There are many ways to improve human resource management in modern organizations. Each manager tries to find out the best way to motivate employees, make them work hard, and investigate their potential and abilities.
Companies may be challenged by the necessity to choose between programs and models, and pay for performance model turns out to be on the list of the ideas to organize work, promote cooperation among employees, and achieve certain results (Waal, 2013). HR managers admit the presence of negative outcomes of pay for performance, including the reduction of autonomy and the promotion of wage dispersion (Allen, Whittaker, & Sutton, 2017). Therefore, the purpose of this paper is to investigate pay for performance and its possible impact on organizations and employees in terms of motivation and productivity.
Management of employee performance may depend on motivation, rewards, and control (Shields et al., 2015). Each organization demonstrates various approaches to the development of HR practices, and inequality should not be defined as a challenge, but as an outcome that has to be investigated (Fenton-O’Creevy, 2016). Ederer and Manso (2013) analyze pay for performance as an opportunity to increase job satisfaction and promote innovation in different facilities. Some employees are aware of how to use financial incentives and introduce new business strategies. Still, Gerhart (2013) questions the worth of pay for performance in some organizations because not all companies can use intrinsic and extrinsic types of motivation and inform employees about the role of rewards in their professional lives.
Pay for performance models are used to introduce a key motivator for employees (Allen et al., 2017). The more organizations promote financial rewards to their employees, the more chances to increase productivity may be observed. However, the effectiveness of such initiatives is closely connected to the level of satisfaction among employees (Waal, 2013). It is not enough to develop pay for performance plans and make sure that people get incentives regarding their abilities. It is necessary to evaluate the level of job satisfaction and the intentions to support employees with the majority of their endeavors.
Regarding the literary sources chosen for research and the explanation given by different authors, pay for performance can be identified as a significant payment model in many modern organizations in terms of which employees are provided with financial incentives regarding the quality of performance they demonstrate. Job satisfaction and productivity are the main outcomes of pay for performance.
The results of the interviews conducted with the manager of a local business company show that monetary rewards have to be based on the level and quality of performance demonstrated by employees. At the same time, pay for performance plans may have certain benefits and drawbacks. On the one hand, pay for performance can motivate people, increase their incomes, help to discover their best skills and opportunities, and analyze recent achievements or losses. On the other hand, some managers are afraid of the possibility to promote inequalities, interfere with a working process, determine teamwork, and using selfishness as one of the main factors in organizational performance.
In both, the findings from the literature review and the interviews, motivation, and job satisfaction are defined as the main outcomes of financial incentives promoted through pay for performance models (Allen et al., 2017; Waal, 2013). These plans may cause positive and negative emotions and lead to various results. Still, today, organizations find it normal to use pay for performance plans to improve organizational performance, attract employees, identify successful and problematic employees, develop a fair treatment, and regulate costs.
An interviewee proves that monetary rewards affect the working environment and have to be regular because they motivate people (Shields et al., 2015). To vary initiatives, it is possible to certificate appreciation and help employees identify their best skills for future jobs and appropriate changes. Readings and interviews prove that pay for performance may have alternatives, and the next portion of research should be devoted to the most effective options that can replace pay for performance.
The research question about the worth of pay for performance in organizational performance is answered. Pay for performance is proved as the option to motivate employees, increase their productivity, and gain control over various activities.
Allen, T., Whittaker, W., & Sutton, M. (2017). Does the proportion of pay linked to performance affect the job satisfaction of general practitioners? Social Science & Medicine, 173, 9-17.
Ederer, F., & Manso, G. (2013). Is pay for performance detrimental to innovation? Management Science, 59(7), 1496-1513.
Fenton-O’Creevy, M. (2016, July 24). Pay for performance around the world: How much choice do firms have? HR Magazine.
Gerhart, B. (2013, October 8). Pay for performance and intrinsic motivation [Video file].
Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P.,… Plimmer, G. (2015). Managing employee performance & reward: Concepts, practices, strategies. Cambridge, UK: Cambridge University Press.
Waal, A. (2013). Strategic performance management: A managerial and behavioral approach. New York, NY: Palgrave Macmillan.