Human Resources Management - The Advantage and Disadvantage of Pay for Performance

The Advantage and Disadvantage of Pay for Performance
Name of Student
HRMT407
American Public University Professor Name
January 6, 2013

Abstract
As individuals start to enter the working world, one of the first things they learn is to expect to get paid either hourly or salary wise. However, many companies and organizations are starting to introduce a concept of pay for performance and this paper will make an attempt to distinguish the advantages and disadvantages of paying employees based on their performance.
Keywords: pay, employment, performance

The Advantage and Disadvantage of Pay for Performance

Employment is what some individuals may consider a necessary evil to survive in almost any economic climate. Employment is defined as being employed or performing duties for an organization with an expectation of monetary gain Merriam-Webster.com). Employment theoretically has only one other branch on its tree and this subpart of employment is known as self employment. Whether an individual is working for themselves or for a larger organization-private or public- their main goal is usually to obtain money to increase their status in society. Many organizations have offered a set pay rate with the possibilities of a pay raise during set quarters of their fiscal year, benefits such as life insurance, health care, and sometimes dental care. Due to many organizations having to cut back their budget, they are trying to convert from their traditional methods to a program that is known in the human resources management world as pay-for-performance.

Pay for Performance

As mentioned earlier, many organizations are under the opinion that they should change their methods, specifically the one that deal with payment to employees for their contributions to the organization to keep the company afloat. The changes that are being completed in many organizations, especially the agriculture fields, is payment based on the work that was done Billikopf, G., (2006).

From some employers perspective this program is one to behold because it increases the labor output and profits for the organization while allowing the company to spend a significant amount of less money out of their budget. While some farmers believe that providing an incentive to employees to get the job done Billikopf, G., (2006), many employers of organizations disagrees. According to Lagace, the disagreement stems from employees vying for the incentive instead of truly contributing to the organization as a whole. Many employees are sitting on the halfway line when it comes to this subject because they can admit that the program is a good idea but are under the impression that they can make less money than what they are making now if their performance is below the standards of the manager or owners opinion.

In conclusion, pay for performance is regarded as a program that will benefit an organization. However, there are numerous disadvantages at this time and employers should take care to implement programs that will encourage employees to work harder, but not take them away from their current duties. As of now, it may be a good thing for employers to stick to their current plans while implementing small changes every quarter fiscal year that will help the organizations bottom line.

References
Employment. 2011. In Merriam-Webster.com. Retrieved May 8, 2011, from http://www.merriam-webster.com/dictionary/employment
Billikopf, G., (2006). Incentive Pay (pay for performance), The Regents of the University of California, Retrieved January 4, 2013 from http://cnr.berkeley.edu/ucce50/ag-labor/7labor/08.htm
Lagace, M., (April 14, 2003). Pay-for-Performance Doesn’t Always Pay Off, President and Fellows of Harvard College, Retrieved January 4, 2013 from http://hbswk.hbs.edu/item/3424.html

References: Employment. 2011. In Merriam-Webster.com. Retrieved May 8, 2011, from http://www.merriam-webster.com/dictionary/employment Billikopf, G., (2006). Incentive Pay (pay for performance), The Regents of the University of California, Retrieved January 4, 2013 from http://cnr.berkeley.edu/ucce50/ag-labor/7labor/08.htm Lagace, M., (April 14, 2003). Pay-for-Performance Doesn’t Always Pay Off, President and Fellows of Harvard College, Retrieved January 4, 2013 from http://hbswk.hbs.edu/item/3424.html