Sample Term Paper
. The idea of a performance based pay system has developed widely in the recent years. Basically the performance based pay system is a financial reward given to the employee whose work is considered as target achieved. This type of pay system is mostly used in organizations where the performance of an employee cannot be measure properly. It’s basically an incentive which is given to the employee on the completion of job (Lowery, 1996). A more clear definition of this concept is given by Evans. According to Evans, “Performance-based pay plans continue this theme by rewarding those who have worked the hardest and contributed the most” (Lowery, 1996).
In the case of Nucor the performance based pay is doing wonders. Employees are more than happy with the performance based system. The reason why this system is successful at Nucor is that if we compare the base pay of a Nucor steelworker with the pay of other workers that are working in the industry it would be a miss match. But what motivates the Nucor worker is the bonus on producing defect free steel, which would increase their pay up to three times, which is far ahead than the industry trends. Another thing that motivates the workers is that the company works out the bonus on every order they get and then distribute it among the workers according to their performance.
Through an analysis of the case in question the employee’s motivation would get down if the empowerment is taken away from the employees. The reason behind this logic is that when the top management empowers the employees this in other words illustrates the trust that they have in their employees. This also creates a sense of ownership in the employee’s mind and their dedication towards the organization increases. If Nucor did not empower employees to make decision this would create an environment of mistrust which would lead to biasness and it would have a demoralizing effect on the employee’s.
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