The Objectives and Dynamics of Pay: Rationalizing the Value of Performance-based Pay System

ANTO COMETA

There are a lot reasons why people work, but in the basic scheme of employment or labor the most evident reason is that people work to earn money to cover their expenses or personal needs. Money is a means to an end – various necessities ranging from the most basic which are essential for the subsistence of the individual such as food, shelter and clothing to the material wants and desires of the person. The relative access to these needs and facilities is a major determinant of how much pay the individual acquires or earns. This is fundamental to the individual since this directly relates to the person’s standard of living and is deemed as a determinant to the value of the performance or services provided or to be rendered.

The significance of pay not only relates to the individual who is working but also to other components that compromise the employment relationship. It is of equal importance and interest to the employer as well as to the government. Pay provides motivation or characterizes the quality of performance needed by the employer to cover the cost of the labor performed. As for the government, not only does it provide proceeds for national undertakings but it affects the stability of the both economic and societal facets of the country such as employment, inflation – purchasing power and other state developments in general.

The main component of employee compensation is the basic pay given to the worker. However, due to the demand and competitiveness characterized by both labor and product markets as well as other objectives and factors that directly affect the performance, productivity and profitability not only of the organization but also the worker new strategies are emerging toward increasing the pay levels given to the employee.

One of the usual and conventional ways of adjusting or modifying the base pay in order to reflect or make it appear higher than what is given is achieved by combining benefits and other incentives either monetary or non-monetary. The objectives of determining pay may have one or more that may be in discord with each other (De Siva, 1992). These objectives can be classified into four distinctive categories. First is equity which includes the narrowing of inequalities, wage increase of the lowest paid employees, the concept of equal pay for equal work value among others. The second is efficiency which is reflected in efforts to connect or associate part of the employee’s wage to the productivity or profit, performance whether group or individual as well as acquisition of both skills and knowledge related to the execution of job functions. The third perceived objective is related to the stability in the macro-economic aspect. This has something to do with the levels of employment as well as other related factors that of could either contribute or impede the balance and sustainability of development of the economy of a country. Last identified objective is the effective allocation of labor in the labor market. This particular objective relates to the mobility of workers whether geographical or industry related since the motive of doing such is to the idea of acquiring a net gain and not only to meet the individual’s basic requirements.

A lot of organizations are now in search of sustaining their competitiveness in the market by means of increasing the pay given to the employee. The type of pay is mostly related to performance measures, this is primarily done in order to sop up the costs of labor of the organization at the same time motivate and recompense the employee for the performance. The conventional way of companies in order to secure increased wages and reward their employees is through job appraisal and promotion. However, due to the limitations on resources as well as achieving higher positions in the organization not to mention that current developments in the organizational structure becoming less hierarchical due to market demands and types of flexibility employed in the company, incorporating pay increases based on performance is perceived to be more attractive and effective rather than rewarding the worker through promotions. One of the methods or strategies that is gaining acceptance throughout different industries particularly in the services sector in order to increase the productivity and profitability of the company at the same time rewarding the worker is through performance-based pay. Moreover, the trend in paying the employees is not for the output produced or even for the labor input rendered but simply for the time spent on the job (Blinder, 1990).

There are several theories in human motivation which incorporates pay or pay system as a driving force in motivating their workers to achieve, increase levels or maintain satisfactory performance. The systems of pay given to the workers are now being integrated as part of the human resource management of organizations. This is primarily done in order to achieve the business strategies and objectives whether financial or employee-related since both directly affect the operations of the business. Pay is viewed as a matching element or a dependent variable to the employee’s performance and productivity, by increasing or providing additional pay based on increased productivity and performance is an indication that the company could its financial profitability and could achieve its business objectives.

Its is noteworthy to take into consideration that in designing or structuring a performance pay system, the type of system should highly promote the kind of performance that the organization requires and not just to increase its revenue. Fundamental principles should be laid out and that the objectives and targets should be quite measurable or realizable. Furthermore, the achievement of the performance pay system should be supported by operative approaches and strategies so not to establish that the targets and objectives are impossible to attain. As necessary, employ consultation or increase the involvement in the decision making process or designing of the system. By employing such actions, it could generate efficient or effective ideas, approaches and strategies that could contribute or lead to the achievement of the goals. The organization should also have a feedback mechanism to review the processes, procedures, outcome among others of both pay system and the targets and objectives. It is a excellent avenue in determining and assessing the key factors of either success or failure. Lastly, organizations should also provide trainings since these are quite beneficial to the company and its workers in achieving their goals both monetary and non-monetary. To reinforce the training programs, the company should employ Total Quality Management which consists of continuous improvement activities involving everyone in the organization, managers and workers alike in a totally integrated effort toward improving performance at every level (Goetsch and Davis, 1997). It could be integrated as part of the organizational and professional development program. In a quality organization everyone is constantly learning. Management encourages employees to constantly elevate their level of technical skills and professional expertise. People gain an even greater mastery of their jobs and learn to broaden their capability (Scholtes as cited by Goetsch and Davis, 1997).

References:

Blinder, A. 1990, Paying for Productivity, The Brookings Institution, Washington

Goetsch, D. and Davis, S. 1997, Introduction to Total Quality – Quality Management for Production, Processing and Services, Second Edition, Prentice Hall, Ohio

De Silva, S. 1998, An Introduction to Performance and Skill-based Pay Systems, International Labor Office, Geneva

Sustainable Progress in the Organization through Shared Responsibility and Social Partnership

ANTO COMETA

It has been a major dilemma in all organizations on how to deal with internal issues and conflicts arising from different values, views and interests of individuals. These disagreements more often than not become impediments or deterrents in achieving organizational objectives both internal and external. The challenge for parties concerned as well as for the organization is how to resolve internal discord in order to address the needs and interests not only of the individual(s) but also of the organization. Effective management and leadership often depend on the capacity to envision, bring about, sustain and modify valuable agreements among parties (Sebenius 1995). If we were to achieve efficiency and the sustainability of the business, we should highly take into account shared responsibility and social partnership within the organization.

Most people look for solutions by simply analyzing the matter based on what they deem is feasible, usually in the confines of their ivory towers. This may hold true to a lot of circumstances particularly those strategies that need to be imposed in order to get things done the way they wanted it to be without resistance and opposition. However, if we really wanted to recognize and address the matter effectively, we should put into operation proper consultation and negotiation between parties since these issues are of significance whether of common interests or not since it relates to organizational efficiency. Consultation is an avenue whereby parties could discuss and understand matters concerning disputes, positions and interests. Integrating consultation with negotiation puts these matters into concrete plans of action(s) in order to arrive at an agreement or partnership that would settle dissension between parties as well as possible risks for the organization. Negotiation is best understood as the process of potentially opportunistic dealings intended to move ahead the full set of individual interests by jointly decided action (Sebenius, 1995).

Responsibility entails accountability of all those involved throughout a certain process or course of action. It requires parties to be liable in all the phases of the process since these individuals comprise part of the assembly or constituent that collectively concerns the organization and that its impact affects individual interests and welfare. In order to create a just and unfeigned organization-focused undertaking, proper representation and consultation which should eventually lead to negotiation should be taken into account.

Dissecting the Rudiments of Work and the Individual: Do You Live to Work or Work to Live?

ANTO COMETA

Work and the individual have been regarded as the essential components of society and its institutions. The formation, growth and development of the state together with the rest of its machinery are derived from the collective functioning of individuals for the sole purpose of survival. Without the individual working, continued existence would not be possible. Dissecting the essentials of work and the values obtained and given by the individual provides a basic understanding on the worth of both work and individual to one another. But does an individual exist to provide and execute work or does the individual toils to survive?

Work has been defined in the general sense of the concept as the individual’s effort or activity performed for the purpose of providing goods or services which are of value to others. It is the creation of material commodities as well as services in which the individual may directly consume or vend to others. This provides remuneration which may be in any form whichever considered being part of the undertaking of paid or unpaid labor. Conversely, it could also be the cause of one’s disappointment and dissatisfaction. Whether the value could be seen to have minimal worth or of vast significance, how the individual perceive that particular value and how it affects his or her well being is of substance and of utmost importance.

The view of an individual functioning and existing to perform occupational activities could be deemed as somewhat fatal to one’s being. This particular discernment of an individual existing merely to provide and execute occupational tasks and functions is of less meaning or no meaning at all when carefully examined. The premise does not have any bearing on the individual’s existence as it does not provide any rationale in the individual’s life.

Work could not be estranged from the individual as work provides several indispensable values ranging from subsistence to its socio-psychological importance. These values are deemed necessary as they are needed in order for the individual to continue and provide worth to one’s self whatever that is. At the most, with respect to one’s existence, the individual whether compelled or not works to live and not the opposite.

Multi Tasking - A Disambiguation for a Slave Driven Job Function

ANTO COMETA

There’s a clear distinction between performing different tasks in order to be familiar with certain functions needed to execute appropriately a particular designation and requiring or dealing with various responsibilities to be able to swathe a nugget of activities essential for the business operation. If we will take the latter as the principle of multi tasking, it is a clear manifestation of employee mismanagement or human capital exploitation.

In third world countries such as the Philippines, the concept of multi tasking is a widely imposed attribute carried out in work places across all industries. Fraudulence in job acquisition has been one of the major sources of grievances and dissatisfaction by majority of workers who were given clear job functions prior to the commencement of the assigned task(s) and then transcended to deviations of the normative occupational description during the course of the worker’s employment in the company.

Multi tasking has been widely exercised and expected to be part of the job. In most cases, companies require the worker to perform several tasks which are oftentimes beyond the scope of the designation given. Even if the title or the role of the employee limits or sets the scope of the functions to a specific area of accountability, it has a propensity of being extended or curled in order to give way to lengthened work assignment.

Companies have a notion that multi tasking is not a bad business concept as it facilitates management of its resources, predominantly for those that do not have sufficient means to acquire or increase the manpower. This cuts or saves operational cost since it necessitates several different tasks to be performed by an individual. However, there is an important factor that has been overlooked which is directly connected to the systems of operations of a business, and that is the capitalization or investment in employee productivity. Productivity is measured or defined by the output generated by the individual in terms of the goods produced or services rendered. In labor terms, it is usually determined or quantified as the output created by the worker in a certain period of time.

Labor productivity is more often than not misrepresented as an exclusive central component of business operations. Employee productivity does not only shape the mechanism of the business but also affects the entire industry. It is not limited to the execution of tasks in the organization. It also concerns the development of the individual in terms of work and contribution in the industry and society. Multi tasking oftentimes hinder both the productivity and the development of the worker as efficiency, delivery and quality are compromised. Consequently, the worker and organization suffer from the cost of employing such aspect.