13 Chapter 2: Critical Literature Review 2.1 ... - Dissertation

292.6.1 OutlierOccasionally, there will be certain occupations that have higher or lower compensationrates due to market demand thus causing the underpayment or overpayment of such individuals.Such occupations are known as outliers. Outliers may not be affected by market rates and aremore prone to compensation rates decided by internal equity. Hence, it is important to giveconsideration to the fact that certain professions have a high and low outlier due to a higher orlower number of candidates respectively. An example of a high outlier would be of physicianspracticing cardiac surgery who tend to be overpaid and one of low outlier being nurses who tendto be underpaid (Solomon, 1997).2.6.2 Incentive PlansIncentive plans are those in which an employee may receive some form of bonus due toan increase in performance judged by pre-decided indicators. Incentive plans have generallybeen seen as essential in organizations in order to achieve integration among staff. Theapplication of such incentives may be in the form of annual leave, payment rates, sicknesspolicy, improving working lives initiatives, flexible working initiatives, and the overall termsand conditions of employment (Solomon, 1997, pp.95-99).2.6.3 Pay for PerformancePay for performance refers to the implementation of a new organizational structure,which has been adopted by the Health Maintenance Organizations in the United States and theNational Health Service in the United Kingdom within the last 10 years. The pay forperformance plan is used to decide internal equity within these public organizations usingperformance indicators similar to those used in incentive plans. A 2007 annual survey conducted