Question

Assume that your employer asks you to create a pay for performance plan for your organization.

1) Describe your suggested plan.

2) OK, now that you have complied with your employers order, please evaluate the wisdom of using pay for performance in your organization.

3) Defend your evaluation.

Answer 1

Assume that your employer asks you to create a pay for performance plan for your organization.

1) Describe your suggested plan.

The Pay for performance plan would necessarily involve the following steps:

1. Set up a parameters or KPIs on which performance would be measured.
2. Set up criteria to in the form of rubrics to ascertain performance type (good, excellent, poor etc.)
3. Ask managers to explain the KPIs in the beginning of the period- describe the expectations.
4. At the end of period, rate the employee performance as per the rubrics created.
5. As for performance pay- as per the rating get approval from finance for the disbursement of the amount

2) OK, now that you have complied with your employers order, please evaluate the wisdom of using pay for performance in your organization.

Pay for performance is disbursed as bonus pay or variable pay. This kind of pay has many benefits:

1. Keep employee motivated for the job
2. Create a competitive environment to get the best out of the employees. Performance pay ranges from 0% to 200% of the said amount. Employees, in order to get 200% of the amount tend to work harder to get the best rating possible.
3. The output achieved with the bare minimum amount as variable pay is better than getting the same performance using two or more employees for the same amount of work.

3) Defend your evaluation:

1. Employee motivation is mostly related to money earned, so higher money awarded as variable pay acts as a motivating factor even for employees who are not satisfied with the basic salary.
2. Every employee knows that not all will get 200% variable pay, so they start competing among themselves and finally you get the best output.
3. Often employee goes for multi-tasking which includes doing their regular work as well as some additional work. Thus employees learn more, get motivated more and even do more work than what two employees can do. The logic behind is that, people in regular job performs less than what one does when they are motivated.