BU354 Chapter Notes - Chapter 12: Merit Pay, Piece Work, Victor Vroom
Document Summary
Motivating employees to achieve strategy include fixed and variable compensation plans. Fixed pay- compensation that is independent of the performance level of the individual, group or organization. Base pay and other forms of relatively consistent compensation (allowances) that satisfy the need for income stability. Variable pay- any plan that ties pay to productivity and profitability. Most have multiple types of variable pay plans. Cash bonuses or incentives most common short-term incentive. Variable pay facilitates management of total compensation by controlling base pay inflation. Accurate performance appraisal or measurable outcomes is a precondition of effective pay-for- Top performers must get top pay to secure commitment performance plans. Important requisite for effective variable pay: line of sight extent an employee can related his or her daily work to organization goals. Employees need to understand strategy and how their work helps to achieve it. Organize job so that it provides challenge and recognition needed to satisfy higher level needs.
