people in engineering industary" PFP in engineering industry is directed by collective bargaining power of engineers working in particular organization (Antoni and Baeten, 2007, p. 123).
Performance related pay is designed in order to measure performance of individual or group in monetary terms. Organizations using performance related pay believe increased pay can motivate employees to perform well. It is difficult to create a standard notion of performance related pay because definition of performance varies from organization to organization. Common performance related pay can be explained in the following manner.
Companies offer individual performance pay schemes in the form of fixed wage or performance related bonus. Engineer’s performance is measured in terms of his/her capability to produce target quantity of output in given timeframe. Cost to the company for engineers is adjusted in terms of fixed salary and variable pay. Variable pay is allocated to employees in the form incentives in order to motivate them to perform well. Individual measure of employee’s performance is subjective to assessment performed by particular supervised. Merit pay defines to pay hike due to good performance (Bryson et al., 2011).
Research scholars have described bonus scheme as self financing method which provides reward to employees with an intention to motivate them to perform well. Bonus scheme is not a static reward system because many organizations change measurement norm of bonus scheme in accordance to business requirement. Basically bonuses are additional payment to base salary and important thing to remember is that bonuses are not paid in periodic manner. There are no fixed performance criteria to link performance with bonus scheme. Labour law suggests that bonus scheme must not be gender biased while research scholars have divided bonus scheme into two broad categories.