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Strategic Pay and Organizational Behavior - Assignment Example

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The "Strategic Pay and Organizational Behavior" paper compares the PRP and PBR system of variable pay, describes the Use of 360-degree appraisal in Performance management, effects of employee participation on performance, and training and development of employees at an organization…
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Strategic Pay and Organizational Behavior
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Download file to see previous pages Both, Performance-related pay (PRP), as well as  Payment by Results (PBR), are based on the notion that if a worker can vary output by increasing his efforts, the hope of increased pay will lead him to perform his best. Both methods can be applied to an individual as well as a group level. Below is a critical comparison of the two:
Defined in simplest of terms, payment by results can be defined as the scheme of paying incentives in which, the bonus or the variable portion of the payment will be dependent on measurable values of outputs, within studied time limits.

Advantages: The primary advantage of this scheme is the inducement and motivation of workers for higher efficiency and great output. It is better than fixed pay because of the reason that fixed pay removes the insecurity in the minds of employees which makes it difficult to improve performance. Increased productivity leads to a reduction in total as well as unit costs. Other advantages of this scheme include reduced supervision, better utilization of resources, reduced scrap and lost time, and reduced absenteeism and turnover.
Disadvantages: This system, however, suffers from many drawbacks. The quality in this system is likely to deteriorate unless sufficient steps are taken to maintain quality through checking and inspecting. In some cases, the cost of deteriorated quality may offset the advantages gained by increased output and lower costs. This system also leads to more resistance towards change to newer machines, techniques, etc, as employees might fear of lower earnings owing to the revival of a new piece or bonus rates. Because of these reasons, it has been found that PBR leads to increased costs in industries such as paper-making and coal mining (Thakur, 1985). Another problems faced by this scheme is the violation of security norms in order to get more output, jealousies amongst workers, and the setting of piece or bonus rates.

On the other hand, performance-related pay refers to the concept of paying an employee based on the assessment or appraisal of employee performance against previously set standards.  ...Download file to see next pagesRead More
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