Organization-wide Pay

GAIN SHARING

• This is based on a bonus plan where employees are encouraged to

fully contribute to the company’s performance
• Gainsharing primarily emphasizes increased productivity and
improved performance of employees. This achievements of the
company are compared to a set baseline based on this, the gains
of the company are calculated and become the bases for bonuses
given to employees.
The Staffing
Process
 Rewards System

The Staffing Process

Companies also provide additional payments
and benefits on top of the employees’ basic
salaries. These form part of the company’s
rewards system and are given to motivate
employees as they perform their tasks.
 Contingent Pay

This is a pay scheme , which is given on top of

the basic pay rate and is based on the
employee’s performance, competency,
contribution, and skills . Contingent pay can be
applied to individuals or groups. .
Contingent Pay

Individual contingent pay can be implemented

along five schemes.
These are the following:
1.Pay for performance scheme
2.Pay for competency
3.Pay for contribution
4.Pay for skills
5.Pay for service
Individual Contingent
Pay
Pay for performance scheme
• On top of basic pay , an employee is given a
bonus based on performance.
• This pay scheme serves to motivate
employees to perform well in their jobs.
• One disadvantage is that the basis for
providing the reward may be subjective.
Therefore , the company should have a good
performance management system that relies
on the quality and not the quantity of work.
Individual Contingent
Pay
Pay for competency
• This is based on the knowledge , skills , and
abilities that employees have that they apply
on the job.
• This encourages enhancement among
competencies among employees but may be
difficult to assess since it ignores output
levels.
• An excellent competency framework is
required in order to implement this scheme.
 Individual Contingent Pay

Pay for contribution

• It focuses on the combination of employee
competencies and output levels.
• This schemes provides employees the opportunity to
simultaneously develop their competencies and
increase their output levels. However, this may be
difficult to manage because managers will have to
assess both the competencies and performance
employees at the same time.
Individual Contingent Pay
Pay for skills
• This payment depends on the skills acquired by the
employee.
• This requires a worker to undergo training and gain
certification for certain skills or competencies.
• The advantage of this scheme is that it encourages
employees to learn more skills and avail of trainings
and development. However , this scheme may be
expensive because a company needs to allocate
resources for training.
 Individual Contingent Pay

Pay for service

• This is usually paid yearly on the basis of an
employee’s continued service.
• This scheme treats all employees equally regardless
of performance , skills acquired , or competence
level. However , implementing rewards based on
length of service fails to reward those who
contribute more to the achievement of company
objectives despite being the company for only a
short period.
Group Contingency Pay

Group contingency pay , on the other hand

may be implemented through two schemes
namely:

1.Team-based pay
2.Organization-wide pay
Group Contingeny Pay
Team-based Pay
• This is given to groups of employees who have related jobs
and are assigned to work on a certain project.
• This reward is based on the achievement of a certain quota or
service delivery standard.
• Team-based pay is usually given at a rate proportionate to an
employee’s basic pay.
• This scheme is effective for highly cohesive groups.
However , this may also spark conflict within the team as
employees who consider themselves to be contributing more
to the achievement of the team are likely to be disappointed if
bonuses are divided equally..
Group Contingency Pay

Organization-wide Pay
• This is given to employees on
the basis of the achievement of
organizational goals.
• There are two types of
organization-wide payments:
1.Gainsharing
2.Profit Sharing
 Organization-wide Pay

PROFIT SHARING

• This refers to a scheme where employees share in the profits of

the company either through cash payments or shares of stocks.
• The value of the incentive is determined by the management .
Usually, the management decides which portion of the profits will
be shared with employees.