Performance Measurements and Reward Systems

BBC has recently transformed its management of performance and rewards for the company’s staff. Prior the changes done by BBC, the staff was paid flat rates for their compensation and was signed up for the company’s established profit-sharing plan. However, BBC decided to change their performance and payment schemes by eliminating the company’ profit-sharing plan and the flat rates as compensation. The company’s staff will receive their compensation based on commission rates that will be established by the company.

The remainder of this text will discuss the effect of the new performance and payment scheme to the actions and behavior that will be taken by the company’s staff as well as the management, and the implications of the changes to the position of the company. In addition, the necessity to make such changes will also be discussed. Profit sharing refers to an agreement between the employer and employees about how compensation will be distributed to them. It allows the sharing of a percentage of the company’s profits to employees depending on their work performances that help the company obtain greater income.

Profit sharing takes on the role of an incentive plan which motivates employees to work on a certain goal or objective

set by the company for them to receive greater benefits and compensation from the profit-sharing plan. (“Profit Sharing,” 1999) On the other hand, flat rates as bases for providing compensation is based on the plan or scheme of paying for the time spent by the staff in servicing the company for fixed rate, whether the work done is maximized to fit the fixed payment or not.

Eliminating profit-sharing and changing the flat-rate scheme to a commission-based type of profit might be motivated by the failure of the performance and payment scheme to address the needs of the employer and the employees in terms of the amount of money being invested for insurance and benefit plans awarded to employees and the total profit being obtained through the rendered services of the employees. The advantages of profit sharing are enough for organizations to implement this performance and reward system in order to gain more profit.

(Nelson, 2008) Therefore, the decision to do away with profit sharing might be due to the fact that it is failing to achieve its purpose in gaining maximum profit. Another reason might be the impact of recession to business organizations. Although the involvement of the members or employees of the organizations is much needed by organizations, the recession which greatly influences the total profit received by organizations forces them to cancel all plans or programs that might help them save the position of the organization from driving into the risks and threats posed by the economic downturn.

(Pitt, 2008) Implementing commission-based payment schemes, on the other hand, motivates employees to work harder in order to reach their desired salary or compensation. Commission-based salaries seek to harness the best productivity rates and work outputs from employees by motivating them that the amount or quality of work or services rendered will be equal to the total amount of salary or compensation that one will receive. Perhaps, this particular move is motivated by the lack of quality performance and work outputs rendered by employees for the organization.