Question

Please discuss the benefits and downfalls of pay for performance systems in your own words. What is an industry that you feel could benefit from the implementation of a pay-for-performance system? Why do you feel this way? How exactly would you begin the process of implementing the pay for performance system? Are there any industries that you feel pay-for performance systems would not work within?

Answer 1

Pay Performance Systems: Under this system the people are paid according to their performance in the business. There is no particular pay structure and people are paid basis the work done by them.

Benefits:
- Quality of work pay be ignored for more output.
- The pay scale is fair and no one gets paid extra.
- People are responsible of the work done by them and they tend to perform better.

Disadvantages:
- People who are new might feel intimidated.
- People might work over time and extra just for more money.
- There can be unhealthy competition between people.
- If someone is not well, just for earning money he would come to work.

The companies who freelance the work to individuals or teams i.e. the project based teams and work done is the industry where pay performance system would work well. The basis of work done by them will be reflective of the progress they had made. And in order to complete the project, they would work faster.

The implementation methodology will be:
- Fixing a meeting and discuss the rate per hour.
- Sending a notice to all stakeholders regarding the same.
- Clearly mention the employees about the policy.
- Be fair with evaluation of performance and set standards for it basis which the performance will be measured.
- Constantly update the measurement standards.

The industry related to education, sales and HR will not be ideal for pay performance system as it will lead to unhealthy competition and excessive work pressure.

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