Pay and The Organizational Performance

Pay and The Organizational Performance

  

Introduction 

Many studies have shown pay does not relate to the performance. No matter how much you pay the workers they will continue their routine work. Giving annually increments to the employees, increase the expenditure of the organization. As employees do not get much delighted because of an yearly increase in salary the motivation of the job remains same and productivity comes down. This is serious burning issue in the business world as employers are investing huge amount of money to cover up workers wage bill. 

As per Ray (2019) increasing salary in the hope of encouraging higher productivity can backfire on you. 

Pay as per the Performance

Employees normally expect higher income for above average performance. They think that they are better than others and expect something extra from the organization. This is fair by them as they put extra effort, but problem is when everybody gets equal pay, the extraordinary employees will get demotivated. Therefore, it is recommended output-based wage model which reward for better performance.
As per the Awards network website (2021) people work for money but, go the extra mile for recognition and rewords. 

Performance Based Wage Model

Performance based wage model can be described as that the employees get their earning according to their output. Well performed employees will receive higher salary and others get motivated to hunt for more money. This is a win win situation where both organization and employees will get benefited. This type of pay model increases job satisfaction and improve quality working environment across the organization. 

Employees Acceptance

On some occasions this performance-based model is not appreciated by all the employees as they have different kind of views on this. Sometimes employees get demotivated when the disconnection happens between promise and action.

Some workers do not get much inspired of this model as they have faith in a fixed wage. they think everyone cannot be top performers and therefore, they think they will lose on this. 

Employees will not be able to achieve the task, when the sets goals and objectives are not specific, measurable, attenable and realistic. Therefore, workers get demotivated and performance will come down due to decrease in productivity.

Every employee will not be motivated by money. Some are motivated by appreciation, recognition and compliment. 

International Development 

The countries in North America, Latin America, Europe and Asia Pacific have been continuing this model successfully. The employees are happy to work for the target and get more rewards in terms of money. In addition to that those countries economy has improved due to the growth in net annual production. 

In Sri Lanka

In Sri Lanka most of the employees prefer a fixed income. In most instances they do not want to face the new challengers and are afraid to go beyond the box. The classic example is the plantation workers daily wage model. The cooperate company was willing to give profit share based wage model which could earn more than 1500 rupees per day for a one worker. But the workers and trade union denied this proposal and agreed fixed daily wage of 1000 rupees which is below the plantation company proposal.

Conclusion

In the modern business world it is compulsory to create the link between pay and the performance for the betterment of both employers and employees. Therefore, performance based wage model should be the key to motivate employees, increase productivity and explore their talent around the globe. 


 

References

Miller, S., 2010. SHRM. [Online]
Available at: https://www.shrm.org/resourcesandtools/hr-topics/compensation/pages/variableworld.aspx
[Accessed 20 April 2021].

NETWORK, A., 2021. AWARDS NETWORK. [Online]
Available at: https://blog.awardsnetwork.com/top-10-quotes-rewards-recognition
[Accessed 20 April 2021].

Ray, L., 2019. Chron. [Online]
Available at: https://smallbusiness.chron.com/salary-affect-workers-productivity-38126.html
[Accessed 20 April 2021].

 




   

 

Comments

  1. Ruwan HerathApril 29, 2021 at 8:38 PM

    Pay-for-performance, in particular, is a tempting model because it promises maximum pay for minimum investment. You'd pay for good work and not pay for bad work.
    Pay-for-performance can motivate employees to perform at the top of their skill set. Pay-for-performance can motivate employees to stay with the company.

    ReplyDelete
  2. Saranyah MBA 21April 30, 2021 at 6:52 AM

    As you said, Pay for prerfomance strategy will works to drive employee engagement and boos top talent retention.
    This will definitely help to the organizational development.

    Pay-for-performance heavily relies on both the employee’s and the employer’s understanding of what good performance actually looks like. Pay-for-performance models can be great tools in driving performance and recognizing and reward top-performing employees, but only when they are designed and implemented correctly

    ReplyDelete
  3. Saranyah MBA 21April 30, 2021 at 6:53 AM

    As you said, Pay for prerfomance strategy will works to drive employee engagement and boos top talent retention.
    This will definitely help to the organizational development.

    Pay-for-performance heavily relies on both the employee’s and the employer’s understanding of what good performance actually looks like. Pay-for-performance models can be great tools in driving performance and recognizing and reward top-performing employees, but only when they are designed and implemented correctly

    ReplyDelete
  4. Janashi LamahewaApril 30, 2021 at 9:25 PM

    According to Drexier (2014), There are two major problems in executing pay-for-performance strategy. First, how to define the correct criteria which can be directly achievable, accountable and measure. Second, is the added incentive going to the right people? Pay-for-performance strategy can be adapt successfully in an organization with a proper metrics.
    Nicely written article.

    ReplyDelete
  5. HemalMay 1, 2021 at 10:33 PM

    Good article about pay and performances .Further performances are not only depend on what pay.
    More than that wide range of mix-and-match options to suit individual needs and preferences relevant to the levels of employees.

    ReplyDelete
  6. MythiliMBA2021May 2, 2021 at 12:07 AM

    Pay for performance will definitely improve the out come of the employee in an organisation.If the author should have add more statistics relevant to the subject it will be an advantage for the article

    ReplyDelete

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