Pay at risk - Can anyone tell me about the effectiveness of this compensation scheme?

salmanhyd
I am working for a healthcare organization, we have a proposal for implementing pay at risk wherein a small percentage of base pay is withheld till the time of employee appraisal. If the performance of the employee is satisfactory then the employee is given the amount deducted earlier from the base pay and to the contrary if the employee's performance is not satisfactory then the employee loses the amount deducted from the base pay.
Can anyone tell me about the effectiveness of this compensation scheme, whether it has been a success, and the consequences if any?
girisav
Hi Salman,
This concept used to work earlier in late 90's in some of the IT companies in Bangalore. Its known as Long service award.
You need to add the withheld cost to the ctc and educate the candidate that the money will come back to him after ____ no of months.
This is fine as long as the employee is happy but then, there are orgn today who will buy out that amount and offer the candidate.
I doubt whether it will work in today's dynamic job market.
Thanks and these are my thoughts.
Giridhar
girisav
Hi Salman,
Sorry !! i think i misunderstood the concept.
Since, the pay is performance driven, the parameters for perf must be clearly drawn and agreed. I really doubt if some one today would accept such a pay withholding.
Ideally you could give it as performance bonus which most orgns do.
Thanks
Giridhar
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