Individual Performance Pay Many employers compensate their employees by paying them according to their performance. Certain type of incentives may push the employee to strive for success within the organization to reach their personal goals. There are five types of individual performance pay (Noe, Hollenbeck, Gerhart, & Wright, 2011).
The piecework rate pays an individual for each item produce, and it does not matter how many items one individual produces. This brings to mind the ads in the paper that pay a person to sit at home and stuff envelopes. No matter how long it takes them, they receive pay according to how many envelopes they stuff (Noe et al., 2011).
The standard hour plan allows the employee to be compensated at a higher wage if the work can be completed before the standard time set to complete a task (Noe et al., 2011). Proof operators in the banking industry are an example of standard hour plan. An employee must be able to process at least 900 debits/credits in an hour. An employee’s hourly wage will increase if they are capable of exceeding the 900 per hour.
Merit pay is a pay for performance that has been set by an organization. Their level of performance determines the employee’s wages (Noe et al., 2011). Some educational districts are looking at paying teachers on a merit system. It is believed that this system will reward those teachers who are genuinely concerned about the success of students (Barnett & Ritter, 2008).
Performance bonuses are an addition to the employee’s salary/wages. The bonus must be earned during each pay period (Noe et al., 2011). The Veterans Health Administration awards their employees that go beyond their job description annually. The employees do not receive the bonus for doing their job in which they were hired. The employee must receive an Outstanding or Excellent rating to be considered for