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INTRODUCTION
A well-designed compensation program gives an organization the ability to attract, retain, motivate, reward, and recognize its employees. An important element of a compensation program is pay-for-performance. Performance management programs originally were designed to assess employee performance. Historically, this goal gained importance when American organizations realized they were in danger of losing market share to foreign competitors. To make American products and services better and more competitive, many pay-for-performance programs were launched to motivate workers to cooperate and give their best effort on the job.
Pay-for-Performance connects employee compensation, specifically base salaries and short- or long-term incentives to individual, team, or company achievements.
The term pay-for-performance is not intended to imply that performance is the only criterion for pay determination. Instead, it means that at least one component of movement within the pay range is related to performance.
We will begin by describing which organizations are suited to pay-for-performance plans. You will also learn methodologies to influence and create pay-for-performance programs.
How to effectively administer performance management systems will also be covered. Finally, you will see how software can be used to integrate market salary data into the pay-for-performance process.