It keeps the employees of the company on high level, as each aspires to come up with a new idea.
The new ideas ensure that the company improves its service provision daily.
One of the oldest examples is taken from the ancient Egyptians, where slaves working in the pyramids were given bread for superior performance.
Payment of commission for sales production is one of the methods used today.
Most will agree that knowledge is the ‘key’ resource in this post-industrial economy.
The challenge for many companies is developing an organization that creates and cultivates knowledge and learning.Fed Ex Company has realized the importance of offering attractive packages to its employees.The company gives close to 50% of its returns to its employees as benefits and compensation (Fed Ex, 2012).The compensation also acknowledges new ideas that are introduced within the company.High compensation serves to ensure that the employees remain inventive and innovative (Berger & Berger, 2000).Performance-based compensation exists when compensation is tied directly to that portion of an individual’s performance that can be effectively measured.There are a number of ways in which this may be accomplished and a number of examples as well how it is applied.The compensation packages in the company further serve to attract new, competent employees.It also serves to retain the already existing employees.The system is not being able to reward the things the company needs and this presents a barrier.The trend has moved away from pay for the value of the job, service and seniority. ...aining 34, Number 12 (December 1998): 34-40 Hays, Scott. "Guidelines for Administration of Merit Pay Plan." [