Choose a pay for performance method from the following categories: Individual, G
ID: 461363 • Letter: C
Question
Choose a pay for performance method from the following categories: Individual, Group, or Organizational performance and use the Internet to locate the website of a company which has recently introduced a new pay system. Then assess from the information, the drivers that were making the change necessary for the company, the steps and rationale of the system, implementation steps they utilized, and their results. Be sure to provide any URLs you used as a reference source for your answer. Response should be 500 words.
Explanation / Answer
Few years ago, there was a trend in all the companies with respect to the pay system. An individual used to be paid based on the seniority and not on the performance. A person, with a maximum number of years experience were paid more than the person who was performing well in an organization. Those were the organizations which had old and traditional beliefs. Then came certain reforms in the payment system. People were recognized based on their work. They were paid equal to the hard work they put in. All the promotions were performance based and not seniority based. Such a change helps the organizations to grow and that has in turn increased the employee's confidence and boosted their morale.
Purpose of pay for performance - Pay for performance helps to attain strategic goals of the organization. It helps to recognize an individual or a group based on their performance. It ensures that the individual or the group is rewarded for the extraordinary contribution to the success of the organization.
Pay for performance of the individual - Any individual is paid for his/her performance. Better the performance, better is the pay. Performance is often measured by the commitment and the dedication one put's in, in successful completion of the job taken up by the individual.
Pay for performance of a group - A group consists of individuals from a same department of from multiple departments, who come together in working together for a purpose. And the purpose is, either to successfully complete a project which is of prime importance, or to take up small projects which helps them to attain a sustainable equilibrium and which in turn helps to attain the strategic goals of an organization.
In a group everybody has to keep their best efforts and team work for being a the successful group. So, if a group performs well, then all the individuals get the equal praise and equal compensation for the work they do. If a group performs well, there will be an equal benefit to all the group members.
An organization's performance depends on the performance of an individual as well as the performance of the group.
Let's take an example of the company which recently introduced a new pay system.
Source : koreatimes.co.kr
Hyundai Heavy industries (HHI) has introduced a new performance based pay system for all its employees. It is fIrst time in the 40 years it has changed the pay system. Earlier, it used it pay its employees based on its seniority, now company has planned to pay its employees based of their performance. Company has planned to grade its employees in five different levels from one to five allowing a 60% gap among them and the salary will be based on the performance of the individual in each level.
The drivers which led to the change in the performance pay is, that the company has been going through a slump for years. To combat with the loses and to deal with the slump period, the company tried to change its pay system based on the performance. This change has led to profits and turnover has substantially increased.