Question

Plagirism is Strictly Prohibited

.

Question number two: (500 words)

How can the use of incentive compensation programs that clearly links pay to performance improves an organisation’s chances of achieving its organisational objectives?

.

Question number three (400 words)

Compensation programs have been adopted by organisations of worldwide operations. What problems can arise if these programs are not used fairly?

Answer 1

Question 2:

Pay to performance is a kind of compensation plan wherein employees has been allocated with certain variable pay as incentives according to their productivity.

Pay to performance improves an organisation’s chances of achieving its organisational objectives through below ways:

1. Increase in Productivity: One main organization objective is to increase its productivity and profitability year on year basis. This can be achieved by pay to performance compensation plan wherein the employee desires to earn additional income apart from his salary.
2. Cost Reduction: When the employees thrive to achieve more and increase productivity work can be get done by fewer employees, thereby reducing labor cost and other cost which in turn adds to profitability of the organization.
3. Retention: Good employees can be retained by the organization wherein their productivity pays and there by not losing to competitors.
4. Motivation: A highly paid employee is highly motivated, since performance is purely based on their hands they would thrive to work hard thereby achieving the organization objectives.
5. No Limit Income: Under this incentive scheme the employee can earn how much ever income he wishes to. This commission encourages them to run for the target wherein the company’s sales target can be achieved simultaneously.

Question 3:

The problems that can arise if the compensation programs are not used fairly are explained below:

1. Partiality: One of the main issues with this plan would be partiality if the performance standards are subjective. The supervisors can unfairly distribute profits to non deserving employees.
2. Hit on Quality: Since this plan purely concentrates on the productivity level, employees tends to compromise on the quality.
3. Conflict: Since each employee is competing each other there may be lack of team work and everyone is trying to achieve individual goals might raise conflicts among co workers that would lead to pure lack of coordination.
4. Treasure Building: Greed on earning more and more obviously put pressure on employee wherein sometime it leads to low performance.
5. Mal- Practices: In order to earn more there may be changes of mal practices by employees like entering wrong data, providing wrong invoices etc.