Rewarding Individual Employees Through Variable Pay Programs

In deciding what to leave employees, and how to generate them, management moldiness make just about strategic decisions. Will the organization lead, match, or lag the food market in pay? How will respective(prenominal) contributions be recognized? There atomic number 18 many slipway to pay employees. The process of initially setting pay levels entails reconciliation internal equity, the worth of the job to the organization, and external equity, the external battle of an organizations pay relative to pay elsewhere in its industry. The best pay system pays the job what it is worth era also gainful competitively relative to the labor market. just about organizations prefer to be pay leaders by paying above the market, piece some may lag the market because they cannot afford to pay market rates, or they are ordain to bear the cost of paying below market. Pay is very much the highest single operating cost of an organization, which means that paying overly can make the organizations products or services in like manner expensive. Its a strategic decision an organization must make, with pee trade-offs. A variant pay program is a pay plan that bases a portion of an employees pay on some individual and/or organizational measure of performance. Earnings and so fluctuate up and down with the measure of performance.

Variable pay plans have long been used for compensating salespeople and executives. Recently they have begun to be applied to all employees. A number of organizations, business firms as well school districts and other government agencies, are go away from paying people based solely on credentials or length of service and toward using variable pay programs. Low performers find over time, that their pay stagnates, while high performers enjoy pay increases that commensurate with their contribution. There are several variable pay programs. Fluctuation of variable pay has made these programs attractive to management. It turns part of... If you want to get a full essay, order it on our website: Orderessay

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