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The majority of the modern companies tend to employ person-focused payment systems in their management process. Such an approach allows managers to control and objectively evaluate the efficiency of every worker’s professional performance. “Determining the bases of pay,” enterprises choose their management style and regulate their wages expenses according to the productivity rates (Malik, 2018, p. 134). However, person-focused pay programs have some advantages and disadvantages both for corporations and employees. Despite minor detriments, a person-focused approach allows evaluating the productivity of the workers, motivating them, and increasing the quality of their performance and the success of a company as a whole.
Considering the benefits of the person-centered payment system from the employer’s perspective, it is essential to underline that this approach guarantees the business’ professional growth and its success in the market of services or products. First of all, the performance-based payment gives a firm manager an opportunity to motivate the employees and make them utilize their skills for high-quality performance (Shields & Dolle-Samuels, 2015). Such managing approach increases workers’ productivity and enforces their interest in retaining within the company. It “creates healthy competition amongst employees” and contributes to the high quality of work of the whole enterprise (Rehman & Abbas, 2013, p. 513). Thus, the performance-oriented payment proves to be an effective stimulator of the corporation’s development.
At the same time, the employees also benefit from the company’s utilization of a person-focused payment system. For example, a staff member who puts more effort and time in his or her job shows better productivity results and can be rewarded with “maximum pay while having maximum performance at work” (Rehman & Abbas, 2013, p. 513). According to the discussed system of payment, the worker is highly motivated and self-dependent in the workplace. He or she acknowledges the responsibility for the results of the work not only for the personal well-being but also for the success of the company. Such a person is capable of working overtime, upgrading his or her skills to increase productivity and, as a result, the earnings.
However, there are some disadvantages to this approach for both company managers and workers. One of the drawbacks of such systems lies in the probable occurrence of external factors influencing the productivity of a worker. For example, the completion of some tasks depends on the performance of a group of people. However, the productivity of each person separately is taken into account when evaluating their work. If one specialist in a responsible group fails, it affects the efficiency of the work of a whole group (Malik, 2018). That is why it is essential to justify the person-focused pay programs to the requirements of particular working processes. Also, experienced professionals perform better than new workers. That is why inexperienced employees lack financial motivation at the initial stages of their careers.
In conclusion, despite some external factors influencing employees’ productivity and the lack of motivation for inexperienced employees, the person-focused payment system is an effective tool for workers’ motivation and company’s efficiency and compatibility in the market. When the worker’s salary depends on his or her productivity (amount of services provided or products made), he or she becomes self-dependent in the organization of the working process. Better performing professionals have higher wages and retain inside the company, thus contributing to its professional growth and profit. Therefore, both companies and employees benefit from the person-focused approach in the payment system.
References
Malik, A. (Ed.). (2018). Strategic human resource management and employment relations: An international perspective. New York, NY: Springer.
Rehman, R., & Abbas Ali, M. (2013). Is pay for performance the best incentive for employees? Journal of Emerging Trends in Economics and Management Sciences, 4(6), 512-514.
Shields, J., & Dolle-Samuel, C. (2015). Developing person-based base pay systems. In J. Sheilds et al. (Eds.), Managing employee performance & reward: Concepts, practices, strategies (pp. 202-218). Cambridge, United Kingdom: Cambridge University Press.
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