6b

Pay System in Organizations

Since last few years , companies and organizations have been formulating different ways to develop and design different payment methods on the basis of their performance depending on their particular organizational goals . This system , as Jeffery A Mello said , pay for performance programs reward to employees in the form of increase in salary on the basis of merit , bonuses , and stock options as for achieving the acquired performance levels giving due consideration to skills and competencies (Mello , 2006 ) These incentives motivate employees to increase their performance level increasing the

competition spirit as well overall performance of the organization

Academy of Management Journal as on first February 1998 published an article `An empirical analysis of a skill-based pay program and plant performance outcomes ' by Brian Murray and Barry Gerhart . This academic article reported that around 51 per cent of the large companies were making use of the skill or knowledge based pay programs in small portions of their organizations . It was found that the traditional approach of payment takes into consideration only the main features of the work employees need to complete , whereas the pay programs based on the skills were bestowing rewards on the basis of the performance and work shown by the employees that they termed as work-related attributes of employees (Murray Gerhart , 1998 ,

. 68 ) By offering incentives to employees on their performance and showing their different traits like skills , capabilities and knowledge , organizations were able to divert the employees towards several opportunities they can...