CULS Czech University of Life Science Personalni rizeni Payment schemes (based on work by Dr Joan Harvey)

CULS Czech University of Life Science 1. Incentive schemes Individual or group is given a bonus or other “incentive” based on achieving some target Group schemes sometimes considered “not fair” as not everybody contributes to the achievement, yet all get the same reward Employee or group must be able to see the link between effort and reward, otherwise the scheme becomes meaningless

CULS Czech University of Life Science 2. Profit-based schemes If the organisation makes a profit, the each employee receives a share of the profit. Can be achieved by: –Worker shareholders or share option schemes –Partnerships with the company –Profit sharing, where a percentage of the profits are formally given to staff (often as a percentage of salary) Advantages include creating a feeling of loyalty and feeling of belonging to the organisation.

CULS Czech University of Life Science 3. Human asset based systems Employees get rewarded for what they know, for their expertise, skills and/or qualifications they hold – and not directly for what they actually do. Encourages flexibility, multi-skilling and desire to participate in continuous learning Disadvantage is that there is no obvious link between work effort and reward Often seen in (UK) banks

CULS Czech University of Life Science 4. Job-evaluated systems Get paid for what you do – and only for what you do (unlike #3) If the job changes, the value needs to be reasessed Obvious relationship between the job/effort and reward Disadvantages include demarcation (“It’s not my job” attitude), and inflexibility

CULS Czech University of Life Science 5. Measured work schemes The minimum amount of work (and sometimes also the maximum amount of work) is defined for each day, week or work period. Common in the construction industry (“job and finish”) or manufacturing industry (“measured day work) Frustrates managers when job is finished early and the machinery is no longer in use Individuals/groups can work at the rate they desire as long as their allotment is completed in the period Disadvantage is that quality is sometimes sacrificed as a result of rushed work

CULS Czech University of Life Science 6. Performance-related pay Typically used for managers on short-term contracts Problems include: –Behaviour becomes too focussed on targets –Difficulties in measuring managers’ performance –Perceived to be associated with greater profits rather than higher quality

CULS Czech University of Life Science 7. Salaried schemes Rewards based on seniority, loyalty etc in published “grades” –Japanese and to a lesser extent, UK companies respect age, seniority, length of service and loyalty as a basis for rewards Good performance can be recognised by increments of more than one step Rely on Job Descriptions, and there is often an element of “trust” Provides security, predictability and guaranteed development Disadvantages include no “fast-track” salary increases for top performance and not obvious reward-performance relationship

CULS Czech University of Life Science Summary Companies tend to operate two or more pay schemes simultaneously, depending on job –Eg: at a car manufacturer, the production-line staff may be paid by a “Measured-work scheme”, the administrators may be on a “Salaried scheme”, board members on “Profit based schemes” or “Performance-related pay”, and salesmen on “Incentive systems” Rewards may not only be pay increases but may include benefits such as extra holiday, private medical treatment, company car, savings schemes or cheap loans