Question

You have been asked to suggest ways to align remuneration and benefits plans with the performance management system. Suggest four options for doing this. Choose the strategy that you think would be most successful giving reasons for your answer.

Answer 1

Strategy to align performance management system with compensation and remuneration:-

Compensation or pay system can be divided into two parts on the basis of performance - Individual incentive and group incentive and they further divided into 2 parts each. So there are 4 options in total in which performance management can be aligned.

1.Merit pay system- It is a system where remuneration is based on an individual performance. Higher the performance bigger the incentive.

2. Piece rate bonus system- It is a payment system where bonus or wages is to be paid on the basis of the efficienct of the worker or employee.

3.Small group incentive system- When a small group of employees are handed over a project and they compelte it efficiently and effectively they are to be rewarded with incentives for their performance.

4. Profit sharing bonus system- Bonues are non taxable so when company makes profit it can be shared between employers and employees. Bonuses are extra reward for the employees efficient performance.

The most successful strategy for this may be merit pay system according to me because it focus each and every individual's performance and due to this kind of remuneration system they get motivated to perform well for earning more.