PAY FOR PERFORMANCE

Descriptions

 Both Reinforcement  Theory and Expectancy Theory suggest that 

money can be a powerful motivator when pay is based on 

performance. Extensive research has confirmed that 

performance based pay systems significantly increase job performance.

Incentive compensation plays a strategic role in increasing

 organizational effectiveness. One of the popular 

recommendations is to offer financial incentives that are directly 

tied to the productivity. These incentives programs, loosely 

referred to  as pay for performance have significantly increased

 productivity in organization where they have been installed and

 surveys generally find that they also have positive impact on 

employee morale.

There are numerous method of rewarding individual efforts.

 Most pay for performance plans are either individual, group or

 employee wide incentive plans or some combination of all three.