Ihrm--Pay for Performance

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International Human Resource Management

----Pay-for-performance System

----BLB10024-2

Prepared for: Qi Stephanie Zhu

Prepared by: HDBM120071103

Submission Date: 13th June. 2010

Word accounts: 2070 Words.

Introduction

With the developing of the society and the economy, pay-for-performance is becoming a new trend in HR management. Pay-for-performance is also called Merit pay or Appraisal related pay which is based on the post of the employee, and according to the technology content, responsibility and labor intensity of the post with economic benefit and the price of labor to decide the payment which includes: Perks, benefits, freedom at the work place, opportunities for learning & improvement and work environment. (Stella, 2007)

The concept of pay-for-performance is not a new thing. At the beginning of the 20th century, the porters in docks of Shanghai gain their salaries by the quantities they carried. In the 18th century in America, workers in farms who are picking the olive got their wages by the numbers they picking. And foe nowadays, pay-for-performance became more popular and suitable for use in many industries. According to the research for the top 500 companies in USA by in 1991, 35% of companies adopted pay-for-performance system while for 10 years ago, there were only 7% of companies used this method. (George T, 1998)

The reason behind use of P4P system

Compared with traditional payment of salaries, the main factor of pay-for-performance can be concluded as followed three reasons: first, it does well to employee’s salaries which can be connected with countable performance, and put incentive system into the company’s target and personal performance. Second, it is in favor of the salaries to incline to those outstanding performed employee which can improve company’s effective and save the cost of the salaries. Third, it is made for extrude team spirit and company’s image...