Assessment Code: RWT1
Table of Contents
As manufacturers of high precision electronic test equipment, ABC Electronic Test Equipment is in a highly competitive industry that is always looking for the most highly qualified and skilled employees. Edward Lawler of the Center for Effective Organizations at the University of Southern California, the author of many books on compensation, believes that “employees value themselves in relation to the market place and if a competitor were to offer higher pay it is likely that employee will change companies” (Wilson, 2003). As we look towards the future this has …show more content…
For example, goals can be based on overall company profits, cost reductions, safety, sales, production, and/or demonstrating company values. The plans can be designed to reward individual performance, team performance, companywide performance, or any combination. Performance rewards can be awarded as cash bonuses, commission, extra vacation or personal time off, company paid meals, or other incentives. The performance plan can be tailored to the companies needs as well as to provide employees with rewards that are tailored to their needs. Also, due to the flexibility of performance plans if the desired results are not being achieved or if the needs of the business have changed the plan can be modified relatively easy compared to other compensation methods (Wisegeek 2).
There are possible issues with implementing a pay for performance plan. For instance, if rewards are based primarily on individual goals this could lead to unhealthy competition in the workplace that can breakdown teamwork. A pay for performance plan can lead to dissatisfaction among senior workers who feel they should be rewarded more than junior workers. Also, employee moral can become low if they are unable to meet goals due to reasons outside of their control or if performance goals are set at levels which may be unobtainable.
Analysis: Implementing a performance base plan could provide several benefits to the company in terms of