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Compensation Programs: Seniority Pay Systems vs Performance Pay Systems - Research Paper Example

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This paper focuses on compensation programs use in United States and across the globe, the paper will analyze how seniority pay systems compare to performance pay systems…
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Compensation Programs: Seniority Pay Systems vs Performance Pay Systems
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Download file to see previous pages In the early 1900s, unions became a driving force in labor throughout the United States. They started advocating for payment systems that rewarded the efforts of the employees. The unions comprised of organized workers movements and advocated for organized systems for fair compensation. In United States, different attempts to enact laws regarding workers compensation were evidence even before 1900. Such states included New York in 1898, Maryland in 1902, Montana (1909), and Massachusetts (1908) (Williams, 1991). Later on, federal government with the aim of improving and standardizing the compensation system enacted more regulations (Berger & Berger 2000; United States. Bureau of Labor Statistics, 2011).
In Asia, there have been quite a number of reconstructions in the compensation system. The reformations are aimed at changing the system from seniority-based compensation in favor of performance-based compensation. Although the restructuring has taken quite some time, there has been quite a lot of success. In Japan, most organizations that previously favored the seniority-based compensation are gradually adopting incentive based compensation system. In South Korea, the compensation system is still under evaluation. Incentive programs are at the initial stages of implementation. Other countries that are gradually adopting the performance based compensation system include Indonesia, China, Philippines, and Hong Kong. In Asia, it is expected that more countries will continue adopting performance based compensation program to replace seniority systems which are increasingly becoming unpopular (Pierce, 2011).In the west, most countries have already adopted performance based compensation. compensation. The compensation-based system is likely to face challenges in the future. This is because some employees may fail to understand the criteria used to structure the workers payments. In seniority compensation program, the time an employee has worked for an organization was viewed as the best measure to be used in compensation. Therefore, became a popular way of levying out annual pay raises. In the recent past, the economics of the United States have expanded into global markets and the industries have shifted from manufacturing to service related industries. This has led to search for new compensation methods by new companies .The performance-based systems are usually determined by the need to promote higher levels of service on the part of the employees. It is important to consider the fact that the level of service delivery on the part of the employees is necessary for the general purpose of achieving higher performance among the working community. In essence, it becomes necessary to investigate the nature of service delivery from the perspective of the employees. Essentially, such systems require frequent appraisals in order to determine the capacity and value that an employee brings into the company. Pay Systems in the United States The payment systems in United States have evolved greatly over time. Employees’ ...Download file to see next pagesRead More
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Nice paper! Used it to complete an assignment for a management course. It was easy as ABC, for the first time in my life.
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