The Pros And Cons Of Pay-For-Performance Plan

When a company states that they have a “pay-for-performance” plan it is implying that their employees will be offered a plan that rewards them individually for meeting specific objectives within the organization (Dias, 2013, page 161). Pay-for-performance plans rewards include, but are not limited to, cash bonuses, company stock and profit sharing. While each method is unique in their own way, they all offer the employee encouragement to provide better performance in the work place. Encouraging and employee to deliver better performance may lead to more profitable outcomes for the employer.
In order for these plans to be efficient they must be effective. There are a few questions that the Human Resource Manager can ask in order to measure

However, while there are advantages, there are also disadvantages with the pay-for-performance plans that must be considered. For instance, if all employees are in competition with one another to provide the best work, this may influence them to be more reserved and hesitant to work together as a team. Unfortunately, this could conceivably cause conflict between the employees due to the lack of cooperation which may be hindering the performance of another employee. If an employees work performance is hindered, it may make it harder for them to achieve the set goals and objectives (Joseph, C., 2016, para. 3). Working together as a team, at any workplace regardless of the profession, is an important factor in the quality of work, the morale of the company, better communication skills, a better learning experience as well as not overwhelming one individual

These types of plans are the most successful when the employers make the incentives appealing enough for their employees. Appealing incentives motivate the employees to reach the productivity levels set by the company. However, if the incentives that the employer provides are not appealing enough to the employee, it may lead to the employees being uninterested in the provided incentives all together. “Employees might even resent the employer for not offering a more meaningful program that could have a more significant impact on their standard of living” (Joseph, C., 2016, para. 5). Once an employee feels resentment, they may begin to only do the bare minimum requirements of the job. Although this it is not technically against their job description, is not beneficial to individual