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Pay and Performance: Presented By: Quidez, Jerico Ebelte, Leonadyn E. Amoroso, Reshel Jhans Ledina, Sheila Rodela, Lovely
Pay and Performance: Presented By: Quidez, Jerico Ebelte, Leonadyn E. Amoroso, Reshel Jhans Ledina, Sheila Rodela, Lovely
Pay and Performance: Presented By: Quidez, Jerico Ebelte, Leonadyn E. Amoroso, Reshel Jhans Ledina, Sheila Rodela, Lovely
PERFORMANCE
PRESENTED BY:
Quidez, jerico
Ebelte, Leonadyn E.
Amoroso, Reshel Jhans
Ledina, Sheila
Rodela, Lovely
MONEY MOTIVATOR THEORIES
• What Is Taylor's Motivation Theory?
• Taylor's theory was actually the first of many motivational
theories in business. Taylor’s theory, also called Scientific
Management, could also be called the money as a motivator
theory. It was one of the first theories of motivation in the
workplace, notes EPM: Expert Product Management.
• To Taylor, workers were little more than cogs in the mighty industrial
machine, to be used as needed, to increase efficiency, output, and
profits. Taylor stressed money as a motivation in the workplace.
Indeed, workers were motivated only by money, Taylor said. That's
why his theory is often referred to as the money as a motivator
theory. For his efforts, Taylor has been praised by management
experts as the first true, and arguably most influential, management
consultant to this day.
• To Taylor, there was only one correct way to do each job, and workers
would need to be motivated to do their job exactly as management
described, either by coercion (such as the threat of firing) or with
money. As EPM further described Taylor's theory of scientific
management:
• Workers don’t usually enjoy work. Because of this, they need to be
monitored and controlled closely. Essentially, Taylor believed that
employees had a natural tendency to take it easy of slack off
whenever they could. He called this natural soldiering.
• Why Are Employees Motivated by Money?
• Taylor's theory, as noted, argues that workers are motivated by money
– and only by money, while employers want low labor costs. As he also
stated in "Principals."
• The two competing factors, higher wages and lower labor costs, are
not incompatible, Taylor argued. The key is getting workers to work
more efficiently, that is, to complete their assigned tasks correctly,
consistently – the same each time – and in the least amount of time.
Taylor's theory never explained why he felt that workers are motivated
by money. But other experts certainly have weighed in on the subject.
• The National Business Research Institute, for example, says that some
workers are motivated by money, while others are motivated by other
factors. "Research studies sometimes have conflicting results. The
reason has to do with the complexity of human behavior," says the
institute. This is only logical: You can't paint all humans – and by
implication, all workers – with the same brush. Different workers are
motivated by different things, some by money, and others by praise
and meaningful work. So, you cannot simply state that all employees
are motivated solely by money, says the NBRI.
PAY AND PERCEPTION
• Pay Perception
• When it comes to compensation, a new report finds employers, managers
and workers all have very different views of what's considered fair.
• Money and financial savings background pattern for richness and business
success themes design with seamless green and white silhouettes of dollar
bills and coins stacks, wallets and hands with money, piggy banks and money
bags
• Determining fair compensation for employees is one of the great enigmas of
the HR world: Get it right and employees are happy. Get it wrong, and critical
metrics such as employee-retention and engagement rates could take a
nosedive, which could then lead to bottom-line woes.
• With that in mind, employers should take special note of a recent
survey from Pay Scale, the Seattle-based compensation-data provider,
which found that employers and managers are far from being on the
same page with employees—or each other—when it comes to
compensation. Yet, even with the perception disparities uncovered in
the survey, experts say there are some best practices employers can
utilize to close that perception gap.
WAGES AND SALARIES
• Wages are usually associated with employee compensation that is
based on the number of hours worked multiplied by an hourly rate of
pay. Generally, the employees earning hourly wages will be paid in the
week that follows the hours worked.
Example of Wages
For example, a warehouse employee works 40 hours during the work
week. If the employee's hourly rate of pay is $15, on the 5th day following
the work week, the employee will receive a paycheck showing gross wages
of $600 (40 x $15). If the employee had worked only 30 hours during the
work week, the paycheck will show gross wages of $450 (30 x $15).
• Salary is associated with employee compensation quoted on an
annual basis, such as $50,000 per year. Many employees working in a
company's general office will be paid a salary. Often the salaries are
paid semi-monthly. That is, one pay date will be the 15th day of the
month for working from the 1st to the 15th, and the other pay date
will be the last day of the month for working from the 16th to the last
day of the month.
Example of Salary
To illustrate, let's assume that the manager of a company might earn a
salary of $120,000 per year. If the manager is paid semi-monthly each
paycheck will show a gross salary of $5,000 for half a month's work.
BASIS OF WAGES PAYMENT
(i) Wages of Time Basis:
• Although, various wage incentive plans are gradually replacing time wages, the
straight time wage persists as the most common form of payment. Wages under
this method are determined per unit of time that a worker spends in the factory.
The unit can be hour, day, week or month.
• If a worker’s wages are Rs. 25.00 per day, his total wages will be the number of
days he is present multiplied by Rs. 25.00. If he is paid 6 per hour and on a day he
works for 9 hours, his wage for the day shall be Rs. 54.00. Calculation is very
simple and, in addition, the worker is in no hurry (because his wages are
independent of the quantity he produces) and, therefore, can turn out better
quality work. In fact, if quality is of utmost importance, as in artistic goods, wages
should be paid on time basis.
• But in case of ordinary work, this system has many drawbacks. A worker
has no incentive to produce more and apply all his time in doing work.
Strict supervision is necessary. The efficiency of a worker will fall to the
level of the most inefficient worker, since the efficient worker will notice
that the inefficient worker also gets the same wages.
• The employer cannot be sure of the labour cost per unit because this
will change if output per worker falls or rises. Because of fixed nature of
many expenses, the cost per unit will increase much if the output falls.
Circumstances where Time Rate is Suitable:
• (1) Where work is not tangibly measurable like office duties drafting,
repair jobs etc.
• (2) Where the time is entirely governed by the speed of operation
such as in oil refineries and chemical processing.
• (3) Where quality of work is main consideration.
• (4) Where work is extremely unskilled like surveying, cleaning etc.
• (5) In a small plant where work of each
employee can be identified.
• (6) Where workers are under training
• (7) Where measuring of work is comparatively
costly.
Advantages of Time Rate:
• (1) Time rate prevents the workers from doing more work and earning
more through higher output.
• (2) It deprives the employer of the opportunity of lowering the cost of
production by means of higher productivity.
(3) Time rate method provides no impetus to increase individually
efficiency and makes the labor force generally efficient.
• If this method is adopted, it is desirable from the costing point of view
to have separate wage sheets for direct workers, department by
department, and indirect workers. From the financial point of view
one wage sheet for all workers may suffice, showing total wages
earned by the workers and the various deductions to be made from
the wages.
• (ii) Wages on Piece Basis:
• In this method, the time spent by the worker is immaterial and payment is made
according to the quantity of work done. Rate of wages is per unit of work. A
worker may be paid Rs. 5.00 per unit; if his output in a month is 300 units, his
wages for the month will be Rs. 1500 i.e., 300 x 5.00.
• The wage rate may be expressed even as so much per hour; in that case for
computing the wages, the output will have to be expressed in terms of standard
hours. Suppose a worker is paid Rs. 2 per hour. On a day of 9 hours, he produces
36 units, the standard time for each unit being 20 minutes. The output of the
worker may be stated also as 12 hours, i.e., 36 x 20/60.
• The system should mean a good deal of
incentive to do the best. Output will thus be
maximized and the cost per unit of output will
be lowered. The employer will also exactly know
the labor cost per unit. This helps in making
quotations confidently.
Precaution in Piece Rate Method:
• Care should be taken to fix proper and scientific rates from the very beginning. Any future
cutting of rates will be disastrous for relations between management and workers. The need for
proper rates is obvious when we consider that, generally, piece rates are fixed according to the
performance of the worker under time basis. Suppose a worker paid at 25.00 per day usually
produced 50 units.
• The management might be tempted to fix a piece rate of 50 paise. We should remember that 50
units per day was probably a low figure because the worker might have been wasting a lot of his
time. On piece basis, his performance might be much better and management might be tempted
to reduce the piece rate. From the very beginning, piece rates should be fixed on the basis of
time and motion study, if possible.
Circumstances Favoring Piece Rate Method:
• Production bonus means any bonus payable by the parties Under the
Contract on attainment of any specified rate, level or quantity of
production of hydrocarbons.
• A property structured staff bonus system awards bonuses only when
production and collection targets are reached. Bonus system give
team members a strong incentive to work together. A team that
works well together means less stress in the office and better
customer service.
• SUCCESFULL BONUS SYSTEM ADHERE TO THE FOLLOWING
FOUR RULES.
1. The bonus is based on revenue, not production. Bonuses based on
production are ineffective because you cannot spend what you have
not collected. The entire team needs to realize that revenue must be
collected to run an efficient business.
2. The program must be easy to understand. If the bonus system is so
complicated that staff members cannot tract their progress daily, the
system will fail to have any motivating effect. Explain how the bonus
system will work during staff meeting before you implement.
Tie the bonus to team performances. Many staff members tend to view
a bonus simply as extra pay that automatically comes their way.
Thinking that a bonus will occur regardless of performance encourages
a sense complacency, hardly conductive to creating a more productive
team. Team members must realize the bonus will only be earned when
the practice meets set goals.
4. The bonus system is about the entire team. For these parties to
meet its goal, everyone must contribute. When the practice does well,
then everyone does well. An effective bonus system can help create an
even stronger team, while increasing job satisfaction to both staff.
MERIT INCREASE PROGRAM
• Merit pay is an approach to compensation that reward higher
performing employees with additional pay, sometimes called
incentive pay. It is a tool that employees can use to make sure that
their best performing employees feel as if they are adequately
compensated for their contributions
• A merit pay increase also known as a merit bonus means that an
employee will get a bump in their normal salary , based on a
preciously agreed upon policy of conduct ,such as above average
efficiency and performance.
• To be engine for a merit increase an employee must be employed
with at least six months of continuous service before the merit award
date. An employee whose pay is the maximum of the salary range
may not be granted an increase that would cause the base salary to
exceed the maximum of range for the position.
• HOW ARE MERIT INCREASE DETERMINED
• Merit increase are an internally focused raise philosophy. Managers
crate their employees (or employees rate each other in a 360 evaluation
philosophy) usually bases on performance over the last year. Top
performers get a larger raises, while the bottom performers get no raise.
• Merit pay has advantage and disadvantage for both employees and
employers over a traditional pay system that puts the money in base
pay. Before implementing a merit pay system it is a good idea to review
the advantage and disadvantage of this approach to your employee’s
compensation
• ADVANTAGE OF A MERIT PAY SYSTEM
• A merit system is must applicable when detailed data available to
measure the performance of employees. Consider how that data can
push employees to achieve more, padding their own pay checks, as
well as the company's bottom line.
1. Communicate company objectives. Merit pay sends a powerful
message about how you want to see employees perform and what you
want to see them contribute. It confirms what you must value from
employers.
2. Let’s employee know where they stand. Making the range of the available
merit pay public allows employees to see where their increase falls in the merit
pay ranges established by your company pay plan. It can be a good way to
reward the employees that you must want to keep. When employees receive
less than the top increase, supervisors has an opportunity to describe and
discuss exactly how the employees will need to improve their performance to
qualify for the top merit increase during the next cycle of raises.
3. Aids in employee retention. Merit pay can help an employer differentiate
between the performance high and low performing employees and reward the
performance of the higher performers this can aid in retention, because no
employer wants to low the organizations best performers.
• DISADVANTAGE AND CHALLENGES
• Some business are not conductive to measuring, employee
contributions to clearly and definitely, making it difficult to establish
an effective means for merit pay. Consider whether or not you might
be trying to force such a system into an office where it won’t work.
1. Concern about favoritism. Without clear measurable, others easily
could dispute the outcomes when merit pay is determined.
2. Uses time the resources better spent elsewhere: the amount of time
and energy that organization invest in an attempt to make performance
measurable for merit pay including developing competencies,
measurements baseline for performances and so forth is better spent
on delivering service for customer.
3. COMMUNICATION TROUBLE
• Some supervisors communicate better that others, and this means
the effectiveness of merit pay sometimes can vary widely from one
department to the next based on the communications skills of
supervisors.