Thursday, 18 August 2011

Variable Pay in Organizations


Types of Variable Pay:
  Piece-Rate Pay
  Merit-Based Pay
  Bonuses
  Skill-Based Pay
  Profit-Sharing Plans
  Gain-sharing
  Personalised variable pay
  ESOPs

Benefits of variable pay:
  Innovative, productive, and efficient
  To align individual motivation and goals with the objectives of the organization
  Psychological theories suggest that incentive pay motivates performance
  Risk shared with employees
  The idea of creating a culture of ownership
  Lesser turnover
  Eliminate weak links, reward performers

What the organization needs to decide upon?
·        Eligibility
·        Defining measures
·        Developing a reward formula
·        Developing distribution criteria
·        Frequency of payment

1 comment:

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