HRM 546 Describe the strategic importance of performance-based pay

HRM 546 Describe the strategic importance of performance-based pay. From the employee perspective, what are the major advantages and disadvantages of these different forms of performance-based pay: recognition, merit, incentives, and earnings at risk?

HRM 546 Describe the strategic importance of performance-based pay

Address the following questions:

Describe the strategic importance of performance-based pay

–From the employee perspective, what are the major advantages and disadvantages of these different forms of performance-based pay: recognition, merit, incentives, and earnings at risk?

Describe the challenges associated with using team incentives.

–Is performance-based pay more likely to cause employees to behave unethically compared to paying a straight salary, wage, commission? Why or why not?

Use your textbook and online course material to support your work plus at least 5 credible references.

Importance of pay for performance
A pay for performance approach to rewards should help create this kind of “line of sight.” Ultimately, compensation’s role is to reinforce the outcomes the company needs its people to achieve in a way that fulfills the financial vision of both shareholders and employees.
What are the advantages of performance related pay?

Advantages of performance related pay

Gives managers and workers an incentive to improve efficiency and productivity. This can lead to lower costs and help the firm remain profitable and dynamic.

What are the disadvantages of using a pay for performance plan?

A disadvantage of pay-for-performance policies is that they can create contention among employees. A worker sometimes feels as though a manager shows favoritism to certain employees to help them achieve bonuses and higher salaries.

Here’s what Pink identified as some problems with incentive programs:

Firstly, They can extinguish intrinsic motivation.

Secondly, They can diminish performance.

Thirdly, They can crush creativity.

Fourthly, They can crowd out good behavior.

Fifthly, They can encourage cheating, shortcuts & unethical behavior.

Sixth, They can become addictive.

Lastly, They can foster short-term thinking.