In the modern-day concern universe, the competition is really high and every bit the outlooks are at its vertex. The commercial success today, depends on employees utilizing their endowments at the fullest. The employees endowment can be used to its upper limit if decently respected and awarded every bit good. There has to be some factors that can direct them to work hard and expeditiously to come up with winging colorss.

In this context, there enters the construct of payment and wages direction. It is timely payments and wagess that ignite the employees to set excess attempt into the occupation. Now, what is meant by payment and wages?

Pay is cardinal factor of human resource direction as it is the chief ground why people work. “ Payments and wagess ( The Strategic Managing of Human Resources, John Leopold, Lynette Harris, and Tony Watson ) are chiefly concerned with how employee part is recognised through pecuniary wagess, with an accent on the usage of wage as a strategic agencies of alining single attempts to organizational precedences. ”

In the organisational footings, it can be said that wagess and payments is the sum sum of pecuniary, non-monetary and psychological payments that an organisation provides for its employees in exchange of work they perform. Therefore, payment and wages direction is a critical facet of human resource direction today and can non be left unnoticed if an organisation wants to derive maximal net incomes.

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Payment is something that every one plant for as it runs the fiscal facets of every employee. Without payments, there is a really rare individual who wants to work voluntarily. Payment activates the employee to execute to his best and wagess are the excess top-ups to his present wage.


As it can be understood that payment and wagess are of import for the growing, success and net income of both the employee and administration. Payment and wages can optimise the employee ‘s working in the undermentioned ways:

Wagess and payments shape behaviour-

they make the passage to a healthy life style more gratifying

they can turn ends into wonts

they help to keep a positive attitude

Wagess and payments are motivating-

they give extra ground to work for

they help to remain on path

they give encouragement

Wagess and payments help construct confidence-

employee additions assurance when rewarded

Therefore, for the success of an organisation, it is extreme of import to take a proper attention of its employees in all ways. It is merely through proper payments and wagess strategies that the public presentation of an employee can be enhanced which in bend brings net income to the whole organisation.


Payment and wagess direction is an of import challenge for present twenty-four hours directors. The payment and wages system should win in accomplishing its cardinal aims. The direction must run into legion economic and behavioral aims:

Support the organisation scheme

Retain capable employees so that turnover is held to an acceptable degree.

Ensure internal and external equity.

Be sustainable within the fiscal agencies of the organisation.

Motivate employees to execute to the maximal extent of their capablenesss.

Comply with legal ordinances.

Be expeditiously administered.

Promote organisational citizenship.

Therefore, for the success of a payment and wages system depends if it is able to hike the employees morale and construct in them trueness and trust. Similarly if a wages system increases an organisation ‘s market portion, make new markets and foster the company ‘s public presentation can be said to be a perfect wages system.

Reward direction at A­Sony Pictures Entertainment

At Sony Pictures Entertainment, as a portion of wages direction system all eligible employees are provided incentive chances. The company ‘s public presentation assessment procedure promotes fairness and wagess strong subscribers who help to accomplish company ends.

Sony Picture Entertainment has two fillip plans, the ASPIRE Program and the Screenlighter Spotlight Program which provides chances for employees to have wagess.

The Aspire Program awards hard currency fillips to employees who meet or achieve the one-year ends established at the beginning of each financial twelvemonth.

The Screenlighter Spotlight Program provides hard currency payments to eligible employees who demonstrate extraordinary attempt, beyond their regular occupation duties.

This illustration clearly illustrates that the wages and payment system are in topographic point to accomplish organisation ‘s ends and aims. ( hypertext transfer protocol: // )


Any action is awarded in its ratio with the public presentation. The more you perform the more you gain. The wages mechanism of any organisation to a really great extent decides the overall public presentation of the employee and finally, the organisation ‘s turnover. The more the turnover the more the net income and, therefore, best the wages direction system. The reward direction procedure can be better understood by the pictural below:

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The wages direction should decently measure the occupation of an employee and so measure the public presentation and so should make up one’s mind his/her wage construction and design the wages scheme.


Basically, there are two types of wagess.

Extrinsic wagess

Intrinsic wagess

EXTRINSIC wagess fulfil the basic demands for endurance, security and acknowledgment of an employee. This includes fiscal payments, working conditions, and managerial behavior.

INTRINSIC wagess mean fulfillment of psychological conditions. ( Bartal and Locke, 2001 )

The employee wagess has a broader mentality and can be studied in a great item.


Individual Wagess

Team Wagess

Organizational Wagess


Basic Wage


Piece Rate




Paid Leave



Team Bonuss

Addition Sharing

Net income Sharing

Employee stock ownership plan

Scanlon Plan


Time: Maintaining work


Energy: Performing undertakings

Competence: Completing undertakings without mistakes.

Cooperation: with colleagues

Committedness to institutional ends

( Human Resource Management-Theory and Practice, 4th Edition, Bratton and Gold )


Basic Wagess:

It is a basic payment method given to every employee in return of his work.


Employees willing to work excess hours for excess rewards are awarded with overtime as per their work efficiency.

Piece Rate:

It is a payment manner in which the employee is paid for each unit of production at a fixed rate.


Employees conveying excess concern to the organisation are paid committee in regard of their work.


It is an excess sum of money paid to an employee as a portion. Bonuss are designed to reenforce corporate individuality and public presentation. ( Armstrong ‘s Handbook of HRM Practice, 11th Edition, Michael Armstrong )

Example of Ford Bonus Schemes for its employees:

Ford Motor Co. has assured its 21,300 salaried employees they will acquire fillips for 2010 if the car shaper meets certain marks. The new fillip strategy puts all of Ford ‘s salaried employees in the U.S. and Canada under the same fillip program as upper direction. ( hypertext transfer protocol: // id=596389HYPERLINK “ hypertext transfer protocol: // id=596389 & A ; cat=5 ” & amp ; HYPERLINK “ hypertext transfer protocol: // id=596389 & A ; cat=5 ” cat=5 )

Merit Wage:

Merit Pay is given to employees as a portion of a individual ‘s one-year addition on the footing of an overall public presentation assessment. This award method has a long path record and is normally regarded as an effectual incentive. Merit Pay is implemented on an institutional broad footing to give all employees an equal chance for consideration.

Professionals and cons of Merit Pay

Allows the employer to distinguish wage, given to high performing artists.

Allows doing difference between single and company public presentation.

Allows the employer to satisfactorily honor an employer for a finishing a undertaking that might non be repeated.

But in merit pay the wage is subjective.

Paid Leave:

Employees are besides awarded paid foliages in bend of their regularity and subject at work. Employees are given payments when they are at leave for a certain period of clip.

Example of Sony Pictures Entertainment Paid Leave Schemes:

Eligible employees receive 10 yearss of paid holiday per twelvemonth. Additional paid holiday clip is provided as the length of their uninterrupted occupation additions. ( hypertext transfer protocol: // )


Incentives are given to the employees as unconsolidated payments or gifts such as vacations, verifiers and so on.

Performance Related Wage:

Performance related wage is one of the critical rewarding system followed by most of the booming organisations. Both the employees and employers appreciate public presentation related wage because it is just in pattern. It depicts simple principle-‘the better you perform the better you gain. ‘

Performance related wage means the variable portion of wage which is awarded as per the employee ‘s public presentation. ( Performance-related wage policies for authorities employees, by Organization for Economic Co-operation and Development ) .

Therefore, public presentation related wage can be used as a generic term to depict a assortment of payment systems tantamount to an employee ‘s public presentation. Performance related wage can profit both employers and employees. By stressing the importance of efficiency and effectual occupation public presentation, employers can profit from higher productiveness and quality work. Higher wage can be targeted at the better performing artists, promoting them to remain with the company and go on to execute to a high criterion. Good employees benefit from excess wage in return for excess quality of public presentation. ( Human Resource Management-Theory and Practice, 4th Edition, Bratton and Gold )

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Therefore, it is really clear that public presentation and wages are straight related to each other. An organisation set some ends for increasing its market and net incomes and employees are trained to accomplish these ends and so rewarded as per their public presentation.

Performance-related wage replacing the one-year fillip:

HR services house, Hewitt Associates study depicts that alternatively of an one-year fillip, employers are progressively choosing for public presentation based fillips that must be re-earned yearly. These variable wage programmes are now offered by about eight out of 10 employers.

Types of public presentation related wage

Individual Performance Related Wage:

Employee is rewarded based on his single public presentation. When an employee performs to his fullest and best, he is awarded with virtue issues.

Team-based Performance Related Wage:

Under this system, employees are awarded on the footing of their public presentation in a squad or group.

Competence related wage:

This system awards the employees based on their accomplishments and competency. It is a method of honoring people entirely or partially by mention or accomplishments they demonstrate in transporting out their functions. ( The Strategic Managing of Human Resources, John Leopold )

Contribution related wage:

In this system the public presentation is counted depending upon the part of employees in carry throughing a undertaking.

Example of public presentation related wages at Arcelor Mittal Group:

At Arcelor Mittal Group to use the full potency of the staff, organisation provides a supportive substructure leting participative mark scene, decision-making and just, public presentation based wage. An integrated performance-reward system measures performance-reward system steps public presentation consequences and allocates commensurate compensation as portion of a entire reward civilization. ( hypertext transfer protocol: // pid=25HYPERLINK “ hypertext transfer protocol: // pid=25 & A ; mid=24 ” & amp ; HYPERLINK “ hypertext transfer protocol: // pid=25 & A ; mid=24 ” mid=24 ) Therefore, public presentation related wage system is one of the just agencies of presenting employees and besides every bit acceptable by the employers.


Team Bonuss:

By squad fillips is meant employees are awarded with fillips as per their as a squad. The entire squad attempt is awarded on the achievement of the undertaking.


Addition sharing is the system of sharing with employees greater than expected additions in net incomes or productiveness. ( Human Resource Management, Robert L. Mathis, John H. Jackson )

It involves regular fiscal payments to employees, improved consequences for the organisation, and regular audience with employees about how to better public presentation. Gain sharing is widely used by the little every bit good as larger houses. Honda Motor feels that gain sharing is an advanced wages system that enhances organisational development. ( hypertext transfer protocol: // )


Net income Sharing:

Net income sharing is a system in which employees are paid equivalent to an in agreement proportion of the organisation ‘s net incomes. Thus it is a system which gives employees a portion in the net incomes of the organisation. Each employee receives a per centum of those net incomes based on the company net incomes. It is one of advanced manner to give employees a sense of ownership in the house.

Example of net income sharing strategy at John-Lewis Partnership:

For the past 10 old ages, John Lewis Partnership has made profit-sharing between 9 % and 22 % of one-year wage. The profit-sharing is based on net incomes for the trading twelvemonth get downing each February, and is determined by the administration ‘s partnership board. After any capital is held back for reinvestment, the staying net income is distributed among its 64,000 employees. ( hypertext transfer protocol: // )

ESOP ( Employee Stock Ownership Plan )

Employee Stock Ownership Plan is a method in which employees of a company can have a portion of the company they work for. The employees can have stocks and portions of their company as a fillip or can purchase them straight from the company.

ESOP is chiefly designed to honor and actuate employees. It can besides be regarded as a retirement program which an organisation may do available to its employees. Participants in the program are non taxed until they receive benefits from the program, and a company may be eligible for certain fiscal inducements such as decreased revenue enhancement rates in return for set uping the program. ( http: // )

ESOP illustration from Sony Pictures Entertainment

At Sony Pictures Entertainment, eligible employees can purchase American Depository Receipt ( ADR ) common stock in the parent company, Sony Corporation, through automatic, after-tax paysheet tax write-offs. ( hypertext transfer protocol: // )

Scanlon Plan

The Scanlon Plan was developed to incorporate the involvements of the employees with the involvements of the company so at that place would be a strong spirit of cooperation between employees and direction. Milkovich and Newman, 1987 says- ” the Scanlon program is a participatory doctrine of direction that involves a wage inducement system and a suggestion system. The cardinal component of this program is that the employee benefit, through wage, from the jobs that they help to work out for the organisation. ( Pull offing Organizational Behaviour, Henry L. Tosi, Neal P. Mero, John R. Rizzo )


Each every person needs some backup force to execute excess. There has to be some ground for which a individual can execute above the mean and normal outlooks. In the instance of employees, these actuating factors are their awards and inducements which they get in return of their public presentation in the organisation. Incentive awards and employee acknowledgment are of import and utile for both the employee and the employer. Incentive award and employee acknowledgment are an of import portion of an employer ‘s pay-for-performance compensation scheme. On the other manus, an employee benefits for his excess attempts and win publicities for his excellence in the public presentation.

Therefore, it is really of import on the portion of employer to present an employee with virtue issues so as to maintain doing the employees executing better and better. And, on the portion of employees besides the awards are really really of import as they inspire them.

Example of Honda Motors on employee benefits:

At Honda Motors, the employee labor brotherhood has refused to take one-year rewards and urged for the employee benefits. Now, the organisation is concentrating on the employee benefits in order to quiet down the work force. Furthermore, it is just for both sides as employees will have what they deserve and employers can honor who truly deserves the benefits for his/her excess benefits. ( http: // )


Management has to be excess careful in honoring employees. It is of paramount importance to honor the right individual with right virtue. Many factors have to be taken into history for proper wages direction. Directors must put valid criterions for the wagess and skillfully supervise the working of employees and after analyzing, reward the right individuals.

On the portion of direction following factors should be considered while honoring employees:

linkage between wages programs and corporate ends

clear and flexible ends

proper justification in footings of how reward programs will assist to run into concern demands

proper preparation to employees accomplishing the set marks

proper monitoring of the employees

proper analysing of the public presentation of employees

compatibility with short and long-run aims

grade of employee credence of the inducement program

honoring employees in proportion to their public presentation

linkage between the inducement system existent public presentation ( Just-in-Time fabrication: an debut, T. C. Edwin Cheng, P. Jarvis )

These are the cardinal factors which directors should maintain in head while planing the wages scheme. It is really of import for the directors to happen the right individual and wages him tantamount to his public presentation.


To reason, it can be said that all good work should be appreciated and awarded. In the corporate sector today, employers must give proper attending to its work force so as to acquire maximal from them. The successful organisations are successful non merely because they have satisfied clients but because they have satisfied work force.

Therefore, for the success of any organisation proper attention and attending has to be taken of its employees. Employees must be triggered to work expeditiously and efficaciously by some agencies. Employees must be given opportunities to come up with advanced thoughts and do them true. And, those employees who win must be awarded with benefits so that they may go the inspiration for other employees.

Honoring employees is a system that boosts the working capacity of an employee. And, he therefore performs at his best in the hope that he is traveling to be rewarded for his public presentation. Therefore, it is ever good to honor employees with virtue issues. Furthermore, the modern-day commercial universe calls for the modern-day directors to non to handle payments and wagess as an disbursal but use it to act upon the employee behavior and better organisation ‘s public presentation. ( Human Resource Management: Theory and Practice, 4th edition, Bratton and Gold )


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