Types of Pay-for-Performance Plans
As Figure 11.1 shows, pay-for-performance plans can be designed to reward the performance of the individual, team, business unit or plant, entire organization, or any combination of these. All these plans have advantages and disadvantages, and each is more effective in some situations than in others. Most organizations are best served by using a variety of plans.
Unit of Analysis Micro Level Macro Level Individual Team Business Unit/Plant Organization Merit pay Bonuses Gainsharing Profit sharing Bonuses Awards Bonuses Stock plans Awards Awards Piece rate
FIGURE 11.1 Pay-for-Performance Programs
Individual-Based Plans
At the micro level, ...
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