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Incentives and PLC HRM

Incentives are rewards designed to enhance motivation and performance, including both monetary and non-monetary forms. Performance-Linked Compensation (PLC) connects pay to employee performance, promoting goal alignment and motivation. While incentives can be ad hoc and varied, PLC is primarily monetary, periodic, and integrated into salary, offering benefits like enhanced motivation but also challenges such as measuring performance and fostering competition.

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4 views5 pages

Incentives and PLC HRM

Incentives are rewards designed to enhance motivation and performance, including both monetary and non-monetary forms. Performance-Linked Compensation (PLC) connects pay to employee performance, promoting goal alignment and motivation. While incentives can be ad hoc and varied, PLC is primarily monetary, periodic, and integrated into salary, offering benefits like enhanced motivation but also challenges such as measuring performance and fostering competition.

Uploaded by

ridheshsharma38
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Incentives and Performance-Linked Compensation Systems

Understanding Motivation and Pay-for-Performance Approaches in HRM


What are Incentives?
- Incentives are rewards to boost motivation, performance, and productivity.
- Purpose:
• Encourage better performance
• Reward excellence
• Retain talent
- Types:
• Monetary: Bonuses, commissions
• Non-Monetary: Recognition, flexible hours
Performance-Linked Compensation (PLC)
- PLC ties a part of pay to employee performance.
- Also known as: Pay-for-performance, variable pay
- Key Features:
• Linked to performance metrics
• Encourages goal alignment
• Motivates achievement
Difference: Incentives vs PLC
- Incentives:
• Monetary or non-monetary
• May be ad hoc
• Not always part of salary
- PLC:
• Primarily monetary
• Periodic (monthly, quarterly)
• Integrated in salary
Benefits and Challenges
■ Benefits:
- Enhances motivation
- Aligns effort with goals
- Builds performance culture

■■ Challenges:
- Hard to measure performance
- Risk of unhealthy competition
- Potential dissatisfaction

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