Pay for Performance Systems are becoming more and

more part of the current compensation landscape. Discuss

their applicability in the context of individual and team
performance. Identify critical success factors in the
Caribbean Region.
Pay for performance plans signal a movement away from entitlements.
Rather Pay will vary with some measure of individual, team or organizational
performance.
Pay for performance systems are becoming more and more a part of the
current compensation landscape. By motivating workers to be more efficient
at work and increasing their attachment and identification with the interests
of the enterprise, incentive schemes are expected to improve interpersonal
relationships, raise job satisfaction, lower absenteeism and waste of
intermediate material or capital, and lower turnover rates, all of which should
produce lasting effect on company performance.
In some positions roles and results are traceable primarily to individual effort.
It may be the sales area, technology or a staff function such as finance, legal
or human resources, where these individual contributors can be found. In
other cases the organization may require people to collaborate on addressing
the needs of customers. Furthermore the nature of work may require multiple
skills, enormous speed and innovation making it imperative for individuals to
share information and knowledge and collaborate to achieve the best result.
In such a case rewarding individuals for solo performances would no longer
make sense when such teaming is necessary (Chingos, 2002) .Therefore
identifying the right pay for performance plan requires a fair amount of
customization and understanding of the positions linkage to the
organizations mission.
Discussed below are two types of performance related pay systems;
individual performance pay and team performance pay.

Individual Performance Pay

Individual performance pay is an incentive based on achieving individual
goals. Employees are rewarded with individual incentives for meeting work
related performance such as quality, productivity and customer satisfaction.
For example if an organization requires less supervision of employees
individual incentive plans may work well to encourage employees to

maintain reasonable levels of output. Most individual incentive plans fall into
one of three categories; commission, piecework and standard hour plans,
sharing plans in which productivity gains are distributed between employers
and employees and selective plans that encourage efficiency and discourage
inefficiency.
Individual performance-related pay schemes can either base the whole of the
individuals pay on performance, or affect only a performance-related bonus
in addition to a fixed wage or salary. For example, pure piece rates involve
payment strictly on the basis of the number of units produced by an
employee. Similarly, some employees in services are paid entirely with tips
from customers or with a commission on the number of contracts or products
they sell. However, it is more common for employees to receive a basic
wage, together with a bonus if their individual output exceeds a certain
target number of pieces, or with a percentage of the sales they personally
attend to in addition to the basic wage. (DEBENEDETTI, 2011)

Team Performance Pay

Team/ group incentive is an incentive based on the combined
accomplishments of a team or group, typically against specified goals. When
performance outcomes are impacted by the actions of a team of people
working together and when individual contributions are difficult to measure,
it may be appropriate to design team based incentive schemes. For example,
many business projects (e.g. marketing plans, launching new products)
involve teamwork. Much modern production is based on workers acting as a
group where teamwork is important. Such Performance bonuses are often
based on small-group performance. A teams achievement beyond a certain
target, or a divisions success in completing a project, may be rewarded in
this way. Measures of performance may include a number of indicators, from
output to rejects to time down for equipment repairs to customer complaints
or praises, for example, and can be combined to determine group
performance pay. Another type of team performance pay aside from small
group performance is Gain Sharing where participating employees receive an
incentive payment based on improved company performance. However
managers must be extremely careful in designing and applying team pay-forperformance schemes to avoid negative unintended consequences. For
example when several members contribute to a project but there is no good
measure of any one members output, there is potential for free riding
because it is hard to determine who has contributed the most. Top
performing employees may then leave if they feel that there is too much free
riding and their just share of compensation is distributed to others who
free ride. On the other hand an upside of team incentives is that it can signal

to workers that cooperation is a desirable norm and are often enthusiastically

accepted by workers.
Critical success factors identified in the Caribbean Region
Pay for performance compensation systems has been a main topic of interest
in new public Sector Management. Its applicability has been tried in the
Caribbean Region especially after attempts to implement Human Resource
management into the public sector. The quest for methods to motivate
employees and thereby improve efficiency in organizations has for a long
time been the goal of reformers in the Caribbean Region. In an article by
(Bissessar, 2000) critical constraints faced in the attempt to implement such
systems in Trinidad, Guyana and Jamaica were the rigidity of the structures
under which the services operate and the cultures of the institutions
themselves. In addition (Bissessar, 2000) states the imperatives of structural
adjustment would also be a critical constraint to the successful
implementation of a new system. In conclusion the article concedes that
Jamaica had a greater measure of success due largely to the differing
cultures of their bureaucracies yet in Guyana and Trinidad and Tobago it
clearly failed
According to (Compensation Practices, 2014) over past few years there has
been significant advancement in the strategic development and
administration of compensation programmes in companies across Barbados.
The mix of the components in the compensation package has changed now
including; Base salary, Variable pay, benefits and perquisites. According to
(Compensation Practices, 2014) while it is traditional for companies in
Barbados to offer a bonus, we have observed a shift from a bonus variable
pay (traditionally a Christmas bonus) to true incentive pay. Incentive-based
compensation is becoming common place due to the increased emphasis on
performance and increased productivity. Most companies in Barbados appear
to have adopted performance sharing plans for their variable pay design. The
awarding of bonus/incentive payments are based on individual performance,
company (corporate, divisional) performance/ results and also varied by level
or position in company.
Lastly According to (MOULTAY, 2011) The Employers Organization for Local
Government notes that piecework is used as a pay-for-performance scheme
in governmental direct service organizations. For example a way piecework
is partially used to determine pay in the police service in the Caribbean is

that police officers are rewarded based on how many tickets they issue to
drivers for offenses.

References
(n.d.). Retrieved from http://business.uni.edu/mitra/chap10.pdf
(n.d.). Retrieved from http://ohioagmanager.osu.edu/financialmanagement/designing-effective-pay-for-performance-systems-foremployees-and-suppliers-part-v-%E2%80%93-team-incentive-plans/
Bissessar, A. M. (2000). Public Personnel Management. Information Access
Company .
Course Material MGMT 3062 Compensation Management
Chingos, P. T. (2002). Paying for Performance; A Guide to Compensation
Management . New York : John Wiley & Sons, Inc.
Compensation Practices. (2014). Business Barbados. Barbados: Caribbean
Business Publications Inc.
DEBENEDETTI, F. R. (2011). Paying for Performance; Incentive Pay Schemes
and Employees' Financial Participation.
MOULTAY, U. (2011). Trkiye Cumhuriyeti Dileri Bakanl. Retrieved from
http://www.mfa.gov.tr/making-performance-pay-more-successful-inpublic-sector.tr.mfa

Regards
Shenelle Mohammed