The purpose of the pay for performance or financial incentive program is to utilize its human resources to their maximum potential in all areas and in the process to become more competitive, profitable, and team-orientated organization in the market place. The essential goal and value of the pay for performance or financial incentive program is to make all employees entrepreneurs in their areas of expertise within the company.
Pay for Performance is a highly debated compensation. The contra pay for performance view that incentive plans can simply not work. The Pro pay for performance side is the opinion that there are effective incentives that really do motivate. The whole debate arises because of the very fundamental assumption that there is a direct relationship between a companys productivity and its employees performance. Many managers believe that incentive pay drives creativity and productivity, and that people are primarily motivated by money, whereas the counter-argument finds evidence that pay for performance plans are not only difficult to design and implement, but can even de-motivate people.
Human Resource Management has become a key strategic issue of attaining competitive advantage, especially as it ties in with motivating employees to excel in their jobs and to
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