Team Based Incentive Rewards - It's Not All Roses

Pay Decisions at Performance Sports

Katie Perkins owns Performance Sports which is a mail-order golf equipment business. Performance Sports has sixteen people working for the firm and they all receive fixed pay. Ms. Perkins feels the need for a new purchasing agent in the firm with at least f five to eight years of experience in the same business. When setting up the wage for the purchasing agent Ms. Perkins must come up with a wage that would be beneficial for both sides or at least provides sufficient compensation for the new employee so that they want to work energetically for the her and the company. The factors that have to be considered while setting up the wage for this new employee are that since it is considered a managerial position the wage does need and has to be greater than the wage when compared to what is paid to the customer representatives and closer to the what the wage of the current assistant manager of the company is. Also, if Ms. Perkins plans on having someone who has five to eight years of experience in the business the candidates past wages, as well as their performance, past track record, the comparison with the wages provided by competitors for the same position must be evaluated.

Ms. Perkins has recently found out that one her competitors pays its customer service representatives wages on a pay for performance basis. Also, Ms. Perkins has learned that two customer service representatives in her company have expressed dissatisfaction with the current pay arrangement because they think that they are paid less compared to the profits that they generate for the company. Introducing a pay for performance system in the firm would be a tricky decisions for Ms. Perkins because a pay for performance system brings with it some advantages and disadvantages. A pay for performance system can motivate and retain key talent which in turn increases the overall productivity of the organization and creates a healthy competition among employees. The disadvantages is that this system can also create problems between the employees because it measures the performance on just one condition which is profit and not any other factors that should make up the overall performance of an individual. Also, employees become too much inclined to work only for monetary objectives. Another disadvantage is that at times pay for performance acts as an excuse for managers to not manage because they think that pay for performance is an automatic system and if someone is not performing then by cutting the employees pay they have done the job. The company has a duty to closely monitor the progress of individuals and help them to improve

The suggested new payment plan for the customer service representatives would be an better form of a pay for performance system. The new payment plan system will have a formula that does not just pay employees on the basis of their profits generated for the company but for