Sample HR Management Paper on Pay-for-performance plan

Pay-for-Performance plan

Modern organizations use different incentives to improve both quality and quantities production. Organizations that adopt incentives for quality production operate in the service-based industry. Product-based firms adopt incentives that increase quantity production. Direct incentives are awarded to employees as part of their contribution to the success of an organization. Indirect incentives – implemented as long-term plans – aim at creating a sustainable relationship between an organization and employees. Improving a positive organizational image, through ethical practices and professionalism, would be vital in maintaining profitability in a firm. A pay-for-performance plan that creates a strong employee-base as it improves an organization culture would be effective for any organization.

Organizations should consider a proposal that includes a pay-for-performance plan which improves professionalism among employees as well as improves organizational culture. Professionalism among employees ensures that production activities result in high-quality products. For instance, employees who execute their roles and responsibility using recommended professional approaches would enhance quality production. Similarly, a positive organizational culture is beneficial to any firm. Positive attributes of a firm can attract local and foreign investors as shareholders. A pay-for-performance plan that considers improvement in professionalism among employees and a positive organizational culture would be efficient in distinct ways. Investors use feasibility reports that capture international recognition of competent production services in a firm to evaluate investment viability. These reports are indirectly promoted by an effective pay-for-performance plan. Employees are encouraged to simultaneously work towards achieving professional standards in quality products as they improve their firm’s organizational culture. This plan is more effective to traditional pay-for-performance plans which focus on quantity production in both service-based and product-based firms.

Quality production of both services and products enhance profit-margins in an organization. Most companies use to pay-for-performance plans that improve quantity production in their daily operations. Employees are provided with a target which they work towards getting to one to qualify for an incentive. For instance, an employee which produces the highest number of units for a product is awarded cash at the end of the month. Such plans have proven effective for firms which produce seasonal products (Milkovich & Wigdor, 1991). Employees are motivated to produce more products to meet high demand for a commodity in a given market. The proposal in discussion promotes quality production by enhancing professionalism among employees and establishing a positive organizational culture. Both employees and the organization would benefit from the program in different ways. For instance, the career of an employee improves at a significant rate improving chances of working in a senior position at a young age. An organization would benefit from a positive image which creates more chances of expanding the scope of operation for the firm.

Importance incentives in the proposed pay-for-performance plan are objective and diverse. The pay-for-performance plan is objective as it aligns the principles of awarding employees with the firm’s mission and vision statements. For instance, the organization hopes to set new standards which improve quality of production among employees. An employee is awarded for improving quality production of a commodity in a group of employees. The pay-for-performance plan is diverse in that employees are categorized using different parameters (Park & Sturman, 2016). All awards, for instance, should not be awarded to male employees to improve on gender equality. Moreover, the best employee – who had a positive effect on fellow employees and the organization – is voted for in an open contest. Leaving the option for employees to vote for their best candidate for an award would improve on organizational politics in the firm. Organizational politics play a key role in shaping quality production in an organization.

There are numerous benefits of the proposed pay-for-performance plan for the company. For instance, professionalism in production activities would attract more consumers towards a product. Employees who engage in quality production would also improve the chances of national and international awards for achieving a new record of professionalism (Zhang, et al. 2015). Such a scenario would be advantageous to an organization as it would attract the best employees from a competitive labor market. Employees with high professional and academic qualifications would maintain high standards of production for an organization for a long time.

The proposed pay-for-performance plan would also create an effective transitioning process during succession planning. Employees who are awarded long-term incentives play a key role in the management of an organization (Kuvaas, Buch & Dysvik, 2018). Consequently, the organization would benefit from long and sustained quality production that might result in monopoly status in a competitive market. The plan would be mainly advantageous to the firm through high revenue generation and improving on company image.

Pay-for-performance plans are important to organizations as they motivate employees for better production services. Incentives adopted for pay-for-performance plans should be long-term and sustainably by the organization. The plan proposed in this discussion achieves has diverse advantages to both employees and the organization. This is contrary to pay-for-performance plans which aim at quantity production to meet the immediate demands of a market. Creating a positive organizational culture and improving professionalism among employees are appropriate principles for a progressive pay-for-performance plan.



Kuvaas, B., Buch, R., & Dysvik, A. (2018, July). Individual variable pay for performance,            incentive effects, and employee motivation. In annual meeting of the Academy of       Management, Chicago, USA.

Milkovich, G. T., & Wigdor, A. K. (1991). Pay for Performance : Evaluating Performance           Appraisal and Merit Pay. Washington, D.C.: National Academies Press.

Park, S., & Sturman, M. C. (2016). Evaluating Form and Functionality of Pay-for-Performance   Plans: The Relative Incentive and Sorting Effects of Merit Pay, Bonuses, and Long-Term         Incentives. Human Resource Management55(4), 697–719.

Zhang, Y., Long, L., Wu, T. Y., & Huang, X. (2015). When is pay for performance related to       employee creativity in the Chinese context? The role of guanxi HRM practice, trust in           management, and intrinsic motivation. Journal of Organizational Behavior36(5), 698-            719.