Example Of Pay For Performance Essay

Introduction

Organizations have varied compensation systems that determine organizational change. Reward systems can have positive and negative implications for the employees depending on the mode of implementation. Pay for performance is one of the strategies that are used by companies to reward their employees. Pay for performance is connected to a number of issues that can either be linked to the present or future value. Pay for performance can either impede or enhance the organization. This paper puts into perspective, various issues related to pay for performance.
The productivity of an organization is dependent on the motivational incentives that are provided to the employees. Organizations have reward systems that relate pay to performance. Organizations should link pay to the current value of the company based a combination of issues. Firstly, organizations operate in environments that marred with various challenges to the extent that future productivity cannot be guaranteed. Secondly, organization cannot lay emphasis on certain elements that are not realistic and, therefore, firms should link pay to current value because the budgets and financial incentives can be variable under such circumstances (Young & Conrad, 2007).
The adjustment of pay is dependent on a combination of factors critical for the organization. Throughout the lifespan of an organization, there are fundamental changes that impact on organizational change. Transformational processes may not necessarily indicate productivity. However, pay should be adjusted when an organization transforms because employees normally have more expectations when companies undergo such changes. Transformational processes come with a number of incentives and pay influences the extent to which employees are motivated to take up new challenges (Werner & Dudley, 2009).
Organizations have a responsibility of ensuring that they monitor the process and determine if the pay being awarded is having a positive effect on the hard wiring behavior. Organizations are structured in various ways, and the management teams have a strategic placement within the setup. To this extent, senior and unit managers have the responsibility of monitoring the effect of the pay in the organization and the employees. Evaluation of the process is important because managers can derive feedbacks that can enhance the profitability of the program (Kaplan et al., 2004). The appraisal procedures should not be flawed because it can negatively impact on the feedback sought by the firm. Though there are various methods that companies can employ in deriving certain performances, the management should consider the extent of productivity or loss. Managers are charged with the responsibility of monitoring the reward systems to determine the effect on the hard-wired employee.
Linking pay to performance can have far reaching implications for organizational change. While positive incentives can be derived when pay is linked to performance, it can also exhibit certain challenges. Pay for performance is an approach that focuses on the evaluation of organizations and individual functions. Pay for performance can enhance organizational change in a number of dimensions. Pay for performance is a form of reward that aims at motivating the employees. The aim of this strategy is to ensure that employees who have shown exemplary performance receive better pay to ensure that they can maintain higher delivery of service (Kaplan et al., 2004).
The approach is important because it enhances the competition among employees, effectively enhancing the productivity of the organization. The employees who receive limited pay strive to get to the high-performance level. Such tendencies increase the competitive ability of every worker in the organization. The strategy could enhance individual employee development. Essentially, employees are motivated towards achieving the ultimate goal of achieving higher pay. The performance of an organization is significantly bolstered because workers perform their duties with certain expectations. Such behaviors in the organization only work towards the well-being of the organization.
There are a number of areas through which the organizations get to benefit. Quality, enhanced performance, employee motivation and increased productivity are some of the areas of profitability. However, organizations should not solely focus on pay as reward system within the organization. Case in point is that employees may not respond to such strategies in a positive manner. There are other factors such as individual pride or desire that motivate workers to perform their duties to optimal levels. The absence of other factors does not guarantee that an employee can perform to the optimal levels (Rosenthal et al., 2005). Pay for performance requires huge financial investments and could be negative for growth and development within the organizations. Ideally, the strategy should be evaluated against other factors to ensure that it meets its objectives while positively enhancing organizational change. The company budget should factor to ensure that the organization does not operate on deficits in the disguise of offering pay for performance in the reward system.

Conclusion

Pay for performance is an important reward system that organizations can employ within their systems though there are inherent challenges linked to issue. Pay for performance should be linked to the current value of the company and should adjust at certain points of the transformational process. Managers have the responsibility of monitoring the effect of a reward system and deriving the necessary feedback.

References

Kaplan, Robert S. and Norton, David P. (2004). “Transforming the Balanced Scorecard from Performance Measurement to Strategic Management: Part I,” Accounting Horizons, 15(1), pp. 98–99.
Rosenthal, M. B., Frank, R. G., Li, Z., & Epstein, A. M. (2005). Early experience with pay-for- performance: from concept to practice. JAMA, 294(14), 1788−1793.
Werner, R. M., & Dudley, R. A. (2009). Making the “pay” matter in pay-for-performance: implications for payment strategies. Health Affairs (Millwood), 28(5), 1498–1508.
Young, G. J., & Conrad, D. A. (2007). Practical issues in the design and implementation of pay- for-quality programs. Journal of Healthcare Management, 52(1), 10−18; discussion 18−19.