Blackwell Reference Online

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Employee compensation can be linked either to the amount of time worked or to a measure of the work completed ( see incentive pay ; pay for performance ). With a time‐based pay system, employee compensation equals the rate of pay per unit of time multiplied by the number of time units worked; for example, $8.00 per hour multiplied by 8 hours equals $64.00. Another label for such a system is membership‐based compensation. In a simple time‐based pay system, all employees in a given job receive the same rate of pay per unit of time. Such a system is easy to administer because management has only to measure the amount of time an employee is on the job rather than measure the amount of work performed. Time‐based pay assumes that the amount of work performed per unit of time is quite uniform. Quality of performance is expected to be better with time‐based pay compared to performance‐based pay. The principal criticism of such systems is that compensation is linked to attendance and not to performance. ( 1992 ). Compensation, Organizational Strategy, and Firm Performance . Cincinnati, OH : South‐Western Publishing . ( 1993 ). Compensation , 4th edn. Homewood, IL : Richard D. Irwin . ... log in or subscribe to read full text