Incentive Pay, Employee Performance and Employee Productivity

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Introduction

Today, competition between the businesses is extremely high thus companies need to find ways to be competitive. Organizations prepare the best market strategy to increase the company performance and the ways to keep their employee motivation on the highest level to perform well within the competition. At that time, several incentive pay programs play an important role for every organization to perform well within the competition.

Creating and implementing of incentive pay system supports to solve organizational problems to align the preferences of business and employees. In addition, the system serves as an organizing tool to identify and attract the most capable employees since companies need to deliver the product or service within targeted timeframe.

Since organization success depends on both customers’ satisfaction (outsource) and increase employees’ productivity and commitment (internal source), today companies attempt to attract improving employees’ performance by using various flexible incentive pay programs. Careful design of incentive pays program and rules of administration are crucial to the effective management of an organization.

Incentive Pay and Purpose of Incentive Pay System

Incentive pay is a form of direct compensation where employers pay for performance beyond the normal expectations to motivate employees to perform at higher levels. (www.uslegal.com, 2001-2014).

Employers are practicing the incentive pay systems to promote employees particular behavior and performance to get more involved in the organizational development and which is essential for the organization’s success. So employers use incentive pay program as an effective tool for employees to achieve their goals and improve emp...

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Heathfield, S. M. (n.d.). Performance Management. Retrieved March 15, 2014, from About.com Human Resources: http://humanresources.about.com/od/glossaryp/g/perform_mgmt.htm

Radek Knesl, Sal DiFonzo, Philip E. Warner. (2013). Incentive Compensation Effectiveness Study. US: FMI Corporation.

Rao, S. R. (2008, June 01). Merits of companywide incentive plan. Retrieved March 30, 2014, from www.citeman.com: http://www.citeman.com/3350-merits-of-companywide-incentive-plan.html

rms. (2013, January 29). Explain the various Group Incentive Wage Plans . Retrieved March 30, 2014, from Education Observer.com: http://www.educationobserver.com/forum/showthread.php?tid=13111

Sani, A. D. (2012). Strategic Human Resource Management and Organizational Performance. Business Intelligence Journal, 10.

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