REWARD SYSTEM

Companies also provide additional payments and benefits on the top of the employees
basic salaries. These form part of the company's reward system and are given to motivate
employees as they perform their task.

CONTINGENT PAY

This is a pay scheme which is given on top of the basic pay rate and is based on the
employees performance, competency, contribution and skill. Contingent pay can be applied to
individuals or groups. Individual Contingent pay can be implemented along five schemes:

1. Pay for performance schemes

On the top of the basic pay, an employee is given a bonus based on performance .
This pay scheme serves to motivate employees to perform well in their jobs.
Employees are encourage to fully participate in attaining the company objective.
One disadvantage is that the basis for providing the reward may be subjective .
Therefore , the company should have a good performance management system that
relies on the quality and not the quantity of work.
2. Pay for competency
This is based on the knowledge, skills, and abilities that employees have that they
apply on the job. This encourage enhancement of competencies among employees but
may be difficult to assess since it ignores output level.
3. Pay for contribution
it focuses of the combination of employee competencies and output level.
4.Pay for skills
This payment depends on the skills acquired by the employee. This requires a worker
to undergo training and gain certification for certain competencies
5. Pay for service
This is usually paid yearly on the basis of an employees continued service.
Group contingency pay,
on the other hand, maybe implemented through two scheme
1. Team based pay
This is given to groups of employees who have related jobs and are assigned to work in a certain
project. The reward is based on the achievement of a certain quota or service standard. Team- based
pay is usually given at a rate proportionate to an employee’s basic pay.

2. Organization wide pay

This is given to employees on the basis of the achievement of organizational goals . There are two
types of organization-wide payments.

a.Gainsharing
This is based on a bonus plan where employees are encourage to fully contribute to the
company’s performance. Gainsharing primarily emphasizes increased productivity and improved
performance of employees.
b. Profit sharing
this refers to the scheme where employees share in profits of the company either t rough cash
payments or shares of stocks. The value of incentive is determine by the management, Usually the
management decides which portion of the profits will be shared with employees