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PERSON-FOCUSED PAY PLAN

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PERSON-FOCUSED PAY PLAN

Person focused pay plan is an approach that focuses on incrementing employees based on

individual performance rather than comparing them with other employees. It aims to recognize

and reward top talent for their hard work while motivating others to emulate the behaviour of

high performers to be recognized and rewarded too. Allows employers to engage and retain their

best-performing team members by giving them credit for their skills and achievements.

Reasons Why Companies Adopt Person-focused Pay Plans

Companies that focus on the well-being of their employees can benefit from offering a

person-focused pay plan. This type of compensation model incentivizes staff members to show

up and provide quality work, as they can see themselves being rewarded for doing so. A person-

focused pay plan rewards hard work and dedication and sets up structures that allow teams to

collaborate more effectively. With the right setup, coworkers will become more productive and

efficient, leading to improved results over time. This type of compensation structure gives

employees the motivation they need to stay motivated and perform their best daily.

To ensure that a company's employees feel secure, valued and compensated fairly,

companies need to adopt a person-focused pay plan. This type of pay plan promotes fairness and

equity within the workplace. It rewards employees based on performance evaluation and aligns

their remuneration with job duties and responsibilities.

By providing equitable payments based on individual achievement, companies can

reward their top performers while still recognizing the smaller accomplishments of all workers in
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the organization. Person-focused pay plans strive to create an environment where everyone

thrives and no one feels undervalued due to unfair advantages some employees take.

The traditional way of paying employees is not always fair and equitable. It does not

consider factors such as skills, experience, and level of performance (Lorene, 2015). It is where

the person-focused pay plan comes into play. It focuses on rewarding excellence in all its forms

and awarding compensation based on individual contribution to the company's success rather

than simply giving the same pay to everyone in a particular job category.

Person-focused pay plans are designed to increase employee satisfaction and loyalty by

recognizing individual efforts and awarding performance-based rewards that show appreciation

for their hard work. Companies adopting these plans will benefit from a unified and motivated

workforce who are contributing towards shared goals and promoting an atmosphere of fairness.

Person-focused pay plans are quickly becoming the go-to for companies who want to

attract and retain the best talent. By creating a payment plan that rewards quality work and

performance, employers incentivize employees to give their all and stay with them long-term. At

its core, person-focused pay plans are characterized by two main components - meritocratic

performance and professional development. This type of pay plan cultivates a sense of growth

and achievement amongst employees, which is why it is the preferred method of many

successful organizations.

Types of Positions in Person-focused Pay Plan

Sales positions are increasingly often individuals that can benefit from these types of

person-focused pay plans. This type of reward system is better suited for sales positions as
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people can easily monitor sales conversations, and variable commission packages allow

salespeople to focus on closing larger deals while still earning an appropriate amount for smaller

values. Person-focused pay plans also give individuals greater license and autonomy over their

income streams, allowing them to take greater ownership of their job.

Person-focused pay plans are fast becoming popular for companies looking to reward

their executives for their contributions and job performance. These pay plans recognize each

executive's unique qualifications and experience, offering tailored rewards that reflect the

individual's values and goals (Rehman and Abbas, 2013). Person-focused pay plans enable

employers to reward top performers for keeping them motivated and engaged while rewarding

average performers according to the merit of their work. It makes organizations more

competitive, agile, and successful in the long run. Person-focused pay plans provide an

advantage by allowing executives in high positions who lend themselves well to these plans to be

rewarded accordingly for their hard work and effort.

As businesses embrace innovative approaches to workplace compensation and

advancement, more companies are investing in person-focused pay plans designed with the

needs of the individual in mind. Such projects recognize the unique contributions of each

employee, taking into account not only job duties but also areas such as experience,

qualification, and potential. The key is to create reward structures that recognize employees'

skills and knowledge while allowing them to grow. It has proved especially advantageous for

technical positions, which can often lend themselves well to these plans.

Person-focused pay plans are an innovative way of paying employees, centred around

giving more freedom to the individual and recognizing that not all positions need to be paid the
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same. It's an approach that considers how an employee's unique skills, experience, and

individual contributions can help a business succeed. Creative positions, such as copywriting or

content writing, lend themselves particularly well to these plans because they rely on individuals'

specialized talents and perspectives to create engaging pieces of work. Person-focused pay plans

offer creative professionals the autonomy that comes with being able to dictate their salary

structure and set their pay rate based on the quality of their work.

Advantages of Person-focused Pay Plan

Person-focused pay plans may increase employee motivation and job satisfaction because

such programs recognize and reward individual performance rather than just the team or

organization's performance. Encourages employees to put in more effort, as they know their

efforts will be rewarded and their performance will be recognized. Additionally, this recognition

and reward can increase employee motivation and job satisfaction, as they feel that their hard

work is being acknowledged and rewarded. Person-focused pay plans typically allow employees

to earn more money or enjoy other benefits based on their individual performance.

By offering employees bonuses or other incentives based on individual performance,

person-focused pay plans can help to increase productivity. This is especially beneficial for

organizations that rely heavily on the efforts of individual employees. Increased productivity is

one of the main advantages of person-focused pay plans. By rewarding employees for their

actions, organizations can motivate them to perform at their highest level and increase overall

productivity (Malik, 2018). Additionally, person-focused pay plans help promote a sense of

fairness in the workplace, fostering positive employee morale and improving productivity.
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Person-focused pay plans can help improve recruitment and retention by providing

employees with rewards tailored to their unique skills, interests, and needs. This can help make

the job more attractive to potential employees and encourage current employees to remain with

the organization. Additionally, it can help to show employees that their contributions are valued

and appreciated, which can also help to improve morale and job satisfaction.

One of the major benefits of person-focused pay plans is an enhanced corporate culture.

Employers can reward staff for their contributions to the business through person-focused pay

plans, which boosts motivation and morale. Employees may feel that their efforts are actually

valued and acknowledged, which can foster a climate of fairness and equity in the workplace. An

organization's productivity and profitability might grow as a result of higher employee retention

rates and increased employee loyalty and job satisfaction.

Disadvantages of Person-Focused Pay Plan

One of the main disadvantages of person-focused pay plans is that they can lead to

reduced employee motivation. It is because the pay plan rewards individual performance, which

can lead to employees competing against one another rather than working together as a team.

Leading to an unhealthy work environment and may reduce overall performance.

Another de-merit of person-focused pay plans is that they can increase employee

turnover. Employees who feel their contributions could be more adequately appreciated or

rewarded may become dissatisfied and look for opportunities elsewhere. It can be especially true

if employees feel that their peers are receiving more generous rewards and recognition than they
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are. High turnover can be costly for employers and impede their ability to retain valuable talent.

It can lead to employees leaving the organization or feeling disengaged.

Reduced team work is also a disadvantage of person-focused pay plans. Since employees

are rewarded individually, they may be less likely to work together and collaborate (Malik,

2022). It leads to poor communication and cooperation among coworkers, negatively impacting

overall performance. Additionally, individual rewards can create an atmosphere of competition

rather than collaboration, further reducing teamwork. It can lead to decreased overall

productivity and a lack of employee cooperation.

Another disadvantage of person-focused pay plans is that they lack flexibility. Person-

focused programs often offer higher salaries for certain positions, but they sometimes provide a

different level of flexibility than other pay plans may offer. For instance, if an employee wants

to switch to a different position or take on additional responsibilities, they may need a pay cut.

This lack of flexibility can be a significant disadvantage for some employees.

A job-specific example of a person-focused pay plan could involve paying an employee a

bonus for meeting a certain goal or reaching a certain milestone. Employees are evaluated based

on their performance against specific metrics such as the quality of their code, meeting project

deadlines and contributing to the team's general success. Those who perform exceptionally well

may receive additional pay. For instance, a software engineer may be given a bonus for

completing a project on time and within budget, or a salesperson may be issued a commission for

a meeting or exceeding a certain sales quota. Other examples include offering incentives to

employees for completing extra training or taking on additional responsibilities.

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In conclusion, Person-focused pay plans can have both positive and negative effects. On

the positive side, they can help increase motivation and engagement and reward employees for

their efforts and contributions. On the negative side, they may lead to inequities between

employees and create an environment of competition rather than collaboration. Additionally,

they can be costly to implement and maintain. Ultimately, an organization must carefully

consider their goals and objectives when deciding whether to implement a person-focused pay

plan.
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References

Lorene T Stasheen. (2015, October 27). Person focused pay programs.

LinkedIn. https://www.linkedin.com/pulse/person-focused-pay-programs-lorene-

theodora-stasheen

Malik, A. (2018). Strategic human resource management and employment relations: An

international perspective. Springer.

Malik, A. (2022). Strategic performance and commitment management. Springer Texts in

Business and Economics, 93-101. https://doi.org/10.1007/978-3-030-90955-0_9

Rehman, R., & Abbas Ali, M. (2013). Is pay for performance the best incentive for employees?

Journal of Emerging Trends in Economics and Management Sciences, 4(6), 512-514.

(2013). Deferred incentive pay plan for key employees. Compensation & Benefits

Review, 45(2), 121-121. https://doi.org/10.1177/0886368713492114