Individual Pay Plan Compensation: Michelle Company

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Question :

Explain Individual Performance Pay Plan  and Group Performance Pay Plan. Imagine that you are employee at Michelle Company, write which plan would you choose among the two and why. 

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Answer :

Individual Pay Plan Compensation

Michelle Company

Individual Performance Pay Plan 

After analyzing the performance pay plan, I could say that the pay for performance plans are ways of compensating the employees based upon their productivity, used as a means to improve individual productivity by providing them with incentives and benefits on each sale. Therefore, such methods are used especially in professions such as sales and commission based jobs (Lagerström, 2012).  It is the method to align the interest of the employees and staff members of the organization with the organizational development (Flammer, & Luo, 2017).

Group Performance Pay Plan

The group performance pay plan is prepared to strengthen the team work. Raising the group performance and teamwork, the payment and incentives are given as lump sum amount to the entire team on achieving the target. In case one member of the team fails to perform he will receive his share, similarly an increased effort will not increase the incentive (Celliah, 2015).

As An employee at Michelle Company, Individual performance pay plan would be the chosen over Group Performance pay plan for two reasons (Shields, et al. 2015). 

This type of payment plan allows competitive spirit to grow and add more chances to stay productive and not leaning on others for the work, the group payment plan, on the other hands is responsible for the initiation of business politics and  the blame game. The individual performance plan will help identify the loopholes in the performer’s work and will open ways to find a solution in order to achieve more (Shields, et al. 2015).  In this type of pay plan the input (Hard work, ideas, skills, money, learning and efforts) is directly proportional to the output (Rewards, awards, compensation, incentives.) There is a chance to earn more or less depending upon the requirement as opposed to group pay plan, where even if we need more incentives in a month there are less chances we earn them through individual performance in the group (Nyberg, Pieper, & Trevor, 2016).

The opportunity to gain awards and earn incentives and rewards together with the base income leads to an improved motivation and a longer stay in the company. Preferring this kind of payment plan will help achieve enhanced motivation and hard work and reduced procrastination. The impact of procrastination will be seen directly on the individual performance and pay benefits. There will be no impact of the low performing team on an individual payment and incentive. With each achievement, there will be a target to perform even better in order to provide quality product. The speed of delivery of results will also be enhanced in order to take up new products to gain more incentives. It has strengthen the employee outcomes but also align their interest with the organizational growth and development at large.