There are multiple legal responsibilities when setting up a pay structure, to name a few there is the Equal Employment Opportunity that essentially says a company can not base pay on a persons race, sex, or age and that employees need to be evaluated for pay based on their experience and skill sets. Another regulation is complying with Minimum Wage, this is a rate set by each state that an employer must pay their employees and the rate is usually set per the hour.
Overtime pay is another thing that must be complied with, it states that employees should be paid extra for the extra work that they do, in the company I am in currently I am a salaried employee, however employees that are paid hourly wages are watched very closely and if they are at 40 hours they are generally sent home early. The company will pay the overtime if you have it for some reason but they watch very closely to time and try to avoid giving hourly employees overtime if they do not have to; I think many companies think similarly to this and that they will not deny you the overtime if you have it but they try and prevent you from being able to receive it because generally for a company overtime means time and a half pay.
One of the last major rules that apply is the child labor laws, which states that child labor is strictly prohibited and that a child under the age of fourteen can most likely not be employed.
I think that financially something like overtime can be one of the most challenging aspects for a small company because overtime is such an added and unexpected expense when you essentially budget to only pay x amount of employees x amount of money each week and then have the responsibility to pay them that plus some. I think thats why the company I am in currently watches so closely, they are family owned and employee about fifteen locations as well as warehouses and a corporate office, for a small family business extra unexpected expenses are generally something you don’t want to have often or make a habit of. However I have heard of some new regulations that are going to even further limit who can receive overtime, that there is a possibility that overtime will only be able to be earned by low paid individuals which would make it an easier expense if you know that someone making more wouldn’t be striving to receive overtime pay, adding that expense.
I think an accountant with a manufacturing company would be considered a base pay employee because their job is essentially to just focus on the companies numbers and make sure everything is in order and most likely would not have daily tasks that would need to be offered as an incentive. A salesperson at a retail store, this one I have mixed emotions on, I currently work with a company as a sales manager at a home design and retail store. While I am currently on a salary as well as incentive/commission pay I think that sales people could benefit from a base pay, offering a base pay to sales people would allow them to focus on making the customer in front of them happy without having to feel desperate to make a sale to increase their paycheck. However, at the same time I think that there is a benefit to incentivizing pay for sales people because it gives them more passion to help the company sell, if there is no commission for example involved then if there is that customer that is on the fence about something but would probably buy if they just knew a little more about it then why would the employee feel inclined to talk the product up more, employees could possibly develop a “whats in it for me” mentality towards selling. A chief executive officer would probably benefit from incentive pay, this is a competitive profession and one that requires a lot of hard work so fir someone to be able to see the work that they are putting in is helping the company would most likely be incentive enough to work harder and invest more into the position. A physician in a health clinic would most definitely benefit from a base pay, their primary role is to focus on the patient and do whatever is best for them. I can’t see many ways that you could make this a position that goes off of incentive pay, it would not function correctly and most likely many people would not get the help they need or would not receive the quality of help that they need opposed to someone who knows that if I see twenty people today or two people I will make the same amount so why wouldn’t I give those two people the best care possible.
The advantages to incentive pay being linked to an individuals performance go as follows, I think primarily it is just that, the incentive is linked to performance which means that the stronger the performance the stronger the incentive, if an employee feels that they will be properly compensated for a task that they are supposed to accomplish then they are more likely to throughly accomplish said task, this can become the basis of setting goals. Paying an employee this way can also increase productivity in the workplace because employees see a dollar sign attached to the end of a project making them more inclined to complete the project and focus on their own performance. Which leads to another positive being that incentive pay greatly benefits the most efferent workers and rewards your top performers making them feel valued and appreciated. Some of the disadvantages however can be that their is a possibility that if a goal is set pretty high or is more difficult then the employee can become demotivated and quality can be compromised. Quality is another thing that is hard to gauge when working with incentive pay, there has to be a standard in which the quality of an employees work is judged, if their are multiple people in charge of deciding whether or not someones work is worthy of the incentive then opinions can vary and some employees may benefit while some stay stagnant in their positions so having a strong control in which performance is gauged is very important for this type of pay. Another thing to consider as a possible consequence to incentive pay is that performance can become very one sided and there is always the possibility that cooperation and the idea of working as a team can be jeopardized, when someone is working towards a certain dollar sign or end result with a project it becomes very personal and the need for ream work can go away making the workplace very divided which can be dangerous if you have a group that is always reaching goals and earning incentives and then you have a group that can’t always hit the target this can make those employees feel less valued and either encourage them to under-perform or leave the company all together making turnover an issue as well.
I think that Continuum’s plan to implement incentive pay in regard to performance experiment has the potential to boost employees performance because the top performing physicians would have the opportunity to show their best work and get compensated fairly and only based on their performance, so physicians being paid as they generally are would want to obtain that same level of pay in the experiment as well taking possibly good work to great work for the same amount of money. If the hospitals are trying to build their reputation for quality of health care like they said they were then this could be a viable option, I think one thing that it is very essential is that it is voluntary who chooses to participate in the experiment. I think that the garnishing program would be something that would be more debatable for the non-medical staff, depending on the position they are in it may be something where they never even see the patient and that they have the same amount of work to do everyday, so I think that there definitely have to be a different structure for the program that these types of employees would be on compared to physicians and people who work directly with patients that would be an essential role to client satisfaction, I do however think that if they could in one place at least keep base pay these would be the employees to offer it to, like I had said before their work may not be something that is centered around client satisfaction making it harder for them to reach goals in their work based solely on that principal. I think if client satisfaction is what they are seeking then I think it would be one of the most important factors to have at the top of the scorecard. I think being timely and efficient while still being precise with their work is very important as well as working cost effectively and ensuring that they are not costing possibly more than they are bringing in for the company. I think compensation for this type of scorecard would be based primarily on their efficiency while still developing strong customer relations and ensuring that clients are satisfied and treated well and feel that they are in the best possible care. I would say that that is a physicians primary role if they have that job and it should be their goal everyday to always strive to be the best and provide the best possible care to their patients.