Plans

Running Head : PLANS

PLANS Write Your Name Here

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Compensation plans have a great and substantial impact on employee performance and motivation . Hence , choosing the right plan is very important since it can have many repercussions for the organization on the whole

Previously , many employers used the Cost-of-Living-Adjustments (COLAs This meant that the employers based their compensation decisions on the Consumer Price Index and in to accommodate the differences in the purchasing power of employees due to changes in

inflation , wages were adjusted annually . Many employees compare their cost of living to the wages they are bring paid and if there is an increase in the cost of living , they expect a simultaneous and equivalent increase in their wages . Thus , in to compensate the customers or the employees for changes in the price levels , their wages are increased to enable them to maintain their standard of living . This plan has its advantages and limitations . This is quite a straight forward system so the employers do not have to get into extensive or complex calculations different for each employee . It also ensures that all employees stay even since everyone gets the same annual increase in their wages (Tim McConnell 2010 . Previously , it was an effective method to keep employees motivated . But as business has become complex and different employees have needs , this method is not very applicable in today 's environment The biggest problem with this plan is that employees do not...