I am working for a healthcare organization. We have a proposal for implementing pay at risk, wherein a small percentage of base pay is withheld until the time of employee appraisal. If the performance of the employee is satisfactory, then the employee is given the amount deducted earlier from the base pay. Conversely, if the employee's performance is not satisfactory, then the employee loses the amount deducted from the base pay.
Can anyone tell me about the effectiveness of this compensation scheme, whether it has been a success, and the consequences, if any?
From United Arab Emirates, Dubai
Acknowledge(0)
Amend(0)
Can anyone tell me about the effectiveness of this compensation scheme, whether it has been a success, and the consequences, if any?
From United Arab Emirates, Dubai
Acknowledge(0)Amend(0)
Hi Salman,
This concept used to work earlier in the late 90s in some of the IT companies in Bangalore. It's known as the Long Service Award. You need to add the withheld cost to the CTC and educate the candidate that the money will come back to him after a certain number of months. This is fine as long as the employee is happy, but then, there are organizations today that will buy out that amount and offer the candidate. I doubt whether it will work in today's dynamic job market.
Thanks, and those are my thoughts.
Giridhar
From India, Bangalore
Acknowledge(0)Amend(0)
This concept used to work earlier in the late 90s in some of the IT companies in Bangalore. It's known as the Long Service Award. You need to add the withheld cost to the CTC and educate the candidate that the money will come back to him after a certain number of months. This is fine as long as the employee is happy, but then, there are organizations today that will buy out that amount and offer the candidate. I doubt whether it will work in today's dynamic job market.
Thanks, and those are my thoughts.
Giridhar
From India, Bangalore
Acknowledge(0)Amend(0)
Hi Salman,
Sorry! I think I misunderstood the concept. Since the pay is performance-driven, the parameters for performance must be clearly defined and agreed upon. I really doubt if someone today would accept such pay withholding. Ideally, you could offer it as a performance bonus, which most organizations do.
Thanks,
Giridhar
From India, Bangalore
Acknowledge(0)Amend(0)
Sorry! I think I misunderstood the concept. Since the pay is performance-driven, the parameters for performance must be clearly defined and agreed upon. I really doubt if someone today would accept such pay withholding. Ideally, you could offer it as a performance bonus, which most organizations do.
Thanks,
Giridhar
From India, Bangalore
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
India Inc Moves to Link CXO Pay to Performance.pdf
Salary Break Up - Performance Pay.xls
12 Vangonotes HRM - Pay for Performance and Financial Incentives.zip