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Types of Performance Pay

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Give a brief description of the 5 types of individual performance pay, and recommend which type of job would benefit by using which type of performance pay.

1. Piecework rates
2. Standard hour plans
3. Merit pay
4. Individual bonuses
5. Sales commissions

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1. Piecework rates: This is when workers are paid a set rate for miles traveled (drivers, for instance), items manufactured (factory job) or items sold (sales people). It is when a worker is paid a fixed price for each unit produced. An example would be in a warehouse setting where workers are paid for each item pulled. Time worked does not enter the equation, only productivity. This is used to boost productivity in jobs dealing with little variance. Productivity would increase as workers are encouraged to pull more to earn more.

2. Standard hour plans: This is a wage incentive in which standard work times are expressed as standard hours and worker is paid based upon ...

Solution Summary

This solution explains in detail different types of performance pay (piecework, standard hour, merit, individual bonuses, sales commissions) and links a particular type of job to each one.

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