å"Applying Advanced Analytics to HR Management Decisions: methods for selection, developing incentives, and improving collaboration† authored by Sesil (2013) implies that compensation is clearly a key business decision and impacts the success of the organization. It emphasizes that employee compensation is a divisive topic, and closely aligning pay and organizationalRead MoreThe Protection Of Environmental Quality1423 Words   |  6 Pagesenvironmental quality is a globally growing concern, and there has been an increasing use of economic instruments in the environment protection policies, such as tradable permits or pollution charges, to reduce environmental harm by harnessing economic incentives to encourage the industries. 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First we will look at performance-based-pay as a policy for recognizing employee contributions. Performance-based-pay is a pay plan that varies with some measure of individual or organizational performance, such as merit pay, lump-sum bonus plans, skill-based pay, incentive plans, variable pay plans, risk sharing, and success sharing. It is basically a pay plan that moves awayRead MoreSteps For More Effective Pay For Performance969 Words   |  4 PagesFive Steps to More Effective Pay-for-Performance It?s hard to pick up a newspaper without reading about another major employer who has decided to abandon the use of performance ratings altogether. In a recent survey of North American employers conducted by Willis Towers Watson, 8%, have eliminated ratings entirely while another 29% are either planning or considering such a move. North American organizations are restless for change. Seventy three percent report that they are planning to make some