Discussion – Pay-For-Performance Plans
Pay-for-performance remuneration is a perplexing concept. It rewards employees’ production efficiency rather than a fixed income. This form of remuneration is sometimes seen in sales, wherein incentives are dependent on the number of sales closed. Although some employees may dislike the unpredictability of financial stability with a defined compensation for hours worked, there might be benefits to it. “Pay-for-performance plans are ideal for self-starters who are motivated by the opportunity to do more to drive income levels. With more motivated employees working harder, the company also benefits” (Mathias, 2017). This can assist the organization by raising efficiency. Employees are motivated to perform more in fewer timeframes to earn more money. Pay-per-performance (P2P) plans have become more popular because pay-for-performance compensation plans are win-win for employees and business owners.
When pay for performance salaries is properly implemented, everyone shares a common goal of doing what’s best for the company (Martinovic, 2019). Pay-per-performance compensation plans will differ from one business to another. However, the common factor is what these companies are attempting to accomplish. The main objectives of these firms using P2P plans are as follows: They want to attract, recruit, and retain the highest quality and most talented employees, to communicate and strengthen the values, goals, and objectives of the company to their employees, and to foster engagement for the employees in the overall success of the firm, and to reward value creators (Gibson, 2015).
To make P2P plans successful, the elements required are as follows:
- It must integrate performance incentives with shareholder goals.
- It must use the appropriate mix of compensatory elements.
- It must produce significant dollars.
- It must recognize performance evaluations employees can influence.
- It must convey and keep rewards adequately (Gibson, 2015).
References
Gibson, K. (2015). The Five Essentials of Pay for Performance. Retrieved from: https://blog.vladvisors.com/blog/the-five-essentials-of-pay-for-performance
Martinovic, S. (2019). Pay for Performance Compensation Plans. Retrieved from: http://www.gaebler.com/Pay-for-Performance-Compensation-Plans.htm
Mathis, R., Jackson, J., Valentine, S., & Meglich, P. (2017). Human Resource Management 15th Edition. Boston, MA: Cengage Learning
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Question 
Pay-For-Performance Plans
Discuss why pay-for-performance plans have become more popular and what elements are needed to make them successful.