UB MGI 301 - CHPT 12 STUDENT (11 pages)

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CHPT 12 STUDENT



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CHPT 12 STUDENT

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Pages:
11
School:
University at Buffalo, The State University of New York
Course:
Mgi 301 - Human Resources Mgt

Unformatted text preview:

Recognizing Employee Contributions with Pay Introduction Organizations have discretion in deciding how to pay Each employee s pay is based on individual performance profits seniority or other factors Regardless of cost differences different pay programs can have different consequences for productivity and ROI 12 2 Programs Recognizing Contributions Programs differ by payment method payout frequency and ways of measuring performance Potential consequences include employees performance motivation and attraction culture and costs Management style and type of work influence whether a pay program fits the situation 12 3 Merit Pay Merit pay programs link performanceappraisal ratings to annual pay increases Merit Bonus Merit pay paid in the form of a bonus instead of a salary increase 12 4 Merit Pay Criticisms of merit pay o Focus on merit pay discourages teamwork o Measurement of performance is unfair and inaccurate o Too much emphasis on individual performance o Merit pay does not really exist high performers paid more than marginal and poor performers Individual Incentives Individual incentives reward individual performance but payments not rolled into base pay o Must continuously be earned and re earned o Performance measured as physical output rather than by subjective ratings Individual incentives are rare because o o o o o o Most jobs have no physical output measure Many potential administrative problems Employees may only do what they get paid for Do not fit in with team approach May be inconsistent with organizational goals Some incentive plans reward output over quality or service Profit Sharing Payments based on a measure of organization performance profits and payments do not become a part of base pay Advantages o profit sharing may encourage employees to think more like owners o labor costs are automatically reduced during difficult economic times and wealth is shared during good times Disadvantage workers may perceive their performance has less to do with



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