Identify two ways an organizations compensation plan may be

Identify two ways an organization’s compensation plan may be linked to key objectives, and explain how they could benefit the organization.

Solution

Usually, company follows two types of compensation plan and they are: Experience and performance oriented

Experience Oriented: Companies hire experienced employees who can bring a lot to the table and value to the company. The compensation plan is often related to the experience of a person and how well versed he/she is in a specific domain or technology. When there is a match between the job requirement and skill set of the employee it can benefit the company because the employee will be happy to share his experience and train new people in the team. Usually, the objectives of the companies would be to deliver a project successfully or implement a new technology successfully to help the customers in getting what they want. End of the day generating revenue from business is important so, an experienced guy will be an excellent addition to the team.

Performance Oriented: Companies decide the basic compensation of an employee during the interview based on the budget and the company needs. But to motivate the employees they provide the option of earning more money by proving their worth to the company. They usually provide performance-based incentives to the employees. This allows the company to keep the employees motivated and also make them work harder and smarted towards achieving their goals on a regular interval. This work very well in all the sales driven organization around the world. The good performance never goes unnoticed and unpaid in all the organizations. So having a compensation plan will definitely help the company in reaching their objectives and also keep the employees happy at the same time.