Today, competition between the organizations is extremely high thus organizations need to find the ways to be competitive. Organizations prepare best market strategy to improve the company performance and the ways to keep their employees motivation on the highest level to perform well within the competition. At that time, several incentive pay programs play important role for every organization to perform well within the competition.
Creating and Implementing of incentive pay system supports to resolve organizational problems for to align the preferences of organization and employees. In addition, the system serves as an organizing mechanism to identify and attract the most capable employees since organizations need to deliver the product or service within certain timeframe.
Since organization success depends on both customers’ satisfaction (outsource) and increase employees’ productivity and commitment (inside source), today organizations attempt to attract improve employees’ performance by using several flexible incentive pay programs.
Incentive Pay and Purpose of Incentive Pay System
Incentive pay is a form of direct compensation where employers pay for performance beyond 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 performance.
Purpose of all incentive plans is to encourage employees to achieve specific organizational goals such as in...
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...ed April 4, 2014, from U.S. Securities and Exchange Commission: https://www.sec.gov/answers/empopt.htm
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Healthfield, S. M. (n.d.). What Are Incentive at Work? Retrieved March 29, 2014, from About.com Human Resources: http://humanresources.about.com/od/employeerecognition/g/what-are-incentives-at-work.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
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