Reasons for employers to adopt pay –for-knowledge pay programs "Pay-for-Knowledge systems give employees higher pay as an incentive for each new skill or job they learn". Many organizations of today are like to adopt these pay for knowledge system because of it can use regardless of specialized industry and sizes of company and especially suitable for the medium size organization between 150-2000 employees. Under such plans, a typical employee starts at a base rate, and as he or she learns different jobs in the organization, the pay rate increases simultaneously. There are six reasons for adoption; to removes entitlement label, connects pay to job-related abilities, increase employee autonomy, technological innovation and increased global competition. Among them, increased global competition and technological innovation is the main reason to adopt the par for knowledge plans. Technological Innovation As information travels faster and faster and more reliably, barriers of distance disappear, and businesses are realizing how easy it is to outsource jobs overseas. Technological implication such as mails, texting, websites and personal digital products applications, known as “apps," can help companies improve communication with consumers and world-wide supplier as well as outsourcing refers to the practice of hiring employees who work outside the company or remotely. In line with this, Job demands, higher level of reading, writing and computation skills, technical skills, the skills of understanding the cultures and interpersonal skills become important factors to drive efficiency and improve quality at globalized working enviroment.Business technology helps automate back office functions, such as record keeping, accounting and... ... middle of paper ... ...ncourage the employees for continuously learning by employees in order to be employable and relevant in the industry and this requires the organization to tailor the compensation plan appropriately. Pay-for-knowledge plans have been hypothesized to offer many advantages to organizations and employees. For example, many analysts suggest that organizations experience greater work force flexibility, leaner staffing, greater work force stability, higher quality of output, lower absenteeism, less turnover, and higher productivity . Likewise, analysts also say that employees in pay-for-knowledge systems may benefit from higher motivation, higher job satisfaction, higher pay satisfaction, increased feelings of self-worth, more opportunities for growth and development, increased job security, improvements in the quality of worklife, and higher organizational commitment .
Compensation is made of a base salary (paid by the hour, work or the year; excluding overtime or bonuses), variable pay (bonuses, profit sharing/stock options which work hand and hand with the performance of the company), and benefits (to include health insurance/savings plans – 401(k), or tuition reimbursement). The traditional way of determining base pay for jobs was to compare jobs in the same industry. Now industry and market, no long work by themselves, the current thinking is more person-based that considers knowledge, skills, and competencies of the work. This, however, is best suited for high-performing environments that remain flexible in their deployment of human capital.
Without a high passionate employee, the Boston Market could not stay longer. However, April said that she is studying in college right now because she think that working in the Boston Market are lack of opportunity for her to get a promotion. In order to keep April retain at the organization, Racheal want to give an offer to April to be a General Manager at the South Florida because of her be talent in managing the restaurant. Apart from that, Racheal gives her son 10,000$ for her son’s college education. April also have been given a 20,000$ student allowance to further her study and after that continue back to work with Boston Market after getting her degree. Boston Market should give more reward to their employees in return of their contribution and performance. Thus, Boston Market should incorporate a reward based performance into their organization if they wish to retain their employees. By doing this approach will motivate the employees to perform and contribute better (Lee, Singram & Felix, 2015). Silbert (2005) stated that the reward is very important because it make employees to feel that they are appreciated by their organization. When employees know that they are appreciated by the organization, they will feel happy and will contribute more and perform better. That’s why, an effective reward system can lead to employee retention (Lee, Singram & Felix,
Companies are increasingly thinking about getting rid of annual pay raises. The positive side of this could redefine reward systems which motivates employees and attract high quality workers. Being that it could also have a negative side, it could prove to be a demoralizing switch that leaves many workers not able to provide for their cost of living. There is a decision to be made throughout companies which will have an effect not only on the company, but on the employees as well.
The above examples of pay show that the more skills, experience employees are with the organization the more they are compensated. Organizations would benefit by utilizing the same practice’s Disney extends to their workforces. For those businesses whose primary purpose of their plan is to only meet compliance requirements could greatly benefit by developing a comprehensive benefit plan. This could help increase their return on investment. The value I believe a business may gain from Disney’s compensation plan is to appeal to competent workers, to maintain those workers, and to motivate workers to direct their energies towards achieving the goals of the organization. Companies can set up policies to conduct a market study on a regular basis to implement a real performance appraisal system and then work on retaining good employees and elimination of poor performing workers. By following Disney’s lead of in obtaining those who best fit their company’s culture and supporting the company’s Mission. To guarantee that the pay structure is externally competitive, a pay survey should be shown. The results of a survey to be valid, the market pay data must be from the relevant labor market for each benchmark job. I would advise that a survey of regional and global pay data should be collected from the company, because for example, most of the office support, HR and operations jobs will be filled by local applicants. A job analysis is the procedure of reviewing jobs in an alike business. The result of this process is a job description “that includes the job title, a summary of the job tasks, a list of the essential tasks and responsibilities, and a description of the work context “(Burke, 2008). A job description consists of the knowledge, skills and aptitudes necessary to do the job. A job evaluation is the process of adjudicating the comparative value of job within a company
Global outsourcing first became popular in the apparel and textile manufacturing industries during the late 1960’s and 1970’s. Then it continued with automotive, computers, electronics, and other forms of assembly work during the 1980’s. Most recently, during the 1990’s, now and also in the future the outsourcing is focused on ‘knowledge’ work such as work in software design, technical support, telemarketing, call centers, and back office work. By the end of 2009 Information Technology outsourcing (ITO) revenues were over US $250 Billion while for Business Process Outsourcing (BPO) were more than US$ 140 billion. By 2006, over 200 firms from the Forbes 2000 companies and almost half of the Top Global 250 had offshored IT and business process activities. By 2008 India was managing 65% of the ITO and 43% of the BPO market. In general, India, China, Latin America, Philippines and Mexico have been the top locations for offshoring. The United States is a major player in the offshoring of IT and business process, however, Europe is also catching up. The growth of global sourcing sparked due to the technological advances in the telecommunications industry and the internet w...
Incentive compensation should communicate a company’s overall objectives and be structured so as to reward performance while ensuring overall company growth objectives are met. One type of an incentive is a structured incentive, these incentives have two components; (1) they must be capable of fluctuating as performance changes, and (2) based on a specific accomplishment that is understood by both management and the employee. Examples include but are not limited to piece rate (set dollar amount for every product sold), profit sharing, or set percentage of the total dollar amount sold. Whichever pay structure is implemented it will be important that the incentive be linked to pay for performance. It is presently clear that resources make it difficult to offer competitive salaries that are aligned with the larger competitors. Therefore, linking pay for performance will ensure optimal results for both the company and the employee. Implementing a fair pay structure will not only motivate employees, it will also facilitate in their retention which will decrease costs associated with
Performance related pay is a financial reward given to employees whose work is considered to have reached a required standard or is above average. “PRP criteria can relate to the individual employee, to work groups or to the organization as a whole” (Armstrong, 2002). It is fair to provide people with financial rewards as a means of paying them according to their contribution (Armstrong 1993:86). The primary purpose of performance related pay in any organization is to recruit, retain and motivate the workforce. It also helps in focusing employees’ minds on particular goals (Protsik, 1966); communicate to employees an organization’s core values, and change the culture of that organization (Kessler and Purcell, 1991).
To accomplish these objectives, the Holland Enterprise will provide a compensation program that establishes and maintains competitive salary levels within the mark...
The succeeding paragraphs will explain how innovations in employee benefits can improve the overall competitive compensation strategy of the organization. In order to maintain their competitive edge, companies need to fully understand that as the needs of their employee’s change, so does their benefit plans. Companies need to find innovative ways of engaging employees that encourage and support their commitment and improve their performance.
A better the compensation rate, leads to greater the employee satisfaction. Compensation and benefits for many employees are being recognized as important part they consider when applying or accepting jobs. Pay and benefits are very important to both new employees and existing employees. The compensation system is the reason behind why people seek employment. A company with a good strategy that’s wants to compete externally is aware of what other companies are paying their employees. It will not be easy for any organization to exist for a long time if they don’t have a strategy. Every organization is unique it their own way, but their goal is mission is to have the best employees work for them. Change is expected, if organizations don’t keep up with changes, they won’t be able to be externally competitive. It will affect the organizations long term stability.
Meyer, H. H. (1975). The Pay-for-Performance Dilemma. Organizational Dynamics, 3, 39-50. Print. 8 Feb. 2014.
Employee compensation and reward systems have undergone a couple of paradigm shifts since inception. Reward systems were traditionally compensation based and focused on the individual or the position (Beam 1995). After a recession in the early 1980's, employers turned to performance based models in an attempt to save money while still rewarding top performers (Applebaum & Shapiro, 1992). Today, the most successful organizations are using a total reward model, a hybrid of the performance based model combined with strategic human resource management planning to create reward systems that both benefit the employee and help organizations realize their operational goals (Chen & Hsieh, 2006).
There is considerable debate over merit pay and the effect it has on employees within an organization. Psychologists believe merit pay is related to the incentive theory of psychology; people respond to rewards and with the proper motivation, it increases performance (Cherry). Employers consider merit pay an effective tool and a form of competition strategy for motivating employees to achieve positive performance outcomes. Many employers ignore the fact that incentive plans may motivate some individuals while others have high work ethics and do not need motivation. The intent of this paper is to discuss merit pay used by companies, the motivational factors on employees to reach high achievement, and the challenges that employees face due
The total pay package has a direct impact on the successful recruitment, selection and the retention of staff within any organization. This pay package is critical for any business to remain competitive in today’s business world. Competitive compensation packages are vital to both large and small organizations as they encourage the retention of talented staff.
The foundation for effective job performance and compensation system can be traced to effective job analysis process. Fundamentally, a job analysis should consist of a thorough examination of the job 's duties and knowledge, skills, abilities, and qualities that are required in order to be successful in a specific position, upon which appropriate rewards or compensation can be determined. For many perspectives, jobs are usually made up of requirements and rewards, where rewards may be regarded as a major recruitment strategy for motivating potential employees in order to influence them to stay the organization for a longer period as well as enhance their performance. The most common or basic form of rewards which attracts employees is extrinsic