What is a Pay-for-Performance Plan? скачать в хорошем качестве

What is a Pay-for-Performance Plan?

Many different compensation practices are lumped under the name pay-for-performance. In compensation, you hear about incentive plans, variable pay plans, compensation at risk, earnings at risk, success sharing, risk sharing, and others. The major thing all these names have in common is a shift in thinking about compensation. We used to think of pay as primarily an entitlement. If you went to work and did well enough to avoid being fired, you were entitled to the same size check as everyone else doing the same job as you. Pay-for-performance plans signal a movement away from entitlement - sometimes a very slow movement toward pay that varies with some measure of individual or organizational performance. Merit pay is still a pay-for-performance plan used for more than three-quarters of all exempt, clerical, and administrative employees. In comparison, variable pay of some form is offered by 95 percent of all companies. Well-designed variable-pay plans have a proven track record in motivating better performance and helping cut costs. No profits, or poor profits, means no extra pay beyond base pay—when times are bad, compensation is lower. New technologies, new work processes, and new work relationships all require workers to adapt in new ways and with a speed that is unparalleled. Failure to move quickly means workers face possible layoffs and terminations. To avoid this scenario, compensation experts are focusing on ways to design reward systems so that workers will be able—and willing—to move quickly into new jobs and new ways of performing old jobs. The ability to do this comes partially from reward systems that more closely link worker interests with company objectives.