The paper 'Effective Management Issues' is a good example of a Management Assignment. The main goal of all compensation programs is to motivate workers to perform at their best level. As one of the compensation programs pay linked to performance is a system in which decisions for payment are normally based on defined levels of performance rather than entitlement, tenure, or other factors that are not related to performance. Several organizations are adopting pay linked to performance program as a better way to attract, retain, and motivate workers. The adoption of pay linked to performance programs normally eliminates the problem of having low performers in an organization, thus increasing its effectiveness.
Organizations need to know how to pay linked to performance programs that can be employed so as to improve their effectiveness. This paper, therefore, seeks to assess how companies can use pay linked to performance to enhance organizational effectiveness. How companies use pay linked to performance to enhance organizational effectiveness When designing a total reward system such as pay linked to performance, it is important to think strategically. This implies that the implemented system needs to pass a clear message that the company is focusing on high performance and is willing to pay or reward for it.
Linking pay to performance motivates employees to effectively execute their tasks. Effective execution of tasks by employees due to high pay normally enhances organizational effectiveness. Organizations, therefore, in order to enhance their effectiveness they need to create a positive working environment by linking payments to performance (Bratton & Gold, 2007). Bratton and Gold (2007) argue that creating a working environment in a company implies concentrating on the skills and performance of workers.
Pay linked to performance should, therefore, be formulated in such a way that it concerns with results, measurement of performance, open communication, skill and competence that add value to the business, nurture talents, create opportunities and career paths and creation of a strong relationship between the company and the workforce (Becker, 1996). In order to enhance organizational effectiveness, companies need to ensure that the strategies used in pay linked to performance programs are different from the company’ s business objectives and specific situation. According to Becker (1996), the objectives of many businesses are always about cost minimization and profit maximization.
Therefore the strategies used in pay linked to performance should not revolve around profit maximization and cost minimization but rather to performance (Becker and Gerhart, 1996). Companies need also to ensure that the adopted pay linked to performance program is uniformly applied across business units and variables that are linked with the company's overall performance, thus improving its effectiveness. The adopted pay linked to performance should be used in such a way that it develops a positive and natural reward experience that enables workers to understand, accept, support, and commit themselves in the company’ s operations (Beardwell and Claydon, 2010). The company can use pay link to performance to enhance organizational effectiveness by developing appositive and natural rewards experience so that workers can be able to understand, accept, support and commit themselves to the developed reward system.
Pay linked to performance can also be employed by a company by extending an individual’ s line of sight (Bratton & Gold, 2007). This can be done by relating the payment offered to employees with key measures of business success.
The key measures can include company financial performance and customer satisfaction. Employees always desire to know what the company expects from them and how they suit the entire plan for company success (Beardwell and Claydon, 2010).
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