PAY FOR PERFORMANCE

BY: MARIANNIE RICHALYN M. GABRIEL

WHAT IS PAY FOR PERFORMANCE?

 ALSO KNOWN AS INCENTIVE PAY

IT IS USE TO RECOGNIZED AND REWARD EMPLOYEE

CONTRIBUTION ABOVE AND BEYOND THEIR NORMAL
JOB REQUIREMENTS, TOWARDS COMPANY
PRODUCTIVITY, PROFITABILITY, QUALITY AND THE LIKE.
 WHY PRACTICE
PAY FOR PERFORMANCE?

 People have beliefs about fairness & rewards for

their job contributions

 Skills, expertise & work ethics should be rewarded

with monetary & non-monetary compensation.

 Creates a sense of fairness and motivation for

employees performing well
PAY FOR PERFORMANCE CATEGORIES

INDIVIDUAL: GROUP: COMPANY WIDE:

• Piecework • Team • Profit Sharing

Incentive • Stock Options
• Bonuses Plans
• Merit Pay • Gainsharing
Plans
 INDIVIDUAL INCENTIVE PLANS

these plans reward employees whose work is

performed independently.

o Straight Piecework
- An incentive plan under which employees receive a
certain rate for each unit produced.
 INDIVIDUAL INCENTIVE PLANS

• Bonus
- Incentive payment that is supplemental to the base
wage for cost reduction, quality improvement, or
other performance criteria.

• Spot Bonus
- Unplanned bonus given for employee effort
unrelated to an established performance measure.
 INDIVIDUAL INCENTIVE PLANS

• Merit Pay
- An increase in base pay to how successfully an
employee achieved some objective performance
standard.
 GROUP INCENTIVE PLANS

 these plans promote supportive, collaborative

behavior among employees

oTeam Incentive Plans

- A reward where all team members receive an
incentive bonus payment when production or service
standards are met or exceeded.
 GROUP INCENTIVE PLANS

o Gain sharing Plans

- Are used to enhanced productivity by sharing with
a group a percentage of the gains the organization
realizes from specific group efforts.
 COMPANY WIDE OR ENTERPRISE
INCENTIVE PLANS

 These plans tie employee compensation to a

company’s performance over a short time frame.

oProfit Sharing
- Any procedure by which an employer pays or
makes available to all regular employees in addition
to their base pay, current or deferred sums based
upon the profits of the enterprise.
 COMPANY WIDE OR ENTERPRISE
INCENTIVE PLANS

oStock Options
- Granting employees the right to purchase a specific
number of shares of the company’s stock at a
guaranteed price during a designated time period.
THANK YOU